CITY HALL — City Council approved a $9.8 million tax break for a development that’s already been completed — and is owned by a wealthy Chicago family and one of the world’s largest companies.
Class 6b tax incentives are a Cook County program meant to spur industrial development on vacant land or the rehab of existing buildings. City officials argue the tax abatements are offset by the economic benefits the development will create for the city, like jobs and a padded tax base.
But a plan to award a 12-year property tax break for an already completed building in Back of the Yards, much of it leased, created a stir at City Hall this week before eventually being approved.
Marina Crossing JV, a joint venture owned by the influential Tadin family and banking giant JP Morgan’s investment arm, built a $32 million, 633,057-square-foot warehouse at 2075 W. 43rd St. on previously tax-exempt land owned by a railroad. It was completed in 2019, creating 300 temporary construction and 64 full-time jobs, and is already 69 percent leased, officials said at a Committee on Economic and Capital Development meeting last week.
The warehouse is just south of MAT Asphalt, co-owned by Michael Tadin Jr., a controversial asphalt plant that neighbors say pollutes the adjacent McKinley Park. He also owns MT Transit and Morgan Street Development.
Last summer, Tadin tore down hedges that blocked off prime Chicago Park District land after an Inspector General’s report accused him of using the public parkland as his own front yard.
The ordinance supporting the tax break for the Back of the Yards development, introduced in December by Mayor Lori Lightfoot and supported by local Ald. George Cardenas (12th), advanced out of the committee Jan. 21.
Ald. Raymond Lopez (15th) wanted the committee to reject the proposal, saying he didn’t believe millions in tax incentives should be awarded to “something that’s already there, already built, already in existence and already having an impact on the residents of Back of The Yards.”
Cardenas said the tax break was justified and praised the Tadin family for employing “hundreds and hundreds of other people in the community through other ventures” and for initially financing this project without city help.
“I think it’s laudable because most of the developers I know ask for front-end incentives. Heck, Amazon has received over $170 million of tax incentives throughout Cook County the last couple of years,” he said. “So it’s a little bit disingenuous of anybody on this council to talk about holding this or not give somebody a shot in the arm to bring in jobs and development.”
Cardenas rejected Lopez’s call, and the measure passed on an 11-1 vote. It was approved by the full City Council Wednesday.
After the meeting, Peter Strazzabosco, Department of Planning and Development spokesman, said Marina Crossing submitted its application to the county in 2017, prior to construction, and informed the city of the application in 2020. It’s “not unusual” for developers to seek approval after projects are leased, he said.
“The incentive is intended to help Cook County remain competitive with industrial locations in other parts of the region,” Strazzabosco said.
Because the Tadins and JP Morgan lease the building with the condition the tenant pays all associated costs, including property taxes, gaining the tax break allows them to “attract and retain the current tenants for the facility,” planning department financial analyst Emmett Morrissey said during the meeting.
Currently, 69 percent of the warehouse is leased to two companies, First Logistics and Ardagh Glass, for $219,877 a month, according to the department.
During the meeting, Tadin said the project converted land that was contributing zero dollars in taxes into a “state-of-the-art” facility. He also touted his companies’ commitment to hiring a diverse workforce.
The tax break would make it easier to lease the remaining 30 percent of unoccupied space. When completely occupied, the warehouse could employ about 300 people, he said.
Tadin told Block Club the delay in applying to the city for the tax break was caused by the complexity of the land survey after the railroad was converted to the warehouse.
He defended applying for the incentive, saying there would be “no industry in Chicago” without it, as incentives make it attractive to develop in Chicago rather than in nearby counties where taxes are cheaper. Because the incentive levels the playing field for property taxes in the city compared to nearby counties, developers “assume you’re going to get the 6b” when building an industrial property in Cook County, Tadin said.
“The value of this building without the 6b would be less than the value” to build the building itself, he said — developers “can’t build without it.”
Tadin is the son of trucking magnate Michael Tadin Sr., the chief beneficiary of the Hired Truck scandal and a key ally to former Mayor Richard M. Daley.
The senior Tadin built his trucking empire with the help of tens of millions of dollars in city contracts doled out to his businesses, including Marina Cartage and MAT Construction. The $40-million-a-year cash spigot to construction companies under Daley ended after the Sun-Times exposed the scandal.
Despite the coronavirus pandemic’s effect on the economy, JP Morgan Chase & Co. reported revenue of $29.2 billion in 2020.
Class 6b incentives are based on specific requirements but do not take into account financial need, Strazzabosco said.
The “review of the Marina Crossing application produced no factors to disqualify the development partners from participation in the County program. The review included a check of firms and individuals that are formally barred from conducting business through City assistance, the review of economic disclosure statements, scofflaw debts, and child support payments,” he said.
Although Cook County must approve and administer the tax incentive, the county requires developers to receive approval from the local municipality first — in this case, the city of Chicago.
The city’s portion of the $9.8 million tax break is $2.26 million, according to city documents.
The property will generate $5.4 million more in property tax revenue over the 12 years to the city and other taxing bodies, including Chicago Public Schools, than if the site remained vacant.
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