Millions in Tax Breaks for Ed Burke’s Law Clients Fronted by Fellow Aldermen

Ald. Patrick Daley Thompson and former Ald. Michael R. Zalewski sponsored six resolutions that benefited clients of Burke's law firm. The moves allowed the now-indicted alderman to skirt city conflict-of-interest rules.

Ald. Edward Burke (Ashlee Rezin Garcia/Sun-Times)

In a sharp break with City Hall convention, two Chicago aldermen fronted measures for now-indicted Ald. Edward Burke that steered millions of dollars in property tax breaks for Burke’s law clients in his Southwest Side ward.

The half-dozen measures found by the Better Government Association allowed Burke to skirt city conflict-of-interest rules. And some of the resulting tax break measures came even as federal agents quietly built their abuse-of-power case against him, the longest-sitting alderman in Chicago history.

In two instances, Burke’s name and ward number were scratched off official city resolutions and the other aldermen’s names and ward numbers were penciled in as sponsors of the measures.

Ald. Patrick Daley Thompson, 11th, and Ald. Michael R. Zalewski, who represented the 23rd Ward until he retired last year, sponsored the six tax break resolutions since 2011. The measures were for industrial businesses in Burke’s 14th Ward whose owners also were clients of Burke’s property tax law firm, Klafter & Burke.

Aldermen rarely sponsor resolutions that don’t involve their own wards, especially tax breaks for businesses. Of the 123 industrial tax incentive resolutions filed since 2011, all of them were sponsored by the local alderman except the ones identified by the BGA in Burke’s ward.

In a statement, Thompson acknowledged he was asked to introduce the resolutions because Burke “had a conflict.”

“It is not uncommon for an alderman to introduce an ordinance for the local alderman if that alderman has a conflict,” Thompson said in an email response to questions. “According to the corporation counsel, it was appropriate to introduce said resolution because the local alderman had a conflict.”

The revelations underscore the often-chummy relationships many aldermen share with each other and suggest a wink-and-a-nod attitude in the council to bypass conflict-of-interest rules aimed at ensuring aldermen were not personally profiting from their official actions. It also raises questions about the city’s system for handling these types of tax breaks, which were approved by Mayor Rahm Emanuel’s planning department before they made their way to the council floor for a vote.

Thompson pointed to the planning department’s sign-off on the tax breaks, saying that “these projects are heavily scrutinized by the Department of Planning and Development” and that a resolution is not brought to the council until the department has “determined it is a good project for the city.”

Patrick Daley Thompson's signature crossing out Ed Burke's name
Ald. Edward Burke’s name and ward number were scratched off this official city resolution and Ald. Patrick Daley Thompson's information was penciled in as a sponsor of the tax-break measure for the property at 5000 S. Homan Avenue.

“In these cases the department approved and supported the resolutions,” he said.

In one case, the city said the tax break could save one Burke client $3.1 million over 12 years.

Burke’s dual roles as alderman and private attorney are also the key elements of the pattern federal prosecutors outlined in late May when they indicted Burke and accused him of using his elected office to shakedown businesses that needed his help at City Hall to hire Klafter & Burke for property tax appeal work.

Despite his legal troubles, Burke was re-elected earlier this year. Still, he resigned his long-held post as chairman of the council’s powerful finance committee following his arrest and, in April, filed papers with the state withdrawing from Klafter & Burke. His daughter is still a member of the firm and it is not clear whether the alderman is getting any payments from the firm’s partnership.Burke, who has pleaded not guilty to the federal racketeering and bribery charges, did not return phone calls or answer a list of questions emailed to him about the tax breaks. One of his criminal defense attorneys, Charles Sklarsky, declined comment.

Both Zalewski and Thompson also have come under federal scrutiny. Zalewski’s home was searched this spring by federal agents as part of what sources said was an investigation seeking records regarding Illinois House Speaker Michael Madigan. Zalewski did not comment.

His attorney, Tom Breen, said in an emailed statement that while he has advised Zalewski “not to comment on any aspect of an ongoing investigation, we are confident Alderman Zalewski followed all applicable City Council rules regarding substitute filing when a colleague perceives a conflict of interest.”

