City committee approves $20 million tax incentive for shipping center despite resistance from Little Village Residents

View of the Chicago City Council Committee on Economic, Capital, and Technology Development’s hearing on Hilco Redevelopment Partners . Photo by: Pascal Sabino

alt text By Pascal Sabino, Environmental Health and Wellness Editor, The Real Chi & Industry Pathways 2018 Cohort

The Chicago City Council Committee on Economic, Capital, and Technology Development voted on Friday, March 1 to approve a tax break for a controversial shipping center in Little Village. The Class 6(b) tax incentive for the site of the former Crawford Generating Station will now move to city council for a full vote, despite protests from residents that the project will be harmful to their health.

The incentive would allow the property now owned by Hilco Redevelopment Partners to be valued at only 10 percent of market value for tax purposes for the first 10 years, before sliding up by five percent for each of the next three years. Industrial properties are typically assessed at 25 percent of market value without the tax break.

Hilco representatives and Department of Planning and Development officials addressed the city council committee together, explaining that without the tax breaks, the project is unable to stand on its own two feet.

"In light of the extraordinary scale and cost of this project we feel the Class 6b is necessary to keep the project economically viable to keep it leases competitive with surrounding suburban communities," said John Molloy, economic development coordinator for the Department of Planning and Development.

The total cost of the project is estimated at roughly $100 million. According to the DPD, the incentive will reduce the tax burden by 60 percent, saving Hilco an estimated $19.7 million. According to Hilco Redevelopment Partners' director of development Jeremy Grey, "The benefits of that incentive will be passed through to future tenants and really 6(b)'s give industrial sites a competitive advantage in Chicago. They help attract tenants and help provide good head of household jobs."

Hilco Redevelopment Partners plans to tear down the old power plant to construct a 1,052,854 square foot distribution center that will lease out storage and shipping space to ecommerce companies. With the assistance of the tax break, the DPD estimates that the price tenants pay to lease space would fall from $4 per square foot to $1.5 per square foot.

Ald. Ricardo Munoz (22nd) represents the community where the distribution center would be built, and spearheaded the efforts to bring Hilco to Little Village. Ald. Munoz argued the economic development would be worth any environmental fallout.

"Hilco has identified is a project that is seeking to invest well over $300 million [sic] in construction about 150 and demolition in the construction of a distribution center in order to be able to bring a tenant that can utilize this facility and create well over between three or 400 jobs in neighborhood of Little Village," he said.

One hundred seventy-eight of the jobs that Hilco would bring to Little Village are expected to be permanent positions, in addition to 360 temporary construction jobs. Munoz continued to say that the facility's sustainability infrastructure could also mitigate some of the environmental health impacts caused by the influx of truck traffic.

"There is a debate about the traffic that this might cause. These trucks are already in our city," he said. "What was asked of Hilco is that they build one of the most environmentally friendly facilities possible: solar panels, well over 600 landscaping trees, a design that basically takes the traffic out of the neighborhood and puts it basically on the Stephenson."

Ever since Hilco purchased the property early last year, it has faced a heated battle from community residents and environmental advocates who say the development will carry an immense environmental burden on a community already saturated with industrial air pollution. The concentration of diesel particulate matter in the area surrounding the property ranks higher than over 90% of the country according to data collected by the Environmental Protection Agency.

Opponents of the incentives argue that the Hilco development would reverse much of the work that has been done to rehabilitate the environmental health conditions of Little Village, especially after the community was able to get the Crawford Coal plant shut down in 2012. The distribution center would increase truck traffic in Little Village by an estimated 173 trucks per day, notwithstanding the pollution caused by idle trucks parked on the property.

"The air pollution that the children in area, that the workers in the area, that the families in that area are going to be breathing in— the particulate— will the solar panels and the trees have an impact on that?" asked Ald. Carlos Ramirez-Rosa (35th), who is one of 19 council members on the Committee on Economic, Capital, and Technology Development.

"Another question that I have is, you know, we've had a lot of studies and a lot of research that has shown how, you know, this particular that comes from the diesel trucks and trucks from all the, you know, air pollution that it leads to, you know, an increase in childhood asthma... will Hilco help families that have children with asthma, to cover the cost of treatment?"

When it came time for public testimony, both sides showed out. In support of the tax break, the council chamber was stacked with Hilco supporters who had largely benefited directly from the development. In addition to a few small business owners eager for new investment in the neighborhood, most supporters at the hearing were Hilco contractors— consultants and laborers hired by Hilco to do environmental assessments and site remediation at the Crawford facility.

Several of those supporters represented GSG Consultants, an environmental and civil engineering consultancy contracted by Hilco to work on the demolition of the Crawford coal plant.

"I want to commend Hilco for their commitment to diversity and giving us great opportunity to provide construction management oversight at the site," said Arturo Saenz, the principal on the project. Other key supporters included the Chicago and Cook County Building Trades Council, and Laborers Local 225 Union.

The opposition largely consisted of neighborhood residents organized by the Little Village Environmental Justice Organization (LVEJO), as well as other environmental advocacy organizations such as Sierra Club, the Sunrise Movement, and the Natural Resources Defence Council.

"The proposed financial incentives would find a facility that would severely increase local air pollution putting our lungs, our community and our local health systems under even higher burdens," said Kim Wasserman, executive director of LVEJO, noting that the DPD found that Little Village already the second worst air quality in the state of illinois. "So the idea that a warehouse with 179 [sic] proposed trucks, but really has 200 parking lots for trucks is not an ideal growth in our neighborhood."

Reiterating statements made by DPD and Hilco president, other residents asked why the City is willing to shell out $20 million to support a company that admitted it would not be solvent without government money.

"You're voting yes to say we as taxpayers find it acceptable to pay companies to move into our neighborhoods and contaminate our environments,” said Jose Acosta, a community organizer who testified at the hearing. “Hilco purchased the property for $12.25 million and they're going to save 19 million over 12 years. This means that we're essentially paying them to move in."