The University of Michigan

Urban Planning 538 - Economic Development Planning

Winter 2005

Contact Information:

Anna Sokol

Last Modified:

March 21, 2005


Industrial Retention Programs

Chicago's North River Industrial Corridor


The so-called “Rustbelt” of the United States experienced massive amounts of deindustrialization in the late twentieth century due to massive shifts in production out of the city center. This was fueled in part by cheaper land values in the suburbs, cheaper labor abroad, and rising costs of both land and labor in the inner city due to high property taxes and wage increases with unionization of the manufacturing sector. Many inner cities have realized that they must compete with their hinterlands as well as with their neighboring cities to keep industry within their borders. The advantages of keeping high paying jobs, an industrial tax base, and occupancy within industrial districts in a city outweigh costs that may come as a result of economic programs aimed at industrial retention for those cities. While industrial retention programs are not widely adopted across the U.S. , they are relatively common in Rustbelt cities such as Chicago , Pittsburgh , and Cleveland . This report will focus on three industrial retention programs in Chicago , Enterprise Zones, Permanent Manufacturing Districts, and Tax Increment Financing Zones, with a particular emphasis on how these programs have affected the North River Industrial Corridor in Chicago 's near north side region.

Chicago 's North River Industrial Corridor (NRIC) houses one of the city's oldest industrial sectors, as well as one of its most controversial. The land surrounding the NRIC includes some of the highest, and fastest, consistently growing land values in the city. As a result of the contentious location of the NRIC, there have been significant battles on all the sides of the issue, particularly between residential and commercial developers and those who wish to keep industry in the inner city. Elected city officials found themselves on both sides of the issue, but it was not until Harold Washington became mayor in 1983, that those in favor of industrial retention truly had a political ally. Mayor Washington strongly advocated the use of two particular industrial retention methods: Enterprise Zones and Permanent Manufacturing Districts. In addition to these two industrial retention methods, Industrial Tax Increment Financing Zones have been heavily used in Chicago since Richard M. Daley became mayor in 1988.



View of the Cortland Bridge Entering the NRIC.

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Enterprise Zones


The earliest policy that affected Chicago 's industrial districts in an effort to revive the inner-city economy was the establishment of Enterprise Zones. Enterprise Zones were originally conceived in the early 1980s, and there are currently six enterprise zones in the city, one of which occupies the manufacturing area of interest on the Near North Side. The city describes the purpose of an Enterprise Zone as an entity designed “to stimulate economic activity and revitalize declining neighborhoods” ( The goal of the zones is revitalization, with a philosophy that if business is to stay in problem areas or if the private sector is to invest money into distressed neighborhoods, then there must be a guaranteed good return on the investments made. The return is guaranteed by waiving ordinances, codes, and tax regulations, many of which were passed earlier in the city's history to ensure balanced development in the future.

Critics of enterprise zones (particularly in the earliest stages of its implementation) question the long-term impacts of the zone and this guarantee, challenging the overall loss of tax revenue might cause more harm than good for the city and that the incentives offered “have little effect in keeping or attracting commerce and industry” (Riposa 1996). Others describe the zones “as a way of bringing Third World wages and working conditions to American cities” (Squires et al. 1987). Another main complaint of the zones is that they do little to encourage development of the communities which they encompass. As Gerry Riposa (1996) states, “[Enterprise Zones] ignore the need to develop within the community a knowledgeable and experienced base of individuals.” It might be argued that this complaint could be made to some degree of many industrial retention and revival programs, but enterprise zones gave very little back to their communities in any capacity (economic, social, etc.) within Chicago . While enterprise zones were an important first step in the retention of industrial jobs and sectors of the inner-city, they have proven to be insufficient on their own, and while there have been some success stories within Chicago's enterprise zones more aggressive steps needed to be taken so as not to perpetuate cycles of inequity towards low-wage, low-skilled workers that would inevitably suffer the most from industrial relocation. (Squires et al. 1987)


The above images show Enterprise Zones in Chicago as well as a zoom of Enterprise Zone 4. The NRIC is located in the southeast quadrant of this map.

Images Source:The City of Chicago,



Permanent Manufacturing Districts

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The next of the major industrial related policies enacted in the City of Chicago is, of the three policies examined, considered the most controversial and was the source of the most heated debate. The concept of the Permanent Manufacturing District, or PMD, was first formulated during the term of Mayor Washington in the mid-1980s. During this time period, the predominant thought was that the “highest and best” use of land was anything that increased property values, and the policies that were in place mostly benefited the property owners and developers of that land. At this time, however, and shortly after Mayor Washington took office, a significant conflict erupted on the Near North Side of the city between “property developers seeking to redevelop industrial space for new commercial and residential uses and manufacturers attempting to maintain a foothold in these areas of the city and in the face of intensive real estate speculation” (Rast 1999). The conflict drew into question and highlighted the importance and power of city zoning laws, and the administration was forced to make decisions, supporting either the real estate-based development strategy or the jobs-based development strategy, which would benefit very different segments of the community. Powerful members of the city's downtown growth coalition supported the former, while the latter was supported by a coalition of manufacturers, workers, and neighborhood organizations. (Rast 1999)

Proposals for the PMD came without many obstructions and obstacles, the same could not be said about the process of actually creating the PMD. Real estate developers argued that their initiatives had revitalized the neighborhood, and that market forces and economics should not be obstructed by zoning regulations. The PMD and the neighborhood councils in favor of industry were labeled as antigrowth and antidevelopment by many influential bodies, including the Chicago Tribune (Rast 1999). Manufacturers, on the other hand, mostly supported the PMD arguing that the costs of relocating, even to other parts of the city, would severely affect or ruin their businesses, and for the health and preservation of their industries and the jobs they created they took an active role in the public policy debate. The surrounding residential community was somewhat divided on the issue, with the neighborhood organizations leading the initiative that supported the PMD legislation. Residents to the west of the North River Industrial Corridor strongly supported the PMD, fearing that if development was allowed to continue at the pace it did on Clybourn gentrification and land values would eventually push out the lower and middle income residents of other neighborhoods the way it had occurred to the east of the corridor (Rast 1999).

