Nothing but Net (Profit):
Jerry Reinsdorf, Property Tax Relief, and Corporate School Reform on Chicago’s Near West Side
Table of Contents
How Corporate Welfare for Reinsdorf Hurts Ordinary Taxpayers and Starves Chicago’s Public School Children
The city of Chicago has been good to Jerry Reinsdorf. Support from a large fan base has helped Reinsdorf transform the Bulls and White Sox into two of the most successful sports franchises in North America, with a combined value of $1.2 billion and over $70 million in total annual operating income as of 2012.1 According to the mainstream media, Reinsdorf has given back to Chicagoans by establishing himself as, in the words of the Tribune, one of the “leading philanthropists” in the professional sports business.2 Indeed, Reinsdorf has made several highprofile charitable contributions in recent decades. Perhaps most notably, he gave $4.5 million to help construct a new Boys & Girls Club on the Near West Side in 1995, and followed up in 1998 with a $3.5 million donation to after-school instruction programs run by Chicago Public Schools.3 More recently, Reinsdorf has directed his “philanthropic” efforts toward supporting the charter school movement in Chicago. In 2009, he donated $2 million to help launch Bulls College Prep, a Near West Side high school that belongs to the Noble Network of Chicago charter schools.4
Commendable? It may seem that way. But while these acts of unselfishness make for good public relations, they are an altruistic sleight of hand. What the mainstream media fails to mention is that Reinsdorf’s seemingly generous and very visible donations are a drop in the bucket compared to the tens of millions of dollars in property tax relief that he and fellow owners of the United Center have received since 1994. New data obtained by the Chicago Teachers Union from the Cook County Board of Review reveals that, based on special legislation passed in 1989 by the state of Illinois, Reinsdorf and the owners of the Chicago Blackhawks saved at least $30 million on property taxes for the United Center between 2002 and 2007 alone! At the same time that he makes relatively small contributions to a local charter school— one with a history of pushing out the most vulnerable students—Reinsdorf benefits from an unpublicized system of corporate welfare that shifts the burden of paying for public schools onto ordinary taxpayers and ultimately diverts resources away from the city’s most vulnerable students.5
By now, many Chicagoans are familiar with the anti-union tactics of charter school advocates like Penny Pritzker and Bruce Rauner. However, these high-profile union critics are part of a much larger network of real estate and private equity moguls who have created a toxic environment for public education.6 Less vocal members of this network, like Reinsdorf, also profit from lucrative kickbacks and political favors at the same time that they support a growing charter movement that threatens to privatize public education in Chicago under the guise of increasing “accountability.” This report offers a case study in why calls for increased accountability need to be directed at the corporate profiteers who make it impossible to equitably fund local public education, instead of at hard-working and dedicated teachers.
What You Get Is More than What You Give (When You’re Jerry Reinsdorf)
Jerry Reinsdorf has a history of using taxpayer money for his own private gain. In the late 1980s, Reinsdorf held the city of Chicago hostage by threatening to relocate the White Sox to Florida unless he received public funds to build the new Comiskey Park. Taxpayers ended up footing 100% the bill for the South Side baseball stadium, which currently accounts for $125 million of the $600 million franchise value of the Sox.7 And while Reinsdorf and former Blackhawks owner Bill Wirtz covered the construction costs of the United Center, they did so only after the state passed legislation in 1989 providing them—and them alone—with a unique tax abatement formula for minimizing the new arena’s property tax liabilities.8
The appendix of this report includes the original Cook County Board of Review data and methodology used for determining the property tax savings that accrued to Reinsdorf and Wirtz as a result of the special formula. The formula allows United Center ownership to avoid paying their fair share of property taxes by drastically understating their net income, and slashed the final rate at which the arena would be assessed by almost half. According to the most conservative estimates, had the United Center been subject to standard assessment procedures for commercial properties in Cook County, Reinsdorf and co-ownership would have owed over $35 million in total property taxes for 2002-2007. Less conservative estimates indicate that this number was likely closer to $60 or $70 million. This may sound like a lot of money, but keep in mind that, during those years, the United Center generated over $150 million in net income (i.e. income after expenses). But Reinsdorf and co-ownership of the United Center did not pay $60 million. They did not pay $30 million, either. They paid approximately $8.5 million in total property taxes over the six years. This means that, at the most, they paid only 25% of what their property tax liabilities would have been without the breaks.9 If this sounds unfair, that’s because it is. When does the average person ever get to pay only a quarter of what they owe? In addition to detailing the methodology behind these estimates, the appendix explains how the special formula depressed the effective property tax rate for the United Center far below that of other commercial properties in Chicago.
