1840-oak-google-earth-2016

Northwestern University has told city officials that it has acquired the 1840 Oak Ave. office building in the downtown Research Park zoning district.

The school, in a letter to the city, said it was prepared to make an annual voluntary $350,000 payment in lieu of taxes for the property, which in 2015 had a tax bill of $275,860.

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The university’s purchase of the 1800 Sherman Ave. office building downtown over a decade ago created years of controversy over the resulting loss of tax revenue for the city and schools.

The 1840 Oak building has had a spotty occupancy record in recent years. It sold in 2006 for $3.1 million but then changed hands again in 2012 for just $981,000, according to county records.

Northwestern reportedly is paying $4.5 million for it this year.

In a letter to city officials, NU Executive Vice President Nim Chinniah said the school hopes to use the building to provide research space for “companies founded by our faculty to remain in Evanston, and thus strengthen our retail and local businesses by contributing jobs and enlivening our city center.”

In a memo to aldermen prepared for tonight’s City Council meeting, city attorney Grant Farrar indicated that agreements the city and university entered into in the 1980s for development of the Research Park district may bar the transfer of land in the district in a way that would take it off the tax rolls.

But Farrar says the “long and winding” history of the Research Park development makes more time necessary to determine whether that restriction actually still applies. And he’s asking that the issue be referred back to the Administration and Public Works Committee for further discussion at its March 13 meeting.

Bill Smith is the editor and publisher of Evanston Now.

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14 Comments

  1. Leaving the tax rolls?

    As a multiple parcel taxpayer in Evanston, I am very concerned about properties that leave our tax rolls for one reason or another.

    Northwestern University was founded in 1851 and has enjoyed tax exemptions for most of their 166 years (Evanston was founded in 1863)… It occurs to me that their ancient covenant with the City of Evanston needs to be revised for the 21st Century.

    Evanston’s total land area is only 7.8 sq/miles. When a property leaves the tax rolls that means my tax bills can only go up! Methinks it would be fair to the taxpayers of our community if henceforth, everything east of Sheridan Rd would be tax exempt. Everything west of Sheridan Rd. not directly related to educational activities should be taxed fairly.

    Furthermore, I don’t know the answer to this question but when a home or residence is donated to the University (like a few of my friend’s family homes were) and are provided as housing to University faculty and staff – are these properties paying property taxes? If they are not and these faculty or staff have children attending public schools in Evanston – who covers the 10’s of thousands of dollars per pupil?

    To be honest, I recognize the University’s founder status here. I have attend school there in mid-70’s and enjoy many of the benefits of the University’s presence in our community. But to ignore the 800 lb gorilla which are our tax problems would be irresponsible… especially when an Institution that has a cache of $9.6 Billion (as of 2016 – one of the top 10 Endowments in the US) in their kitty is part of the problem.

    I feel strongly that it is time to ask the tough questions and move more towards equity for the citizens and other entities who occupy the other part of these 7.8 sq/miles who pay taxes. I trust that the next mayor will address this with our friends and neighbors at the University.

    Respectfully submitted, Brian G. Becharas

    1. Couldn’t Agree With You More

      Brian – I agree with you 100%. Even though NU is running programs at the High School and donating $1million to the Crown Center – those are actions they undertake at their own discretion – at their pleasure. Meanwhile we (residents) must pay escalating taxes – no choice there.

      NU needs to start paying taxes. Period. They are taking properties off the tax rolls, they are locking down their lakefront access and planning to do monster developments to their sport facilities on Central St. – just look at the parking lot improvements foreshadowing the new stadium, new arena etc.

      Who can force this issue? Wally? Step up buddy.

    2. Well said Brian. It is

      Well said Brian. It is unlikely that the next Mayor will utter a peep about this issue. Alderman have the power to address this issue but they won’t either

    3. I fully agree that this

      I fully agree that this covenant should be revisited. Although the university is pledging to make these payments in lieu of taxes (PILOT) contributions annual for this one property, the payments will not be tied to inflation and will likely be discontinued once this transaction is a distant memory. Also, how many of the universities’ other properties that the university has aquired over the past few decades have these PILOT contributions tied to them?

      The City should request for the University to make general payments in lieu of taxes contributions to the city that are commensurate with the University’s footprint, endowment and property tax savings. NU is only giving ~1-2 million per year as part of their “good neighbor fund” and other contributions, whereas several other top universities with a similar tax exempt status (ie Harvard, Yale, Stanford) are giving their municipalities annual PILOT contributions that are several times larger. Source: http://apps.northbynorthwestern.com/magazine/2014/fall/evanston/

      With a few strategic donations over the past few years, the University and its Neighborhood and Community Relations department are running laps around our city’s government. Very disappointing. 

    4. Return to original land grant ?

      Maybe NU can ask for the orignal grant back—it went to Ridge [though I recall actually Asbury] and Central.  

    5. 1840 Oak Ave – NU – and taxes

      Hello, I am writing as a son of Evanston and current ‘ex pat’ who loves the city.  Mr. Becharas makes a well reasoned point.  There is only so much land in Evanston, property taxes are a principal source of revenue for city and schools, and every property added to the tax exempt roles promises a decline in those revenues – generally.  I say “generally” specifically to address the case of 1840 Oak Avenue.

      First, Northwestern has offered to make an voluntary annual payment of $350,000, almost $75,000 over the 2015 tax payment on the building (perhaps ask to index that for the future?).  And, the use that is suggested – to provide space for “companies founded by our faculty to remain in Evanston…” – can promise additional benefits.  I say this as the use is very similar to one that occupied that building from 1991 until roughly 2000.

