Illinois Plans Tax Break for Billionaires and the Chicago Bears. Everyone Else Could End Up Paying More.
· Reason
The Illinois Legislature is busy advancing a bill that's one of the most egregious examples yet of the grift between professional sports teams and state and local governments.
Under House Bill 910, projects designated as "megaprojects" would have their assessed value frozen at a base-year level, effectively shielding all new construction from property taxation for up to 45 years. Just two developments would qualify for the maximum duration under the current language: the proposed Chicago Bears stadium in Arlington Heights and the One Central mixed-use development near Soldier Field in Chicago.
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Rank-and-file property owners in Illinois pay the highest property taxes in the nation, but middle-class taxpayers get no relief under the bill. Instead, it's likely their taxes will go up even more. The language says "megaproject" developers (for projects that cost at least $100 million) would be able to negotiate a payment in lieu of taxes with local taxing bodies, with the duration of the tax break varying by the total cost of the development. For example, if a property tax analysis of the Arlington Heights stadium estimates it to be a $5 billion development on land currently valued at $100 million, this bill would reduce the developer's annual tax liability from roughly $350 million to approximately $7 million.
What happens to the difference of $343 million in this example? Local governments can still count the full value of the megaproject when calculating how much they're allowed to tax and borrow—they just can't actually collect taxes on most of the megaproject. Given the record of local governments in Illinois, it's a pretty good bet they'll find that revenue elsewhere by raising taxes. The legislation, as it stands, does basically nothing to address this.
The bill passed the Illinois House in April. The bill passed 78–32, with 10 Republicans crossing party lines to support it. Democratic Gov. J.B. Pritzker is busy pressuring the state Senate to get it across the finish line before the end of May. Pritzker (and the rest of the Legislature) are feeling pressure to pass the bill due to the looming threat of the Bears moving to northwest Indiana. Hoosier lawmakers, especially Republicans, have a standing offer for the Bears to relocate just across the state line for over $1 billion in public subsidies. (At least Indiana is in better fiscal health than Illinois.)
Keeping the Bears in Illinois is not Pritzker's only interest in the bill, though. He and his family, the wealthy owners of the Hyatt hotel chain, stand to gain from similar property tax schemes for billionaires. (Pritzker and his wife once had five toilets removed from a vacant mansion they owned next door to their primary residence, with the goal of having the property classified as "uninhabitable" in a property tax appeal. The mansion's assessed value was thus lowered from $6.3 million to about $1.1 million.) Hyatt operates a state-owned, tax-exempt property, Hyatt Regency McCormick Place, that just received tens of millions of dollars in taxpayer-funded renovations, approved by a board partially appointed by Pritzker.
Grifting off taxpayers via property tax schemes is a practice that goes way back for Pritzker, so it shouldn't surprise anyone that he's seeking to extend these property tax breaks to other billionaires. If he gets his way, Illinois residents will be stuck paying for these sweetheart deals while billionaires get a break.
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