Chicago is getting serious about their property taxes. Last year, the Chicago Sun-Times caught several families using illegal ways of lowering their property taxes. The day after the story was released, the local assessors office demanded repayment and raised their property taxes to the regular levels. Now, Crains Chicago Business has found out that the same assessor office is going after their local NFL team, the Chicago Bears, and the team is not happy about it.
Several weeks ago, the Bears publicly admitted to buying land in nearby Arlington Heights to likely build a new stadium. However, it appears that a Chicago (technically Cook County) assessor is now holding the Bears accountable for future property taxes on this land. The county assessor raised the property tax value of this land by six times (applies to tax year 2022 and beyond), and that does not even include the construction that will be done. For those non-tax fans, a land value generally increases when buildings are constructed on it.
The Bears are appealing the move to the Cook County Board of Review. If the Bears do not win their appeal, they are looking at an additional $15 million per year in property tax payments. But the reasoning by the county assessor makes more sense to me than what the Bears are proposing. The Bears bought this property for $197.2 million in 2022. The assessor is claiming that the property’s tax value is worth $197 million. The Bears believe it is worth $33.5 million, but are willing to settle at $37 million. Not to worry, though, as the Bears are telling the public that they “want to pay our fair share”.
I won’t get into a fair market value vs property tax worth discussion, as that would bore everyone reading this. But I will say that both sides have points. Let me quickly break them down:
- The Bears are correct in that a piece of land’s tax value is not the same as its fair market value.
- The Bears are likely correct that since the land was vacant when bought, it was producing nothing and therefore has a lesser tax value.
- The assessor is correct that the Bears tax value is a joke, especially if you factor in how close the purchase date is from this assessment.
- According to a local board of review commissioner, the assessor looked at recent sales of “comparable business property” and found the tax value to be $150 million…meaning the assessor’s value should be looked upon more favorably.
- Assessors are given a lot of room, legally speaking. If one assessor wants to value a land’s purchase price more than the immediate money-producing value, they are allowed to do that.
Yesterday, the Chicago Tribune reported that the Bears have asked city officials for permission to tear down a number of buildings on their Arlington Heights property. Most assumed when they saw the headline that the Bears just wanted to start the stadium construction early.
“The story by the Tribune suggests the demolition is merely happening now … to lower taxes on it for the Bears. It’s being done, according to the story, to offset a tax raise to around $16 million from about $3 million in 2021 when the track was operating. The increase is the result of a higher assessment, but the Bears are hoping the demolition decreases the property value.” — Sports Illustrated, 05/04/23
I am going to give the Bears the benefit of the doubt here and assume this wasn’t the motive for the demolition request. The reason for the assessors price was due to the purchase price and how close that date was from today. Tearing down the remaining buildings on the land doesn’t solve that issue.
As I have written about in the past, it is very rare for any sports team to pay anywhere close to what they are supposed to for property taxes. Several years ago, the San Francisco Giants got so mad at the local assessors for their property tax bills in 2015-2016-2017, that they took them to an Appeals Board and had their property taxes lowered each year by close to $180 million. Not to be outdone by the local baseball team, the San Francisco 49ers have gotten their own property tax bill cut in half in past years.
In 1996, Cincinnati county commissioners promised taxpayers that in return for passing a law allowing for a sales tax increase to pay for two new stadiums, the commissioners “pledged to give property owners 30 percent of the money back in the form of a property tax rollback”. Since this pledge was not mandatory, local commissioners have only rolled back the full amount two times since 1996. Why? Because the sales taxes from the new stadium and ballpark haven’t generated enough money to pay down the debt on the two stadiums.
In 2013, the Atlanta Falcons let their city/state fund between $700 million to $1 billion of their new stadium. One would think that their local leaders would be interested in getting back some sort of revenue from the tax money given to this project. One would be wrong.
“The city (of Atlanta) has (an agreement) with the Georgia World Congress Center that gives the (Falcons) $1.5B stadium a property tax abatement for 30 years … Those taxes could add up to $700M, or $26M a year, in taxes using the 2018 tax rate” – Biznow.com, 01/22/19
The list of other teams getting these breaks is numerous. I found articles detailing how the Columbus Blue Jackets “owners sought and received a property tax abatement”. The Arizona Coyotes are asking voters to let them skip property tax payments on their billion dollar sports district for 30 years. The St. Louis FC team hadn’t even started playing in the city, yet they were securing a number of tax abatements, including a partial property tax abatement.