Tag Archives: tax breaks

New golf courses as signs of wealth

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If you are wealthy, building a new golf course may just be the way to put that money on display:

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Lately, though, there’s a rash of billionaires breaking ground on new golf clubs for reasons that seem to defy economic logic and environmental sanity. It seems they are so rich that they are willing to spend whatever it takes to build their dream playgrounds, and it’s less important, in many cases, whether the new enterprise makes money or not.

“Many are ‘financed’ by wealthy people who want to do something great, and know how to work the system to get tax breaks etc. from localities eager to have a great project providing jobs and tourism [dollars] in their backyard,” Tom Doak, the great golf-course architect, wrote on Golf Club Atlas, a popular blog, last year…

Last year, more than 25 new golf courses were opened around the country, the most in the past decade. Many of these were add-ons to existing resorts or in remote private locations, such as Mauk. Land and building costs have become too pricey to justify the construction of new golf courses and clubs in Metropolitan areas, according to the National Golf Foundation, but in remote locations like Mauk, there’s plenty of room and the costs are often low…

Ground zero of golf madness is almost certainly Florida, which has more courses than any other state in the country by far, with nearly 1,200. Between the warm, humid weather; the flat, sandy terrain; and the abundance of wealthy retirees with plenty of time and money on their hands, the state is incredibly attractive to developers. It doesn’t hurt that the rich are flocking there in droves, thanks in part to the fact that there’s no state income tax…

“It’s all about controlling the number of people who have access to maintain the quality of the experience,” Nathan explains. “That’s the funny thing about golf. Every golfer’s dream is to be on this amazing piece of land, on this perfectly manicured golf course. And to be out there alone with their group.”

I am interested to know the scale of tax breaks available for such courses. If local governments are willing to offer tax breaks, does this mean they find a golf course and associated development to be an improvement over the current state of the land? If so, how much money do they expect that course to generate (vs. how much it could generate without the same tax break or with the ongoing non-golf course use of the property)? It sounds like this is a tool for more rural areas to quickly jump start development but it is harder to know the longer-term consequences.

It would also be interesting to know what happens to golf courses and clubs long-term after they get past their opening and first generation of members. It is one thing to plan the course and see it come to fruition. Do kids and grandkids then continue that legacy or do they sell their portion? Do these courses become their own institutions that go on for generations beyond or even in different directions compared to the original vision cast?

Chicago suburbs as popular places to film Christmas movies

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Chicagoland residents may see some familiar places in recent holiday movies:

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If you’re nodding, you’ve seen Very Merry Entertainment’s three holiday films shot on location in the Lake County village: “Christmas with Felicity,” “Reporting for Christmas” and “Christmas on the Ranch.” The latter debuted on Hulu in November.

“Once Upon a Christmas Wish,” a Long Grove production starring Mario Lopez, premieres Saturday on the Great American Family network. And two other Illinois-based movies, “Christmas at the Zoo” and “Christmas in Chicago,” will be released in the future.

In recent years, Illinois has emerged as the site of a holiday movie cottage industry. While old big-screen classics like “Home Alone” and “National Lampoon’s Christmas Vacation” are associated with the Chicago area, a crop of newer projects were also shot in the city and surrounding villages and suburbs. Of the Christmas movies released between 2018 and 2023, 12 were at least partially filmed in the Chicago area, including the 2021 Disney+ movie “Christmas Again,” according to the Illinois Film Office…

“The villages that surround Chicago are very bucolic, and have this period architecture and a setting that mimics the ideal that the storytelling for a Christmas film encompasses,” said Louis Ferrara, assistant deputy director at the Illinois Film Office. “If you go to Libertyville or Long Grove, you’ll see the Christmas decorations going up [in early November] and through the holidays. So, these villages exist in this manner every year. And I think producers and filmmakers are really now discovering that aspect of our region.”