These calculations cover 2002-2007 because those are the only years for which the complete income statements of the United Center are public record. However, the special tax formula for the arena has been in place since 1994, which means that this report only scratches the surface in terms of documenting the property tax savings enjoyed by Reinsdorf and his partners over the course of the last two decades.10 Figure 1 provides a graphical representation of the disparities in what United Center ownership should have paid and what they actually paid.
Figure 1. Comparison of United Center’s Estimated Annual Tax Liabilities per Normal Assessment Procedures and United Center’s Actual Tax Liabilities per Special Legislation
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Source: Cook County Board of Review and Cook County Clerk. See Appendix B for methodology. These ‘normal assessment’ numbers are based on the most conservative estimates.
Reinsdorf would no doubt try to justify the tens of millions of dollars in government handouts by pointing to his “philanthropic” giving to Bulls College Prep and other organizations, but the fact remains that his charitable donations constitute a tiny fraction of the corporate welfare he has collected in recent decades. Adding years of property tax abatement at the United Center to the public moneys used to build the new Comiskey Park amounts to hundreds of millions in taxpayer-funded aid to Reinsdorf and his associates.11 The notion that a $2 million donation to a local charter school makes up for this in any appreciable way is a slap in the face to hardworking Chicagoans. As if the tax breaks on the United Center were not enough, Reinsdorf receives significant tax write-offs for his contributions to Bulls College Prep, since Noble Charter Network enjoys 501(c)3 status as a non-profit (which means that all donations are taxdeductible). In the end, Reinsdorf capitalizes on behind-the-scenes political connections, and pads his image as a “philanthropist” by giving a pittance of the profits back to the community and posing for some nice photo ops with local kids.
How Corporate Welfare for Reinsdorf Hurts Ordinary Taxpayers and Starves Chicago’s Public School Children
The ins and outs of Cook County’s property tax system are complex, and those interested in more detailed information on how it works should consult the appendix and endnotes at the end of this report. Luckily, you don’t have to be a rocket scientist to understand how Reinsdorf and his colleagues shift the burden of paying for schools onto working Chicagoans and ultimately make it difficult to establish an equitable funding structure for public education.
Public institutions in Cook County that depend on property-tax revenue are referred to as “property-taxing bodies.” Each year, taxing bodies such as public school districts use the budgeting process to project expenditures for the coming year. After this process is complete, districts like Chicago Public Schools (CPS) issue their “levy,” or the amount of property taxes they need in order to support the proposed budget. School districts and other taxing bodies issue their levies before Cook County determines tax rates for Chicago’s various taxing districts, and these taxing bodies are restricted in how much they can increase levies in at least two ways. First, state law prohibits taxing districts from increasing levies by more than 5% of the total tax bill for the previous year. Second, political pressure from taxpayers hamstrung by increasing tax bills may make it unrealistic for taxing bodies to ask for more money, even in the case of legitimate shortfalls. Keep in mind, even if property values decrease or stay the same, tax bills can rise as a result of higher levies (since higher levies mean that the County Clerk has to raise tax rates in a given taxing district).12
When commercial properties like the United Center receive massive property tax breaks from the state, regular Chicagoans are asked to pay more in residential property taxes to make up for the gap left in the tax base. Since the United Center is grossly under-assessed, Reinsdorf effectively reduces his taxing district’s overall tax base (i.e. the assessed value of all of the property in the district). This means that the Cook County Clerk has to raise the district’s tax rate in order to satisfy the levies issued by schools and other taxing bodies. By using political favors to artificially depress their tax liabilities, Reinsdorf and his associates have avoided paying their fair share for city services like public education. As a result, regular homeowners who struggle to keep up with their mortgage payments have to shoulder more of the burden, as do renters whose landlords pass along increased property taxes in the form of higher rents.13
Figure 2. State and Local Taxes as Share of Family Income for Non-Elderly Residents, Illinois, 2007
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Source: Adapted from Carl Davis et al., Who Pays?: A Distributional Analysis of the Tax Systems in All 50 States (Washington, D.C.: Institute on Taxation and Economic Policy, 2009).