Thompson also has drawn interest as part of a probe involving a failed bank in his Bridgeport neighborhood, according to the Sun-Times.

All three aldermen hail from the South or Southwest sides and Burke has supported both Zalewski and Thompson with thousands of dollars in campaign cash, records show. Zalewski also headed the council’s aviation committee at the same time Burke oversaw the finance committee. And Burke has a long history with the Daley family, including former mayors Richard M. Daley and his father, Richard J. Daley. The elder Daley was Thompson’s grandfather and the younger Daley is Thompson’s uncle.

Ward Map
Jared Rutecki/BGA

The city’s ethics code prohibits aldermen from voting on legislation that affects personal business clients and contacting city officials on behalf of those clients. While Thompson and Zalewski’s sponsorship allowed Burke to skirt the conflict-of-interest rule, the BGA found Burke wrote a letter on behalf of one of the clients and voted in favor of a tax break resolution that benefited another of the law clients.

Burke has previously attempted to avoid conflict-of-interest issues by recusing himself from council votes. The BGA and WBEZ documented 462 recusals by Burke, by far the most of any alderman since 2011. Many of those cases involved his clients. There have also been repeated examples where Burke took actions at City Hall to benefit his clients.

Some of the 462 recusals involved the tax breaks sponsored by Thompson and Zalewski for Burke, which are called 6b incentives. The tax breaks are highly sought after because they slash the level at which an industrial property is assessed. Industrial property is typically assessed at 25% of its market value but those that receive a 6b designation see that drop to 10% for the first ten of the tax cut’s 12-year life. The cut is made to encourage businesses to develop new facilities, rehab existing ones or find new uses for abandoned structures.

Before the tax breaks take effect, they need to be approved by the Cook County Assessor’s Office. But before the assessor grants the incentive, it must first be approved by the local municipality — in Chicago, the City Council must pass a resolution supporting the tax break.

Aldermen traditionally have to sign off on such projects in their wards prior to the measures being put up for a council vote. In a cornerstone of what has long been called aldermanic prerogative, the city’s planning and development department required the local alderman to write a letter of support, city records show. The local alderman is also expected to sponsor the corresponding resolution.

“You had to have the local alderman’s support,” said Andrew Mooney, a former Chicago commissioner of planning and development. “If the local alderman didn’t approve it, it was not going to go.”

Mayor Lori Lightfoot on her first day in office issued an executive order curbing some of that aldermanic power and resulting in the planning department announcing it “will no longer require a letter of support” for tax incentives or other programs.

‘Alderman Edward M. Burke is in support’

Perhaps the most telling tax break introduced by one of the other aldermen was for the Brite Logistics trucking company’s warehouse project at 5000 S. Homan Ave.

Brite Logistics’ owners initially filed paperwork for the incentive in April 2015. That May, records show, the owners hired Klafter & Burke to represent them for property tax appeals. Then in June 2015 the firm closed on the purchase of the warehouse on Homan Avenue.

Between 2015 and 2018, according to records, the owners spent more than $5 million rehabbing the building, and Burke’s firm twice successfully won property tax reductions for them using the Cook County appeals process and citing vacancy as the rationale for the decreases.

In 2018, the owners went back to City Hall to obtain the resolution of council support for the incentive, which the city estimated could save the firm $1.3 million over 12 years.

A June 5, 2018 memo written by city planning officials stated, “Alderman Edward M. Burke is in support of the proposed 6(b) designation” and “would testify in favor of the project.”

Ald. Ed Burke
11th Ward Ald. Patrick Daley Thompson (Rich Hein/Sun-Times)

Three weeks later, Emanuel’s Law Department prepared the resolution with Burke’s name and ward typed on the document. But when the resolution was introduced the next day, Burke’s name and ward number were both crossed out and substituted with Thompson’s name and ward number, which were written in by hand. The resolution passed, with Burke abstaining from voting.