In other words, the financial situation in the Chicago suburbs has to be good – aka tax breaks – and the communities fit the aesthetic for a Christmas film. If the goal is to have charming downtowns in small suburbs, the Chicago area has plenty of those. Take the Wikipedia description of Long Grove, mentioned above:

The village now has very strict building ordinances to preserve its “pristine rural charm”,[5] including prohibitions on sidewalks,[6] fences,[7] and residential street lights.[8] The Long Grove area is now known for its historic downtown, its exclusive million dollar homes and the annual events including the chocolate, strawberry and apple festivals that take place in May, June and September, respectively.[9] The Robert Parker Coffin Bridge, on the edge of the city’s downtown, is a historic 1906 bridge that is featured on the Long Grove’s logo and welcome signs.[10] Due to the 8-foot-6-inch (2.59 m) clearance height of its covering, it has been struck by vehicles dozens of times in recent years.[11]

Or Wikipedia’s overview of Libertyville’s downtown:

Libertyville’s downtown area was largely destroyed by fire in 1895,[11] and the village board mandated brick to be used for reconstruction, resulting in a village center whose architecture is substantially unified by both period and building material.[11] The National Trust for Historic Preservation, which gave Libertyville a Great American Main Street Award, called the downtown “a place with its own sense of self, where people still stroll the streets on a Saturday night, and where the tailor, the hometown bakery, and the vacuum cleaner repair shop are shoulder to shoulder with gourmet coffee vendors and a microbrewery. If it’s Thursday between 7 a.m. and 1 p.m., it’s Farmer’s Market time (June–October) on Church Street across from Cook Park — a tradition for more than three decades.”[17]

I could imagine some additional Chicagoland suburbs would want to get in on selling themselves as having a charming, Christmas aesthetic that lasts all year long.

Who won with a massive tax break affecting a major corporation and a Chicago suburb?

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This story is from 2020 but I found it interesting: what happened when the State of Illinois gave Sears large amounts of money to relocate to suburban Hoffman Estates? From ProPublica and the Daily Herald in 2020:

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The deal cemented that day would permanently change Illinois, as politicians embraced the use of taxpayer funds to stop a growing exodus of jobs from the state. Since 1989, state and local officials have given $5.3 billion in government incentives to corporations, according to Good Jobs First, a non profit which compiles data on tax deals.

In Sears’ case, state and local officials awarded the company subsidies and tax deals worth more than $536 million over the past three decades — the largest package of governmental incentives ever given to a single company in Illinois.

The tax breaks and credits would transform Hoffman Estates, then a suburb of 45,000 that lay among cornfields 30 miles northwest of Chicago. Sears worked with state and local politicians to build a sprawling corporate headquarters, new roads, tollway interchanges and other infrastructure in the growing village.

Was it a “success”?

ProPublica and the Daily Herald wanted to know whether the investment paid off. Where has the deal succeeded? Where has it failed? What did Illinois and Hoffman Estates taxpayers get for the half billion dollars awarded to Sears?

The review of the Sears deal shows that 30 years of spending public money on private interests failed to deliver the economic bonanza envisioned by corporate, state and local officials.

Reading through the report, it seems that a few parties might claim victory decades later. Local officials attracted a major corporation and jobs. Illinois officials could claim they saved jobs and promoted economic development. And Sears got lots of money (even if the company’s long-term trajectory was not good).

Was it worth more $536 million? Could the money have been better invested elsewhere? Would the story be any different if Sears went to a different community or a different state and got similar amounts of money?

Offering these kinds of incentives is now common across American communities. It may have been Sears in the late 1980s but more recently it was Amazon and a possible second headquarters and Foxconn and Samsung and many others. If communities do not participate, they will “lose out” as other places claim a victory.

Do local residents win in the long run? How do the fates of the communities who got the spoils versus those who did not and/or those who did not compete? Is this the only way to play the game to lead to flourishing suburbs and metropolitan areas?

Tax breaks and Chicago suburban locations standing in for other locations in films and TV shows

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The state of Illinois offers tax breaks for filming in the state. This means the Chicago suburbs can stand in for numerous other locations:

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The state’s film production tax credit allows qualified productions to receive a 30% transferable tax break on most production costs and certain salaries. Producers can also receive 15% more for hiring workers living in “economically disadvantaged areas.” In return, these productions generate jobs and draw business from outside the region.