As the data in Figure 2 show, Reinsdorf and his peers at the top of the income ladder pay—by a large margin—a much lower percentage of their income in the form of property taxes (and taxes in general) than Chicago’s poorest households. The special treatment of the top 1% not only shifts the burden of paying for public services like neighborhood schools onto those who can least afford it, it also makes it more difficult for taxing bodies to raise their levies, even when severe budget shortfalls result in overcrowded classrooms, shortage of support staff, and a scarcity of basic classroom supplies like textbooks. With regular homeowners already pushed to the limit by increasing property tax bills, politicians will inevitably resist significant levy increases—even for funding schools—because of concerns about alienating voters. Chicago Public Schools are particularly dependent on local property taxes, from which they draw nearly 40% of their funding.14 The downward pressure placed on levies by tax relief for people like Reinsdorf ultimately makes it difficult to fund public schools in a way that allows for equitable instruction and student development.
When More Just Isn’t Good Enough
You might think that tens of millions in savings would satisfy someone like Reinsdorf. Unfortunately, he and his associates at the United Center believe that even with an incredibly generous tax deal, they still pay too much to fund neighborhood schools and public services. The Board of Review data, along with data available through the Cook County Assessor’s website, reveal that the United Center appeals its property tax assessments just about every year. In other words, Reinsdorf and his partners hire expensive lawyers to argue that they should pay even less in taxes than what they owe based on the special assessment formula, which already gives them huge property tax breaks.
In fact, the only reason that the income data used to compile this report exists in the public record is that Reinsdorf and co-ownership of the United Center had to provide detailed revenue information to the Cook County Board of Review in order to argue their case for property tax reductions in 2008. The combination of the special property tax formula and annual appeals to the Assessor’s Office and Board of Review have placed so much downward pressure on the United Center’s tax bills that, despite consistently high revenues, the arena’s tax liabilities plummeted between 1997 and 2007 (Figure 3). Adjusting for inflation, by the mid-2000’s the tax liabilities on the five parcels that house the actual arena had fallen to a quarter of their mid1990s level. The exact opposite has occurred for many homeowners in Chicago, who, despite falling property values, have seen their tax bills increase.
Figure 3. United Center’s Annual Tax Liabilities (parcels occupied by actual arena), 1997-2007, and United Center’s Annual Net Income, 2002-2007
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Source: Cook County Clerk’s Office. The five parcels used to construct this graph are those taken up by actual arena property, including the walkway that houses the famous statue of Michael Jordan. The remainder of the more than 80 parcels belonging to the United Center consists of parking lots, and is not included in this graph.15 There is no evidence suggesting that the trend with the parking lot parcels differed in any appreciable way.
As Figure 3 also shows, while the United Center’s net income dropped during the NHL lockout as a result of canceled hockey games, it bounced back to its pre-lockout levels in 2006. However, its property tax liabilities did not. This suggests that even after professional hockey returned to the United Center, arena ownership paid tax bills as if they were earning no income on hockey games.
Figure 4 (below), which shows a map of the parcel-by-parcel property tax savings for the United Center as a result of appeals filed with the Cook County Assessor’s Office in 2006, highlights the lengths to which Reinsdorf and his associates have gone in order shirk their obligations to the county and city. In 2006, flush with profits, their lawyers filed successful appeals with the Assessor’s Office for no fewer than 84 of the 87 parcels that make up the United Center complex. As a result, the owners saved an additional half a million dollars on top of pre-existing property tax breaks. The biggest savings, represented by the parcels colored with the darkest shade of purple, came from the parcels comprising the arena itself and nearby parking lots to the north and south (presumably the most profitable parcels within the complex).
Figure 4. Property Tax Abatement from Appeals to Cook County Assessor, United Center 2006
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Source: Parcel data obtained from Cook County Bureau of Technology. Assessment appeal data obtained from online appeals records provided by the Cook County Assessor’s Office ([http://www.cookcountyassessor.com/]). All parcels overlaid with purple (all shades) are United Center property. Ownership status determined using property tax records from the Cook County Clerk’s Office. “Savings” determined by calculating the difference between the initial assessed value and the post-appeal assessed value, multiplying the result by the state equalization factor, and multiplying that result by the local tax rate. FOIA requests to the Assessor’s Office for the appeals dockets for these parcels (which, in theory, would explain the variation in savings from parcel to parcel) were not returned.
The Dark Underbelly of the Noble Network
Compared to Penny Pritzker and Bruce Rauner, Reinsdorf has remained relatively quiet amidst the heated public debate over charter school reform. However, charter supporters like Reinsdorf can keep a low profile—and even use the mainstream media to project a caring image—while they undermine public education in Chicago. Corporate irresponsibility and unfettered greed are, in fact, the rule when it comes to the naming donors of the Noble Network of charter schools. Bulls College Prep is only one of many charter schools where donations from local elites help divert attention away from their role in the underfunding of public schools.
