Lawmakers reconvene Tuesday in Springfield for the start of the fall veto session and at least one major bill that appeared slotted for action already has fallen by the wayside. In a refrain familiar to Chicago sports fans accustomed to our teams’ frequent futility, the Chicago Bears will have to wait until next year to win approval of legislation the team says it must have to begin construction of its new Arlington Heights stadium.
Senate President Don Harmon said the fall veto session would be the equivalent of a bye week for the Bears.
While the delay is yet another impediment along the Bears’ tortuous stadium path, waiting in this case is a good thing. The measure helping the Bears would go well beyond the team’s needs to give the state an expansive new tool to attract so-called megaprojects. And, like many a construction blueprint, this first draft needs more work.
The main idea behind the approach is to give developers of projects that would be difference makers for local economies an incentive to make a long-term investment and commitment. Those developers would get decades’ worth of certainty over their property tax bills — a luxury not afforded ordinary taxpayers. The community would get the jobs and ancillary tax revenues that come with economic growth.
Win-win, right?
Theoretically, yes. But the devil, as so often is the case, is in the details. And the details with this bill as it stands don’t offer enough of a surefire benefit for taxpayers in the localities that would host these megaprojects.
The first problem with the legislation is what sort of projects could get this generous treatment. Qualifying developments would have to invest at least $100 million, create at least 100 full-time jobs and operate for at least 20 years.
The $100 million threshold is far too low and would encompass ordinary developments such as apartment buildings with ground-floor retail that shouldn’t need decades of property tax breaks in order to get built. We can’t see how any project worth less than $500 million could be considered “mega.”
Bill supporters will point out that any deal on property taxes would need the approval of local taxing bodies, which should act as a safeguard against a flood of such agreements. But we’d be concerned about opening the door to corrupt arrangements in which project developers could curry favor with local officeholders and secure approval of deals not in the interest of average taxpayers.
Megadevelopments ought to be just that — megadevelopments. And $100 million in today’s dollars simply shouldn’t make the cut. The Bears stadium, for example, will cost billions to build. Not all qualifying projects need to be on that scale, but they should be true game-changers for their local economies.
Secondly, these revenue deals with local taxing bodies, designed to establish a fixed figure the development will pay in lieu of property taxes, would last as long as 40 years and offer no guarantees that any of the proceeds would go to reducing the tax burden on existing residents and businesses.
In a state where the property tax burden is among the nation’s highest, one of the primary virtues of large-scale developments is that they help shoulder the tax levies schools and other local taxing bodies collect, potentially easing the burden on taxpayers. Under the bill, these payments in lieu of taxes could be used for almost any purpose.
So, at a minimum, there should be requirements that local taxing bodies entering into these deals use at least some of the proceeds to ease property taxes on their constituents.
Gov. JB Pritzker appears to be in favor of the bill, as least judging by the evidence in these pages of the full-throated support of John Atkinson, whom Pritzker appointed chairman of the Illinois Economic Development Corp.
Pritzker convinced state lawmakers a few years ago to appropriate $400 million for the governor’s office to use as a “closing fund,” useful when states are competing with each other for big private investments.
Atkinson described the megaprojects legislation as a similar policy — versions of which many other states have to lure major developments, including a $20 billion semiconductor campus to be built in New Albany, Ohio, by Intel. New Albany has given Intel a 30-year property tax abatement deal, and the state has added other lucrative incentives, but construction is well behind schedule. Ohio Sen. Bernie Moreno has said publicly he fears the 1,000-acre development could become a “white elephant.”
Such are the risks that come with generous taxpayer subsidies for splashy projects. But, given New Albany’s current issues, it’s an odd example for Atkinson to use to support his position.
Of course, unlike Intel and Ohio, the Bears already are in Illinois and there’s little risk, if any, of the team’s leaving the state. So dangling such a long-term break on property taxes arguably makes far less sense than it did for Intel’s Ohio deal.
All of this is to say that this issue is complicated and shouldn’t be rushed due to the Bears’ needs. Let’s make sure that sweet property tax arrangements are reserved only for real blockbusters and are fair as well to long-suffering property taxpayers.
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