According to a new report commissioned by Dudley’s group, the state’s film incentive is the biggest box office draw for Hollywood. A survey of producers included in the report indicates more than 90% of the productions shot in Illinois would not have occurred without the incentive…

Producers of the television series “Fargo” used Elgin and other suburban locales as a stand-in for Kansas City a few years ago. Acclaimed director David Fincher turned downtown St. Charles into upstate New York for his recent Netflix film, “The Killer.” And parts of Warrenville and Lockport are used as substitutes for Manhattan, Kansas, in the HBO series “Somebody, Somewhere.”…

This commonly happens in movies and television shows: a filming location stands in for another place. This could include filming on a backlot or in another city or community.

Yet, it still is a strange experience to see a location you recognize on-screen that is supposed to be somewhere else. Imagine you live in a suburb listed above. These communities have their own history roughly 30-40 miles outside of Chicago. They exist alongside dozens of other suburbs. But, you could be watching what is supposed to be Kansas City and you recognize this suburb. Or, Manhattan, Kansas is on-screen and it happens to look like Lockport. Do these geographic switches make the on-screen presentation less real? How many people notice the disconnects?

The article also emphasizes the role of finances: tax breaks help drive where filming takes place. I assume there are also efforts to try to make sure the stand-in location looks similar to what is supposed to be depicted. Do certain suburbs make good stand-ins for all suburbs or are particular metropolitan regions good to offering the variety of locations studios might want?

Why not let every Chicago suburb pitch the Chicago Bears on a stadium deal?

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The Chicago area has several hundred suburbs. Why not have dozens of them submit proposals to the Chicago Bears for a stadium and surrounding development? If the goal is to get the most tax breaks and make the most money, this is how Amazon and other large firms operate.

Here is one satirical look at some options:

Winnetka

Cheap Uber rides to the stadium for the McCaskeys from their North Shore abodes. Every dollar saved counts…

Blue Island

A local referendum changing the town’s name to “Black and Blue Island” could seal the deal. Fans would travel from remote parking lots to the stadium via a scenic barge ride on the Little Calumet River…

Batavia

In conjunction with nearby Fermilab, America’s particle physics and accelerator laboratory, the Bears could find the answers to two of life’s eternal questions: How did the universe begin? and Why can’t the Bears win another Super Bowl?…

Downers Grove

The Bears already have been a downer for many years. Just make it official by building a retractable DownersDome.

The Chicago area is large and there are plenty of possible sites for a stadium. And for most fans, the view of the game on TV will look the same regardless of where the stadium is located.

Playing Chicago suburbs off each other to get the best deal for the owners of the Bears

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Which Chicago suburb might give the Bears the best option to make money off a new stadium and development around it? Enter Naperville, the largest suburb in the region:

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“We will continue the ongoing demolition activity and work toward a path forward in Arlington Heights, but it is no longer our singular focus,” Scott Hagel, the Bears senior vice president of marketing and communications said in a statement. “It is our responsibility to listen to other municipalities in Chicagoland about potential locations that can deliver on this transformational opportunity for our fans, our club and the state of Illinois.”…

This isn’t the first time there’s been hopes of a Bears move to the suburbs. Through the years, the Bears have considered sites in Hanover Park, Hoffman Estates, Aurora, Elk Grove Village and Waukegan. And once before in Arlington Heights.

Wehrli’s letter touts Naperville as accessible through major highways, such as the east-west Interstate 88 and the north-south Interstate 355, as well the city’s downtown Metra train station. There are also Metra stops in nearby Lisle and on Route 59 in Aurora.

The meeting is a major splash for Wehrli, who was elected in April and has been mayor for only a month. A lifelong Naperville resident with family roots in the community dating back to the 1840s, his letter to Warren stresses the impact an NFL stadium would have on the city.

This strategy works for the Bears because they can seek out a community that will give them a good deal on land, permits, taxes, and more. Their goal is to make money off the stadium and nearby development.

