* Michael Hoffman, acting director of the Illinois Department of Central Management Services, writing in the Tribune…
Many have focused on the potential short-term financial windfall to the state, but the long-term benefits to the city of Chicago are even more striking. The state currently pays nothing in the way of property taxes for our space in the Thompson Center. That’s an entire city block currently devoid of value to the city’s coffers. If negotiated reasonably, the city would realize up to $45 million annually in property taxes. That’s $45 million a year — in perpetuity.
* Chicago’s budget director Alex Holt responds…
The Rauner administration’s argument that the city will collect $45M in property taxes from this land - “in perpetuity” - is inaccurate.
1) Only 20% of property tax revenues come to the city. So for the city to net $45M, the property’s total tax bill would have to be over $200M a year. That’s almost 10 times the annual property tax payments from the Willis Tower.
2) The city would see no additional property tax revenue, because the city’s property tax levy is a set figure. $45M in property taxes on this building wouldn’t mean $45M more for the city, it would mean that all other owners in Chicago would pay less. The city won’t see that money unless we increase our property levy.
* Today…
* Adam Collins with the City responded…
Suddenly he’s interested in funding CPS? That’s rich. This a fraction of the amount of funding the governor vetoed for our school children a few months ago. Don’t be fooled. The governor is using this as a shiny object to distract from his own failure to fund education fairly and his failure to propose a balanced budget the entire time he’s been in office.
Not to mention that the money wouldn’t even arrive for years because that new building isn’t gonna suddenly appear out of nowhere.
And not to mention that this bill is being handled by the two minority party leaders, meaning it may never see the light of day.
But, anyway, as I’ve said before this week, this Thompson Center fight likely has more to do with CPS than the CTA.
* OK, now on to another subtopic. From yesterday morning’s Tribune editorial about the Thompson Center sale…
So it was strange that Mayor Rahm Emanuel played obstructionist this week, raising the issue of the Chicago Transit Authority station in the building and implying the city had no intention of partnering up to redevelop it.
“We have one of the busiest ‘L’ stations in the entire network of 140-plus ‘L’ stations,” Emanuel said. “If you sell it and it has to come down, who builds it? Who takes the cost? I’m not going to stick that on Chicago taxpayers. The developer or the state has to do it.”
Rauner’s office responded with a question mark. While the CTA station in the building has been discussed as part of a broader redevelopment package, the issue has not loomed as a deal-breaker. Emanuel’s comments, a Rauner spokesman said, came “out of the blue.” [Emphasis added.]
* From a subsequent Tribune story posted around noon yesterday…
Koch said the city would allow a new project there only if the state and developer agree to keep the station open and any new station would come at no expense to the city. Emanuel went public with that concern Tuesday, suggesting the state expected the city to cover the entire cost of a new station, which he said would “stick Chicago taxpayers with $100 million.”
Rauner spokeswoman Eleni Demertzis said the administration has advocated for the state, city and developer sharing the costs of any new station, adding that it was too early to specify what percentage would be covered by each. [Emphasis added.]
So, I guess that issue of the city not paying didn’t really come out of the blue?
* Today…
I hope that shell has room for tunnels so people can get to their trains.
- New Slang - Friday, May 5, 17 @ 11:14 am:
Love the candidness of Adam’s comment.
- The Captain - Friday, May 5, 17 @ 11:21 am:
The only underground line there is the blue line and you can get to the underground platform both via the JRTC and the building across the street so that’s not really an issue. The main CTA issue is the elevated platforms for the green, orange, pink, brown and purple lines. Depending on the line they run on either side of the elevated tracks, some adjacent to the JRTC and some adjacent to the building across the street but you can access either platform for any of those lines via either building. For the elevated lines that load on the side of the JRTC I’m not sure how you could have that platform while the JRTC is being torn down and the new building goes up and then who knows what that public access looks like in the new building. There’s a lot to figure out there.
- Michelle Flaherty - Friday, May 5, 17 @ 11:22 am:
– Rauner says state could pay for a “shell” over CTA construction should Thompson Center be redeveloped. –
RaunerDome.
Can’t wait.
Will it be sponsored by Carhartt?
Will he build it in his workshop?
Will it be as impervious as the bubble within which the governor exists?
So many questions.
- W Flag - Friday, May 5, 17 @ 11:23 am:
It is mind-boggling that with all the newly redeveloped property in Chicago that the city is in so much debt. I recently was at the NBC Tower and was stunned to see the new residential neighborhood to the east. Time was when the world ended east of the Tribune Tower. Where did the tax money go?
