$741 million in tax incentives for Amazon in NE Illinois – with a bigger price tag for economically challenged communities

Amazon has constructed 36 facilities in the Chicago region since 2015. And they got a lot of help from taxpayers in disadvantaged communities:

WBEZ

To help pay for its vast expansion, the company and its developers have won at least $741 million in taxpayer-funded incentives in northeast Illinois alone, according to a Better Government Association/WBEZ investigation…

Amazon collected less than $100 million in public incentives for the 15 warehouses it built in predominantly white communities but won more than $640 million in taxpayer incentives for the 21 projects built in communities with larger nonwhite populations, the examination found. Many of those communities are either mostly Black, mostly Latinx or have higher concentrations of low-income residents, and with municipal budgets already short on cash.

Records show the three largest incentive packages Amazon received — totaling $512 million — all came from predominantly Black suburbs. By contrast, the company built warehouses in at least seven mostly white communities that reported offering no public incentives at all…

While many of the communities may get more jobs, experts interviewed say the lost revenue from taxpayer incentives will strain public resources to rebuild crumbling roads from the truck traffic, mitigate pollution from the exhaust fumes and noise and to pay for other services such as police protection and fire prevention.

That big companies seek out tax breaks and local incentives is not new. Amazon played the game on a grand scale with its proposed second headquarters.

But, this illustrates one of the problems with tax breaks in general: it is a race to the bottom. Companies look for communities that will have a hard time saying no. What mayor or local official wants to turn down local jobs? Or, turn away a big company with the status like Amazon? Once they have such a company in town, communities often build on this when marketing land and facilities to other firms by saying they are home to Amazon.

Yet, the deal may not be a good one. Jobs are not the only factor that matters in a community. As the story above notes, traffic, pollution, noise, the strain on local budgets and services, and the quality of the jobs also matter. Does the addition of Amazon or another large company make the community as a whole better down the road?

The system could be improved in multiple ways. All the communities in a region could stop competing in this way; that Amazon locates within one municipality could also have spillover benefits for other communities. One community’s gain is not necessarily one community’s loss; the region operates as a whole. If revenue was shared across a region, then tax breaks in a particular community would matter less. Or, communities could just commit not to offer tax breaks at all. If companies cannot play the game, they would have to locate places for other reasons.

These possible solutions do not solve the underlying issues: jobs and capital in a metropolitan region are not evenly distributed. Patterns by race and class continue for decades as companies, residents, and other seek out particular locations and not others. That some communities have to pay more for Amazon to locate there just compounds the problem.

Census data on how Chicago would have lost more residents in the 2010s if not for international migration

I was looking at Census Bureau data recently on population change in metropolitan statistical areas from 2010 to 2019. Here is what I found about Chicago:

The data shows the Chicago MSA lost nearly 3,000 residents over the decade. This is something urbanists, demographers, and Chicago area leaders have been tracking and trying to explain.

The data above helps provides details on this population change. The net migration data shows the region gained nearly 200,000 residents via international migration. If you rank all of the MSAs over the decade, Chicago was #10 on the list of international migrants. Chicago continues to be an important center for immigrants (even as it lags behind New York, Miami, Los Angeles, Houston, Washington, Boston, Dallas, San Francisco, and Seattle).

This means that if the Chicago area had fewer international immigrants, it would have lost a lot more people. If international migration was more like San Diego or Tampa or Minneapolis, the region would have lost more than 50,000 people. While I suspect few in the Chicago region would like to lose any residents over a decade, the situation would be much worse without the city and region continuing to attract immigrants.

Local TV market ad celebrities, Bob Rohrman edition

For decades, American television viewers have been treated to (or subjected to, depending on one’s point of view) recurring characters in local television ads. In the Chicago region, Bob Rohrman was a mainstay:

Of all the Chicago auto dealers who ever graced the small screen as their own TV pitchman, few were as delightfully campy as Bob Rohrman.

Rohrman’s low-budget commercials radiated good humor and bad production, featuring his mustachioed and bespectacled face peering out from a variety of goofy costumes, a uniquely awkward delivery and flubbed lines that often devolved into a joyous cackle.

The spots were punctuated by a cheesy cartoon lion and the tag line: “There’s only one Bob ROHRRRR-man!”

Somehow it all worked, turning the Bob Rohrman Auto Group into one of the largest family-owned dealership groups in the Midwest, and its spokesman/founder into something of a Chicago celebrity.

