TAX NEWS - JUNE 2010

Chicago Tax: Burke questions whether developer who wants Wal-Mart paid taxes

by FRAN SPIELMAN, 03 June 2010 -- The City Council's most powerful alderman today used an obscure tax issue to turn up the heat on Wal-Mart to appease union leaders demanding that the world's largest retailer pay its employees a "living wage" of at least $11.03 an hour.

As expected, the Zoning Committee put off a showdown vote on Chicago's second Wal-Mart at the company's request.

But Finance Committee Chairman Edward M. Burke (14th) showed up anyway to question why the developer of the proposed Wal-Mart-anchored Pullman Park did not pay the city or the CTA a transaction tax after a change in ownership.

The ownership change — to an entity known as North Pullman 111th, Inc. — was triggered by the takeover of Park National Bank, an original partner in the development, by the Federal Deposit Insurance Corp. (FDIC).

David Reifman, an attorney representing the developer, argued that the Far South Side property is located in an enterprise zone and, as a result, would be "exempt" from the transaction tax.

But he was not as certain about the CTA portion of the transaction tax and acknowledged that additional research would be needed.

Burke let him have it.

"If an applicant is in arrears on a tax — just as we have disclosure requirements for scofflaws or deadbeat dads — if it isn't now an invalid application, it ought to be," Burke said.

Even if Reifman is correct and enterprise zone transactions are exempt from city taxes, it may not apply to the CTA portion of the tax, Burke said, adding, "I don't think we included that in the ordinance."

"I, for one, will oppose any further action by this committee until such time as we get answers to these questions, and until we learn whether there's an obligation for a transaction tax, what the [financial] consideration was for a transfer of ownership," the alderman said.

Burke has single-handedly blocked a Finance Committee vote on another proposed Wal-Mart, that one in Chatham.

He has insisted that developments that receive city subsidies directly or indirectly pay at least $11.03-an-hour. He doesn't want to risk alienating union support he needs in next year's aldermanic election — not after organized labor spent millions in 2007 to elect a more labor-friendly City Council.

Today's Perry Mason-style questioning was apparently aimed at forcing Wal-Mart to re-open talks after last month's unprecedented meeting between five Wal-Mart executives and five union leaders.

"I'm disturbed because … I'm supposed to be in Washington D.C. with my son's 8th-grade class and I cancelled … because I wanted to be present for this meeting," Burke said.

"Now, I'm here and once again it's not going to be heard."