Chicago aldermen advanced a $54.7 million tax break Monday for the $7 billion plan by owners of the Bulls and Blackhawks to redevelop parking lots around the United Center into thousands of residences, plus businesses and a concert hall.
The Reinsdorf and Wirtz families now argue they need the 12-year property tax cut moving ahead in the City Council to jump-start one of the largest developments in the city’s history, a sprawling bid to remake the Near West Side neighborhood. And their representatives on Monday did not rule out coming back to the city to ask for additional reductions as the work advances. They initially touted the plan’s private funding.
The abatement is necessary in order to lock down the remaining 80% of private financing needed to move the plan forward, United Center CFO Steve Rucks told aldermen.
“With the market where it is today and construction costs where they are, it’s been a struggle to get that remainder,” Rucks said. “A lot of that remaining 80% is contingent upon the resolution of this [abatement].”
Members of the council Economic Committee unanimously advanced the abatement in a voice vote. It is expected to face a final vote by the full council next week.
The tax break is tied to the $500 million initial phase of the seven-phase project. That start is set to include a 6,000-seat music hall, a boutique hotel, several parking garages with ground-level retail space and nearly 10 acres of green spaces.
Known as the 1901 Project, the development is set to be finished in an about 15 years, when it is expected to add nearly 10,000 new homes, 20% reserved as affordable, to the area now defined by unsightly parking lots surrounding the stadium. Even with the abatement, the initial project will result in an estimated net increase of $46.3 million in tax revenue, according to the city’s Department of Planning and Development.
The City Council approved needed zoning changes for the plan in February, clearing the way for construction to begin. But Johnson’s administration announced in March that it was supporting a tax break sought by the developers to make the green-lit project “economically feasible.”
At Monday’s meeting, city planners and developers did not give a clear answer when asked if they would return to the City Council to ask for further tax breaks as the next phases of the project move forward. The current abatement request is “the only request we have,” said Katie Jahnke Dale, a DLA Piper attorney representing the developers.
“We don’t know what the next phases will look like, but the only request we have right now is the current one,” she said.
Beyond questions about future abatement requests by Ald. Raymond Lopez, 15th, aldermen did little to press on why the tax cut is needed. They shared support for the overall project, but called on developers to better answer questions about concerns regarding racial equity and gentrification.
“You got to look at the big picture,” West Side Ald. Emma Mitts, 37th, told developers when they were unable to say how the plan would affect West Side property tax rates. “The big picture would be to look how it’s going to affect the area and the residents that live there.”
After several Latino aldermen questioned developers about how Latino contracting firms would be involved in construction, Ald. Nicole Lee, 11th, one of two Asian aldermen, reminded them that “we live in a very diverse city.”
“Please don’t come back for the rest of the phases without answers to these questions. That’s really not going to be acceptable to this committee,” she said.
Lee said the request for the abatement came as “quite a surprise” to aldermen, but added that the project marks an “appropriate” use for such tax incentives.
Ald. Walter “Red” Burnett, 27th, whose ward includes the United Center, similarly praised the tax cut as a way to spark an “unheard of” West Side investment. The parking garages included in the first phase will allow later phases to include as much housing as possible, he added.
“The $55 million is a way for us to continue the largest scale of this project,” he said.
Burnett credited developers for reaching out to area residents in job fairs and trying to address gentrification concerns. The half-mile sea of gray asphalt surrounding the arena now brings in little tax revenue and divides the neighborhood, he said.
“Let’s talk about what those parking lots produce in taxes currently. It’s a fraction, if not minimal, to what can be utilized on this land,” he said. “We haven’t had this type of investment on the West Side. We just haven’t.”