- wordslinger - Friday, May 5, 17 @ 11:24 am:
What happened to that “focus” imperative Rauner has been yammering about?
Given the current fiscal meltdown and its consequences, the fate of one building and the money involved are chi-chi beans.
- Sue - Friday, May 5, 17 @ 11:32 am:
No matter the calculation- converting the property to private ownership is a boon to both the County and City for tax revenue purposes and rids the State of a decaying eyesore with the need for 250 million or more of maintenance costs
- Henry Francis - Friday, May 5, 17 @ 11:36 am:
This is nothing but a distraction. The Guv does nothing but try to point fingers at others who are preventing him from doing something. First it was the budget, but once it became obvious to anyone paying attention that it wasn’t Madigan who killed the grand bargain, but the Guv himself, then the focus needed to move off the budget and onto to something else that Madigan (or Rahm) is obstructing.
After over a year this deal still is barely half baked. Hoffman’s figures are not serious. You would think superstars from the business world would be able to at least have a plan with real numbers by now. But they probably don’t want this sale to close, because it won’t realize the $300M in proceeds.
At this point is more valuable as a distraction to point the finger at someone other than the Guv.
- 47th Ward - Friday, May 5, 17 @ 11:36 am:
Alex Holt just schooled Team Rauner on Property Tax 101. Well done.
Not answered: how much will the CTA need to move or re-build the station?
- Sue - Friday, May 5, 17 @ 11:38 am:
W-Flag- you must live in a cave- Chicago has both a structural deficit and tens of billions of unfounded pension and health care liabilities. No matter how much Rahm raises taxes he can’t get ahead of the mess Daley left on his plate
- 47th Ward - Friday, May 5, 17 @ 11:43 am:
===Rauner says the state could pay for a “shell” over the CTA station===
I think we now know what the duct tape is for.
- Mike Cirrincione - Friday, May 5, 17 @ 11:44 am:
Just wondering, could we sell the parking meters and Skyway to get some cash?
Oh, shoot.
Already did that.
- Henry Francis - Friday, May 5, 17 @ 11:54 am:
And of course not mentioned at all is the cost of relocating all the workers currently housed at the JRTC.
And the cost of the new leases.
- Matt Belcher - Friday, May 5, 17 @ 12:17 pm:
==And of course not mentioned at all is the cost of relocating all the workers currently housed at the JRTC.==
Unless the plan all along is to NOT relocate ALL the workers but transfer essential functions to Springfield in the name of saving through “cost synergy” and the “reduction of redundancy.”
- Dublin - Friday, May 5, 17 @ 12:19 pm:
==And of course not mentioned at all is the cost of relocating all the workers currently housed at the JRTC.==
I hear there is an old furniture store available…
- Juice - Friday, May 5, 17 @ 12:22 pm:
Matt Belcher, that would be even more reason for Rahm to make it difficult on the Governor to get what he wants.
I can’t imagine removing over 2,200 jobs from Chicago would go down all that well.
- Annonin' - Friday, May 5, 17 @ 12:22 pm:
The proper term is envelope the CTA station. Word is the state already agreed to it …wonder why DopeyDuct needed this presser? Perhaps a media appearance but avoidance of ??? about Obamacare before winging off somewhere…BTW today’s DopeyDuct conflict check will for WisdomTree Investments Inc looks like a big ETF stash…wonder shat the conflict is?
- Bill - Friday, May 5, 17 @ 12:38 pm:
There seems to be little thought and planning put into coordinated messaging by this administration. First, get your facts straight but second this issue is not relevant. Nobody cares about the JRTC. Focus on what is important the state budget.
- W Flag - Friday, May 5, 17 @ 12:55 pm:
@Sue:
Chicago needs to stop spending on vanity projects and to prioritize.
The City continues to burn through money like mad despite a seemingly endless addition of new tax dollars. All of these new developments added to the city’s revenues, but the money did not put a dent into city debts because of Emanuel’s mismanagement.
We need a moratorium on vanity projects:
A basketball arena for DePaul at McCormick Place that will never turn a profit according to analysts.
A elevated train improvement (the Belmont Flyover) that will cost close to $2 billion because the mayor dislikes the two to three minute wait for trains to switch tracks at the Belmont platform where Brown, Red and Purple line trains use the same tracks and trains sometimes need to wait briefly.
