On the surface, the city’s recent proposal to give a real estate consortium roughly $51 million to develop the old central post office looks like another unwarranted handout to the rich and well connected. But in fact this is one of the few tax increment financing deals that actually makes some sense–which just goes to show you how demented the program has become.
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So on May 8 the Community Development Commission, the body that oversees TIFs, recommended that the city fund a new but similar plan, giving Walton Street Capital LLC $51 million in property tax dollars to convert the old post office into office space, a luxury hotel, and condos. The proposal now moves to the City Council, where approval is expected.
For Walton, headed by real estate mogul Neil G. Bluhm, the deal’s a no-brainer. The federal postal service is selling the property for ten dollars and kicking in another $9 million to yank out the asbestos. The city’s $51 million will cover about 17 percent of total construction costs, including the demolition of 800,000 square feet Walton has no use for.
As Kostiner pointed out, there’s no guarantee that Walton’s post office project will be a winner either. The downtown condo market’s soft, and Walton still hasn’t lined up all of its conventional financing. Noting Bluhm’s involvement in the Block 37 deal, Kostiner asked the developers what assurances they could offer that the city wouldn’t wind up on the hook once again.
Starting With a Handicap
But let’s face it, suburbanites are wiser about how they spend their property tax dollars: they invest in their children. Meanwhile, Chicago looks to commit hundreds of millions of property tax dollars to the 2016 Olympics. It’s no wonder our city’s schoolkids run at the back of the pack.
