May 7, 2009

SC Johnson, Becker traded tax-exempt status for Uptown cash

SC Johnson's response to RacinePost's stories.

So what's the big deal about SC Johnson getting two of its signature buildings taken off the tax rolls?

Commenters have pointed out SCJ is a valuable corporate citizen that provides millions of dollars directly and indirectly into the local economy. A minor tax break for two buildings designed by the great Frank Lloyd Wright doesn't seem like much of an issue.

But there's more to the story.

SC Johnson received the tax-exempt status by swinging a deal with former Mayor Gary Becker. Becker agreed to support SCJ's request to Gov. Jim Doyle, and SCJ agreed to donate $100,000 a year for five years to the city's Uptown program.

The deal was in place by late 2007 and went into affect when Doyle issued an executive order on Jan. 10, 2008 naming SCJ's Administration Building and Research Tower historic landmarks, according to our sources. The executive order, which made the buildings exempt from property taxes, also included the two new buildings being built as part of Project Honor.

City Development Director Brian O'Connell said in an interview Friday that he was involved in part of the agreement. First, SC Johnson officials told the city in 2007 it was pursuing a property-tax exemption from the state for its Wright-designed buildings. State law specifically allows Wright buildings to go tax free with an executive order from the governor.

"It could have been done without city consent," O'Connell said.

The city wrote a letter to the governor saying it would not oppose SCJ's request to make the buildings tax exempt, O'Connell said.

According to a second source, who requested anonymity, Becker supported SC Johnson's request because the company offered the five-year, $500,000 grant for Uptown. By Becker's reasoning, the source said, the deal was OK because SC Johnson was getting less in return than it was giving - for five years. SCJ will save at least $25,000 a year in property taxes (a lot more once Project Honor is complete), but it's paying $100,000 to the city.

Under the deal, the Racine Unified School District, Racine County, Gateway Technical College and the state (who all receive a portion of local property taxes) receive nothing despite losing SCJ's buildings from their tax rolls, as well.

O'Connell said SC Johnson has yet to make its first $100,000 payment to the city. The final details on the five-year grant are being worked out, he said. The first payment will go toward renovating the facade of 1418 Washington Ave., he said.

1418 Washington Ave. is the building on the right

O'Connell said he was not part of any talks between Becker and SC Johnson about the tax-exempt status, and couldn't comment on whether there was an explicit deal to trade the city's support for the governor's executive order for the $500,000 Uptown grant.

But our second source said there was an agreement between Becker and SCJ to swap the tax-exempt status and the Uptown money. Becker felt he had to offer SCJ something in exchange for the money needed to kickstart the Uptown artist program, our source said. So he agreed to support the company's request to the governor.

"He was looking for a quid pro quo on this one because of the money he wanted for Uptown," the source said.

O'Connell said he didn't know if Becker ever considered bringing the city's support of SC Johnson's historic status to the City Council. But the SC Johnson grant was brought before the city's Redevelopment Authority on Oct. 1, 2008. The money can be used to improve public safety, to renovate facades on RDA-owned buildings, to conduct design services, to renovate the residential neighborhood and to market the artist relocation program.

While Becker may not technically have had to bring the deal with SCJ before the council, our source said the deal may not pass the "smell test" for ethical government.

Becker was the type of mayor who got things done and worried about the repercussions later, they said. In this case, he needed seed money for the Uptown project so he made a deal with SCJ.

Under this scenario, SC Johnson actually went out of its way to help the city. The company, which has spent millions maintaining its Wright buildings, likely could have gotten its buildings exempted from property taxes without paying any money to Uptown. Instead, the company engaged the city and worked out an agreement.

But the deal will cost the city, Racine Unified, Racine County and Gateway in the long run. SCJ may pay around $25,000 in taxes on its current buildings, but its new Project Honor buildings will be worth upward of $20 million - millions that are now off the tax rolls forever.


  1. And we have as Mayor some one cut from the same cloth. OMG

  2. City Development Director Brian O'Connell should resign at once. He has a duty to protect the city from sweetheart deals.
    I now wonder what he?City of Racine was offered for the West Racine slum project? 30 pieces of sliver?

  3. I'm pretty sure that if you check the tax records for Mt. Pleasant and Sturtevant you'll find that Johnson's Waxdale plant is free from the burden of property taxes as well.

    Pretty sweet deal if you can get it 'eh? The politicians ought to be hung from light poles so we tax paying citizens and business owners who pay our share can beat them like pinatas.

