Chicago Loop Alliance drops plan to expand taxing district
BY FRAN SPIELMAN City Hall Reporter June 2, 2014 2:32PM
Pedestrians cross at State and Randolph Streets in Chicago. | Michael Schmidt/Sun-Times
Updated: July 4, 2014 6:19AM
Pressure from downtown property owners and their local alderman has forced the Chicago Loop Alliance to abandon 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.
Instead of expanding the boundaries of Chicago’s oldest special taxing district to include scores of buildings on Wabash and Michigan between Wacker and Congress and ten cross-streets, the Chicago Loop Alliance will simply ask the City Council to renew the so-called “special service area.”
“Chicago Loop Alliance and the SSA #1 Advisory Committee have decided to pursue a renewal-- not an expansion. After listening to public opinion at two community meetings and one-on-one discussions with numerous property owners, as well as consulting with [downtown] Alderman [Brendan] Reilly, they’ve assessed there is consensus on the value of services provided within the current SSA service area and support for the renewal,” said a spokesperson for the Chicago Loop Alliance.
The renewal would pave the way for the Chicago Loop Alliance to “continue its successful work . . . to maintain a high-performing Loop environment, addressing issues of safety, cleaning and beautification, landscaping, infrastructure maintenance, and placemaking and management,” the spokesperson said.
The Chicago Loop Alliance’s initial plan called for nearly tripling 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 Ave. south of the Chicago River.
That would have been 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 ten cross-streets: Wacker, Lake, Randolph, Washington, Madison, Monroe, Adams, Jackson, Van Buren and Congress.
The number of commercial Property Index Numbers affected would have gone from 224 to 692. Residential properties would have been exempt from the increase.
But, the Building Owners and Managers Association of Chicago (BOMA) marshaled opposition to the expansion because of the timing.
It came as Emanuel prepared 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,” BOMA’s Executive Vice President Michael Cornicelli said last month.
“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 six percent increase for the Chicago Loop Alliance that would last for 15 years. The impact would be an increase of close to six 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 last month that the timing was not ideal.
But, Edwards maintained that the expansion was 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 generate higher demand, increased rental rates and increased property values,” Edwards said then.
At the time, 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 maintain occupancy, property values and rental rates.
He further noted that bleak Wabash Avenue — with L tracks hovering overhead — desperately needs lighting, landscaping, pigeon and rat cleanup 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 then.
“This is a way for everybody to contribute and provide a consistent level of service so that, when you walk down Wabash or Michigan Ave., everything is great. You say, `Wow. Somebody is taking care of this place and I want to be here,’” Edwards said.
Anne Voshel, an SSA commissioner who serves as consultant to Marc Realty, argued that the increase for the expanded taxing district amounted to just 20 cents per square foot.
“Is someone going to move to another state over 20 cents? I doubt that,” she said last month.
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.”