It’s been almost two years since the owners of the Chicago Bulls and Blackhawks announced plans for a $7 billion development housing-and-concert-space-and-hotels-and-0ther-stuff project on the parking lots around the United Center arena, without exactly indicating who would be paying for it, though it’s been widely described as “privately funded.” And now we have one sliver of an answer: a $55 million property tax break.
[Chicago Mayor Brandon] Johnson introduced the estimated $54.7 million in property tax incentives to the City Council on March 18. Under Cook County’s Class 7b special assessment, the project’s property tax rate for the first phase would be 10% for the first 10 years, 15% for Year 11, then 20% for Year 12…
“Cook County incentives such as a Class 7B are standard incentives designed to encourage private investment in underserved areas, and this project is exactly that,” [an unnamed United Center] spokesperson said. “Developments across Cook County routinely pursue these types of incentives, and we’ve done so with the understanding that the development will generate significantly increased property tax revenue over time.”
Developments across Cook County indeed receive tons of property tax breaks — it’s a Chicago specialty — but that doesn’t necessarily make them a great idea. Yes, a new development will pay more in property taxes than parking lots would have, but it would also come with new costs, starting with schools for all the kids at the new housing to attend; and that’s assuming that any new development at the United Center doesn’t lead developers to build less somewhere else in the city, which is very much something that can happen. (The Chicago Tribune editorial board points out that the planned music theater could also siphon off concerts from other city venues.) As for categorizing the arena’s Near West Side environs as “underserved,” that’s possibly a bit of a reach when it’s had the second biggest increase in property values in the entire city since 2000.
That said, $55 million in tax breaks for a $7 billion project wouldn’t be the worst sports-related development deal, if that’s all that Bulls owner Jerry Reinsdorf and Blackhawks owner Danny Wirtz would be pocketing—
The project is also in a tax-increment financing district, which could give city officials another way to subsidize the project or the infrastructure it needs, including a new station on the CTA’s Pink Line.
Sigh. Okay, file this one under “Public cost: TBD” for now. Maybe we’ll learn more once the Chicago city council, which unanimously approved the project itself last year, takes up consideration of the tax breaks, at a time also TBD.
The 6b (industrial) and 7b (commercial) tax incentives are indeed overused in Cook County and their true benefits are being studied and hopefully reformed.
https://www.cookcountyil.gov/news/cook-county-releases-independent-study-modernizing-economic-development-incentives
Additionally, the practical effect of the incentive is that commercial property (usually assessed at 25% of market value) pays a residential tax rate (assessed at 10% of MV) for 10 years. So the new housing (already at a 10% level of assessment) does not benefit from a 7B incentive. This should blunt some of the criticism that the new residential portion of the development is not paying it’s fair share of school tax. However, this does not consider the TIF implications.
All in all, I feel that the incentive is not the worst thing in the world.
Tax money is tax money, so blowing a $55m hole in the city budget is the same whether you’re giving it to the residential part or the commercial part. Though at least if they build the commercial part in an earlier phase, there’s no schools cost at that point, true.
I don’t disagree. I just take it from the perspective that in 101/102 counties in Illinois, residential and commercial property are assessed at the same rate (33.33%). Only in Cook County does commercial property pay a higher percentage of it’s market value for property tax. If treating this development as residential property for 10 years incentivises the owners to finally develop these parking lots, I won’t complain too much.
Think of the alternative. If it’s a $7B development, they could seek the same “mega development” tax break that the bears want.
Oh, absolutely. It’s why I wrote that $55m for a $7b development wouldn’t be the worst. If it were only that, I would have gone with a headline more like “Bulls/Blackhawks’ $7B arena development only getting $55m in tax breaks, yay?”
Being in a TIF district, though, could add significantly to the cost.
I have no problem with TIF money being used to pay for a new train station. Spending tax money on public transit is a good investment, both in terms of increasing property values (tax receipts) and decreasing traffic.
There’s already a pink line stop at Lake and Ashland a few blocks away, so this wouldn’t really increase transit capacity, just make for a shorter walk for people traveling to the new district.
There is approximately 1 mile gap between Lake and Polk (the next stop). Adding a stop between isn’t outrageous to support the new housing. This is similar to the spacing on the north end of the Red line.
I thought they needed a Pink Line station near the United Center, but then they just finished a new Green Line station at Damen. The Green and Pink Lines follow the same path through the Loop to Ashland. So it’s not saving you many steps. Maybe after the UC is surrounded by all this promised new housing, we can talk new station. (Oh look, the $80 million Damen station was itself funded by the Kinzie Industrial Corridor TIF. Might be double TIFFing the West Side.)
This looks at people only traveling between the UC and the Loop. Traveling between the UC and further west should also be considered. We need to build for a future of broader transit coverage, and not only consider inbound/outbound desk commuters. That has long been a failure of Metra commuter rail, which it seems like they are finally trying to address.
Wild that developers of these mega projects have incorporated “the housing crisis” into their pitch decks. 99% of housing in Chicago and every city are just buildings, unattached to nearby developments of music venues (which are doing horrible, btw) and a restaurant row. I can’t help but to notice that things like music venues and restaurants tend to trail housing development — they go where the people are, as the spread of venues and Michelin starred restaurants in gentrified neighborhoods over the last 30 years has shown. It seems unnecessary to point out that it is possible to build apartments and houses without using them as sprinkles on a multi-billion dollar development by two city oligarchs but maybe we do.
Also it seems that Jerry Reinsdorf will be 104 years old when this project nears completion. The succession will be interesting, there’s no reason why his heirs can’t sell their share of the Bulls after he dies (I’m not familiar with it but I’ve read that Lasry kept a large amount of the development around Fiserv Forum after selling the team) though he’s publicly stated that he’s advised them not to. Can’t help but to notice that he’s celebrated his 89th and 90th years by pitching two megaprojects connected with his sports teams after working mostly on his very un-mega housing projects for most of the last 20 years.