This strategy might work for individual suburbs beyond Arlington Heights. If the Bears do not come to Naperville, does the new mayor lose anything by reaching out? Even a short conversation keeps his community in the news. If the Bears come, it could be touted as a big deal. (On the other hand, just as some residents and taxing bodies in and near Arlington Heights are not thrilled about the Bears locating there, I imagine there would be some resistance in Naperville.)

Ultimately, providing public money for stadiums tends to benefit the team owners the most. Someone will host the Bears in the future but the team will end up as the biggest winner.

Chasing development: give big tax breaks to Foxconn, then to Microsoft…

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American municipalities want growth and jobs. Hence, they give tax breaks to corporations to locate there. In southern Wisconsin, they first gave big money to Foxconn. When that fell through, now they are giving money to Microsoft:

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Taiwan-based Foxconn Technology Group forged an agreement in 2017 with former Gov. Scott Walker to manufacture LCD screens in Mount Pleasant, investing $10 billion and employing 13,000, in return for billions in subsidies. But the company, a top manufacturer of Apple’s iPhones, downsized its plans and created few jobs, forcing government officials to find other users.

Data centers process and store huge volumes of computer data, forming the backbone of the internet. Although these facilities typically don’t create large numbers of permanent jobs, local leaders and tech experts say Microsoft’s arrival signals the Foxconn land, along with infrastructure improvements already complete, won’t go to waste…

Residents on the land promised to Foxconn were displaced from their homes, but the company, blaming “unanticipated market fluctuations,” canceled the mega-factory. In 2021, it signed a new deal with Gov. Tony Evers, who beat Walker after criticizing the original agreement. Instead of up to $3 billion in subsidies, Foxconn agreed to collect $80 million for creating 1,454 jobs and investing $676 million in a set of smaller facilities by 2026.

Microsoft’s agreement with Mount Pleasant and Racine County requires it to launch construction by 2026. The company can recover 42% of its property taxes, but no more than $5 million per year. The local governments can also repurchase the land at the same price if Microsoft fails to hit the deadline.

The logic for this is provided in the story. Attracting big companies and jobs is viewed as important. If growth does not come here, it will go to other communities who will benefit. The deal with Foxconn fell through but having some deal and a few jobs is better than nothing. Growth must continue as must the tax breaks.

Do they really have to continue in this fashion? The final paragraphs hint at one of the possible motivating factors for these companies locating in southern Wisconsin: they are just over the Illinois border and can service the Chicagoland region. If Chicago area municipalities will not compete with each other in these same ways, just go over the border and find plenteous tax breaks. Another motivating factor seems to be a fixation on big companies and tech companies. What community would not want to boost they have a Microsoft facility (even if it is just a data center)?

I hope some people keep following up this story and similar ones to find out what communities and residents actually get out of these tax break deals. How much is spent per job? How does the business growth help the community? What does a data center contribute to a community? Years down the road, who benefits the most from these deals?

Nashville, you do not have to commit $1.2 billion in public financing for a new Titans stadium

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Leaders in Nashville approved a lot of public financing for a new dome for the Titans and other uses:

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The Metro Nashville City Council approved by a 26-12 vote early Wednesday morning on the final reading to allow its sports authority to issue $760 million in bonds. That combines with $500 million in state bonds for more than $1.2 billion in public financing committed to the Titans’ enclosed stadium…

The stadium’s total cost is estimated at $2.1 billion. The Titans, with help from the NFL and personal seat licenses, will provide the remaining $840 million. The new stadium will feature a translucent roof with a capacity of approximately 60,000.

This stadium will allow Nashville and the Titans to bid for a Super Bowl, Final Fours, College Football Playoff games and more. Burke Nihill, the Titans’ president and CEO, said they are excited at the chance to host some of the world’s best events…

A new 1% hotel/motel tax, all of in-stadium sales tax and 50% of sales taxes from 130 acres around the stadium will pay off the bonds. The Titans and city officials announced an agreement in December that includes a new 30-year lease. The team agreed not to leave Nashville during that lease.

