On behalf of the Building Owners and Managers Association of Chicago, I would like to thank you for this opportunity to provide some background information on the impact of property taxes on businesses located in commercial office buildings in the Chicago metropolitan area. 

BOMA/Chicago is a trade association that represents more than 90% of the commercial office buildings in the City of Chicago. A sister organization, BOMA/Suburban Chicago, represents office buildings in the suburbs outside of Chicago. 

The 245 office buildings that make up the membership of BOMA/Chicago contain more than 100 million square feet of office space, housing more than 15,000 businesses and more than 350,000 workers. These businesses include every possible type of professional, sales, management, creative or service industry, including legal, financial, manufacturing, consulting, insurance, advertising, high technology and much more. These small and large businesses represent the heart and soul of the largest financial engine of the Illinois economy. 

Some years ago, the City of Chicago estimated that these businesses in Downtown Chicago office buildings contribute more than $50 billion to the Illinois economy. Given the growth of our economy in recent years, that financial impact is definitely much higher today. 

BOMA/Chicago was formed in 1902, the first local BOMA association formed in the United States. Now there are 101 local associations located around North America and the World. These local associations form BOMA/International which provides information, education and advocacy for the office building industry around the world. 

Each year, BOMA International conducts the Experience Exchange Report (EER), which is an exhaustive survey of the expense and operating costs of office buildings within its membership. It is considered the most comprehensive and largest sample of such data available. It is the leading, if not the only, "apples to apples" comparison of benchmark income and expense data for office buildings in the nation.

As part of that survey, the EER documents a wide variety of office building operating expenses, including property taxes. 

For the last several years of EER surveys, Chicago has led the nation in the amount of property taxes paid per square foot.  In the 2000 EER, which represents data from the 1999 operating year, the average property taxes paid per square feet in Chicago office buildings was $6.02 per square feet.  Downtown Boston ($5.57) and Downtown Minneapolis ($5.49) can in second and third in the nation.

Please note that property taxes, like most other operating expenses, are paid by the office building tenants as part of their gross rent or as pass through expense items. Property taxes on office buildings, therefore, become taxes on the businesses which occupy that office space. For Class A Chicago office buildings, property tax expenses can range as high as $8 to $10 per square feet. 

The Chicago average of $6.02 in property taxes paid per square feet is more than twice the national average of $2.68 per square feet. In fact, the Chicago rate is 125% higher than the national average. 

Meanwhile, in the suburbs, office building tenants are paying an average of $3.75 per square foot in property taxes.  While that is significantly lower than Downtown Chicago, it still represents the second highest suburban property tax in the nation, behind only Suburban Minneapolis ($4.13).

The average property tax burden for Suburban Chicago office tenants is 40% higher than the $2.68 national average for all office building and 69% higher than the $2.22 national average for suburban office buildings.

Let me restate these facts again: 

• businesses located in Chicago office buildings pay the highest property taxes per square foot in the nation,
• suburban Chicago businesses pay the second highest suburban property tax rate in the nation. 

Either way, the property tax burden on office building tenants in the Chicago metropolitan area is the highest or second highest in the nation for their respective locations. 

Another dramatic way of looking at this property tax burden is the cost per employee. According to BON4A International EER research, the property tax cost per employee in Chicago is $1,954.62 - once again, the highest burden in the nation.

The next highest city is Boston at $1,769.73, nearly $200 per employee lower than Chicago. The property tax cost of doing business in Chicago is 10.4% higher than its next highest competitor. 

Downtown Minneapolis and Miami come in third and fourth on this list, but guess which area comes in fifth? Suburban Chicago at $1,244.76 per employee. 

Let me repeat that:

• employers in Downtown Chicago office buildings come in first in the nation on the amount of property taxes paid per employee, 
• Suburban Chicago employers come in fifth in the nation. 

BOMA/Chicago provides these facts to help illustrate why property tax relief is a critical issue not only for Chicago area homeowners, but also for businesses. 

As you begin your work of analyzing the education funding formula and the over- reliance on property taxes as a method for funding education, we urge you to keep these facts in mind. 

According to the BOMA International Experience Exchange Report: 

• Chicago office based businesses pay the highest property tax burden in the nation, both by square foot and by employee,  
• Suburban Chicago businesses pay the second highest suburban tax    burden in the country and the fifth highest overall per employee.

BOMA/Chicago, its Board of directors, officers, staff and members, all stand ready to assist the Advisory Board in any way we can to help you find a way to reduce the property tax burden on both homeowners AND businesses in Illinois.

Please let us know how we can assist you. 

Thank you for your time and consideration.