Almost immediately after the Chicago Bears closed on their purchase of the 326-acre Arlington Heights property they’re eyeing for their new home, the organization made it clear the move is not a done deal.
They’d need certain assurances first, the team’s owners wrote in an open letter on Wednesday.
“If we construct a state-of-the-art stadium, we will not seek taxpayer funds locally or otherwise for the structure,” the letter said. “If we proceed, however, this project would require assistance to ensure feasibility, including our securing property tax certainty and support for infrastructure commensurate with the public benefits the project will yield to the region.”
Representatives of the team wrote that their planned mega-project, envisioned to include apartments and an entertainment complex, would not pass financial muster unless local governments can ensure “predictable taxes” and promise to help pay for public infrastructure around the site.
“It’s all a nice way of saying they’re looking for a tax break,” said State Sen. Ann Gillespie (D-Arlington Heights). Gillespie has followed negotiations closely and recently filed a pair of bills in the legislature designed to guide conversations around public support.
The senator said she is not outright opposed to leveraging public dollars to help bring the project to fruition if the team and local policymakers can strike a deal with convincing public benefits. But many of her constituents have already made up their minds, and an “overwhelming majority” don’t want to send their tax dollars to aid the Bears’ vision, she said.
“We’ve gotten calls in the office, emails to the office,” Gillespie said. “People come up to me at events all the time to talk about it. I heard about it during the campaign.”
The village of Arlington Heights could exercise plenty of options short of direct spending on a new stadium to meet the team’s demand for “tax certainty” — including several ideas that were listed in a pre-development agreement signed late last year between the team and the village.
No option would be safe from public criticism.
The most direct route for public financing of the Bears’ plan would be for the state of Illinois or the village of Arlington Heights to simply pay for infrastructure upgrades itself.
The local government could develop a capital plan for the road, sewer and electrical work necessary to accompany the Bears’ proposal and then issue bonds to borrow the money they need to get the work done.
Gov. JB Pritzker has publicly closed the door on the use of any state funding to see the project through, and Gillespie said most of her colleagues in the legislature are similarly cool on the idea. Legislators slipped language into a funding package last month prohibiting the state’s economic development department from doling out grants to help any sports team move within the state.
But Arlington Heights village leaders have left the option open. The village board voted last year to reject an “anti-corporate welfare” ordinance that would have forbidden the village from offering financial incentives to the team.
While direct government spending may be the simplest option, it could also prove the most controversial.
Between 2000 and 2016, 35 professional sports teams leaned on local governments to issue tax-exempt bonds to help fund stadium construction or renovations. Almost all of them turned out to be bad deals for the public, according to the Brookings Institution, which in 2016 found “little evidence that stadiums provide even local economic benefits.”
“There’s a very long standing, bipartisan academic consensus that [stadiums] don’t equal economic development — they make franchise owners rich,” said Greg LeRoy, executive director of the Washington, D.C.-based nonprofit fiscal watchdog group Good Jobs First.
He added that “tax-free financing” like government-backed tax-exempt bonds “cost Illinois taxpayers” because the interest on the bonds cannot be taxed by the state or federal government.
Issuing tax-exempt bonds may not look like direct public spending, but “it’s absolutely public money,” LeRoy said. “Just because it’s in the tax code doesn’t make it any different than an appropriation.”
Tax-increment financing (TIF)
Arlington Heights could create a new TIF district at Arlington Park, freezing property tax revenues already being generated by the area and diverting all new tax growth into a fund that the village could tap to pay for surrounding infrastructure.
It would be the suburb’s fifth TIF district. The four existing districts in Arlington Heights pulled in a combined $3.3 million last year, according to data from the Cook County Clerk’s Office.
A TIF district at Arlington Park has the potential to be even more lucrative, especially if it sees new development continue to push up its tax assessments. Cook County Assessor Fritz Kaegi’s Office, which reassessed the county’s north and northwest suburbs last year, multiplied the combined assessments on Arlington Park nearly fivefold in 2022, records show.
Another precedent can be found in Chicago’s Cortland/Chicago River TIF, which city leaders created in 2019 to fund new infrastructure around the Lincoln Yards mega-development. The district has already raised more than $12.5 million in taxpayer dollars.
