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Special Message on the Leasing Out of School Property in Chicago.

State of Illinois, Executive Office,
Springfield, March 6th, 1895.

To the Gentlemen of the Senate and House of Representatives:

I desire to direct your attention to the importance of more thoroughly protecting the productive properties belonging to the school fund of the State, and also of striking from the statutes all provisions under which vast amounts of property escape taxation.

1st. In some portions of the State, particularly in Chicago, there are very valuable lands which belong to the school fund, and the rent of which was intended to maintain the public schools. Some of the most valuable land in the heart of that city is of this character. Besides numerous other pieces there is the entire block bounded by Dearborn, Madison, State and Monroe streets. Years ago all school lands were leased by the Board of Education to various parties for a long term, but with the provision that there should be a revaluation every five years, and that the rent should be six per cent. per annum on this valuation. The purpose of this was to enable the school fund to get the benefit of the advance in the value of the land as the city grew larger. Under this arrangement the lessees all erected buildings which were similar to other buildings in the vicinity that were not on leased ground. Revaluations have been had from time to time, each much higher than the former, but the lessees, many of whom are prominent citizens, have been able to exert such an influence that the rent produced by this ground has always been far below that paid for ground belonging to private individuals, in the same locality and no more desirable, so that these school leases have become very valuable over and above the value of the buildings. Some of them have been sold for large sums and others are held at over half a million dollars, whereas, it a fair rental were paid, this would not be the case.

It is found that the owners of our great daily newspapers hold leases of school lands. Three of these papers are actually published on school lands, and it has happened in the past that when certain men made a strong effort to compel the payment of a fair rent on this land they were made targets of abuse by at least one of these newspapers. The original lease provided that the Board of Education should alone select the three appraisers. The theory on which the contract was made was that the lessee should pay all the ground was worth from time to time and that, as the members of the board were not personally interested, they would not ask more. This was the contract. But eight years ago, after an appraisement had been made and there was some litigation, this Board of Education took the remarkable step of waiving this right and entered into a contract whereby it was in the future to select only one appraiser, and the other two were to be selected by two different judges of Chicago. Now, while these judges will always be honest and able, yet experience has shown that as a rule judges are as sensitive to newspaper influence as other men. When, therefore, the board gave up the right to name the appraisers it lost what was of great value to the public. The time has now arrived for making a new appraisement, and it is proposed by some of the parties in interest, who pose as patriotic citizens that the board shall waive the right to have revaluations from time to time


altogether. This would prevent the school fund getting the benefit of the appreciation in the value of land in the future and would be practically robbing the school fund in advance. Further, as we are just emerging from a panic, this is not a good time to fix values for the future. Not only should this be prohibited by emergency legislation, but, if possible, measures should be adopted that will compel the payment of such rental in the future as the ground is worth. At present the entire block above described pays only $166,521 per year, while the corresponding piece of ground on the opposite side of the street is worth more than twice this sum in addition to the taxes. These school grounds are exempt from taxes. The law contemplated that the rent should be that much higher. Instead of this, it has been kept lower. For example: The southwest corner of State and Madison streets is the most valuable corner in the city. The lot is 48x80, and leased to Mr. Otis, who pays $15,120 a year rental on the ground, and no taxes. The building is old and of little value, yet he sublets it at a rental which, after paying the ground rent and all expenses, nets him over forty thousand dollars ($40,000) per year. As this is due to the value of the ground, most of this sum should go to the school fund. The southeast corner of Dearborn and Madison streets is leased to the Chicago Tribune Company. The ground is 72x120 feet and at present pays a rental of only $12,000 a year, while on the opposite corner, diagonally across Dearborn street, a piece of ground 20x40 feet, having only 800 square feet, is rented at an annual sum of $10,000 in addition to the taxes, which at present amount to $2,240, bringing the annual cost of the ground to over $12,000. Again, on the southwest corner of Dearborn and Madison streets a piece of ground 50x92 ˝, being but little more than half as large as the Tribune lot, and just across the street from it, is rented at an annual rental of $26,900 in addition to the taxes, which now amount to over $3,000, making the annual cost of the ground alone $30,000. In comparison with what other property in the same locality is paying, it is clear that the Tribune lot is worth nearly three times the rent it now pays, and that the owners of the Tribune have for a number of years been pocketing in the neighborhood of $25,000 a year that should have gone to the school fund.

Second. For the purposes of general taxation other property is assessed at from one-fourth to one-fifth of its market value. This newspaper, aside from the real estate, has a cash market value of over three millions of dollars and for many years has been paying dividends on this sum. If it were assessed on the same basis as other property, its assessment would be at least $600,000, and it would have to pay upwards of $40,000 a year taxes, yet it manages to escape with an assessment of only $18,000, and pays only about $1,500 taxes, so that the owners of this paper have for many years been able to pocket in the neighborhood of $40,000 a year that should have gone to the public treasury for taxes. This added to what should have gone to the school fund makes over $60,000 a year that has been diverted from the public into the hands of private individuals in this one instance.

As these newspapers have much to say about patriotism and a higher citizenship, they should set a better example. Waving the flag with one hand and plundering the public with the other is a form of patriotism that is getting to be entirely too common and is doing infinite harm to our country.

Under the Constitution new legislation does not take effect until July 1, unless it contains an emergency clause, and, as the next assessment of


property for purposes of taxation will be made before that time, I respectfully urge immediate emergency legislation which will wipe out all laws under which glaring injustice and wrong can be perpetrated.