Chicago Bears Stadium Deal Hinges on Controversial Property Tax Bill That Critics Say Will Hurt Homeowners

The Bears Wait. Lawmakers Rush

The Chicago Bears have given Illinois lawmakers time to work through a legislative maze, but critics warn the property tax bill at the heart of the stadium deal could make Illinois property tax problems worse for homeowners.

Bears President Kevin Warren confirmed Monday that the franchise will give Illinois state legislators space to work through their legislative process, with a timeline of sometime this spring or summer. The team has to know because they would have completed their due diligence in Indiana and will see what happens in Illinois.

The Illinois General Assembly session does not wrap up until May 31, though state Rep. Kam Buckner said she does not see this as a May 31 thing.

Property Tax Breaks at the Core of the Deal

Negotiations in the General Assembly have centered around property tax breaks for new megaprojects, which would include a new Bears stadium. The proposed incentive package, HB 910 House Amendment 1, would be devastating for Illinois property tax crisis.

The bill would freeze property tax assessments on the sites of megaprojects and instead allow developers to negotiate a payment-in-lieu-of-taxes with local governments. Governor JB Pritzker supports the measure, but many lawmakers have concerns about the long-term tax revenue implications for their communities.

The proposed incentive package includes several key provisions:

• Projects must have at least $500 million in eligible costs, which can include the property purchase and can be retroactive up to five years before the megaproject certificate is issued
• The project must be completed within seven to 10 years, but that can be extended by five years
• The site must be operated for at least 20 years; the tax incentive would last at least 23 years and up to 40 years
• The megaproject assessment would be frozen so that its property tax bill is calculated on the base year of the project, meaning the value of the property before any improvements such as a stadium

However, for purposes of issuing bonds and property tax extension limitation calculations, the taxing body could use the current fair cash value of the property. In other words, new development, which is generally exempt from Property Tax Extension Limitation Laws, would allow for the levy to grow beyond the limited rate. Other taxpayers would have to cover that.

The Problem With the Bill

The bill allows for a separate incentive agreement that lets local governments count the cash value of the megaproject in their total assessed value. While approved megaprojects would pay steeply discounted property taxes, this clause allows taxing bodies to increase taxes as if the project were paying normal tax rates, generating increased revenue, but the project would not pay those higher taxes. Neighboring businesses, homeowners and renters would pay more to make up for the team discount.

One simple solution is to strike this language from the bill:

Projects to be valued at fair cash value for purposes of bonded indebtedness and limitations on property tax extensions. Projects to which an assessment freeze applies pursuant to this Division shall be valued at their fair cash value for purposes of calculating a municipality's general obligation bond limits and a taxing district's limitation on tax extensions.

Removing that language would ensure that businesses, homeowners and renters in the megaproject area would not face higher property taxes because of an incentive agreement.

A Crisis for Illinois Property Taxpayers

Illinoisans already pay the highest property taxes in the nation. Homeowners in Arlington Heights pay average annual property taxes of more than $8,000. HB 910 would make the situation even worse for Illinois property taxpayers.

A March analysis by Cook County Treasurer Maria Pappas found that property tax bills rose at twice the rate of inflation for the past 30 years in Chicago and suburban Cook County.

Illinois House Republicans have stated they will not support any Chicago Bears stadium deal or other major development projects in the state unless there is also statewide property tax reform included. In a letter to Governor JB Pritzker and the General Assembly, the GOP state reps said they want property tax referendums to appear only on November ballots, and they want an end to back door referendums or bond rollovers that allow governments to raise taxes without asking voters.

The Bears Look Elsewhere

There are no property-tax taxes for our stadium in the state of Indiana, so that is certain. Indiana lawmakers approved legislation in late February that set up a framework to build a publicly owned and funded Bears stadium across the state line in Hammond.

Bears President Kevin Warren said the team believes strongly that Arlington Heights is the only site in the state of Illinois that is feasible, citing the need for space for a surrounding mixed-use district surrounding the stadium. But with construction costs increasing about $150 million per year, which would place the price tag at nearly a half-billion dollars higher than three years ago, when the team finalized the purchase of the Arlington Park property, the stakes are high.

The Governor Stands Behind the Bill

Governor JB Pritzker said he supports a bill like this because it attracts development, and in the case of the Bears development, it appears it is not aimed at building new housing, which would add significantly to a burden of a community. He said rather it will hire people locally and provide development that would not have otherwise occurred.

The governor was quick to remind that projects would be built on properties where no development is really occurring and would not occur unless there is some incentive or some benefit to a company.

Pressure Mounts

NFL Commissioner Roger Goodell said March 31 that the Bears need to find a solution for a stadium and that the deal needs to be done relatively soon. Arlington Heights Mayor Jim Tinaglia said the deal needs to be done ASAP, likely hoping the Bears choose his suburb over Hammond, Indiana.

Kevin Warren basically confirmed that the franchise will give Illinois lawmakers space to work through their legislative process. I mean we have to know because we would have completed the due diligence in Indiana and we will see what happens in Illinois.

The team appears to be giving Illinois lawmakers space, but Buckner said she is optimistic this will not come down to the wire. One way or another, there should be some clarity on the Bears stadium saga sometime in the next eight weeks.

The Choice Before Illinois

Illinois faces a choice between keeping the Bears and protecting property taxpayers. The current bill structure could shift costs onto homeowners and small businesses while giving megaprojects like the Bears stadium preferential treatment.

Lawmakers have until May 31 to decide whether to support a property tax reform package that includes guardrails to prevent cost shifting, or to rush a deal that could make Illinois property tax problems worse for residents who already pay the highest rates in the nation.

The Bears will wait. But Illinois homeowners and businesses might not.