Arguably the most powerful entity with any influence on the subject of the PMD was the Washington administration itself. As explained earlier, Mayor Washington articulated his policy as follows: “Prioritizing jobs over real estate development, neighborhoods over downtown, and traditional blue-collar industries over service sector and high-tech employment strategies” (Rast 1999). The mayor found himself in a tough situation, however, because his support of the PMD risked accusations of being antigrowth and antidevelopment and harming already tenuous relationships with members of the downtown business community. Eventually, the administration took a strong stance in favor of the PMD despite criticisms that ensued, and decided to support the passage of the PMD. Unfortunately, however, another problem arose when in 1987, shortly after officially deciding to sanction the Near North Side as a PMD, Mayor Washington died in office, the victim of a massive heart attack. The PMD was eventually passed after Mayor Washington 's death, and represented an extremely significant moment in the history of inner-city industry in the United States . As Joel Rast states, “[The] passage of the Clybourn Corridor PMD ordinance represented, without a doubt, a key legislative milestone in Chicago . Never before had city officials acted so aggressively to protect central area manufacturers threatened by the pressures of nearby commercial and residential redevelopment” (Rast 1999). The PMD is still in existence, and within the NRIC industry, retail, commercial, and residential land uses flourish and interact more visibly than in any other part of the city. Property values continue to rise, but high paying industrial jobs have been retained in the inner city, and the industries that exist have found creative ways to sustain themselves, their companies, and their neighborhood in Chicago.



The above images show the borders of the NRIC, as well as a view from inside the PMD, at Cortland and Southport.

Image sources:The City of Chicago,,



Industrial Tax Increment Financing Zones

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The final policy to be investigated is that of industrial Tax Increment Financing (TIF) on the Near North Side. The establishment of the TIF zone was not nearly as hotly contested as the establishment of the PMD, but is still a topic of much debate in Chicago and in economic and planning circles around the country. TIF districts within Chicago operate by allowing the city to reinvest all new property tax dollars generated back into the TIF from which they came for a twenty-three year period. The revenues created (called “increments”) arise if new development takes place in the TIF districts, or if the value of existing property rises, resulting in higher property tax bills, but taxes are not raised in the neighborhood during this twenty-three year period. Part of the definition of a TIF district is that development could not occur within the district without the policy initiatives and implementation, and it would not be eligible to be a TIF district if redevelopment would occur independently ( The argument then becomes that there is “the genuine economic contradiction of subsidizing what would not otherwise succeed on its own” (Nyden 1991). But a question then develops of what would be done with an area if it is not naturally going to develop and if a TIF is not created, and Chicago has decided that rather than allowing further deterioration of the city's neighborhoods to occur, policy initiatives must be taken, thus advocating the creation of TIF zones. The Metropolitan Planning Council's Peter Skosey states, “Industrial TIFs are seeking to level the playing field between the land prices manufacturers are facing in the city and out in exurban areas” (Phillips-Fein 1998). There are problems that have been identified with TIF zones, among them a lax control of the money generated by industrial TIFs being used on business or commercial development rather than further industrial development (Phillips-Fein 1998, Nyden 1991). Some see a “more stable financial commitment to industrial infrastructure via allocations in the city budget” or better general management of funds within the TIF (Phillips-Fein 1998). There are currently 129 TIF districts in the city, twenty-two of which are industrial TIF districts. The long-term effects of most TIF districts has yet to be seen, with the earliest of the twenty-three year periods expiring in 2007, but without a doubt this newest policy will be highly scrutinized at that point and its impact will be measured.



This map from the City of Chicago shows the city's 129 TIF districts, including the industrial TIF zones. The NRIC is located in TIF zone 32, highlighted on the map.

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Industrial retention methods have proven successful for some of Chicago 's inner city neighborhoods, but new strategies could always be tested and developed to further retain high paying jobs and diversity of land use. The three programs outlined above provide insight to potential strategies for other similarly situated cities, and show the value of flexibility in policy making. Each of these policies developed and grew from what came before, and will perhaps prove to be most successful when used in conjunction with one another for set periods of time. Other areas that can be further explored to understand the context and future of industrial retention include macroeconomic shifts in production across the United States since World War II, the value of service sector jobs versus manufacturing jobs, and real estate pressures that exist in cities and suburbs that face a deteriorating industrial base.




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City of Chicago Website. February 2005. 12 February 2005.

Nyden, Philip W. and Wim Wiewel. Challenging Uneven Development: An Urban Agenda for the 1990s. New Brunswick , N.J. : Rutgers University Press, 1991.

Phillips-Fein, Kim. “The Still-Industrial City : Why Cities Shouldn't Just Let Manufacturing Go.” The American Prospect , Sept-Oct 1998 n40 p28(8).

Rast, Joel. Remaking Chicago : The Political Origins of Urban Industrial Change. DeKalb , Ill. : Northern Illinois University Press, 1999.

Riposa, Gerry. “From Enterprise Zones to Empowerment Zones: The Community Context of Urban Economic Development.” American Behavioral Scientist, Mar-Apr 1996 v39 n5 p536(16).

Squires, Gregory D. Chicago: Race, Class, and the Response to Urban Decline. Philadelphia : Temple University Press, 1987.

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