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Emanuel to use Skyway windfall to bankroll property tax rebate

Sun-Times file photo

Mayor Rahm Emanuel’s plan to offer homeowners a modest rebate to soften the blow of the largest property tax increase in Chicago history will be paid for with a $20 million transfer tax windfall generated by the sale of the Chicago Skyway.

With that funding guarantee, the Finance Committee on Tuesday approved a revised version of the mayor’s token rebate. That sets the stage for a final vote at Wednesday’s City Council meeting, followed by a whirlwind outreach and application process culminating in rebate checks in time for the holidays.

To appease aldermen whose phones have been ringing off the hook from angry homeowners, Emanuel agreed to sweeten the pot for seniors by $50.

He also added an “extraordinary hardship” clause that empowers Budget Director Alex Holt to issue rebates that exceed the maximum ceiling — $200 for the average household and $350 for seniors — if homeowners are in danger of losing their homes because of the double-whammy of rising property taxes and increased assessments. The enhanced grant “shall not exceed the amount of that homeowner’s property tax increase,” the ordinance states.

Earlier this year, the Skyway was sold to Canadian pension funds for $2.8 billion — $1 billion more than the city’s take from a landmark privatization a decade ago.

Emanuel signed off on the sale after the Spanish-Australian consortium that unloaded the Skyway and the three pension funds that bought it agreed to pay the city’s “real property transfer tax.”

The amount paid by Skyway Concession Co. LLC and three of Canada’s largest pension funds totaled $28 million. Of that amount, $20 million was the city’s portion of the real property transfer tax. The remaining $8 million is paid by the seller to the CTA.

Now Emanuel is using the transfer tax windfall to finance what he hopes will be a one-time expense.

Before raising property taxes by $588 million for police and fire pensions and school construction, Emanuel vowed to double the homeowners’ exemption so homes worth less than $250,000 would be held harmless. The plan went nowhere in Springfield.

Holt said Tuesday the mayor plans to “keep working on” the homeowners exemption. She acknowledged that the rebate does not provide “the same level of relief.”

But if the Illinois General Assembly turns thumbs down again, the “one-time expense” could turn into a recurring cost.

“If the City Council wanted to do another rebate program and the homeowners exemption hadn’t passed, then we would need to come back and do it again and we would need to find a revenue source to pay for it,” she said.

The Skyway windfall provided a politically painless way to fund a popular, albeit token rebate.

But West Side Ald. Jason Ervin (28th) questioned the mayor’s priorities at a time when homicides and shootings have spiked by 50 percent over the same period last year.

“While you all are finding money, could y’all find some money for some jobs on the anti-violence level?” said Ervin, whose ward includes the gang-infested Harrison police district.

“While we’re in the finding business, we really need to be finding something that’s going to be more tangible and useful than giving money back that we just took,” Ervin said. “I hope we can see beyond the political expediency of this and get toward something that will really have a meaningful impact on what’s happening out here on the streets.”

Emanuel has placed a $20 million price tag on his rebate offer. That assumes that every one of the roughly 155,000 eligible households with incomes under $75,000 takes advantage of the city’s offer.

Past history argues otherwise.

In 2010, then-Mayor Richard M. Daley set aside $35 million for rebate checks. In the end, only $2.1 million was distributed. Most homeowners didn’t bother to apply.

Holt hopes to break that mold by issuing a request for proposals within weeks for entrenched groups with deep ties to Chicago neighborhoods and extensive outreach experience.

The goal, she said, is to make the application process as simple as possible — with proof of family income and a copy of the most recent property tax bill — after encouraging homeowners to apply “instead of hoping that they don’t.”

“The last rebate program the city had was advertised, but not beating the bushes,” Holt said. “As long as we get everybody who’s interested in getting a rebate in the door and, if they’re qualified, we get that rebate to them, I would consider that to be a success regardless of what the percentage is.”

Earlier this week, aldermen and community leaders demanded that Emanuel broaden the umbrella of his $20 million rebate to include renters in danger of being squeezed out of gentrifying neighborhoods.

The mayor’s office rejected that idea on grounds that it would be “difficult and costly to administer and enforce.”

But under questioning Tuesday by Aldermen Proco Joe Moreno (1st) and Carlos Ramirez-Rosa (35th), Holt cracked the door open to rent relief.

“There was a concern about trying to move the rebate forward now because people have just received their property tax bills,” Holt said.

“With the renters, we’ve got a little bit of work to do with you and your colleagues about how we structure that and how we make sure that the relief goes to the renter and what kind of renters we want to be benefiting and making sure we’re getting the people we’re most concerned about,” she said. “Happy to do work with you guys on a going forward basis to figure out what a rental program might look like.”

Moreno was happy to hear it, adding: “The rental market is increasing in Chicago and, unfortunately, there are some bad landlords out there [who] are preying on some folks.”

Civic Federation President Laurence Msall said he appreciates the city’s “desire to reduce the impact of the more than $800 million in potential property tax increases to be implemented over several years” to save police, fire and teachers pension funds.

But he questioned whether it’s worth the trouble.

“This $20-million rebate program is likely to have a very modest impact and won’t be available in future years, as this one-time revenue source will have expired,” Msall wrote in an email to the Chicago Sun-Times.

Msall said he’s also concerned that, “Just as the 2010 property tax rebate program proved to have very limited appeal, this new program may prove to also have limited attraction due to the administrative burden required to secure such a rebate and the potential that the rebates may be additionally taxed as income to the homeowner.”