City couldn’t fight 98 percent of alderman’s tax appeal cases ruled on by state

WATCHDOGS SPECIAL REPORT: PART 1 OF 2

READ PART 2: Ed Burke vs. the City of Chicago

Ten years ago, Chicago’s most powerful alderman, Edward M. Burke, and the rest of the City Council signed off on a deal that promised $16 million in taxpayer subsidies to the Wm. Wrigley Jr. Co. to help it build a new corporate campus on Goose Island rather than move to the suburbs.

Three years later, Burke’s law firm, retained by Wrigley, persuaded Cook County officials to lower the property assessments for two buildings the chewing gum giant had bought down the street from the new campus.

Burke’s legal work helped Wrigley cut its property taxes by more than $412,000 between 2006 and 2008, records show.

For that, the company says, it paid the alderman about $90,000 in legal fees.

As a result of his ties to Wrigley, Burke subsequently abstained from voting when the company came back to the City Council Committee on Finance, which Burke chairs, for permission to delay the completion of its taxpayer-subsidized campus — one of many times during his three decades in office that Burke has declined to vote because of a conflict of interest.

Burke’s committee gave Wrigley what it wanted. And based on its recommendation, the full City Council did, too, voting in April 2008 to give Wrigley an extra two years to complete the final phase of its headquarters — with Burke again abstaining.

Wrigley has never finished the project, though.

Three weeks after the April 2008 City Council vote, Mars Inc., the candy conglomerate, announced it was buying Wrigley. And Mars scrapped the final phase of the Wrigley Goose Island plans — a 90,000-square-foot-office building and parking garage.

Burke’s law firm no longer works for Wrigley.

But the tax subsidy that he originally voted to give Wrigley continues until 2019.

So far, Wrigley has gotten nearly $4 million from City Hall as a result of that subsidy. Its latest check — for $279,170 — went out Aug. 29.

Asked about his relationship with Wrigley, Burke declined to answer any questions. Instead, he had an aide pass along minutes of the Finance Committee meeting that show he abstained from voting to give Wrigley the extra two years to finish construction.

The Wrigley Co. is now headquartered on Goose Island, which straddles Division Street east of Elston Avenue. Wrigley has an estimated 600 employees there now that everyone has been relocated from the company’s former home, the iconic Wrigley Building on North Michigan Avenue.

The move to Goose Island came after Wrigley executives decided a decade ago that the company had outgrown its lab and research facility at 35th and Ashland in Bridgeport. They were thinking about moving to the suburbs, maybe to Mokena or West Chicago, saying it would cost too much to build a corporate campus in Chicago.

But then Mayor Richard M. Daley’s staff came up with a way to help finance construction on the northern tip of Goose Island and keep the world’s largest gum manufacturer in Chicago, along with as many as 388 jobs from the Bridgeport facility.

On Oct. 2, 2002, the City Council — including Burke — approved the project.

Under its deal with the city, Wrigley said it would spend $84.3 million to put up four new buildings: a lab, a research plant, an office building and a parking garage.

In turn, City Hall would pick up about 19 percent of the tab by giving Wrigley two tax breaks:

• The reimbursement of as much as $15 million in real estate taxes by

• And a 12-year industrial property-tax break on the research building that could save the company another $1 million.

The taxpayer money helped Wrigley buy the 7.6-acre site for $8.8 million from divine Inc., the one-time dotcom darling whose plans for an Internet incubator on the island had fizzled.

Wrigley’s Global Innovation Center — a striking structure on the banks of the Chicago River that’s visible from North Avenue — opened in October 2005.

By then, the company already was asking city officials for more time to start construction of the taxpayer-subsidized project’s parking garage and 90,000-square-foot office building.

Meanwhile, Wrigley had bought a building about that same size at 1300 N. Branch, just two blocks south of the corporate campus, paying $10.15 million on Dec. 16, 2005, for the offices and warehouse of River North Sales & Service, the Anheuser-Busch distributorship owned by Yusef Jackson, son of the Rev. Jesse L. Jackson.

Three years later, Wrigley dropped its plans to put up a new office building on Goose Island.

But Wrigley says it wasn’t because, by then, it had bought the building from Jackson.

“We determined that the facility at 1300 N. Branch would provide the most ready option for conversion to the engineering labs we sought to locate there,” says Wrigley spokeswoman Melissa Weber.

Three months later, Wrigley bought another nearby building on Goose Island, paying $31.5 million on March 17, 2006, to buy the factory and offices of Republic Windows and Doors, which Wrigley then leased back to Republic, until the window company’s bankruptcy two years later.

Wrigley — which says it overpaid for both the Jackson and Republic Windows properties because it coveted them — then hired Klafter & Burke, the four-attorney Chicago law firm headed by the alderman, to help cut its property taxes.

Jackson and Republic both previously had retained Burke’s law firm to contest the property assessment on their buildings — which were built in the 1990s with tax subsidies. That’s why Wrigley decided to stay with the alderman’s firm for those property-assessment fights, a Wrigley spokesman says.

“It’s not surprising that we chose to stick with the law firm that was already working,’’ says Wrigley spokesman Andy Pharoah.

When Jackson’s beer distributorship moved, that left the building at 1300 N. Branch temporarily vacant — the key point Burke made to persuade then-Cook County Assessor James Houlihan to cut his agency’s proposed assessment of the property by 55 percent. That cut Wrigley’s 2006 tax bill by $139,096.

The following year, Burke swayed Houlihan to slash his office’s now-higher proposed assessment by 40 percent, arguing that the building was now only partially occupied. That cut Wrigley’s 2007 property taxes by $114,245.

In 2008, Burke again appealed the assessment but was unable to win any further reductions the third time around.

Burke won smaller reductions — from Houlihan and the Cook County Board of Review — in the assessments for the former Republic property, at 930 W. Evergreen, cutting Wrigley’s tax bills by $119,685 in 2006 and $39,867 in 2007.

Though Wrigley never did all that it promised to win its subsidies, completing only two of the planned four buildings, City Hall says the company will continue to get the tax breaks through 2019 — just not as much as it would have.

Wrigley will end up getting no more than $11.1 million of the $15 million it could have gotten in property-tax reimbursements under its deal with City Hall, according to Peter Strazzabosco, spokesman for the Chicago Department of Housing and Economic Development. So far, Wrigley has gotten about $4 million of that.

It’s also saved $643,200 so far as a result of the promised $1 million tax abatement for erecting a new industrial building.

Wrigley’s former chairman, William “Beau” Wrigley Jr., left the company in January 2010. Wrigley, who didn’t respond to an interview request, is now a private investor and a member of the board of Wrapports LLC, which owns the Chicago Sun-Times.