    How many vacant storefronts line our city's Main Street?


  4. abuse of power, misconduct in office, I'll say it bribery?

  5. I'll bet there must have been aldermen on the council that knew about this. Becker and Friedel were pretty close - maybe someone should ask Friedel for answers.

    How many other deals happened behind the scenes like this?

  6. If I hear ARTIST one more time I'll puke. I love art but WAKE UP Racine, art galleries are not a turnkey business, they don't bring back customers on a regular basis, especially in this economy. I am not knocking artists at all. Just frigging tired of hearing about our ART districts in Racine...

  7. There's more to this story and if you want to know someone needs to go ask the local bank managers how much they had to pony up for this UPTOWN fiasco!

  8. How 'bout the Post listing some key parcels that are exempt from property taxes?
    What portion of Racine's assessed value is exempt from property taxes?

  9. We sure have some pretty crooked people running this city.

    Hey, why don't they raise our taxes to make up for it.

  10. The Translator5/08/2009 12:43 PM

    So Becker wanted his art district so bad that he sold Racine out for it. I also call Bull Shot on SCJ for saying it is a good corporate citizen and a great family company when it makes a backroom deal with a pervert to save some long term cash. Can I make a deal and get out of paying property tax too?

  11. See I told you. SC Johnson does nice things for Racine BUT never without getting in return!!!

  12. Waxdale pays no property taxes because the company argued that they have so polluted the land that it has no value.

  13. Thank you guys for this story something the J-T would ever do!
    Thank you!

  14. Yes thanks for the story. I am embarassed and ashamed for them. They will continue to pick out items for Racine so they can recruit fancy suits and we will pay for it. Because all the fancy suits live in Caledonia.

  15. Let their fancy suits buy and pay for the train.

  16. Henry Robichaud5/08/2009 4:47 PM

    Funny, All the tough guy J-WAX hacks are pretty silent on this.

    Hopefully indictments will come out of this, sounds criminal.

  17. I missed the story about the cop who pulled a gun on the basketball coach. Why was that never reported in the media??

  18. I think this week belongs to SCJ. Their story about the VP they hired and being sued over, their story about the tax manager alleging fraud and going public, and now their ties to Becker and tax evasion.

    Talk about a "dysfunctional family" company!!!!!

  19. ProgressiveRacine5/08/2009 7:09 PM

    No doubt about it. Time to take down SCJ. They are part of Racine's problem.

  20. I am seriously beginning to think that the citizens should revolt agains the government and over throw those idiots. OMG, what do I have to run for alderman. This city has never seen someone like me. I would scare the hell out of the people in office.

  21. I don't know what the tax rate is in the city, but I'm assuming it's not too much higher than Caledonia. So, if my calculations are correct, this will be a loss of at least $250,000 in tax revenue for the county/city/school annually...forever.

    And in return J-Wax is going to generously donate a total of $500,000 - or the equivalent of less than 2 years property taxes?

    Again J-Wax finagles a deal that leaves the taxpayers on the short end, and Becker's gone so there's no elected official left accountable.

    Anon 1:29 has it right. J-Wax wants the appearance of helping the community, but they always get a payback on their investment, and usually via the local taxpayers.

    And they want money from the Racine citizens to pay for a train for their Illinois execs? Seems to me the tax money they're saving could offset some of that annual subsidy from the taxpayers for KRM!

    Alderman Helding - if you're reading this - REALLY?

    Great job digging this up Dustin.

  22. Are you serious? How many of the commentators here complain about how Wisconsin penalizes and discourages businesses from being here? Has anyone here criticized Racine and Wisconsin for not offering incentives to keep businesses here? I think so. So SCJ is offered incentives that amount to $250,000 a year, while putting well over $100 Million a year into our local economy every year? Let's see, would I invest $250,000 per year for a $100 Million return?

    Don't bite the hand that feeds you.

  23. Nothing in the urinal times, huh? go figure!

  24. The J-wax carnuba museum needs to be incentivized? How is a property tax on a building that is homage to their own family a penalty?

    There's a huge difference between incentives (such as the taxpayer funded parking garage for the downtown building) and tax exempt status for this project.

    This would be akin to a privileged citizen wanting tax breaks when he adds a swimming pool and tennis court to his property.

    Doesn't J-Wax already have enough incentives with owning most of the pollution credits in this area, making it next to impossible for other manufacturing to come here?

