It doesn’t matter if you live in a historic bungalow on Chicago’s Southwest Side, a nice ranch house in Arlington Heights, a modest two-flat in Logan Square or a $30 million Sheridan Road mansion in Winnetka. You get a big property tax bill two times a year.
Here’s what you don’t get: property tax certainty.
In fact, you likely don’t even know what you have to pay this year.
But that quixotic phrase is at the center of the Chicago Bears’ salvo as it negotiates with Arlington Heights to build a new stadium on the site of the former Arlington Heights racetrack.
We were less than shocked with the seemingly final decision to move to the northwest suburbs: That had been the obvious plan for a while. Chicago will survive; it’s not unusual for big cities to have sports stadiums, and the now-essential surrounding entertainment campuses, located in their suburbs. At least we still have Wrigley Field, the unique cache of which now will grow. (What happens with the Chicago White Sox remains to be seen.)
Now, the Bears are trying to wrangle their best deal out of Arlington Heights. That’s the organization’s right, of course. The team doesn’t just want property tax breaks and other incentives, but it wants to freeze, or lock in, those breaks far into the future: hence the phrase “property tax certainty.” We should all be so lucky.
California homeowners enjoy a measure of stability under Proposition 13, the 1978 constitutional amendment that caps the general property-tax rate at 1% of assessed value and limits annual increases in that value to 2%. Reassessment occurs only when property changes ownership or undergoes new construction (this is why owners of Los Angeles homes destroyed in the recent wildfires are incentivized to rebuild only similarly sized structures, lest they get reassessed at current market rates). But in Illinois, both residential and commercial property regularly gets reassessed. Ergo, no certainty, since no one knows the future trajectory of property values.
The Bears, like all businesses, crave the ability to know and limit the size of their future bills. Thus they are arguing for a change in state law to allow for them to make “a payment in lieu of taxes,” or PILOT. They want to negotiate right now an annual payment that would be a known quantity for decades. The Bears also want to get a piece of the expanded sales tax revenue their stadium would generate over the racecourse.
A PILOT-friendly change in the law, assuming it is made applicable to all megaprojects, appeals to contractors and the construction unions, of course, given their vested interest.
In his open letter to season ticket holders this week, Bears CEO Kevin Warren said that the team will build the stadium itself without state money (“zero state dollars for construction”), which is just as well since there was no appetite in cash-strapped, pension-hobbled Springfield for putting public dollars toward funding a stadium for a wealthy NFL team. Nor should there have been.
Warren first weirdly downplayed the Bears’ connection to Chicago (“the Chicago Bears belong to more than just Chicago. We belong to the entire state of Illinois. The Nation. The World.”), which involves some tortured rhetorical logic, and then floated a variety of economic benefits to the region and the state, including the carrot of a Super Bowl in 2031. That would, of course, attract tourists and one-off international media attention, although the size of the impact of the Bears’ regular NFL season on tourists from outside Chicagoland is open to debate.
There was other strangeness to Warren’s letter, including a dig at Chicago for having very few cranes in the sky while making that argument that the Arlington Heights site was “an opportunity for Chicago,” implying that cranes are more likely and beneficial in the suburbs, which is not an argument we accept.
We do accept that the stadium, fit for concerts, soccer internationals and the like, will bring huge economic benefits to the northwest suburbs, liking raising commercial and residential property values, and we can see some preliminary logic to the idea of the Bears getting a share of the sales tax revenue that accrues in addition to the old racecourse’s level of revenue. We’re less enthused by the “certainty” argument, especially without some mechanism for reassessment after five or 10 years, or some consideration of the impact of the kind of inflation we’ve seen in the last few years. Long-term government deals like the notorious parking meter fiasco offer a cautionary tale.
At this early point, we invite the Bears to tell us more about what they think they deserve and why. We’re all ears. We’d also point out to the other side of the table, the one that takes care of taxpayers, that it should not overestimate how much leverage the Bears wield.
The team could back out of the plan, sell the land and start talking again with Chicago. It could move out of state. But although the Bears have tried mightily to pit city against suburb, it surely has reached the point where its sunk costs all scream “Arlington Heights.”
The village, and even jurisdictions beyond, hold more cards at this point than it likely thinks.
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