When a suburb doesn’t support the big tax break supported office park

An interesting story is brewing in Hoffman Estates where the State of Illinois wants to keep the Sears headquarters by continuing a major tax break but the local school district and some in the community don’t want to live with the reduced tax revenue for years to come. Central to the story: the tax break didn’t help fill up the 780 acre office park, leading to less tax revenue than expected even with Sears located there.

Instead, two decades after the special taxing area was created, some 200 acres remain undeveloped in the 780-acre park anchored by Sears Holdings Corp.’s headquarters. A swath of land that was supposed to generate $50 million in property taxes in 2012 raised only $25 million in the past tax year…

The ambitious project’s inception came at the pinnacle of “euphoria” over a booming commercial real estate market, said John McDonald, who teaches land economics and real estate at Roosevelt University. But that party ended with the economic slowdown of the early 1990s, and the market, he said, has not rebounded. There is no “desperate need for office space anywhere right now,” he said…

The inability of the park to pull in the predicted revenues underlies the battle over Sears’ future. The fight has largely centered on Community Unit School District 300, a financially strapped taxing body whose officials claimed it stood to lose more than $10 million in revenue per year under the original plan to extend the taxing area’s term.

The parties and legislators are continuing to discuss whether Sears would be required to keep some 4,000 of the roughly 6,100 jobs at its headquarters well into the future. The potential consequences should the company not meet that condition remain unclear, said Hoffman Estates Corporation Counsel Arthur Janura.

Typically, suburbs are thought to be in favor of these tax breaks as it helps lure new businesses to town. However, this situation is a cautionary tale about tax breaks: just because one is granted doesn’t necessarily mean that businesses will necessarily move in. If everyone is building big industrial or office parks and offering tax breaks, can everyone win? And in an era of falling tax revenue and rising costs, suburbs need to maximize their assets.

Of course, the State of Illinois will look really bad if Sears leaves as it will feed a (growing?) narrative that Illinois is generally bad for business. It will be fascinating to see how the State and Hoffman Estates come to some sort of agreement that everyone can live with.

An office park that successfully created a “culture of public transit”

A lot of people would want more Americans to consistently use public transit. But one writer suggests a San Ramon, California office park where “33 percent of the park’s 30,000 workers leave their cars at home” might hold some answers. Here is a look at how this office park’s transportation center tackles logistics, focus on the multiple benefits of using public transit, and has “evangelistic zeal”:

1. Logistics: the office park was built in 1978 and needed to competed with other office parks. The office park purchased a fleet of buses, found ways to subsidize costs, and coordinated bus schedules with other nearby mass transit options. Today: “There are now 13 different bus routes running to the park, and the connections to BART and various local train and express bus services are coordinated. On its website, the Ranch now pitches its transit program as a competitive advantage.”

2. Pitching the multiple benefits of public transit: it’s not just about money but improving health and reducing stress. Today:

Marci says that once riders begin leaving their cars at home they go through a stressful period of two weeks or so where they feel that they’ve lost the control they had in the car. But within three weeks they notice their overall stress levels are lower. “Transit requires that you go at a different pace. You have to wait. If there were roses, we’d smell them,” she says, “There’s not much of that in our lives.” She says HR people have called her saying some of their meaner workers have become pleasant people after switching to transit.

3. The office, particularly its program manager, aggressively push the program and look to engage people in conversations.

Overall, this sounds interesting. But I am a bit skeptical about whether this is a possible solution to energy and transportation issues:

1. Even with all of this work, 67% of the workers still use their cars on a regular basis. (This is based on data the story provides.) Is this the best we can hope for outside of really dense urban areas like New York City? It really is difficult to fight a culture that prizes individuals being able to drive themselves.

2. There is no mention in this article about the cost of this program. It could be cheaper in the long run (if all the possible costs are accounted for) but I imagine some money might need to be spent up front for similar programs with the reduced costs coming down the road. The article suggests this program helped this office park compete – how much did it help?

3. Is this three-pronged strategy viable on a larger scale? Or does it only work under certain conditions?