  25. We need a John Doe into the corruption in the city. These Alderman sit in these positions and let these types of illegal activities go on. Illegal because they are not only suppose to know about it but are suppose to approve it. How much more?

  26. Wax bashing may fun for some of you conspiracy mongers, but it looks like SCJ is just a very good corporate citizen. No support needed to be provided for the uptown redevelopment AT ALL!! If you want to be outraged about property being removed from the tax roll start with the lavish churches and their side businesses. They are the vampires on our community, not our last healthy major employer!!!!

  27. 7:19 -

    You sound like a moron and a J-Wax employee. Churches are vampires?? get a life. I hope you're un-employed soon.

  28. I am beginning to think that laws were broken at the least misconduct in office, abuse of power. I hope that someone (don't know who but there has to be a agency out there) that will look into every angle of this along with the actions of the previous mayor and all aldermen who had knowledge of this.

  29. Was the city adminsitrator who resigned earlier this year (Ben Hughes) working for the city when this happened? If so, he must have been part of this too.

  30. Ben Hughes is probably on the Johnson's payroll along with Gary Becker.

  31. If SCJ were to walk on this community it would fill a hole that could never be repaired. They are an honest, generous corporate and civic leader in our community. Any other community would do back flips and more to get their presence. I don't agree with every thing that they have ever done, but I certainly would be ashamed to make the kinds of mean spirited comments that I've read here. The Johnson family and their businesses are core to the economic life of this community. We shouldn't be afraid to offer constructive criticism, but outright unfounded accusations and name calling are wrong and very saddening. I hope that none of them read this blog, they deserve better.

  32. Unless my recollection's faulty, I don't think S.C. Johnson can use the tower for much of anything anyway because it doesn't have enough egress for people to get out in an emergency. How much is a commercial building worth for taxes if most of it can't be used anyhow?

  33. Unplugged,
    The article says that SCJ will save $25,000 / year. So, that $500,000 contribution would be 20 years worth of tax, upfront, no?
    Me thinks you should plug back in. Your battery is low.

  34. A lot of wet grumbling ogres in this blog, but if Dustin will follow up on some of the legitimate questions asked here, it would be a real service to all citizens of Racine. Tough to ask the tough questions, harder still to get honest answers. Persevere, please?

  35. Anon 3:18- maybe you should read the article more carefully, then do some math - actually fairly simply math, I'm sure you can handle it: will save at least $25,000 a year in property taxes (a lot more once Project Honor is complete).

    The $25,000 is for the two administration buildings which, the tower has almost no value. The Honor project will be included in the tax exemption and it's value is projected at $20 million according to this article.

    I'm sure you can use Racine's tax rate and come up with a ballpark figure on the property taxes for a $20 million dollar structure. My estimate of $250,000 might be off, but if anything it might be low.

    But please, if you will, let me know where I can build a new $20million dollar structure and only pay $25,000/year in property taxes - oh and make sure it's in this country....thanks!

  36. Caledonia Dead Battery,
    Like it or not 20 x 25 = 500. Here is what I think, LOTS of folks who live in Caledonia earn their living at SCJ. They probably have for some number of years, or hope to. So, your attacks will only appeal to people who don't derive any economic advantage from the SCJ enterprise.
    It seems that you are looking for support from a small group of trolls.
    When you cut their lawns, where do you think that they get the cash to pay you?
    Whether you like it or not we are very fortunate to have this business here. What are you a Democrat?

  37. "I am beginning to think that laws were broken at the least misconduct in office, abuse of power. I hope that someone (don't know who but there has to be a agency out there) that will look into every angle of this along with the actions of the previous mayor and all aldermen who had knowledge of this."

    You people need to crack open a law book. What laws were broken?

  38. Wouldn't the city attorney's office had to have been involved in the paperwork for this? If so, which attorney was it? (I think there are 3 of them) Whoever it is needs to go! If it's the attorney that's also currently serving as interim city administrator - HE ESCPECIALLY NEEDS TO GO!

    None of this crap would have happened under the old city attorney Dan Wright!

  39. anon 10:22 - let's try this one last time.

    1) The Project Honor exhibit will also be tax exempt.

    2) The Project Honor exhibit will (according to the article) have a value in excess of $20,000,000.

    3) The taxes for this building ARE NOT (according to the article) included in the $25,000 figure - which is the figure for taxes J-Wax is saving ONLY on the existing administration buildings.