Penny Pritzker, the namesake of Noble’s Pritzker College Prep, is one of the worst offenders in this regard. Local community activists have outed her for diverting money away from Chicago’s public schools by aggressively appealing the property taxes on her luxury residential properties.16 Although she poses as an education advocate, Pritzker fails to disclose these tax breaks, and omits the fact that she and her family have benefited from millions in TIF-fund giveaways that have further eroded the tax base on which Chicago Public Schools depend.17
Bruce Rauner, naming donor to Noble’s Rauner College Prep, has not only proven one of the most vicious detractors of Chicago’s public neighborhood schools and teachers, but also an advocate for “reform” that would allow private firms to profit from public education. As reported by Crain’s Chicago Business, Rauner previously floated a plan to transfer antiquated CPS properties to private equity firms at fire sale prices and then allow those firms to lease the properties back to charter schools (and claim tax breaks on the depreciation of the buildings).18 Since the charters would be funded by taxpayer dollars, this means private equity outfits like Rauner’s would profit directly from Chicago’s schoolchildren if such a plan went into effect. This is not some farfetched pipedream of a ravenous capitalist; similar schemes have already taken hold in cities like Miami.19
Allan Muchin, naming donor of Muchin College Prep, has been far less outspoken than Rauner in his opposition to equitably funded public education in Chicago, but he has also played an active role in perpetuating the backwards system of corporate welfare that continues to suck the lifeblood out of neighborhood schools. For example, Muchin’s law firm is one of the premier representatives of commercial property-holders in property tax appeal cases. The firm has regularly represented United Center ownership in its appeals to the Cook County Assessor and Board of Review. Of course, regular homeowners in Chicago are allowed to appeal, but most cannot afford Muchin’s services, which means that they are at a huge disadvantage in terms of filing effective appeals.
It is not simply material gain that motivates these donors. They all share a deep ideological commitment to gutting the public sector and allowing the “free market” to run rampant, even when it comes to educating Chicago’s children. Ironically, they have all benefited from incredible amounts of government welfare in their quest for more wealth and power. What unites them is their commitment to a society in which the success of a select few happens at the expense of everyone else. Not surprisingly, this approach seems to manifest itself in the way Noble Charter campuses deal with public school students. In recent months, Noble has come under intense scrutiny from students, parents, and community activists for using severe disciplinary policies (including monetary fines for students and parents) to push out lowperforming students, presumably in order to pad their test scores.20
Is this the world we want for Chicago school children? If not, it is time that we start pointing the finger at the right people: the charter advocates and donors whose constant search for government handouts perpetuates the under-funding of public education in Chicago.
Appendix A- A Very Brief Primer on Property Tax Calculations in Cook County
In Cook County, the tax liabilities for a residential property depend on four factors. The first is the property’s “fair market value” (FMV). For residential properties, the assessor employs something called the “sales approach” to determine fair market value. The sales approach uses data on sale price of comparable properties that have recently been sold to estimate residential fair market values.21 The second factor is the assessment level, which is the rate (i.e. percentage of FMV) at which property is assessed (until 2008, Cook County assessed residential property at 16% FMV, and since then has assessed it at 10% FMV).22 A property’s “assessed value” (AV) is determined by multiplying the fair market value by the assessment level established by Cook County. The third factor is referred to as the “equalization factor” (EF) or “equalization multiplier.” The State of Illinois determines the equalization factor each year to ensure that the assessment level on the total assessed value of properties in all counties equals 33.3% (the stated intent behind the equalization process is to distribute the property tax burden equally throughout the state). Multiplying the assessed value by the equalization factor yields the “equalized assessed value” (EAV). The final factor is the actual tax rate. Keep in mind that the Cook County Clerk determines the tax rate after taxing bodies like local school districts issue their budget requests and calculate what percentage of their budget will have to come from property tax revenues. This latter amount is called the property tax “levy.” The County Clerk’s office calculates the tax rate simply by dividing the total property tax levy by the total tax base (i.e. the total EAV). So, in the end, the formula for calculating a residential property tax bill looks something like:
In Cook County, the formula for determining commercial property tax liabilities differs from the one used for determining residential property tax bills. Much of the difference has to do with variations in the way the assessor determines the fair market value for each. Instead of using the sales approach for determining commercial properties’ fair market value, the Assessor’s Office employs something called the “income approach.” The income approach tries to account for the fact that, unlike residential properties, the value of commercial properties depends in part on their potential for generating future commercial income.23 To determine fair market value using the income approach, the Assessor’s Office determines the annual net income (i.e. income after expenses) produced by a property and multiplies this by a special multiplier based on that property’s capitalization rate (i.e. rate of return on investment in the property). This multiplier is called the “net income multiplier.”24
Assessment levels for commercial properties also differ from those for residential ones. Until 2008, Cook County assessed commercial properties at 38% of fair market value (as opposed to 16% for residential), and that number dropped to 25% as a result of legislation passed in 2008. While assessment levels and the formula for calculating fair market value differ for commercial and residential properties, the same equalization factor and tax rate apply to both (though each of these numbers varies from year to year). So, the formula for calculating the tax bill for a commercial property looks something like this:
Appendix B- Behind the Numbers
Legislation passed in 1989 by the Illinois General Assembly stipulated that the Cook County Assessor value the United Center according to a special formula. This formula involves several key provisions that drastically reduce the property tax bill for the arena. First, it fixes the assessment level of the United Center at 20%, significantly below the 38% percent standard used for commercial properties until 2008 (and below the current rate of 25%).
