- Credibility:
CHICAGO — An ordinance that aims to give the city a mechanism to revoke property tax incentives awarded to “bad actor” developers advanced out of committee on Tuesday.
The measure aims to hold developers who don’t keep their promises or whose projects fail to comply with environmental rules accountable. It was introduced by Ald. Michael Rodriguez (22nd) following the botched implosion of a smokestack in Little Village which blanketed the surrounding neighborhood in dust.
But it’s unclear if the measure would allow the city to claw back incentives already awarded, or if it only pertains to those awarded in the future.
The Committee on Economic, Capital, and Technology Development unanimously approved a tweaked version of Rodriguez ordinance, sending the measure to the full City Council for a possible vote in October.
Rodriguez praised tax incentives as “vital tools for economic development in blighted communities,” but said the city must have an avenue to revoke tax incentives from “bad actors.”
“When there are bad actors, actors who repeatedly violate municipal, state or federal law, actors who have been dishonest, actors who cause environmental and economic harm, actors who repeatedly break promises, actors who are careless…we must hold them accountable,” he said.
Following the botched implosion, the city temporarily stopped work at the site and fined Hilco Redevelopment Partners $68,000. But residents have argued the company should lose the tax incentive it was awarded to convert the shuttered Crawford Coal Plant into a massive Target distribution center.
Known as a “Class 6b” tax incentive, Hilco only has to pay real estate taxes on 10 percent of its overall property tax assessment for 10 years. Years 11 and 12 are also deeply discounted, saving the Northbrook-based company–or new owners if the property is sold– $19.7 million over the life of the agreement.
After a similar resolution was passed in July, Gary Epstein, executive vice president of Hilco, defended the tax break.
“This benefits the local residents and is used to encourage developers to take on complex projects that would otherwise remain obsolete and often contaminated,” Epstein said. “The future of this site in Little Village is very special, with major economic and environmental benefits for local residents and we’re eager to make this vision a reality.”
Prior to the committee meeting, Rodriguez amended the ordinance to reflect changes the city made to require companies that receive tax incentives to sign redevelopment agreements with the city. If the company doesn’t live up to the agreement, the tax incentive can be revoked.
Tim Jeffries, deputy commissioner of financial incentives for the Department of Planning and Development, praised the ordinance, saying it gives the city a tool to hold companies accountable.
“This means ensuring recipients fulfill their commitments regarding investments, jobs and other factors that DPD and this committee base their support on when approving the incentives,” he said.
But Jeffries was unable to provide an answer when asked whether the ordinance allowed the city to revoke an incentive already awarded, deferring the question to the city’s Law Department.
After the meeting, Rodriguez told Block Club an attorney for the City Council’s Legislative Reference Bureau gave an opinion the ordinance could be used retroactively, while the city’s Law Department has not issued an opinion. The Law Department did not immediately respond for comment.
If the ordinance does allow for retroactive revocation, Rodriguez was non-committal on whether he would seek to revoke the $19.7 million incentive from Hilco, saying he would seek input from the community first.
“This ordinance was put together to hold companies accountable and we’re going to continue to work on that with our community,” he said.
The ordinance is the city’s first mechanism to claw back the lucrative tax breaks it argues drives economic development in underserved neighborhoods.
If a resolution calling for revocation is filed, the Committee on Economic, Capital and Technology Development would provide notice to the property owner and the resolution would be sent to committee for a public hearing with a recommendation from the commissioner of the Department of Planning and Development.
The mayor, Planning and Development commissioner and alderman would have the ability to file a resolution calling for the revocation of a tax incentive.
A resolution calling for the creation of the ordinance was approved in July.
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