I'm writing in response to an article, "North Lawndale Industrial campus moving forward," which ran in the Dec. 7 issue of Austin Weekly News. Clarius Partners has just gotten zoning approval to construct a $42.5 million, mixed-use commercial and industrial development on the corner of Roosevelt and Kostner, the former site of the Proposed North Lawndale Obama Presidential Library.
There will be 3 industrial buildings and one commercial building with a combined 60,850 square feet, built over three phases. According to a Power Point presentation Clarius presented to the Community Development Commission back in August, the public benefits the development will provide include 380 permanent jobs; 380 construction jobs; participation from minority-owned and women-owned contractors; an expanded tax base; city residency requirements for construction workers and LEED certification.
The appraised value of the land is $2,550,000. The city's offsets and assistance will amount to a maximum of $1,528,954, or approximately 4 percent of total project costs. The combination of offsets and assistance will bring the land acquisition costs down to as low as $1,041,026 for the developer. The city will provide a $650,000 escrow towards environmental cleanup and $878,954 towards a jobs/wage escrow to be provided as an incentive for eventual employers to hire locally, create jobs and pay $15 per hour. Eventual employers would get a 50 percent rebate for every job that is filled locally; 25 percent for every job created, and 25 percent for every job that pays $15 per hour.
These incentives would not go to Clarius, but to the tenants who eventually lease the space. There is no guarantee the tenants will take the incentives, although Ald. Scott is quoted as saying that the eventual tenants may cooperate, given that they will need his office for some things.
The first phase of the construction will be industrial and will be done speculatively, meaning Clarius will build it without knowing who will eventually occupy it. The second phase will also be industrial and will be built-to-suit. The third phase will be commercial.
There is no doubt in my mind that Ald. Scott has the best of intentions for this development and will do everything in his power to make this deal work in the best interests of the community. While the Alderman will press for the 380 jobs for local residents, quotes from the article suggested that he is flexible and that "some jobs are better than no jobs." It remains to be seen whether Clarius shares his commitment to community.
I do know that Clarius can do better by the community and still make a handsome profit. The deal between the city and Clarius provides for PUBLIC benefit; however, there is very little apparent leverage to ensure that local community residents will benefit directly. Clarius, on the other hand, stands to get millions of dollars in tax breaks because the location is in a low-income community that has withstood dis-investment for decades.
Think about it. This development will be about $42.5 million; Clarius will get a 12-year tax break through the Class 6(b) Property Tax Incentive, a program that offers a 12-year reduction in real estate assessments from the standard Cook County industrial rate of 25 percent. Qualifying properties are assessed at 10 percent for the first 10 years, 15 percent for the 11th year and 20 percent for the 12th year. This translates into a 60 percent discount on property taxes for the first 10 years; a 40 percent discount the 11th year and a 20 percent discount in year 12.
That's a huge savings that will go to Clarius's bottom line (tens of millions of dollars over the next 12 years, just for the 6(b) program incentives alone). This site qualifies for a number of other federal and local (and probably state) incentives as well. On top of that, the tax breaks kick in upon the building being 50 percent leased, not upon the jobs being created. As it stands, the redevelopment agreement provides incentives to hire local residents, but there are no sticks in the event that they don't follow through.
The community needs a comprehensive community benefits agreement that will provide incentives for local hiring and other community benefits, while holding Clarius accountable in the event they don't perform. This agreement should be negotiated with a coalition of community groups, who will also be held accountable to follow through on their commitments. We don't need any more situations in which North Lawndale has added new jobs that are not held by any local residents.
— Valerie Leonard, North Lawndale
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