A new Malcolm X College to replace a building that was only forty years old.
It is madness.
- JoanP - Friday, May 5, 17 @ 12:59 pm:
Sounds like Rauner’s spokespeople need to speak to each other!
- Louis G. Atsaves - Friday, May 5, 17 @ 1:21 pm:
I use that L stop at least 3 days a week. I can access all trains from 203 N. LaSalle Street (the building immediately North of the Thompson Center). I can exit trains from my office and step off into both buildings.
The major problem they would have during construction would be handicap accessibility for those who enter at 203 N. LaSalle. There is an overpass with stairs to get to the Southern part of the station, but no elevator.
They can build skyscrapers in Chicago on a seemingly postage sized stamp of land, but with the Thompson Center, suddenly everything is impossible?
Illinois. The laughingstock of the nation.
- Rod - Friday, May 5, 17 @ 1:37 pm:
W Flagg I agree Chicago lacks any realistic concept of austerity to get control of finances. There must always be yet another big project to keep the idea of a dynamic city front and center. CPS is still building new schools and its losing students every year. The Mayor puts bicycle lanes in all over the place that create new traffic problems on arterial streets using the magic of TIF funds. It goes on and on. Really Mayor Emanuel is very similar to Rich Daley on that level.
Meanwhile the City Council is proposing that more CPS officers have direct access to fully automatic assault riffles following the shooting in the Back of the Yards. I need a drink.
- Mike Cirrincione - Friday, May 5, 17 @ 1:54 pm:
@W Flag:
Dont even get me started on the Belmont Flyover madness.
BUT, since its going to happen why isnt the CTA straightening the track between Addison and Belmont.
It has that dipsy doodle in there that sometimes sends people and/or their coffee flying if the operator is speeding thru that part of the track.
- Anonymous - Friday, May 5, 17 @ 2:06 pm:
#Brownline problems
- Dick Butka - Friday, May 5, 17 @ 2:56 pm:
@W Flag
Respectfully, I think Chicago is operating under a “spend money to make money” philosophy. The fact that, in a free market, developers are still choosing to build luxury buildings on land that was part of a “national conversation” on drugs, crime and poverty less than ten years ago proves that this type of thing is working.
In order to keep up, attract young professionals, and keep tax-paying families in the city, they need bike lanes, better public transit. I agree that the DePaul Arena stinks to high heaven.
What everybody in this thread is missing is that, like it or not, gentrification works.
Anyone complaining about the Belmont Flyover has clearly never had to make a Belmont Transfer or ridden a northbound train full of Cub fans during rush hour in summer.
- Rod - Friday, May 5, 17 @ 3:29 pm:
Dick Butka I do the transfer some days from the brown line to the Red line at Belmont, other days I take the Red line strait north from Chicago Ave. True it sucks when there is a Cubs game, but its simply not worth the money for that part of the project. Rebuilding the Red line is necessary.
But really using TIF funds for Chicago’s share of the project, half comes from the feds, is absurd. One mile on each side of the Red line on the north side is now a TIF district. My block is now in a TIF and there are $1.1 million homes on it, our own home is worth a lot now too. Its absurd, CPS should be getting the increases in value in these communities not the CTA via the TIF deal.
CTA has an A1 negative bond rating by Moody’s, this is exactly what it should be borrowing money for.
- Arthur Andersen - Friday, May 5, 17 @ 4:07 pm:
I have the perfect location for the JRTC employees.
Chicago State University.
It will be highly surplus by the time the space is needed.
Actually, I could find more State-owned places to house people in Chicago than places to store paper Downstate.
- Juice - Friday, May 5, 17 @ 4:08 pm:
Rod, in accordance with state law, CPS will get their share of the revenues generated by the transit TIF (around half) and the CTA will get the rest. So CPS does get that additional revenue from increases in value, which they wouldn’t get without the TIF since they’re under PTELL.
And the CTA is borrowing money, likely in the form of a TIFIA loan, which has much lower interest costs. The purpose of the TIF is to be the source of the repayment for the loan.
Also, As you stated, rebuilding the red line is necessary. The cost of that is about $1.3 billion. But since the feds don’t really offer much in grants for maintaining existing transit infrastructure, all $1.3 billion would need to be generated locally. By including the fly-over, it raises the total cost of the project to $2 billion, but the feds are covering half, leaving the local share at $1 billion, less than if only the absolutely necessary work of the red line reconstruction were being done.