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Businesses Reap Dividends of 'Special' Tax Zone

 In many ways, Jamie Calvetti’s 20,000-square-foot facility in the former Union Stockyards is a testament to the advantages of doing business in Chicago.

A Special Service Area in the Back of the Yards neighborhood has been credited with reducing crime and improving the appearance of the streets.

Gordon Walek

Easy access to several expressways and his location in a dedicated industrial tract have allowed James Calvetti Meats—the second-generation meat processing operation he oversees as president—to thrive in this section of the Back of the Yards neighborhood. 

But for all of the benefits afforded by his ZIP code, conditions haven’t always been advantageous for business owners in the Stockyards. 

In the transitional years that saw the area transform from a meatpacking mecca to a diversified industrial park, its isolated nature created easy opportunities for break-ins, vandalism and drag racing. City services were often lacking, and police response times were frustratingly slow, as officers prioritized calls to residential districts. 

In 1991, those challenges led area business owners to establish a Special Service Area, or SSA. The locally established taxing district allowed them to impose a small property tax levy on themselves to fund additional services and cultivate a more vibrant commercial district. 

For the area’s business owners who now benefit from private security patrols, maintenance services and landscaping crews, the SSA has paid tangible dividends.

“It’s greatly reduced crime in the Stockyards over the years,” says Michael McMullin, Back of the Yards Neighborhood Council's SSA manager. A security patrol even helped prevent an attempted suicide. 

The wide range of services funded by SSAs have allowed business owners to concentrate on their day-to-day operations. “That’s what a community is,” McMullin says. “People come together, pool their resources and solve problems—that’s what an SSA does.”

Clean-up crews, such as this one on 47th Street, keep Back of the Yards streets clean and tidy.

Gordon Walek

A new day for SSAs

As helpful as an SSA can be, the process to get one established can be complicated. A sponsor agency—usually a local community development corporation or chamber of commerce that will serve as the SSA’s service provider—submits an application to the City of Chicago’s Department of Planning that includes an economic analysis and demonstrated public support from the affected properties. If the city gives the sponsor agency the greenlight to conduct a feasibility study, the sponsor agency works alongside a consultant to gather property ownership information, establish potential boundaries and discuss the community’s specific service needs. The organizations must then host a pair of community meetings and a formal public hearing before an ordinance is submitted to City Council, which ultimately approves the SSA. The entire process takes about 15 months from start to finish, says Mark Roschen, assistant commissioner of the city’s Department of Planning and Development.

LISC Chicago has long supported neighborhood partners’ work to strengthen local commercial corridors. Recently, with the growth of its Business Resource Network, LISC has become a resource to help neighborhoods navigate the process to create an SSA. Neighborhood nonprofits such as the Greater Auburn-Gresham Development Corporation and the Quad Communities Development Corporation have taken advantage of the assistance. 

“More groups are interested in what an SSA can provide their local small businesses,” says LISC Program Officer Dionne Baux. “We can come out and talk with them about what it takes, we’ve had a representative from the city present at one of our business roundtables, and we’ve connected local groups to consultants that work on SSA creation.” 

In fact, the city is recommending LISC as a financial resource for local groups interested in an SSA, and Baux says LISC has worked with a number of chambers of commerce that it hasn’t partnered with in the past. 

A street banner on 47th Street.

Gordon Walek

LISC offers interest-free project initiation loans to a CDC or chamber of commerce interested in an SSA to provide funds to do the work to get the district started. In addition, grants are available for business owners to make improvements to their districts before any SSA funds have been collected. 

A recently awarded $25,000 loan from LISC to the West Humboldt Park Development Council helped WHPDC successfully demonstrate the need, benefits and community support to create SSA #63 along West Chicago Avenue. With the new SSA as a springboard, WHPDC has created a substantial rebound in this corridor, attracting significant investments from the Citi Foundation and others. 

“It’s a sustainability mechanism for many of our (partner) organizations,” says LISC Program Officer Dionne Baux. “We want to make sure these groups have the capacity to be successful.” 

Local control

SSAs are initially established for period of 10 years, after which point they can be renewed in 15-year increments. State law caps the tax levy at three percent of the equalized assessed value of the properties within the SSA boundaries, though many groups opt to collect less. 

For instance, the Kedzie Industrial Tract—a South Side SSA bounded by Kedzie Avenue on the east, 47th Street on the north, 49th Street on the South and Central Park on the west—is on the lower end of the tax for local businesses among the city’s SSAs, at 0.98 percent. But that still allows for an annual budget of more than $130,000. 

At the local level, SSAs are overseen by a board of commissioners charged with drafting annual budgets and guiding its overall direction. Day-to-day management is handled by neighborhood nonprofits contracted by the city. This localized organizational structure allows SSA-funded projects to be more easily incorporated into broader community development efforts. 

While SSA funds typically go toward popular services such as street maintenance and the installation of flower planters, the imposition of any new tax is a difficult sell.

Case in point: A recent plan to establish an SSA along 18th Street in the Pilsen neighborhood was quickly derailed by neighbors who objected to the potential increase in their property tax obligations. 

But those with experience managing many of Chicago’s 52 SSAs say the benefits regularly offset the costs. McMullin said that while business owners are understandably hesitant to raise their own taxes, most of the individuals who work within the boundaries of the two SSAs he oversees have come to appreciate the tool. 

Roger Carter, an artist-in-residence at the Bronzeville Artist Lofts, works on a piece during the Aug. 13 Bronzeville Night event hosted by the Quad Communities Development Corporation. The local nonprofit manages a pair of Special Service Areas in the historic South Side community.

Paolo Cisneros

“They’re getting services they couldn’t ordinarily afford on their own,” he said. “They don’t mind paying their dues.” 

To see what an SSA can mean, look to a stretch of 47th Street, where a recurring summer festival, Bronzeville Nights, has been hosted by SSA managing group Quad Communities Development Corporation. 

Over the course of a breezy summer evening, neighbors take in public art displays, dance along to a live jazz quartet and interact with local merchants. There have been two Bronzeville Nights this year, with another scheduled to start at 6 p.m. on Sept. 25 near 43rd Street and Forrestville Avenue.

SSA Manager Christyn Henson says that the events helped residents more easily understand the effect that SSAs can have in terms of beautifying and revitalizing local commercial strips. Because, in the end, a community that has healthy small businesses is a better place to live.

Posted in Economic Development, Back of the Yards, Quad Communities

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Local Initiatives Support Corporation Chicago connects neighborhoods to the resources they need to become stronger and healthier.

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