- Rich Hein/Sun-Times Media
- Nice building—but it’s no toilet paper.
On behalf of all the movers and shakers in this town, I’d like to take this opportunity to thank the public school children of Chicago for their generosity in making this a banner year for Willis Tower and other downtown properties.
Admittedly, I’m probably not the best representative for this task, as I’m not—nor have I ever been—a mover or a shaker.
But it’s already been roughly two months since word broke that the Blackstone Group—a private equity firm out of New York City—was looking to pay $1.3 billion for Willis Tower, and still no one’s gotten around to thanking the kids.
Hell, someone’s got to do it.
In particular, I’m thanking the kiddies for the millions in property tax dollars that would have otherwise gone to the schools but instead went to help pay for refurbishing Willis Tower as part of the deal in which United Airlines moved its headquarters there.
The millions come out of the slush fund known as the city’s tax increment financing program, in which the city slaps a surcharge on the property taxes we pay for things like schools.
And then diverts that surcharge—roughly $450 million a year—to private accounts which the mayor’s basically free to spend as he likes.
In this case, by giving about $24.4 million to help pay for United’s Willis Tower deal.
Now I realize the kiddies didn’t actually pay the millions themselves—not many of them actually own property.
Instead think of it as sort of a replacement cost, as generation after generation of public school kids goes without toilet paper, chess, janitors, librarians, drama, and other amenities that most school systems in the civilized world take for granted.
The current owners of Willis—a consortium that includes American Landmark Properties—bought the property for $840 million in 2004.
So that’s a sweet profit.
Just to be clear, I doubt the school children of Chicago realize they donated those TIF millions to Willis Tower.
Certainly, no one asked them if they wanted to make such a donation.
I know this because I was there at the creation of the TIF district—LaSalle Central—from which the Willis money comes.
I can tell you that at no time during those hearings did any school child speak on behalf of that TIF.
On the other hand, there were plenty of movers and shakers on hand who took the opportunity to lavish heaps of praise on Mayor Daley for giving them that blessed TIF.
That’s the same Mayor Daley who movers and shakers currently blame for everything that’s wrong in this city—though they still won’t blame him by name.
Consider this another reminder that, when it comes to selecting our leaders, the movers and shakers don’t exactly have the best track record.
I was thinking of these ancient TIF deals as I read that Blackstone was making another big-time downtown purchase, scooping up the Apparel Center for about $390 million.
That’s the building that houses, among other things, the Reader.
So if they move me to the basement loading dock, you’ll know why.
In any event, the big sales prices indicate the recession’s passing and another real estate boom is upon us.
All this talk about downtown real estate reminds me of my long-ago conversations with alderman Burt Natarus.
He used to tell me that I was too hard on the city’s TIF program, without which downtown Chicago would be like some old abandoned mining town with tumbleweeds blowing through.
I used to tell him: You know, Burt, it’s funny, but New York City’s managing to have its real estate boom without a $500 million annual slush fund.
Alderman Natarus left office back in 2007.
But get ready for Burt’s descendants to try and convince you that the latest downtown real estate boom means your property tax bill will be lower.
Oh, if that were so.
In the case of the Willis Tower, whatever tax increases its new owners pay will go to the surrounding TIF district.
And my tax bill will go up to compensate for the property tax dollars that the schools, parks, county, etc. are not getting from Willis.
So here’s how it breaks down . . .
The Willis owners get roughly $460 million from selling the property.
The school kids of Chicago get janitorless schools.
And I get a higher property tax bill.
Such a deal!
The least they can do is give us a free visit to the Skydeck.