As investment in an area increases, it is not uncommon for real estate values to rise and for gentrification to occur.
Although generally sold as a tool to redevelop blighted areas, some districts are drawn up where development would happen anyway, such as ideal development areas at the edges of cities (and specifically here, the areas around Porter Road).
The designation of urban areas as "blighted," essential to most TIF implementation, can allow governmental condemnation of property through eminent domain laws. The famous Kelo v. City of New London United States Supreme Court case, where homes were condemned for a private development, arose over actions within a TIF district.
The TIF process arguably leads to favoritism for politically connected developers, implementing attorneys, economic development officials, and others involved in the processes. However, most Urban Renewal Authorities require public notice and have competitive bidding requirements.
Local governments are under no obligation to recognize when TIF designation would adversely affect a school district's financial condition, and consequently the quality of some schools can be compromised.
Normal inflationary increases in property values can be captured with districts in poorly written TIFs, representing money that would have gone into the public coffers even without the financed improvements.
Districts can be drawn excessively large thus capturing revenue from areas that would have appreciated in value regardless of TIF designation (like is being done with the annexation along Porter Road).
Approval of districts can sometimes capture one entity's future taxes without its official input (i.e. the school districts taxes will be frozen on action of a city).
Capturing the full tax increment and directing it to repay the development bonds ignores the fact that the incremental increase in property value likely requires an increase in the provision of public services, which will now have to be funded from elsewhere (often in the form of higher taxes for all taxpayers). For example, the use of tax increment financing to create a large residential development means that public services from schools to public safety will need to be expanded, yet if the full tax increment is captured to repay the development bonds, other money will have to be used to expand those services (i.e. increased taxes for everyone outside the TIF).