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South Side business owners fight special taxing district

A group of business owners and representatives pose for a portrait near their businesses on Halsted near 116th Street, Wednesday morning, Aug. 22, 2018. | Ashlee Rezin/Sun-Times

Seven years ago, Ald. Carrie Austin (34th) was forced to rescind creation of a new local taxing district in her Far South Side ward after it unexpectedly sent property taxes soaring on the businesses forced to pay for it.

Now, much to the consternation of those same businesses owners, Austin and a local community organization are back with a similar proposal to add an expensive new line item to their property tax bills.

This time, Austin says she’s not backing down, and in a high volume interview, the veteran alderman all but invited businesses who object to the tax to close up shop and move.

“If they would prefer to leave the ward as opposed to investing in the community, good luck,” Austin told me over the phone, her voice raised for emphasis. “They can relocate to the suburbs where they’ve been taking their money anyway.”

Alderman Carrie Austin during a 2016 Chicago City Council meeting.| Brian Jackson/ for the Sun-Times
Alderman Carrie Austin during a 2016 Chicago City Council meeting.| Brian Jackson/ for the Sun-Times

As before, the dispute involves an obscure taxing agency known as a “special service area” or SSA, sometimes referred to as a business improvement district.

SSAs were conceived as an economic development tool to allow property owners within a limited geographic area to tax themselves to provide enhanced services.

But SSAs also can serve as an under-the-radar source of power and funding for local aldermen from which their allies can bestow contracts and jobs.

Chicago has 53 Special Service Areas spread across the city with a new one coming on line this year in Chinatown after much debate.

Among these is SSA 45, which since 2009 has operated along the Halsted Street business corridor from 99th Street to 115th Street.

For property owners within its boundaries, more than 17 percent of each property tax bill goes into the coffers of SSA 45, which is then used to pay for services such as private security, landscaping and snow removal.

That makes SSA 45 the third most expensive item on their real estate tax bills — costing more than they pay for Cook County government, Chicago Park District, Metropolitan Water Reclamation District and City Colleges combined.

Austin says she needs the SSA to help her protect and revitalize her ward’s most important business district.

Her opposition comes from property owners who say they don’t need the SSA’s services and that the higher taxes being imposed only make it harder to do business.

Making the case succinctly is Norm Logan, owner of Lil Logan’s Auto Collision at 11815 S. Halsted.

“Our taxes are high enough,” Logan told me. “They’re putting us out of business. We don’t want it.”

Norman Logan, 61, owner of Lil Logans Collision, poses for a portrait on Halsted near 116th Street, Wednesday morning, Aug. 22, 2018. | Ashlee Rezin/Sun-Times
Norman Logan, 61, owner of Lil Logans Collision, poses for a portrait on Halsted near 116th Street, Wednesday morning, Aug. 22, 2018. | Ashlee Rezin/Sun-Times

SSA 45 was due to expire next year, and along with it, the approximate $700,000 annual pot of money it generates.

Rather than allow that to happen, Austin and the non-profit agency that operates the SSA, Far South Community Development Corporation, applied to renew it –– and to expand its boundaries to take in more territory.

Their proposal would extend the taxing district to 97th Street on the north and to 119th Street on the south, then east on 119th to Princeton.

Much of that same territory was previously included in Austin’s ill-fated SSA 46, which she withdrew under pressure in 2011 after it caused property tax increases averaging 30 percent –– far exceeding the projections on which the proposal had been promoted.

Austin tells it a little differently, saying she only shut down the taxing district because property owners promised her they would do more to “invest in the community.”

This time, Far South CDC is projecting the SSA will cause a 17 percent tax increase for property owners in the expanded territory, which will allow for a 4 percent tax decrease for businesses within the SSA’s existing boundaries.

But some of the business owners who would receive the tax cut say they would prefer the SSA be eliminated altogether.

Greg Ehman, who owns a small stripping center where his parents once operated a dry cleaning business, calculates he’s paid nearly $70,000 in taxes over a decade to SSA 45 while getting “nothing in return.”

“We’re not getting our money’s worth,” Ehman said.

Abraham Lacy, executive director of Far South CDC, said much of the opposition comes from “white-owned businesses” that don’t care about the neighborhood.

“If this was the same community they lived in, would they have the same mentality?” Lacy said.

Responds SSA opponent Neil Haleem, who converted an old muffler shop into a strip mall: “Where does it say you have to live in a community to make a community better? Just buying property here is an investment.”

It’s little wonder that opponents of special service areas often feel as if they are playing against a stacked deck.

By law, supporters of SSAs are only required to produce signatures from 20 percent of the affected parcel owners to win approval, while opponents must collect signatures from 51 percent of parcel owners — AND 51 percent of registered voters — to defeat it.

“It’s all skewed against us,” said Thomas Jundanian, whose Oriental rug and carpet business has operated from the same location at 116th and Halsted since 1960.

Jundanian and Bernie Van Etten, president of nearby Murphy Marble Co., have tried to organize the opposition, no easy task in a ward with an all-powerful alderman.

Austin said she has no sympathy for them.

“They don’t invest nothing in my ward. They want to cry about they gotta pay more taxes,” Austin fumed. “They’ve been the same raggedy businesses for the last 50-60 years.”

Austin’s broadside caught the business owners by surprise. They had previously sought to emphasize to me that their policy dispute with the alderman was neither political or personal.

“I’ve got nothing against the alderman’s office. I just can’t afford my taxes,” said Van Etten, whose family-owned stone fabricating business has operated from an industrial building at 11756 S. Halsted for 118 years.

Video by Ashlee Rezin | Bernie Van Etten, president of Murphy Marble Co., chats with the Chicago Sun-Times at his business at 11

But just so that Austin knows these two “raggedy businesses” aren’t alone, I also spoke to the owners of four auto repair shops, three strip malls and a fast-food restaurant in the preparation of this story — many of whom were brave enough to pose for a photo.

Still, Austin doesn’t have to take their word for what’s wrong with the SSA.

She need look no further than the application submitted to the city by Far South CDC, in particular the surveys purporting to show support for the SSA from owners of 124 (or 22 percent) of the 569 affected properties.

More than a third of that support comes from the 48 parcels controlled by funeral home operator Lafayette Gatling Sr.

And what does Gatling think of the SSA?

“The cost overwhelmingly outweighs the benefits,” he wrote on the survey.

With supporters like that, who needs opponents?