HOW BURKE BENEFITTED, CHICAGO STYLE, FROM VIENNA BEEF DEALS
Nine months after he helped get $ 5M tax deal for hot dog makers, his law firm gained a client: Vienna Beef
This is a story about how hot dogs and money are made, Chicago- style.
Nine months after Ald. Edward M. Burke led the Chicago City Council in approving a nearly $ 5 million tax deal for Vienna Beef to buy a vacant factory in Bridgeport in 2013, Burke’s law firm got a new client — Vienna Beef.
It hired the alderman’s law firm to push for property tax cuts on the factory site.
And Burke’s firm got results. It got Vienna’s property taxes slashed by an average of 70 percent over the next two years, arguing to Cook County Assessor Joseph Berrios and the Cook County Board of Review that cuts were merited because the factory wasn’t operating while renovations were underway. That saved Chicago’s biggest hot dog maker a total of $ 308,460, a Chicago SunTimes analysis has found.
On top of that, records show Burke’s firm won a refund of $ 135,602 of property taxes Vienna had paid when it bought the factory at 1000 W. Pershing Rd., where Sara Lee Corp. used to make Best’s kosher hot dogs.
Klafter & Burke — a small law firm that specializes in property tax work — was paid an undisclosed percentage of the money it saved Vienna on taxes, according to Vienna president John “Jack” Bodman, whose father is the company’s biggest shareholder.
“They did a nice job for us,” Bodman says. “When the assessor came in with a really high number, he got it down for us. He got us an appropriate tax bill.”
It was the first time Burke’s firm had done work for Vienna. At the same time, the iconic Chicago hot dog maker was using another law firm, Tews Thiesen & Thiesen, to challenge the property assessments on the company’s headquarters at 2501 N. Damen.
That’s where it made hot dogs until Mayor Rahm Emanuel decided the city needed a chunk of that land to untangle the traffic nightmare at the intersection of Damen, Elston and Fullerton.
Vienna hired Klafter & Burke for the property tax work for the new factory, Bodman says, because it hadn’t “had a lot of success” winning cuts in the assessments on the Damen property.
“I don’t know how we found Burke’s office on that,” Bodman says. “I don’t know if we looked at more companies besides his.”
The Southwest Side alderman had praised Vienna’s commitment to Chicago in October 2013 in pushing the Chicago City Council to approve a $ 4.97 million tax subsidy for the company to buy the South Side factory, where it moved its hot dog making operation. Burke voted for the deal.
“This is a great example of what city economic development ordinances can do,” Burke told Emanuel and the City Council before a 49- 0 vote to give the company the tax subsidy to buy the factory. “The commitment of the family that owns Vienna to keep the company in Chicago is, in my opinion, something admirable. A lot of these companies could move to Wisconsin,
they can go to Indiana, a lot of other places. But this is a true commitment to the history of Chicago and the history of the meat- producing record that Chicago has had for all of these many years.”
On Dec. 5, 2013, Vienna bought the factory, using the city subsidy. The same day, City Hall also paid the hot dog maker nearly $ 5.8 million to buy 1.1 acres of Vienna’s North Side property to realign Elston Avenue.
Vienna kept its headquarters and a retail store on Damen but closed the factory there.
Bodman says hiring Burke’s firm had nothing to do with his support or the money his company got from City Hall.
“To imply we had to do something for Ed Burke to get this to go through is not true and not in the right spirit,” Bodman says.
In financial disclosure statements filed last spring with City Hall, Burke reported that Vienna Beef paid his firm between $ 5,000 and $ 24,999 a year in both 2015 and 2016. The disclosures require giving a range for how much compensation an alderman received, not the exact amount.
Vienna also gave $ 6,000 to Burke’s campaign funds in the past two years, records show. Burke hadn’t received any campaign contributions from the company before it hired his law firm.
Burke — alderman of the 14th Ward since 1969 — didn’t respond to written questions about his ties with Vienna.
It’s one of 36 companies his law firm represents that do business with City Hall or sister city agencies. Those companies paid Burke’s firm at least $ 395,000 a year in 2016, according to the alderman’s financial disclosure statement last spring.
Vienna Beef was founded by two Hungarian immigrants, who introduced their hot dogs at the 1893 World’s Columbian Exposition world’s fair held in Chicago. The company supplies Cubs and Sox games, and its hot dogs are a staple at stands across the city and suburbs.
According to the company, it produced more than 104 million hot dogs and Polish sausages in 2014 at the factory on the North Side as it was preparing to move production about seven miles to the South Side. Vienna had been operating on Damen since 1972 and had recently reno- vated its factory there when city transportation officials decided they needed part of that land to realign Elston to ease the traffic nightmare at the six- way intersection in the booming area.
“We would have preferred to stay where we were,” Bodman says. “It became clear this road was going to go through. They kept adding sidewalks, bike lanes. ... Our main wastewater facility was in the ground. Once it became clear that had to be replaced, it was clear we had to move.
“We found a vacant hot dog building in the city,” he says, making a move less costly.
As the city was negotiating to acquire the 1.1 acres of Vienna’s North Side property, the company reached a deal in August 2012 to buy the vacant factory in Bridgeport.
Vienna initially wanted $ 13.8 million in tax- increment financing from City Hall to buy and renovate the factory, according to city records, before ending up with $ 4.97 million to buy the property.
Meanwhile, it haggled with City Hall over how much the city should pay for taking part of the Damen Avenue land. The city’s appraisers said it was worth between $ 3.1 and $ 3.4 million, records show. Vienna countered that its land would be far less valuable without the parcel the city wanted, so it should get $ 18.1 million. They settled on under $ 5.8 million.
About seven months later — on July 14, 2014 — Vienna hired Burke’s firm to contest the $ 4 million market value that Berrios’ office had placed on the Pershing Road property, county records show.
Burke’s firm argued that the assessor should lower the value — which would end up reducing the tax bill — because the building was largely vacant during the ongoing renovations. Berrios agreed to a one- year break, reducing the property’s estimated value to $ 1.3 million.
Burke appealed for an even greater cut to the Cook Coun- ty Board of Review, a panel of three elected officials, two Democrats and a Republican, which cut the property’s assessed value to slightly more than $ 1 million.
Burke’s efforts left Vienna with a tax bill of $ 53,995 due in 2015 instead of $ 209,315 — saving the company more than $ 155,000.
The following year, Berrios reassessed Vienna’s factory, raising the property value to $ 5.3 million. That prompted another appeal from Burke’s firm on Nov. 2, 2015, which again urged the assessor to reduce the value because the factory still wasn’t fully occupied.
Berrios dropped his estimated value to $ 1.5 million. Again, Burke appealed to the Board of Review, which wouldn’t cut the figure any further.
Vienna was left with a tax bill of $ 78,545 due in 2016 instead of $ 231,686, saving the company more than $ 153,000.
In December 2015, hot dog production began at the Pershing Road factory, near the entrance to the old Chicago stockyards.
That same month, Burke’s firm filed a lawsuit asking a Cook County judge to issue a “certificate of error” to refund most of the property taxes that Vienna paid when it bought the factory.
A judge agreed. On April 5, 2016, Cook County Treasurer Maria Pappas sent Burke’s law firm a check for $ 135,602 plus $ 5,360 in interest to reimburse Vienna.
Asked about Burke being hired to do work for Vienna Beef after championing the city tax subsidy, Grant Klinzmann, a spokesman for Mayor Rahm Emanuel, says: “Those are questions for the alderman. But I would note there are laws governing conflict of interest to address these sort of scenarios, and the mayor is not the arbiter of those laws.”