PERFORMING ARTS: Chicago’s cultural comeback is falling short. PAGE 3
GREG HINZ: What our city needs from Vallas and Johnson. PAGE 2
CHICAGOBUSINESS.COM | MARCH 6, 2023 | $3.50
City Council is boxed out of budget making
KAEGI VS. DOWNTOWN LANDLORDS: ROUND 2
Rushed votes, lack of independent analysis shield mayoral spending plans from aldermanic scrutiny
JOHN R. BOEHM
BY STEVE HENDERSHOT
This time, the assessor may have an edge in his campaign to boost property tax assessments on trophy towers like the Aon Center and Prudential Plaza I BY ALBY GALLUN
F
ritz Kaegi, tormentor of downtown landlords, is back at it. After trying unsuccessfully to push through big commercial assessment hikes in Chicago last year, the Cook County assessor is trying again with more than 200 major downtown buildings, including the Aon Center, Prudential Plaza and the Old Post Office. If Kaegi succeeds, many downtown office landlords could face steep property tax hikes at an especially bad time, as they grapple with the worst office market in decades. It’s the next round in a fight Kaegi and commercial property owners have been waging since the former investment manager See KAEGI on Page 18
THE ASSESSOR’S OFFICE MAY SEEM LIKE AN ARCANE BACKWATER OF COUNTY GOVERNMENT, BUT ITS DECISIONS HAVE MAJOR IMPLICATIONS FOR MILLIONS.
As Chicago’s second Daley dynasty ended in May 2011, the departing regime left a gift for the new one: a pension-debt problem that had been quietly snowballing for a decade before exploding into view in the runup to the election. With nearly a third of the City Council following departing Mayor Richard M. Daley out the door, a bewildered cohort of freshmen council members scrambled to understand the mess they had inherited. At the turn of the 21st century, the city’s four pension funds all were stable and funded at or near the levels of peer cities. Chicago wasn’t flush, but it was solvent. But in the late 1990s, the state of Illinois sweetened the pension packages and the city didn’t raise its contribution levels. Chicago began falling behind — slowly at first, during the market boom of the 2000s, and then sharply in
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INSIDE Want better government? Strengthen the City Council. PAGE 12 Reform of Chicago’s City Council should come from within. PAGE 12
the wake of the financial crisis of 2008. By the time Daley left office, the four pension funds were funded at only about half their levels in 2000. One of the new council members, 43rd Ward Ald. Michele Smith, dug into the city’s budget to better understand the issues. She felt up to the task, armed with 15 years of experience as See BUDGET on Page 20
Red ink threatens Allstate’s stock-buyback machine BY STEVE DANIELS A terrible 2022 knocked Allstate’s capital to historic lows that endanger the insurer’s aggressive stock buybacks. Northbrook-based Allstate spent $2.5 billion on share repurchases last year despite posting a
$1.4 billion net loss. In response, Allstate has slowed buybacks slightly. A $5 billion repurchase program that was supposed to be completed by the end of March has been extended through September. There was $802 million left on that authorization at yearend, and CEO Tom Wilson has
said that will be completed. What happens next? The answer matters because stock buybacks are a major source of Allstate’s investor appeal. The company doesn’t grow much, but its consistent practice of buying back much more stock than it issues each year boosts earnings
per share, supporting Allstate’s share price even as its core auto insurance business spews red ink. Allstate’s auto insurance profit margins led the industry until about 18 months ago. Now it’s well into the red, which the See ALLSTATE on Page 17
Tom Wilson
BLOOMBERG
Hyperaggressive repurchases have shored up the giant insurer’s stock as losses rock its auto insurance business
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JOE CAHILL
UTILITIES
Rivian may have to consider whether it makes sense to go it alone. PAGE 3
Electricity rate shock coming this month for ComEd customers. PAGE 4
3/3/23 3:15 PM