Five months ago, Mayor Rahm Emanuel toured the renovated lobby and dusty guts of Chicago’s Old Main Post Office and touted the building as a potential home for Amazon’s second North American headquarters.
On Monday, the giant hulk of a building that hovers over the Eisenhower Expressway got a major boost — whether or not it or Chicago wins the Amazon sweepstakes.
The City Council’s Finance Committee signed off on a Class L property tax break that’s expected to save building owner 601 W LLC $100 million over the life of the project.
The Class L property tax break allows designated landmarks to be taxed at a rate of 10 percent of assessed valuation for the first 10 years, at 15 percent for the 11th year and at 20 percent for the 12th.
But it’s only available to building owners who agree to invest at least half of the value of the landmark building on an approved rehabilitation project. Eligible expenses include the “core shell and systems” of the landmark building, including mechanical, electrical, plumbing, elevators, exterior walls, structural and masonry work.
The other portion of the assessment – the land portion – is also eligible for the incentive, provided the building has been vacant or unused continuously for the prior two years.
The post office qualifies on both counts. It’s been “vacant and deteriorating for more than 20 years” and it’s currently undergoing a gut rehabilitation with a $292 million price tag, said Dijana Cuvalo, a preservation architect for the city’s Department of Planning and Development.
The Class L break is expected to save the building owner $100 million over the life of the abatement or $53.2 million in “net present value,” Cuvalo said.
She pegged the city’s share of that break at $22.9 million or $12.1 million in “net present value.”
Five years ago, the City Council approved a Class L property tax break for Wrigley Field that could save the Cubs $8.5 million over 12 years.
But that was before the furor over the unfairness of how Cook County property is assessed in the decades-old system administered by embattled Cook County Assessor Joe Berrios.
That’s apparently why Zoning Committee Chairman Danny Solis (25th) took pains to defend the $100 million tax break for the Old Main Post Office that will exacerbate, what he called a “tremendous construction boom in this part of the Loop.”
“All of this development is good for the city. We’re talking about jobs. We’re talking about tax revenue. We’re talking about more people moving into the city,” Solis said.
“This is something…we should embrace and something that is well worth the investment that is going to be put into this by this Class L designation.”
Downtown Ald. Brendan Reilly (42nd) noted that the Class L property tax break is “an instrument that’s used to save historic and, in many cases, iconic buildings” – and only after a “very rigorous review.”
“This instrument has literally saved landmark buildings that otherwise would be impossible to restore and re-use,” Reilly said.
“The city is very selective in awarding these types of incentives. In this particular case, given the iconic nature of the property and the sheer massive square footage involved, it makes sense to me.”
Also on Monday, the Finance Committee signed off on new fifteen-year cargo leases at O’Hare Airport aimed at boosting annual revenue for the city from $4 million-to-$41.5 million minus rent credits for building improvements.
Aldermen also approved $150 million in bonds for the Aeroterm cargo development at O’Hare. The city has no obligation to pay the debt.