Statement regarding District 214’s response to the PILOT legislation proposal

On Thursday, February 2, the Board of Education met to discuss a proposal to hire a lobbyist to advocate for the district’s interests in Springfield, with respect to a potential special tax-break legislation, or PILOT, for a potential Bears’ move to the former Arlington Park.

To bring the bottom line up to the top, I share the concerns raised by the various board members, interim superintendent Ken Arndt, and the district’s lawyer, and I endorse this proposal and other efforts to have a seat at the table for negotiations and ensure that the district is not saddled with extra costs that outstrip new revenues. 

Here’s the background:  a week ago, the major news outlets (for example, ABC) reported on a proposal by the Bears for a tax break called PILOT, for Payment In Lieu of Taxes.  As explained in that early reporting and with further details and clarifications in the presentation tonight by Ares Dalianis of the district’s law firm, Franczek, the proposed legislation has not yet been officially introduced and does not yet have any sponsors but could be worked out behind closed doors and with so little time between when it is introduced and when it is passed that it’s necessary to start lobbying now, while details are being worked out outside public view.

This particular legislation would be applicable to any large development, defined as a project over $500 million, so it is thought that legislators might support it, if not for the sake of the Bears’ development, then for efforts to lure large manufacturing projects (e.g., electric car batteries).  Under this bill, called the Mega Project Assessment Freeze and Payment Law, a company could make an agreement with the municipality to have its property taxes frozen for 23 years and pay instead a defined annual amount, negotiated with the municipality and allocated to all taxing bodies in the usual proportions, plus any other conditions that they might agree to in negotiations.  The only checks on this by the state would be the certification that the project meets the “mega project” definition of $500 million, and the only role of the public would be a single public hearing.  In addition, neither the school districts nor any other taxing body would have any say in these decisions.  As a bonus, the municipality could extend the period up to 40 years just on its own self-certification of economic benefit.

The PILOT concept is not new, but where it exists so far, it has been for the benefit of municipalities, not as a corporate giveaway.  For example, Northwestern University makes “PILOT” payments to offset the costs to Evanston, since it is a nonprofit and would otherwise not pay any taxes.

It is also possible that the Bears might negotiate a PILOT agreement for the stadium itself and a TIF for the mixed-use area, which would be a “nightmare scenario” for the district, according to Dalianis, since the district’s boundaries only include a small portion of the proposed stadium area and include the entire mixed-use area.  Although, as explained by Dr. Schuler in a fall board meeting, a school district can bill the municipality for operating expenses related to new students, the same is not true of capital costs (e.g., new buildings or building additions to accommodate new students), and Schuler’s October 26 comment in the Daily Herald that Rolling Meadows could accommodate as many as 2,500 students in a building with fewer than 2,000 students at present, does not feel like a realistic assessment of the situation.

In addition, both a PILOT and a TIF agreement depend on the baseline tax assessment, which could be low-balled.  And, of course, if assessments rise even higher than historically due to inflation, we are all the more worse off.

It is hoped that a lobbyist would be able to push for amendments to the legislation which would, among other things, provide more of a voice for the school districts in the structure the legislation outlines for how the negotiations would happen for these tax breaks.

There are two final considerations, however, with respect to this proposal.  First, the proposal envisions working jointly with D15 and D211.  However, the district should be cautious, as D211 and D214’s interests are not entirely aligned, due to the fact that D211’s portion of the Arlington Park property would be entirely made up of the stadium portion, so that it would be much easier to have a “hold harmless” agreement with them.  It is D214 and D15 which would be at risk of educating potentially significant numbers of students without a corresponding increase in tax revenue.  And, second, focusing on the PILOT proposal could end up being a distraction from the question of tax breaks for the mixed-use part of the development, which could ultimately be far more consequential for the district.

Finally, more generally speaking, it’s important to recognize that the issue of student enrollment changes is not limited to the number of families moving into the new multi-family housing.  Too often, towns imagine that new multi-family housing will attract only empty-nesters and will therefore be “free” to the school districts, but the enrollment effects on the entire district should be considered, as housing filters through:  an empty-nester moving from their longtime family home to a condo sells a home which will be purchased by a family with children.  And, to be clear, I support increases in the amount of, and choices in, available housing in our community, and by no means do I wish for families to be excluded by zoning, but it is important to be mindful of the impact on school districts when tax breaks are at play.

What’s next?

The Board of Education next meets on February 9, and will take a vote at that meeting.  One presumes that, as usual, it will be a 7-0 vote.  For what it’s worth, board members Millie Palmer questioned Dalianis at length and outgoing member Dan Petro had a few questions as well, but none of the others had anything to say, except a  brief question by Alva Kreutzer and a concluding comment by Bill Dussling that he did not want a battle with the village but a consensus.

Illinois capitol dome