If I am reading this correctly:

  1. More than half of the costs of the stadium are coming through public financing.
  2. A number of new revenue sources – hotel tax, sales taxes from the stadium and the surrounding property – will pay off the bonds.
  3. The city thinks this deal will be good because it keeps the team and allows for additional events in Nashville.

My question: who benefits the most from this arrangement? The Titans and their owners. One source has them valued at $3.5 billion August 2022. This puts them toward the bottom of the NFL rankings. A new stadium boosts their value.

Research shows that while political and business leaders tout the advantages of new stadiums (jobs, status, energy, events, tourists, etc.), the money spent at the stadium would be spent elsewhere in Nashville. The city already has a lot going for it. The Titans and the stadium are part of the scene but they are relatively new in the city and there are plenty of other entertainment and tourist options for residents and visitors. Were the Titans really going to leave? (Of course, this is a team that left their previous city…)

But, the NFL generally gets what it wants for its owners. Nashville will try to sell this as a win for the city and region but the ultimate winners are the team owners.

Big box stores in Michigan can have their property taxes assessed on their value as an empty building

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Having a vacant big box store in a community can be a big problem. But, what if the store if in business and generating revenue and it is being assessed for property tax purposes at a value closer to its value as an empty property? Such is the case in Michigan:

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The dark store theory was born, in part, out of the 2008 recession.

Big box stores closed. The massive buildings that housed them had few other obvious uses and, in some cases, restrictions on selling the buildings to competitors put in place by the companies themselves reduced the pool of potential buyers. They often sold for far less than they’d cost to build.

Michigan law allows assessors to determine the value of a property in three ways: based on replacement cost minus depreciation, based on the income a property generates and based on the sales of similar properties.

Retailers began to argue that sales of empty stores were the best indicator of what their properties were worth. The Michigan Tax Tribunal generally agreed…

Of the 110 cases brought before the tribunal by Walmart and its subsidiaries since 2018, 93 have resulted in lower taxable values, often millions of dollars lower. All but one was a negotiated settlement. Eleven of the 110 cases are ongoing.

Two factors may be at play here. Retailers and businesses want tax breaks. They want to pay fewer taxes and boost their profits. If communities are willing to offer tax breaks like this (or others), why not ask for them and utilize them?

On the other side, communities want to bring in businesses and jobs. These retailers still provide some work for local residents and they are still generating some tax revenue. Even if they do not pay in taxes what they might, would a community be willing for a big box store to move to a nearby community and the money go elsewhere? Some development or even bad development might be preferable to no development or an empty building.

The news story quoted above details how this may change in Michigan due to a court case. If these large corporations do have to pay more in property taxes, will they change their operations at all? And how might communities make use of the extra revenue to improve local lives?

Former Dominick’s in Schaumburg vacant for ten years until a new grocery store opened this week

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The closing of Dominick’s stores in the Chicago region left a number of large vacant stores. One location in Schaumburg is now no longer vacant after ten years:

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When first elected four years ago, Dailly said negotiating an end to the vacancy was among his top priorities.

Tony’s bought the Town Center anchor site at 200 S. Roselle Road in 2015. But because of the Albertsons lease, work to prepare it for a new grocery store was stalled until 2021…

The village’s redevelopment agreement with Tony’s ensures the employment of at least 200 workers and a minimum $10 million investment in the building. The store is expected to generate more than $300,000 in annual sales taxes and food and beverage taxes for the village.

In addition to recommending approval of a Class 7b Cook County property tax break lasting 12 years, Schaumburg trustees agreed to provide $3 million in village funds for the expected $13 million renovation of the building.

The building’s vacancy potentially could have lasted until 2036 if Albertsons hadn’t stopped exercising its long-term lease options.

It is interesting to read about the tax breaks and agreements needed to help fill this vacancy. Is this standard fare in the difficult days of bricks and mortar business or is it that hard to fill a big, vacant site?

Ten years is a long time for an empty building to sit. Was Albertsons doing this to prevent competition with its own stores in the area or looking for a good payout from a new property owner or lessee?

In the long run, how many vacant properties can we expect in suburban shopping areas? If there are more coming, does this mean some retail space will be demolished or are there new uses for former shopping spaces?