Bears' $5B Arlington Heights plan will hinge on taxpayer funding options

[December 17, 2022]  By Jon Styf | The Center Square

(The Center Square) – The Chicago Bears have said there won’t be any direct tax dollars funding its potential $2 billion new stadium in Arlington Heights.

But when the team and Arlington Heights came to a pre-development agreement approved by the village in November, there were seven tax options the agreement said would be considered to fund the estimated $5 billion total project on the 326 acres of the former horse racing track at Arlington Park that the team is set to close on purchasing for $197 million in early 2023.

Those options include tax increment financing, special service areas, special assessments, the creation of a business district and business district tax for the project, a parking tax at the project and "other taxes generated by the project."

According to the Daily Herald, there is one more in consideration. Arlington Heights Mayor Tom Hayes confirmed to the paper that the Bears are assessing asking for a PILOT agreement, or Payments in Lieu of Taxes, which would allow the team to negotiate a property tax payment instead of paying taxes based on land value.

The tax option is used now for nonprofits, so setting a PILOT agreement up for the Bears would require at least state legislation but might require a constitutional amendment.
 

When asked by The Center Square about consideration of a PILOT, Hayes would not confirm what he had told the Daily Herald and instead wrote "I'll have to defer to them on that."

"As we have mentioned publicly, in order for this project to move forward, we will need to have property tax certainty and infrastructure support," Bears Senior Vice President of Marketing and Communications Scott Hagel said. "We continue to do our due diligence on how that can be accomplished, but have made no asks at this point."

NBC 5 Chicago reported, through a FOIA request of emails, that it was Hayes who originally reached out to Bears President Ted Phillips to see if the team was interested in buying Arlington Park. The report showed that Phillips later wrote to Hayes that the City of Chicago intentionally leaked the Arlington Park purchase agreement before the team or village could announce it.

Brian Costin, deputy state director of Americans for Prosperity, has followed the Bears and Arlington Heights agreement closely, including pushing for the village to deny the Bears any taxpayer subsidies for the deal through a petition signed by more than 700 residents and a proposed ordinance against taxpayer subsidies that the village rejected.

Costin has looked closely at the deal and believes that, once fully built, the Bears’ multi-use portion of the project could include thousands of residences.

A rendering of a proposed Bears stadium in Arlington Heights. - Rendering courtesy of Chicago Bears

If the increased property value were allowed to be captured by a tax-increment financing district, the property taxes for the difference between the land purchase price of nearly $200 million to the estimated project cost of $5 billion could lead to a huge TIF district, the largest in the state even compared to Chicago’s LaSalle/Central TIF, which reportedly had a $197 million balance at the end of 2021.

That could mean that the village, which currently takes in about $50 million in property taxes annually, could be required to provide services such as schooling, police and more to the new area without increasing its property tax base significantly.

"We’re trying to raise the alarm and let people know what this could mean," Costin said. "But, essentially, 96% of the property tax dollars from the Chicago Bears and their development could go back to the Chicago Bears through a TIF district and punch a huge hole in the budgets of local governments.

"… I think that they’re going to keep pushing and pushing until someone pushes back."

TIF isn’t the only way for public money to be involved in the deal, however. The Bears haven’t announced how the deal will be bonded, but if municipal bonds are used, it would both lower the rate for the Bears but also help the team avoid paying federal taxes on the bonds, as the Brookings Institute showed NFL teams have done for decades.

The Bears are expected to ask for undefined infrastructure at the property to be paid for with public funds and the agreement said that public financing will only occur if "but for the provision and implementation of a public-private partnership, the Project would not be feasible."

Privately-owned NFL teams, however, do not disclose their finances, so it is unclear how the village will make that determination that the project could only occur if there are taxpayer subsidies.

"They want to say this is going to be amazing and so beneficial and, on the other hand in the exact same moment, they are saying, 'We're so poor, we can’t afford to do this unless you concede to all of our demands for taxpayer money,' " Costin said.

Costin said that, ultimately, the Bears are not being transparent about how much public funding they need for the $5 billion project and that both the village and team should make that clear.

"How many millions of dollars do you need to make this project work?" he asked.

Jon Styf is an award-winning editor and reporter who has worked in Illinois, Texas, Wisconsin, Florida and Michigan in local newsrooms over the past 20 years, working for Shaw Media, Hearst and several other companies.