The special formula also ensures the underestimation of the arena’s “net income,” which the Assessor’s Office uses to determine its fair market value. It does this by allowing Reinsdorf and his partners to make several atypical deductions from their reported net income. These deductions include income taxes, annual replacement/maintenance costs, and mortgage interest. As Sun-Times investigative journalist Chuck Neubauer noted when he first reported on the deal, the International Association of Assessing Officers classifies these as “improper deductions” for valuing commercial property (i.e. deductions not usually used for assessing commercial real estate).25 As Tables 1 and 2 show, these deductions have allowed United Center ownership to claim an “adjusted net income” that, between 2002 and 2007, amounted to anywhere between 16.5% and 50.5% of actual net income (the steep decline indicated in Table 2 resulted from increases in the mortgage interest deductions claimed by arena ownership). In concrete terms, this means that, at most, the net income figure used in the fair market value calculation for the United Center amounted to half of what it would have been without the special tax formula. In some years it amounted to less than one fifth.
|Year||Net Income||Depreciation (added)||Income Tax (deduct)||Repl. Costs (deduct)||Interest (deduct)||Adjusted Net Income|
Source: Cook County Board of Review.
Table 2. Ratio Between Adjusted Net Income and Net Income, 2002-2007
|Year||Adjusted Income/Net Income|
In addition to the reduced assessment level and net income deductions, the legislation fixed the net income multiplier at 4 (i.e. mandated that the Assessor’s Office multiply net income by 4 in order to determine fair market value). As pointed out in Appendix A, the net income multiplier is a function of a property’s capitalization rate. For the purposes of this report, the details behind the calculation of capitalization rates for commercial properties matter less than the simple point that the capitalization rate is the inverse of the net income multiplier.26 In other words:
By setting the net income multiplier for the arena at 4, the state mandated that the Assessor’s Office assume a 25% (or 0.25) capitalization for the United Center. As the formulas above show, higher capitalization rates result in lower net income multipliers. Data collected by the real estate industry indicates that, during the 2000s, average capitalization rates for commercial property (all types) fluctuated between 5% and 10%. This range corresponds to net income multipliers as high as 20 and as low as 10. In other words, the average net income multiplier for commercial properties has sat somewhere around two to five times the one stipulated for the United Center by the General Assembly.27
The special provisions secured by Reinsdorf and Wirtz yield a final formula for calculating the arena’s tax liabilities that differs considerably from what it would be under normal procedures for assessing commercial property. In the adjusted formula, the absolute value of net income drops dramatically, and two of the key multipliers—the net income multiplier and the assessment level—also shrink:
To reiterate, these formulas reflect property tax statutes as they existed before 2008. Since 2008, assessment levels for certain classes of property (including commercial) have changed. However, these changes are outside the purview of this report since it deals exclusively with data from 2002-2007.28
Since a property’s tax bill depends on multiplying the various factors together, the reductions outlined above have a big impact on the United Center’s bottom line. Admittedly, determining the exact amount saved on property taxes by Reinsdorf and company proves difficult, in part because such an exercise would require precise data on fluctuations in mortgage interest rates and actual capitalization rates for the United Center (data we do not have). In addition, assessment levels used in practice have historically varied somewhat from the statutory levels, and the information required to track these variations is not readily available.29
