Introduction
How the City Pays for Public Works
Steps for Organizing
Organizing Tips
Neighborhood Plannning and NCBG
The NCBG Neighborhood Atlas

City Funds that Pay for Public Improvements:

• Enterprise Funds: Enterprise funds come from revenues received from city services like water, sewer and the airports.  Revenues from this fund can only be used on projects related to the fund (Water, Sewer, O'Hare Airport, and Midway Airport).
• General Obligation and Revenue Bonds:  G.O. bonds are financed through property taxes, and revenue bonds are financed by user charges or other project related income.
• Motor Fuel Tax: The City spends its portion of the state motor fuel tax.  The Illinois Department of Transportation must approve all of the City's expenditures in this program.
• Tax Increment Financing:  TIF captures the increase in various taxes that result from a redevelopment project to pay for related public improvements.

Federal Funds:

• Surface Transportation Program and Federal Transit Administration (STP and FTA):  STP and FTA provide federal funds (requiring a 20% local match) for capital improvements to the City's public transportation and arterial street systems, respectively.
• Community Development Block Grant (CDBG):  Until 1999, the City has designated a percentage of its annual CDBG appropriation to capital improvements in low and moderate-income areas.  However, no such allocations were made for the years 2000, 2001, 2002 or 2003.  

State Funds:

• Illinois Department of Transportation, State Road Fund:  The State Road Fund is comprised of proceeds from motor fuel taxes.
• Illinois First: See Illinois FIRST and Chicago for details on Illinos FIRST Funding

Other Funds:

• Public Building Commission:  Public Building Commission funds come from property taxes and are made available to the City on an annual basis.
• Private funds:  A recent trend in public finance has been public/private ventures.  This generally involves an agreement between the City and private interests to share the cost of making infrastructure improvements that benefit both parties.
• For a picture of the how the funding process works and who has the power when it comes to capital spending, see this diagram.

CITY OF CHICAGO CAPITAL IMPROVEMENT PROGRAM 2003-2007

Source: Neighborhood Capital Budget Group's analysis of City of Chicago Capital Improvement Program documents from 1990 through 2003.

These figures represent planned allocations, not actual expenditures. The City of Chicago does not report to the public on a regular basis the actual infrastructure expenditures on a project-by-project basis.

Funded vs. Unfunded

When the City develops the Capital Improvement Plan (CIP) -- its five-year road map for public works investments -- one of its main tasks is figuring out how much money is available and where that money is coming from. This means looking at all the State and Federal dollars that will be available to the City, as well as the money it can raise locally from sources such as property taxes, water bills, and other fees. Once the City knows how much money it has, it can figure out how much it can spend on infrastructure and other programs.

The CIP includes all this state, federal, and local money, but it also includes projects for which the City has not identified a funding source. In other words, the City says it wants to do the project, but it hasn't figured out how to pay for it.

Why is this important? Unfunded projects are more likely to be delayed -- sometimes for many years -- or dropped from the books altogether. An unfunded project -- marked "GOF" in the CIP document -- represents a lesser commitment by the City than a project to which it has pledged Federal, State or local dollars.  In other words, all promises are not created equal. Some of the promises included in the CIP -- those with definite funding sources and construction schedules -- are fairly likely to actually come true. But for too many neighborhood projects, taxpayers are in for a long and frustrating wait.