Note to the good people of Arlington Heights: Take a breather and think this through.
Don’t get overly excited by the idea of a Chicago Bears stadium and a new retail-residential-entertainment complex where the empty and abandoned Arlington International Racecourse stands.
Don’t back up a truck to the public vault and load it with the millions in incentives the Bears will ask for — and may not truly need.
And, most certainly, do not create a tax increment financing district to get a deal done.
The pressure to consider a TIF to lure the Bears, among other tax break options, is just beginning. And credit the Bears with a strong opening drive. Their smooth presentation at Hersey High School last week, with concept drawings to make the eyes spin, got residents imagining a remarkable future for the 326-acre site.
Even team President Ted Phillips got a round of applause.
But this will be a long process, one in which cooler heads should be allowed to prevail.
TIFs were invented, in 1950s California, to help developers and local governments find ways to jump-start growth in struggling neighborhoods. In TIFs’ simplest — and most ideal — form, cities begin with a base valuation for the real estate taxes paid on property within a “blighted” district. Developers commit to build or renovate within the district. The improvements cause property taxes in the zone to rise, and the local government can use the incremental proceeds to benefit the developers.
That’s the ideal, and here’s the real: TIFs also have unintended outcomes. They can merely move money around — incentivizing development in one place at the expense of another. They can put other taxing districts, such as schools, at a disadvantage. In Chicago, mayors have used “surplus” funds from TIFs to reward allies and undermine opponents.
They can widen wealth gaps: Despite the rhetoric about improving “blighted” areas, their biggest net impact tends to benefit neighborhoods that already have advantages. In Chicago, TIFs benefiting the developers of Lincoln Yards and The 78 promise overnight successes. Those focused on economically weak neighborhoods, often in communities of color, do not.
Arlington Heights Mayor Tom Hayes has kept his wits with him so far. He said a TIF for the Bears development would be only a last resort. Residents and even some village board members are starting to ask tough questions.
David Merriman, an expert on TIFs who sees their value if done right, describes the appropriate circumstance for one. The local government must need the new investment, without which development won’t happen. And the developer must need the tax benefits, without which investment cannot succeed.
“You need an iron handshake, where one side is bound to the other,” said Merriman, a professor of public administration in the College of Urban Planning and Public Affairs at the University of Illinois at Chicago. “I don’t see that situation here.”
The burden of proof for any sort of tax incentives — whether TIFs or anything else — should be on the Bears. They’re the ones who optioned the racetrack site for $197.2 million. They’re the organization willing to walk out on a Soldier Field lease after taxpayers funded a $690 million redevelopment in 2002.
The Bears are predicting extraordinary economic benefit for Arlington Heights if the stadium complex development moves forward: 48,000 jobs and $9.4 billion in impact from construction and 10,000 jobs and more than $1 billion in annual economic impact over the longer term.
Well, prove it, Arlington Heights should say.
The Bears’ glossy scenario runs up against experience at stadiums across the country and volumes of research from economists who study such matters. Looked at from a regional perspective — as county and state officials should — the Bears’ economic impact argument becomes even harder to make: Economic losses for Chicago must be deducted from the gains in Arlington Heights.
And if those Bears’ numbers are even close to true, that raises a different question: Why would the Bears need the public help? The McCaskey family that owns the Bears may not have the money. But surely, private capital would flock to an investment that promises that kind of impact.
TIFs are built on the notion of “but for.” In other words, without the tax incentive, the development doesn’t happen. And without the developer’s risk capital, the land stands idle.
That “but for” argument would be hard to make for a tract of property in a thriving suburb, within walking distance of a Metra stop, on the kind of flat, open land that developers find inviting.
TIFs are hardly the only option if Arlington Heights, Cook County or the state seek to offer incentives to help the Bears make their development dreams come true. After all, highway interchanges and other infrastructure would benefit residents, not just the Bears. The taxes generated from the property — stadium or not — would be a boon to the suburb’s bottom line.
But even if that’s the case, one last question needs asking: Outside of Arlington Heights, would it be right for any other Illinois government body to subsidize this investment?
The Bears’ proposal pits Arlington Heights against the city of Chicago. It would leave Soldier Field without its major tenant and render the retrofit of the stadium indefensible. The bonds that financed construction don’t retire until 2032.
If the Bears seek state money — something from Gov. J.B. Pritzker’s $45 billion infrastructure plan maybe — they’re asking Pritzker to help stiff Chicago, for the benefit of the team and Arlington Heights. County Board President Toni Preckwinkle would face the same quandary.
It’s no surprise the Bears’ razzle-dazzle wowed the audience at Hersey High last week. But on further review, the stadium proposal might lose some of its pizazz.
David Greising is president and CEO of the Better Government Association and a regular contributor to the Tribune’s Opinion section.