The Chicago Bears don't reach a settlement regarding Arlington Heights, what's next?

I have had a close interest in what is going on with the Chicago Bears and the Arlington Heights property. One, I am a season ticket holder and want to know where I should plan on attending games in the future. Two, I am very intrigued by the entire property tax situation because other than covering the Bears, I am a real estate property tax analyst. The situation regarding the Bears and the 326 acres in Arlington Heights is the first crossover I've experienced with both jobs. This will mark the third installment of what appears to be a long, drawn-out process. One that could lead to the Bears staying in Chicago instead.

Back in June 2023, I wrote about how the Cook County Assessor is single-handedly causing an issue for the Bears and their original dream to build a campus similar to SoFi Stadium in Arlington Heights. About three weeks ago, I addressed the reports that the Bears and the school districts were roughly $100 million off in their valuations. The Bears were arguing the property is worth $60 million while the school districts are claiming it should be valued at $160 million. After settlement talks between the Bears and the school districts failed, the Cook County Board of Review gave their decision.

Originally, the Assessor valued the property at $197 million. That was reduced in 2022 down to $95 million -- once again thanks to the Board of Review. For 2023, the property was originally set back at the $197 million valuation before the Assessor reduced it to $192 million but shifted the value from the improvements to the land. That was the correct thing to do as improvements were being demolished, but the land value was highly inflated. It went from $2.18 per square foot to $14.00 per square foot. I go into more detail about that here.

Outside of this property, I want to see the Assessor show records of land being sold at $14.00 per square foot. Without even looking, I guarantee there aren't any. He will say that the sale dictates the value and that's not the case. The property was purchased with future investment value in mind. Entrepreneurial profit and future investment value are included in the price tag of $197 million and are not real estate values. It's another reason why the Cook County Assessor shouldn't be chasing sales, especially regarding commercial and industrial properties.

The Chicago Bears receive a reduction without settlement

Kevin Warren and the Chicago Bears should be a little happier today as the Cook County Board of Review is reportedly decreasing the value of the former Arlington Park Racecourse to $138 million. What does that mean? Well, it means that the projected taxes dropped from roughly $13 million down to $9.5 million for 2023 (payable in 2024).

I know. Bears fans don't care that millionaires need to pay large amounts of property taxes. In the end, if the stadium campus is finalized, it will be worth way more than the $197 million the Bears paid for it. However, these things are very important when it comes to developing real estate. If things don't get corrected and leveled out, the Bears will for sure look at other site options.

I should point out that the Chicago Tribune article states that the Bears will not receive any tax rate relief. There is a difference between the tax rate and the effective tax rate. Although the property is going to be currently valued at $138 million, that is not the taxable value. Cook County uses a level of assessment of 25% for commercial and industrial properties. They use a level of assessment of 10% for residential and vacant land properties. The Bears will not see the value of the property assessed at 10% as requested for 2023 because as of the lien date (1/1/2023), improvements still existed.

This is a big deal. Had they received the level of assessment change, the property would have been taxed based on a value of $13.8 million instead of $34.5 million. That drops the projected taxes from roughly $9.5 million to roughly $3.8 million for 2023. See why the Bears might not be as happy as fans would like them to be? The thing is, the Board made the right decision here not changing the level of assessment for 2023, but things should change in 2024 since demolition is complete and new improvements haven't been added. Will the Assessor do the right thing? Probably not.

One thing the Chicago Bears mentioned as part of their argument was the unfair treatment they are receiving when valuing this property. They cited other recent, large-scale real estate purchases that saw a drastic difference in valuation compared to the sale price. For example, the former Allstate headquarters was purchased for $292 million in 2022 but valued at only $55 million. They also cited a former United Airlines headquarters. I'll have to look into those more before I can claim they are apples to apples though.

This fight isn't over though. The Board of Review does offer a re-review process, although, I am doubtful the Chicago Bears have any mistakes made by the Board to point out that qualify for that process. It is more likely since a settlement wasn't made between the Bears and the school board, that the appeal will be taken to the next and final level. They have a choice to move the appeal to the Illinois Property Tax Appeal Board (PTAB) or file a tax objection in court. If I had to guess, they would look to go to PTAB since the case isn't based on an income approach to value. The problem is that this process can take years (usually 1 to 2) before it is resolved.

The Bears don't have that time to wait as they race against the White Sox to use a unique bonding clause that expires at the end of this year.