      In that time period most of 1840 Oak Avenue served as a non-profit business incubator formed by Northwestern as a support piece in the then current research park effort.  The incubator did not pay taxes on its space directly, but all clients of the TIC paid taxes on the space they sublet from the incubator via lease-hold taxes.  (This should still hold for “companies” coming our of the university adding to the city and school revenue from the building.)  The nature of such a center also contributed jobs and helped to bring young companies into Evanston that might have started elsewhere and which were likely to stay near their place of origin as they grew – Peapod and First Bank and Trust are two among many that began in the incubator.  The nature of these businesses and the community the incubator helped to create also enriched Evanston as all felt Evanston was their home and a special place – as I think most Evanstonians do.  And as Mr. Chinniah suggests now, the incubator companies, their founders and employees did, “strengthen our retail and local businesses by contributing jobs and enlivening our city center.”  Many invoed in those companies still call Evanston home today.

      I have no quibble with seeking some new arrangement with Northwestern, but I feel that some uses deserve a case-by-case analysis.

      thank you,

      Jim Currie, ETHS ’74, Technology innovation Center Director (the Incubator) 1986-1999

    6. Truth

      Agreed wholeheartedly with this comment. This should be something asked of not only candidates for Mayor, but candidates of all wards in Evanston. In fact, it would be really interesting to here from 1st Ward Aldermanic Candidate Lee Cabot, on this issue, as she is an employee of NU. 

    7. Bids for NU to move ?

      Perhaps NU could put out feelers to see if another city would be interested in hosting NU—that would seem to make a lot of Evanston residents happy.

      In the early 90s it was found U.Chicago had years of building repairs needed. Some thought, and hoped, they would move to Evanston and merge with of replace NU.

      In 1930s there was talk of the University of Chicago moving to and merging with Stanford.

      Maybe NU should think of alternatives. Would Skokie, Deerfield, Naperville or any other town make a good offer to NU–maybe leave a small portion of NU in Evanston as a satellite. But why limit it to the larger Chicagoland area. Maybe Springfield or even Iowa.

      I bet NU haters would jump for joy.  And think of all the land that would be freed-up for Affordable Housing—though there probably would not be any developers interested and employment in Evanston would drop so low that only taxes [raised substantial to cover the budget] paid by commutes to Chicago would be left. But then Wilmette could annex what is left of Evanston.

      1. Many of us that call on NU to

        Many of us that call on NU to pay it’s fair share, are former alums, and are happy to be part of a community. However, one can only see NU’s endowment grow to the billions, while our town continues to have budget shortfalls. And as far fetched and ridiculous as your alternative theory of moving NU is, do you think developers and businesses would not be interested in developing lakefront property for other use? I disagree. And, at least with those options, the town would get the property taxes it is due. And, please don’t point to semi-annual, and limited donations, including of a firetruck and even a $1 million donation to Crown. These do nothing to help property tax paying residents, and, especially our schools, where much of these taxes go towards.

        1. a modest proposal

          I don’t think that we should start and end this argument with NU – there are so many other non profits squating on land that should be returned to the taxrolls. Ones that don’t make donations to the city or profide cultural and educational benefits to the city at little or no cost. As I drive through Evanston I am overwhelmed by how many churches there are – seeminly one or more on every street. They are occupying prime realestate that could be million dollar homes that pay substantial taxes to the city. Why do we need so many and why could they not relocate to Skokie or Chicago to free up that land for development?? Even more obscence is a little place like Evanston having TWO HOSPITALS (both non profit tax exempt!!) Many similar sized communities lack even one!!! WE need to close down at least one if not both of those hospitals and their outpatient faciliites and return those prime properties to the tax rolls. We don’t need them here. And don’t even get me started about the private schools – we have an outsanding school system – we should find ways to drive those schools out and return the properties to the tax rolls. If we are dilligent about these goals we should be able to free up huge amount of prime realestate that can be sold to (and generate taxes from) people who want to live in a monolithic insular communitiy with less culture, arts and vibe… but just want to pay less in taxes. A real WIN

      2. Yea, like the university

        Yea, like the university would consider moving after having spent hundreds of millions of dollars on property development over the past few decades… what a joke.

        1. University resources

          Of course Northwestern has also spent money to open additional new facilities in Chicago, Washington, San Francisco and Qatar in recent years as it seeks a more global footprint.

          The balance between Evanston and elsewhere for its resources is not immutable.

          And then there are the two other colleges — Kendall College and National Louis University — that have pulled out of Evanston completely in recent years.

          — Bill

          1. I agree its not impossible;

            I agree its not impossible; its just extremely unlikely and wouldn’t make financial sense. I would guess the university’s properties in Evanston are worth $1billion+. In the hypothetical scenario of Northwestern leaving, I can’t see how they would be able to find a collection of buyers that would be willing to pay anywhere near close to the amount of value that Northwestern gets out if its Evanston properties. If there was new discussion on the amount of voluntary contributions, several “nuclear options” from either party would likely be threatened, though I think these types of threats would be idle ones when the stakes are only a few million dollars per year.

            If the university raised their voluntary contributions to ~$8-10 million per year, I think that would be equitable relative to what other top universities pay to their respective municipalities.

  2. Which candidate will be Evanston’s Robin Hood?

    A Providence City Councilman a few years ago introduced a resolution calling on the state of Rhode Island to remove Brown University’s blanket property tax exemption. That pressured Brown to kick in $31 million over an 11 year period on top of the $4 million it was already giving Providence.

    Evanston could use that kind of city councilman or mayor. Northwestern has $11 billion in endowments. It’s time they pay the city some real taxes. Afterall, NU uses Evanston’s police and fire services. We should follow the same path as Providence residents.

    This would be a good issue to ask our brave councilmen and mayoral candidates.

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