Downtown property owners brace for double whammy
BY FRAN SPIELMAN City Hall Reporter May 2, 2014 4:13PM
Updated: June 4, 2014 6:15AM
Downtown property owners are raising the roof over plans to dramatically expand a special taxing district--even as Chicago braces for Mayor Rahm Emanuel’s $250 million property tax increase to save two of four city employee pension funds.
The Chicago Loop Alliance wants to nearly triple annual collections from the State Street “special service area”—to $6.3 million—to provide a sorely-needed facelift to a dark and dank Wabash Avenue and a “weak area” of Michigan Avenue south of the Chicago River.
That would be accomplished by expanding the boundaries of Chicago’s oldest special taxing district to include scores of buildings on Wabash and Michigan between Wacker and Congress and 10 cross streets: Wacker, Lake, Randolph, Washington, Madison, Monroe, Adams, Jackson, Van Buren and Congress.
The number of property identification or P.I.N. numbers impacted would go from 224 to 692. Residential properties would be exempt from the increase.
The Building Owners and Managers Association of Chicago (BOMA) is marshalling opposition to the expansion because of the timing.
It comes as Emanuel prepares to ask a reluctant City Council to raise property taxes by $250 million over five years to shore up the Municipal Employees and Laborers pension funds.
“We’re looking at a significant property tax increase already from the mayor’s first proposal and we know there’s more coming. The city needs to address police and fire pension funds. They’ll also be talking to the teachers union. And that doesn’t even touch normal governmental needs,” said BOMA’s Executive Vice-President Michael Cornicelli.
“We don’t know what form [all of] that will take and we need to know that before we can make a commitment to a 6 percent increase for the Chicago Loop Alliance that would last for 15 years. The impact would be an increase of close to 6 percent in the overall property tax bill paid by the buildings added. It’s easily $500,000 for large buildings.”
Mike Edwards, executive director of the Chicago Loop Alliance, acknowledged that the timing is not ideal.
But Edwards maintained that the expansion is needed to extend to Wabash and Michigan a level of cleanliness, lighting, security, maintenance, aesthetics and programming that has already paid dividends on State Street.
“We totally get that this is a cost to property owners. But with a longer view, it will generate higher demand, increased rental rates and increased property values,” Edwards said.
Edwards argued that the office market in the impacted area is facing increased competition from West Loop buildings closer to commuter rail stations and needs to “differentiate itself" to keep pace. He further noted that bleak Wabash--with L tracks hovering overhead--desperately needs lighting, landscaping, pigeon and rat clean-up and the homeless outreach that State Street already has, he said.
“That’s our front door to the Loop and Chicago. You’re only as good as your weakest neighbor,” Edwards said.
“This is a way for everybody to contribute and provide a consistent level of service so that, when you walk down Wabash or Michigan Avenue, everything is great. You say, `Wow. Somebody is taking care of this place, and I want to be here.’ “
Anne Voshel, an SSA commissioner who serves as consultant to Marc Realty, argued that the property tax increase for the expanded taxing district amounts to just 20-cents-per-square-foot.
“Is someone going to move to another state over 20 cents? I doubt that,” she said.
With the $20 billion pension crisis squeezing taxpayers and driving down Chicago’s bond rating, Voshel said, “My concern is you’re going to have less and less the city will be doing. To keep the area looking good and people wanting to come here, it had better be consistent. If I’m walking by somebody who doesn’t clean and doesn’t take care, that affects my property value.”