Armed with the city resolution, the owners requested final approval for the incentive from the county assessor. But, according to public records, they were unable to qualify in 2018 because the warehouse was not fully occupied. They are eligible this year to apply again for the incentive.

Brite Logistics’ experience in getting aldermanic approval for the tax incentive differs greatly from that of the warehouse’s previous owner, Sitex Group, a firm that specializes in developing and investing in industrial real estate.

Records show Sitex spent eight months trying to get Burke’s support for a 6b incentive for the same Homan Avenue warehouse, but failed. Sitex had not hired Burke’s firm for the property or for any of its Chicago-area properties, records show.

In April 2014, Sitex signed a contract to buy the then-vacant 128,000-square-foot warehouse. The deal included an unusual clause demonstrating the importance of obtaining the 6b status, along with the key role played by Burke: “… this Contract is contingent upon Buyer securing a 6B resolution and support from the City of Chicago and Alderman Edward M. Burke,” the contract reads.

In December 2014, the contract was re-written because “despite diligent efforts by both Parties, Purchaser has been unable to obtain the required support for the Incentive.”

Under the amended contract, Sitex agreed to purchase the property without the 6b status if the property was sold for $3 million, $425,000 less than the previous price. The revised contract, however, held out that the price would go back to $3.425 million if Sitex was to “obtain a letter of support from Alderman Burke” before the deal closed.

They never got the letter from Burke and the sale closed in January 2015 for $3 million. 

Sitex began spending $800,000 to renovate the property and sold it to the owners of Brite Logistics in June 2015 for $5 million. The new owners had already hired Burke before they closed the deal.

Neither officials from Brite nor Sitex responded to messages for comment or emailed questions.

Resolution fronted even after Burke arrest

Thompson also sponsored two other tax-incentive requests for Burke clients in the 14th Ward, including one that Burke voted for and that passed the council in April, three months after Burke’s arrest.

That council resolution benefited Amigos Foods, a meat processing company with numerous ties to Burke.

Burke’s law firm began representing Amigos in August 2018 after Burke, as alderman, helped rezone former railroad land at 51st Street and St. Louis Avenue that is now Amigos’ main processing and warehouse facility. Klafter & Burke represented a different piece of Amigos-owned property on the Southwest Side, records show.

Thompson introduced the 6b resolution for the 51st and St. Louis property nearly a year ago in October and it passed the council in April of this year without opposition and including Burke’s vote in favor.

The tax break could be worth hundreds of thousands of dollars in tax breaks per year for what Amigos describes as a $25 million facility that just recently opened. The actual value of the incentive won’t be known until the assessor’s office approves the tax break and assesses the value of the new construction.

Reached for comment on the tax measure, Amigos’ chief financial officer, Manny Rangel Jr., replied with an email stating the company had “no plan to respond.”

Thompson also sponsored a resolution to give a tax break to the Bond Corp., a specialty cleaning cloth company that moved to the 14th Ward in 2011 after a fire destroyed its facility on the Near West Side.

A year after Bond purchased a 50,000-square-foot industrial building near 42nd Street and Kildare Avenue as its new manufacturing headquarters, the company hired Burke’s law firm to do property tax appeal work, records show.

The new manufacturing headquarters already had a 6b incentive when Bond purchased the building but, in the fall of 2015, the company applied to renew the incentive for another 12 years.

City Hall records show that planning department officials requested Bond’s owners submit a letter of aldermanic support to receive the renewal. In response, Bond’s attorney noted Burke had a conflict of interest and could not write a letter but that Burke did not object.

“Note that the property is located in Alderman Burke’s ward,” the attorney, James FortCamp, wrote in a Dec. 14, 2015 letter to the city. “My client has reached out to Alderman Burke’s office and was informed that an Aldermanic letter of support cannot be issued (however, they do not object to the renewal) due to a conflict of interest.”

Nonetheless, a few months later, the resolution authorizing the tax break renewal made its way to the City Council floor, with Thompson sponsoring the ordinance. The measure — which city officials projected would save the firm $232,000 over 12 years — was approved. Burke abstained from the vote. The assessor’s office also approved the tax break.