In the era of cable and satellite television, streaming options, declining network television and local radio, and targeted commercials on particular platforms, we may be at the end of local advertising like this. All the advertising then becomes more corporate, slick, tied to national or multinational corporations. And we lose a few public characters who few people may have actually met but who many could recognize.

We purchased a vehicle from a Rohrman dealership several years ago. At no point, did I think about the commercials in that process. But, given the number of Rohrman commercials I have seen and heard over the years, who knows if it influenced me. (I can safely say that other auto pitchmen or dealers, including Max Madsen or the Webb boys, did not lead me to visit their lots.)

What the 2021 Rand McNally atlas highlights in the Chicago region

The new 2021 Rand McNally road atlas is available. Here is what they have for the Chicago region on the Illinois page (available on the preview):

RandMcNally2021Chicagoregion

As my family or I have owned a version of this atlas for many years, I have spent much time viewing this page. I can recall when new roads were added (like I-355). Here is what strikes me upon seeing the Chicago area in the 2021 version (not the more zoomed in regional map which can offer more detail):

  1. The map cannot mention the names of all of the suburbs; there is not enough room. The ones listed appear to be the suburbs larger in population mixed in with some of the communities between those.
  2. This particular map does not clearly mark the boundaries of Chicago. You can roughly see where Chicago’s edges are due to the positions of other communities. Yet, the edges of the suburbs are marked – see the orange areas versus white areas – though some of the non-suburban areas within the developed areas are oddly marked.
  3. What non-municipal features are noted is interesting. Midway Airport has a label, O’Hare does not. Four universities along the lakefront are marked but DePaul and many others in Chicago and the region are not. There are some natural features and parks visible but not many (for example, it would be very difficult to know from this map all the forest preserves present in the counties in the region).
  4. The lake is present and useful for the map because some of the labels can go off into the water rather than compete for space over land.
  5. You might be able to get a sense that the road system in the Chicago area is both easy to understand and has a complicated history. The roads are fairly straight and the main highways largely radiate out of Chicago (I-94 north, I-90 northwest, I-88 west, I-55 southwest, I-57 south). But, then there are some shorter highways, two ring highways (I-294 and I-355) but not a third one to service outer development, and the toll/non-toll options blend together.

Making this map likely required a lot of decisions as to what to include and what would help make the map readable.

Disproportionately more Illinois COVID-19 cases and deaths in the Chicago suburbs

The Daily Herald reports on COVID-19 cases in the Chicago suburbs as a whole:

IDPHdashboardJul2320

Since the outbreak began, there have been 83,563 cases in the suburbs as of Thursday, 50% of the state’s total, according to the Illinois Department of Public Health. There have been 3,750 deaths in the suburbs, representing almost 50.9% of all deaths in Illinois.

The data presented suggest the Chicago suburbs account for roughly half of cases and deaths in Illinois. But, how does this compare to the percent of Illinois residents living in the Chicago suburbs?

The subsequent numbers of COVID-19 cases by community suggest these are the counties in the Daily Herald analysis: suburban Cook County, DuPage County, Kane County, Will County, McHenry County, and Lake County. If you add up these populations (using the U.S. Census QuickFacts 2019 population estimates), the suburban population is roughly 5,610,000. With the total population of Illinois at 12,671,821, the residents of the Chicago suburbs account for a little over 44% of the state’s population.

Thus, the Chicago suburbs have slightly more of their share of COVID-19 cases and deaths within the state of Illinois. Is this expected or unexpected? If we hold to images of wealthier, whiter suburbs, perhaps this is surprising: can’t many suburbanites work from home and/or shelter in place in large homes? Or, is suburbia more complex?

The disparities across suburban communities are not just limited to DuPage County. Take two large municipalities in suburban Cook County: even though Schaumburg has 13,000 more residents than Des Plaines, it has 1,200 cases than Des Plaines. Or, in Kane County, St. Charles has 4,500 fewer residents than Carpentersville (population of just over 37,000) but has just a little more than half of the cases.

While much attention regarding COVID-19 has focused on cities – and for some good reasons – this data from the Chicago suburbs suggests it is a issue for many suburbs as well.

(It is unclear how this data might change if the analysis extended to more counties in the Chicago metropolitan region, which include additional counties in Illinois, northwest Indiana, and southeastern Wisconsin.)

Finding uses for the “big empties” in the Chicago suburbs

When businesses move their headquarters from sprawling suburban campuses to the city center, they leave behind a lot of building space and land:

Inside the sprawling, 2.4 million-square-foot headquarters — composed of seven interconnected office buildings — there is an almost eerie ghost-town quality, former employees describe. The bank, dry cleaners, hair salon, coffee shop and small sundry shop that once lined the corridor of the main atrium have all closed. Gone, too, are the Sbarro’s and Panda Express restaurants.