    Again, that $25,000 tax figure does not (according to the article) include the Project Honor Exhibit, estimated to be worth in excess of $20,000,000.

    Are you still confused?

    And actually I agree with the anon poster that hopes the Racine Post will follow-up on this because this this quid pro quo deal certainly raises an ethical question with regard to Racine government and completely tramples on the concept of "transparency in government."

    If any other company or development was being offered this level of "incentive" that information would be public record and probably would have had the opportunity for public comment.

    don't bite the hand that feeds you - so we can give a pass to these types of government deals as long it's J-Wax? Are you ok with our new mayor making a similar deal for any other development without public knowledge? Where do you draw the line?

  40. I've always thought they were wolves in sheeps clothing. With that in mind, do you think they have access to Johnson Bank customer's bank accounts?

  41. Dan Wright was afraid of his own shadow. NOTHING happened when he was around. I ask again, what laws were broken?

  42. I'm not sure any laws more broken - but the city government run by elected officials should be more open and transparent. The dealings going on inside should not be secretive and behind closed doors. The people have a right to know what is going on, and making deals in private that affect the entire city just doesn't sit well with many people.

  43. Hmmm everyone here seems to miss the bigger picture. Your are worried that SCJ is getting a tax break and yours might go up. Where is the anger towards city and state government that makes living in Wisconsin and Racine a virtual tax hell.
    What do we get in return for all of this tax revenue generated. I know there are plenty of services I use and am happy to have such as sewer, water, police, fire, waste removal etc. The vast majority of property tax goes to our school system which "feel free to disagree" sucks. Please don't tell me they are underfunded we have been throwing money at them for years and with no improvements.

    SCJ has helped fund so many things in this city and to hear people whine about some tax breaks on an over taxed company "like all businesses are are" is just galling. While most companies hold corporate giving below 2 percent, SCJ has kept theirs at 5 percent, I would say giving generously wouldn't you. I realize some things are for their own good but they are also for the good of this community and others they interact with. I would say every person here has unknowingly benefited from their presence.

    The list is vast and I don't have time to research them all but here is some that I know they helped out on Racine Art Museum, Wisconsin Fresh Start Program, 21st Prep School, Cornell University, Martin Luther King, Jr. Birthplace Museum, The Nature Conservancy, Smithsonian, The Prairie School, Downtown Racine Corporation, World Business Council for Sustainable Development, Racine Heritage Museum, Root-Pike Watershed
    Initiative Network, Opportunities Industrialization Center of Racine County, NGN Daycare, TechStar, Mayo Clinic Samuel C. Johnson Genomics of Addiction Program, Sustainable Racine, EAA’s Young Eagles program, United Way of Racine County

    You nay-saying fools.

  44. Johnson only gives money to local causes in order to gain the publicity of being a do-gooder. They give out WAY less money versus their tax savings - so in the end they save money while the local chumps pick up the tax bills.
    Nice that they can spend a lot of money on a plane museum trying to glorify something that happened 50 years ago! Get over it.

  45. Although the Waxtrash Corporate Crime Family says that it does good, it actually does all too well at the common citizens' expense. The Carnauba Cash-Cadgers' concept of philanthropy seems to be arty-tarty nonsense or non-essentials such as more big-buck beasties for a zoo most of us can't afford to visit. I live and work for the day when our pecuniary pirates will be divested of their ill-gotten gains and sent to penitentiaries for the rest of their natural lives. Maybe their gross guru--Frank Lloyd Wright--will get time off from his cage in hell to design spiffy Cherokee red prison jump suits for our wicked Waxies!

  46. Although the Waxtrash Corporate Crime Family says that it does good, it actually does all too well at the common citizens' expense. The Carnauba Cash-Cadgers' concept of philanthropy seems to be arty-tarty nonsense or non-essentials such as more big-buck beasties for a zoo most of us can't afford to visit. I live and work for the day when our pecuniary pirates will be divested of their ill-gotten gains and sent to penitentiaries for the rest of their natural lives. Maybe their gross guru--Frank Lloyd Wright--will get time off from his cage in hell to design spiffy Cherokee red prison jump suits for our wicked Waxies!

  47. They are building a museum for an airplane trip taken over 50 years ago! - Get over it already, we are sick of hearing about that stupid wax plant in Brazil.
    What have you done lately? - Nothing except screw the employees and hire a bunch of gays!