However, the Lincoln Yards TIF also serves as a cautionary tale for the kind of public backlash a new Bears TIF could invite. TIF districts divert property tax revenues away from school districts and other local governments, forcing those governments to raise property tax levies to balance their budgets.
Leaders of all three school districts that overlap the Bears’ proposed development site have been vocal in their resistance to a new TIF district, Gillespie said.
“It puts school districts and other taxing bodies in a bind, because they’re not getting any of the additional revenue,” Gillespie said. “And what’s being proposed in the area would bring a lot of new residents.”
State senator Gillespie has been working with local school district officials on a bill designed to crack down on the use of TIF by sharpening requirements for the creation of new districts and making the districts sunset sooner. Many local school leaders still have a hangover from a 1989 TIF district that was created to lure Sears to nearby Hoffman Estates and that sapped money from schools and other taxing bodies.
If Gillespie’s bill becomes law before the Bears negotiate a deal with Arlington Heights, the village would have to work harder to prove the Arlington International Racecourse area is “blighted” and would be unlikely to see development without public financing.
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Payment in lieu of taxes (PILOT)
The term “payment in lieu of taxes,” or PILOT, is most often used to describe deals that let local governments pull money from tax-exempt property owners like universities and hospitals to make up for those properties’ use of public services.
The Bears are proposing a different kind of PILOT: one that would freeze their property taxes at their current low rate and then let the team negotiate direct payments to the village and school districts.
Team officials drafted a bill during last month’s lame duck legislative session outlining the proposal. It met chilly reception in Springfield and no legislators stepped up to sponsor it, the Sun-Times reported at the time.
Gillespie offered to take up the bill as the new legislative session got underway, saying she “has real reservations” about the Bears’ proposal but filed their bill as a starting point for negotiations. She also tweaked the language to replace specific references to the Bears or Arlington Heights with “mega projects” that could meet the same criteria elsewhere in the state.
“I thought this would be a great opportunity to have a broader discussion around the use of economic incentives to make sure they don’t disproportionately impact our schools, our residential homeowners and our small businesses,” she said.
Gillespie said the Bears had prepared a slide deck showing examples of how similar PILOT arrangements had worked elsewhere in the country.
A representative of the Bears declined on Friday to share the slide deck or point to any of the examples.
“In this case, ‘PILOT’ is just another fancy name for a tax abatement,” LeRoy said. He argued the proposal has the potential not only to divert funding from schools, but to make it harder for the village to fund street resurfacing, answer 911 calls and clean up trash that the stadium and its surrounding development would create.
“All those things cost money,” LeRoy said. “If the Bears aren’t paying for those induced costs, guess who pays for them? Everybody else, basically.”
Special taxing districts
The pre-development agreement signed between the Bears and Arlington Heights officials lists a range of options for special taxing districts, including special service areas, whereby nearby property owners agree to pay higher taxes in order to fund marketing, infrastructure and programming designed to improve the area’s collective standing.
The agreement also floats a special district to tax local businesses or a tax on people who park near the stadium, both of which would raise money for infrastructure.
“Public funds for infrastructure will provide regional improvements such as roads for better traffic flow and water drainage for residents throughout the area,” the Bears wrote in their open letter last week. “This support, along with the team’s investment, will be crucial to ensuring the local and Illinois economies receive a dramatic, long-lasting influx of investment and new tax revenue of a magnitude never experienced before in the region.”
LeRoy remains skeptical.
Levying additional taxes on nearby landlords, businesses or drivers “just means everybody but the Bears paying more taxes,” he said.
“Who’s going to pay the business improvement tax? The business owners. Who’s going to pay the parking tax? The fans,” LeRoy said. “It’s all the same problem.”
Chicago Mayor Lori Lightfoot is seizing on the inevitable added costs as part of her argument for why the team should stay at Soldier Field.
“When you’re talking about the possibility of building a brand-new stadium…I don’t know where that money is going to come from,” Lightfoot said at an unrelated news conference last week. “Polling shows that the people in the village of Arlington Heights are excited, but they don’t want to pay for it.”
Asked if she would rule out the use of public financing to persuade the Bears to stay put, the mayor declined to answer.