FortCamp and Bond officials did not respond to messages or emailed questions.

Zalewski’s Resolutions

Ald. Zalewski also sponsored three tax-break resolutions that benefited Burke law clients.

In 2013, General Truck Parts & Equipment, a long-time client of Klafter & Burke, purchased a 135,000-square-foot industrial facility at 40th Street and Karlov Avenue in the 14th Ward for $2.1 million.

Ald. Michael Zalewski
Ald. Michael R. Zalewski represented the 23rd Ward until he retired last year. (Brian Jackson/Sun-Times)

Two months later, Burke wrote a letter to Mooney, the then-city planning and development chief.

In the letter on the alderman's stationery, in which he never disclosed that General Truck was a private law client, Burke offered his “full support” for the company to obtain a 6b tax break to rehabilitate the property, which he said had been unoccupied since 2009. He added the project would “have a substantial impact in the community resulting in a great enhancement of the neighborhood and new employment opportunities.”

At the time, records show, General Truck was a client of Burke’s law firm and had been since at least 2007. What’s more, Burke’s political campaign funds had received $26,000 in contributions from the company dating back to the year 2000.

Following Burke’s letter to Mooney, when the resolution came before the City Council in 2014, Burke’s name and ward number had been typed in only to be crossed off by hand. This time it was signed by Zalewski, and the council passed the measure, with Burke abstaining.

In an interview with the BGA, Mooney said he did not remember the incentive for General Truck. While the planning department reviewed the proposals, he said, aldermen played a key role in getting any such incentives passed.

General Truck support document
Ald. Ed Burke wrote a letter supporting a tax break for a company that was also a Burke legal client. After writing that letter, when the resolution came before the City Council in 2014, Burke’s name and ward number had been typed in only to be crossed off by hand and signed by Ald. Michael Zalewski. The measure passed, with Burke abstaining.

“It was up to the developer/owner to work out the politics and deal with the alderman,” Mooney said.

The incentive saved General Truck, whose officials did not return calls and emails seeking comment, an estimated $171,000 in 2017 and 2018 taxes.

Another long-time Klafter & Burke client has had a 6b incentive on its property in the 14th Ward since the mid-1990s and in 2016 received a second renewal thanks to a resolution fronted by Zalewski.

Burke in 1995 pushed the initial tax break resolution for J.B. Hunt Transport Services’ trucking facility at 47th Street and Hamlin Avenue. That same year, records show, the firm began using Burke’s law firm for property tax appeal work.

In 2005, the company got its first renewal of the tax break, although Burke abstained from voting, and by May 2016, the company was back again, asking for another 12-year renewal. This time Zalewski sponsored the measure and Burke abstained again. A Burke economic disclosure report for 2015 shows J.B. Hunt paid Burke at least $25,000 for legal work that year.

The incentive saved J.B. Hunt roughly $185,000 in 2017 taxes and $183,000 in 2018 taxes. The company will save $3.1 million in taxes over the 12-year renewal period, allowing Hunt to afford $4.5 million in improvements, according to a press release at the time from Emanuel’s office.

J.B. Hunt officials did not respond to phone messages or emailed questions.

The most recent time Zalewski helped a Burke client was in 2017 when he not only sponsored a resolution for The Marvel Group in the 14th Ward but also sent a letter on its behalf to the city’s planning department.

“I am issuing this letter of support in place of 14th Ward Alderman Burke, because of his past legal work done for The Marvel Group, and the intent to avoid any possible appearance of conflict,” Zalewski wrote in March 2017 on behalf of the long-time manufacturer of office and school furniture located at 43rd Street near Hamlin Avenue.

Records show Burke’s law firm represented the company since at least 2009 for property tax appeals on its factory property. In paperwork filed with the city, officials with The Marvel Group said they needed the incentive to fix up their building.

Burke abstained from voting on that measure. The incentive has already saved the firm an estimated $91,000 in one year, records show.

Marvel officials did not respond to phone messages or emailed questions.