Over the years, Sears has hired leasing agents to bring in sublessors without much success. Today, with the economy uncertain and Sears’ days seemingly numbered, the building has become an even harder sell. Only about 3% of the complex is leased to outside tenants…

If Transformco tried to sell the campus, it would face long odds, local real estate experts said. The large complex, custom-built for Sears, is nearly 30 years old. Suburban business parks are as outdated and obsolete as fax machines…

The entire region is a buyer’s market, burdened by other big empties. Right down the road from Sears headquarters are two such examples.

Perhaps the easiest answer to filling these properties is to bulldoze them and build housing on the land. In the suburbs in which these suburban headquarters are located (Hoffman Estates, Oak Brook for McDonalds, etc.), there would be demand for housing.

But, bulldozing buildings adds costs as would changing the infrastructure for the site. Plus, as the article notes, housing would not bring in the same kind of revenue or status that a large corporation did. Additionally, more housing might even lead to a bigger tax burden for the rest of the community if there is more demand for schools and other local services.

Thus, suburbs often hope to find corporate partners for such properties. Finding someone to take over the whole property would be ideal. Or, perhaps create a mixed-use community with some residences but also businesses and restaurants. See more on efforts in Hoffman Estates to transform a former AT&T campus into a “metroburb” (also mentioned in the article).

Side note: this does not bode well for large tech campuses amid a possible shift to more employees working from home.

Disproportionate COVID-19 cases among Latinos in the Chicago suburbs

The disproportionate impact of COVID-19 includes suburban Latinos in the Chicago area who have more cases than their percent of the population.

They are factory, service and restaurant industry workers; meatpackers; cashiers; grocery store clerks. They work in health care as housekeepers, nurses and doctors at hospitals and nursing facilities, increasing their risk of exposure. Close-quarter living in extended family groups also prevents proper social distancing, contributing to the virus spreading within poor families.

Many essential workers like Guerrero must go out “to earn their daily bread to feed their families,” as she said through a Spanish-language interpreter…

State data shows 54% of Latinos tested are confirmed to have the virus ­– the highest percentage among all racial and ethnic groups. The proportions are 14.4% for whites, 31% for blacks and 30% among Asians, as of Sunday…

Experts also say many low-wage earning Latinos delay seeking medical care when symptoms arise, possibly due to fears over immigration status, lack of access to health care and having poor or no health insurance.

Covid19AmongLatinos

COVID-19 data from DuPage County in early April hinted at this based on which zip codes had higher rates of cases.

I wonder if the findings about more cases among blacks in Chicago and Latinos in the Chicago suburbs are connected to more consistent patterns across places in the United States. The hypothesis would be that those who are more economically disadvantaged in a community or area have higher rates of infection. If true, this would suggest social class is a key factor in COVID-19 or heavily intertwined with race and ethnicity. I have not seen much about social class and COVID-19 exposure, rates, and death. At the same time, there are plenty of stories about people with means leaving New York City as well as statistical evidence that more wealthy residents left their neighborhoods.

Chicago’s rail and intermodal facilities, pollution, and COVID-19

One of Chicago’s advantages is its transportation sector, particularly the railroad and truck traffic that passes in and through the region. But, the railyards and intermodal facilities where rail and truck traffic converge can cause a lot of pollution, even during COVID-19:

But for reasons that have yet to be fully explained, people in Chicago and its suburbs aren’t breathing dramatically cleaner air during the pandemic…

Likely culprits include buildings, factories and diesel engines that burn coal, oil or natural gas. Diesel emissions in particular remain a chronic problem in Chicago, a racially segregated freight hub where rail yards, warehouses and intermodal facilities are concentrated in low-income, predominantly African American and Latino neighborhoods.

“We already have roughly double the amount of heavy-duty traffic than other major cities in the country,” said Zac Adelman, executive director of the Lake Michigan Air Directors Consortium, a group of state officials from Illinois, Indiana, Michigan, Ohio, Minnesota and Wisconsin…

During the past decade, scientists at the U.S. EPA have discovered daily spikes of soot pollution near intermodal facilities in Chicago and other cities that far exceed average urban concentrations.

