Strategic Opportunities: Leveraging the New “Megaproject” Property Tax Program

Mary Kate Fitzgerald, Fitzgerald Law Group

Summary State lawmakers are advancing HB910, which creates the “Megaproject Assessment Freeze and Payment Law”. While this legislation has been heavily publicized as a vehicle for a new Chicago Bears stadium, it establishes a permanent, statewide framework that any developer making a capital investment of at least $100 million can utilize. For our clients planning large-scale commercial, industrial, or entertainment developments, this program offers an unprecedented opportunity to secure long-term property tax predictability, massive assessment freezes, and substantial material cost savings.

The Core Benefits: Assessment Freezes and Tax Exemptions If your future project qualifies as a “megaproject,” it will be eligible for two major financial advantages:

  • Decades-Long Assessment Freezes: The law freezes your property’s assessed value at its “base year valuation” for the duration of the incentive period. This completely eliminates the value added by your multi-million-dollar project from standard property tax consideration.
  • Payments in Lieu of Taxes (PILOTs): Instead of volatile annual property taxes, you will negotiate an “incentive agreement” with the local municipality to make an annual “special payment”. This payment can be fixed or tied to the Consumer Price Index, providing immense budget predictability. The requisite floor is that the payment must be at least 10% of the property tax levied on the site in the year before the base year (waived for projects over $2 billion).
  • Building Materials Tax Exemption: Megaprojects automatically receive a Building Materials Exemption Certificate, eliminating the 6.25% State sales tax and applicable local taxes on all building materials incorporated into the project.

Investment Tiers and Term Lengths The length of your assessment freeze depends on your capital commitment:

  • Tier 1: $100M+ investment secures a 25-year freeze.
  • Tier 2: $500M+ investment secures a 30-year freeze.
  • Tier 3: $1 Billion+ investment secures a 40-year freeze.
  • Bonus: If your site requires environmental remediation, the freeze period for each tier is extended by an additional 5 years.
  • RREDY Projects: If your project involves rehabilitating underused rail yards or infrastructure, it qualifies as an “RREDY megaproject” and receives a 40-year freeze.

Statutory Requirements and Exclusions To take advantage of these incentives, developers must be prepared to navigate strict statutory mandates:

  • Labor & Contracting Requirements: You must execute a Project Labor Agreement (PLA) before any demolition or construction begins. This PLA must dictate minimum wages, benefits, and include a no-strike/no-lockout clause. Additionally, you must commit to a goal of awarding 20% of the project’s contract dollars to minority-owned businesses.
  • Excluded Developments: The program cannot be used to develop data centers. Furthermore, with the exception of specific RREDY rail yard projects that meet local affordable housing requirements, megaprojects cannot include residential dwelling units.
  • No TIF Double-Dipping: Your megaproject property cannot simultaneously receive benefits from a Tax Increment Financing (TIF) district.
  • Strict Ethics Rules: You cannot hire any local official, lobbyist, or outside attorney who negotiated the megaproject agreement for one year after its execution, and you cannot provide free professional sports tickets to elected officials.

Next Steps For clients with $100M+ capital projects on the horizon, the Megaproject Assessment Freeze represents a powerful tool to eliminate assessment risk and lower your capital stack costs. We recommend engaging our firm early in your site selection process so we can structure your project to meet the statutory requirements, lead negotiations on the PILOT amount with the local municipality, and ensure you secure maximum benefit under this new law.