Despite these limitations, it is possible to estimate the tax savings that have accrued to Reinsdorf and his co-owners with some degree of confidence. This involves first calculating a range for what United Center ownership would have owed in property taxes without the adjusted tax bill formula. In order to estimate the lower bound of the range, we applied the normal tax bill estimate formula above to the Board of Review data, but kept the net income multiplier at 4 (i.e. the level mandated by the special legislation) rather than using the more realistic figure of 8, which Neubauer suggested in his initial investigation.30 This produces a very conservative estimate, since we know that the United Center’s net income multiplier would have exceeded 4 in each year under consideration had the Assessor’s Office valued it according to conventional practice. However, lacking more precise data on what the net income multiplier for the arena would have been under normal circumstances, we give Reinsdorf and company the benefit of the doubt. This conservative estimation technique suggests that United Center ownership would have owed somewhere in the neighborhood of $35 million in property taxes between 2002-2007 (not adjusting for inflation). Table 3 reproduces these calculations:
Table 3. Estimated United Center Tax Payments Using Normal Net Income, 38% Assessment Level, and Net Income Multiplier of 4
However, as noted above, we know for a fact that the tax abatement legislation caps the net income multiplier for the United Center at 4 because, under normal circumstances, this value would be higher. As shown in Table 4, applying Neubauer’s estimate of 8 for a normal net income multiplier, the total estimated tax bill for the arena between 2002-2007 would have totaled approximately $70 million (again, not adjusting for inflation). This is probably a more realistic estimate of what the United Center would have owed, and though it may seem extremely high, keep in mind that the arena cleared over $150 in net income during that six- year period.
Table 4. Estimated United Center Tax Payments Using Normal Net Income, 38% Assessment Level, and Net Income Multiplier of 8
Together, the data presented in Tables 3 and 4 suggests that, under standard assessment procedures, the tax liabilities of the United Center between 2002 and 2007 added up to somewhere between $35 and $75 million. In order to estimate the difference between this range and what Reinsdorf and company actually paid, we applied the special formula to the adjusted income figures. For several of the years in question, applying the special formula would have yielded a total annual tax liability below $1 million for the arena. However, in order to smooth the passage of the legislation in 1989, Reinsdorf and Wirtz agreed to pay a minimum of $1 million in property taxes each year on the eighty plus parcels that constitute the facility. Taking this into account, we adjusted the payment totals for 2004-2007 shown in Table 5, since in each of these years the liabilities indicated by the special formula fell considerably below $1 million. We adjusted up to $1.1 million rather than $1 million after using data at the Cook County Clerk’s office on received tax payments to see exactly what the arena owners paid in taxes during the years in which the special formula shrunk tax liabilities to below $1 million. This is a time-consuming process, so we conducted the calculation only for 2007. In 2007, total tax payments on the arena parcels was slightly over $1 million—$1,005,353 million to be exact. The correction to $1.1 million ensures that we accounted for any comparable spillover payments during the years in question (and we even applied the overestimate to 2007 in order to be extra generous). Ultimately, Table 5 shows that the actual tax liabilities for the United Center between 2002 and 2007 totaled to approximately $8.5 million, or just 23% of the lower bound of our estimate for the expected tax burden under normal assessment conditions.
Table 5. Estimated United Center Tax Payments Using Normal Net Income, 20% Assessment Level, Commercial Property Multiplier of 4, and Correction for $1-Million Minimum Payment
Tables 6 and 7 apply the annual Consumer Price Index (CPI) figures to the yearly differences between the arena’s projected tax liabilities without the special formula and what they actually paid. After using the CPI to adjust for inflation, the data shows that in constant $2007 dollars, Reinsdorf and co-ownership paid somewhere between $29.6 million and $68.6 million less in property taxes than they would have had they been willing to pay their fair share. The fact that this data represents only a six-year chunk of a tax abatement scheme in place since the mid- 1990s should give pause to every Chicagoan.
Table 6. Inflation-Adjusted Difference Between Normal and Adjusted Liabilities (net income multiplier = 4)
Table 7. Inflation-Adjusted Difference Between Normal and Adjusted Liabilities (net income multiplier = 8)
Appendix C- Board of Review Data
The original Board of Review Data used to compile this report was obtained via a Freedom of Information Act (FOIA) request (#WCB081711, 17 Aug. 2011).
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(Alt Description: Real Estate Board of Review 2008)
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