Illinois capital funding bolsters development of Chicago TIF district
Plans for a new $7 billion, tax-increment-financing supported neighborhood taking shape just south of Chicago’s downtown took a step forward Wednesday as the state released $500 million in capital funding to move a University of Illinois’ technology and innovation research center to the site.
The University of Illinois’ Discovery Partners Institute will anchor the first phase of development. The city earlier this year approved up to $700 million of TIF funding for infrastructure work for “The 78” — a reference to the creation of the city’s 78th official neighborhood.
“With this announcement today of Discovery Partners Institute and the Illinois Innovation Network, we are launching a new era for Chicago as an extraordinary focal point for an unparalleled tech workforce and research and development…strengthening Illinois’ long-term economic vitality for generations to come,” Gov. J.B. Pritzker said at a news conference Wednesday alongside Mayor Lori Lightfoot.
Pritzker announced previously authorized funding would be released to help finance the project on land donated by the site’s developer Related Midwest as well as other related research hub projects.
The $500 million state commitment includes $235 million for the DPI center with the remainder going to other projects that are part of the Illinois Innovation Network — a series of research and innovation hubs that officials believe will serve as a magnet for technology and talent.
Plans to locate the new DPI facility were first announced in 2017 by the state’s flagship university, which operates several campuses including one in Chicago, and former Gov. Bruce Rauner, former Mayor Rahm Emanuel, and Related Midwest.
The state provided the commitment but the university was required to come up with matching funds to cover an overall $1 billion price tag and after Pritzker took office last year he pressed the university to step up those efforts.
The university now has $230 million of “hard” commitments from private sources. The university is also relying on non-state funding for a portion of the overall funding with some coming from the various schools that make up the state’s public university system including some bond proceeds.
The state’s capital funding authorization is separate from the six-year $45 billion infrastructure program approved last year but Pritzker left the door open to making some funds from the program available in the future for the university’s projects.
The Illinois Innovation Network has 15 so-called hubs, including DPI, that link all of the state’s public universities and U of I College of Medicine locations in Peoria and Rockford with projects aimed at applying technology to challenges related to agriculture and food systems, manufacturing, transportation, health and wellness, the environment, and entrepreneurship. Partnerships have also been established with 12 universities and research institutes.
University officials said construction of the DPI campus is expected to begin in the next few months.
The DPI, which currently operates out of a downtown location, signed a letter of intent with Related Midwest. The developer is banking on the center attracting other tenants to the site.
In tandem with the state’s funding announcement, Midwest Related unveiled detailed plans for the first phase of the development that calls for office, retail, hospitality, residential and cultural space to be built on 2.8 million square feet of land. The larger development plan covers 62 acres of what’s now mostly vacant land.
Related has targeted completion of the first phase in 2024. Future phases will add another 10 million square feet of commercial and residential space and a new Chicago Transit Authority Red Line station.
Lightfoot inherited the TIF district when she took office in May. Some activists opposed the TIF, and another one known as Lincoln Yards were, arguing the public subsidies were not needed to spur development.
The equalized assessed value of property in "The 78" TIF district is estimated at $91 million. That’s projected to reach $2.1 billion when the area is developed, an argument supporters said favored the public commitment.
The agreements call for the developer to pay for $550 million in upfront infrastructure costs, with the city repaying the note as TIF revenue is generated from the development. The ordinances permit subsidies of up to $700 million in diverted property taxes with an additional $400 million in funding possible.
Lightfoot recently announced various TIF reforms but said at the news conference “the commitment the city has made remains firm” to public infrastructure project funding for the site. Lightfoot called the DPI project a “game-changer” for the city’s goals.