The article primarily focuses on Chicago where intermodal and railroad facilities tend to be located near poorer residents. Leaders have sought to move traffic away from the center of Chicago and more to the edges of the region, but this means this is also a problem for the entire region. With numerous facilities far from Chicago, such as in Will County or as far as New Rochelle near Rockford, the air quality for millions is affected. It would also be worth looking at where the suburban and exurban facilities are located; what residents are most affected? How far away are these facilities from wealthier communities?

The article also suggests new regulations mandating cleaner locomotives and trucks would help. How this would play within a region that relies on the transportation industry – Chicago was not only the convergence center for Midwest commodities, it also developed the capacity to move those goods throughout the United States and world – would be interesting to watch. Suburbanites would not like the pollution if they knew about it or were concerned about it in their own neighborhoods or elsewhere nor do they like the inconveniences of a lot of rail and truck traffic. Yet, they like cheaper goods and jobs, perhaps even more so if the immediate problems of pollution are borne by other residents of the region.

The scale of warehouse and intermodal facilities in Will County, Illinois

As residents and local officials in Joliet and Will County debated a proposal for a new 1,300 acre office park, WBEZ put the size of the issue at hand in perspective:

The county is home to the largest inland port in North America and 3.5% of the nation’s GDP passes through here…

And $65 billion worth of products moves through Will County annually, according to the Will County Center for Economic Development.

In other words, this an important area for the current economy and the land use case has local, regional, and global implications. A few thoughts:

  1. Joliet and neighboring communities might not want the additional facilities and trucks but having these facilities in this part of the metropolitan region might be good for 9+ million residents. Balancing local interests and metropolitan interests is not easy. And the Chicago region has a lot of railroad and shipping bottlenecks.
  2. This is a symptom of larger economic changes as the economy became globalized, shipping goods across the country and on-time delivery became common, and Internet sales picked up. The effects may be local but Will County is part of a larger system.
  3. The changes in Joliet over time are striking, The news story hinted at how the community, what social worker Graham Romeyn Taylor in Satellite Cities: A Study of Industrial Suburbs in 1915 would have called an “industrial suburb,” has changed:

“Three steel mills closed. Caterpillar went from 8,000 people to a little over a thousand. We had numerous manufacturing plants shuttered,” said John Grueling, president and CEO of the Will County Center for Economic Development.

No other county in Illinois has seen job growth like Will County. It’s the epicenter of transportation for goods that move across the region and country with North America’s largest inland port. Now another real estate company wants to expand in the area by developing a logistics business park, and its raising concerns about the future of the county.

In summary: local land use decisions can have big impacts.

(See an earlier post about how the Will County community of Elwood responded to a large intermodal facility.)

Longer freight trains in the United States

Astute observers at crossings for freight trains might have noticed this over the last decade: on average, freight trains have become longer.

Freight trains have grown in length by about 25% since 2008, with trains on some railroads averaging 1.2 to 1.4 miles in 2017, according to the U.S. Government Accountability Office…

Seven major railroads operating in the U.S. are running longer than average trains on specific routes, although some indicated that’s just a small percentage of total traffic. “One railroad said it runs a 3-mile-long train twice week,” the GOA noted.

With the government asking drivers to report long waits at crossings, perhaps the length of trains could change or they might move faster:

The agency recently launched the website www.fra.dot.gov/blockedcrossings with the intent of capturing data on blocked crossings to help identify chronic situations where trains cause traffic jams and hamstring first-responders for long stretches of time…

But will knowledge equal power? The hope is communities that experience the worst train-generated gridlock could lobby for federal dollars to build grade separations or use the knowledge to pressure railroads to offer operational fixes.

This is just made for the Chicago region where numerous at-grade crossings and a railroad bottleneck can lead to frustration or safety concerns.

But, this data does not seem that surprising. There are now more people living in the United States and so why wouldn’t there be more stuff shipped around the country? Presumably, a longer train is more efficient than running more trains. As the recent radio ads from the pipeline industry suggest, would drivers and residents prefer more trucks on the road to ship items than freight trains?

The long-term solution would seem to be the slow work of converting high-traffic at-grade crossings to bridges or underpasses or at least making this an option in some communities so that a slow, long, or stopped train is not a huge impediment. These projects can be costly and disruptive to nearby properties, particularly if located in downtowns. Additionally, intermodal facilities can be located further out in populated regions so as to keep long trains away from more populated areas. (The intermodal facilities can lead to their own problems.)

Finally, if the government wanted to solve the problem, why rely on drivers to report the data? This seems more likely to collect information from (1) certain people (perhaps more technologically savvy, perhaps those who can organize a campaign) and (2) certain locations that are problems. Is this a case where the squeaky (car) wheels will win out and see change?