Tag Archives: Chicago region

Indiana again takes aim at Illinois businesses

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The Illinoyed campaign ended but Indiana has a new strategy to lure Illinois businesses. From the featured story on the A State That Works website:

The state of Illinois has been drowning in debt for years due to mismanagement, and their only solution is to keep raising taxes. Sound familiar? Illinois taxpayers have been picking up the tab for longer than anyone cares to remember, but it wasn’t always that way.

Ten years ago Indiana and Illinois had the same AA credit rating, but the unfunded pension debt crisis in Illinois has steadily deteriorated over the years, to the point that their current credit rating of A- is the worst in the nation.

Illinois is borrowing a staggering amount of money to pay for state services and they’re seen as a bad risk to keep making those payments, according to the rating agencies. In fact, the interest alone on Illinois’ unfunded liabilities is about $1.5 billion per year…

Indiana is deliberately making smart financial decisions and defining what a state can do to pass the savings of efficient government on to their taxpayers by eliminating debt, keeping taxes low and continually balancing their budget.  It’s a refreshing change from a state like Illinois that has taxpayers picking up the tab for a public debt-management crisis, and it’s what makes Indiana a state that works.

Such efforts have been going on for quite a while yet I haven’t seen evidence that shows a campaign like this works. I’ve long suspected this is more about scoring easy political points than anything else; “look at the good things happening in Indiana while Illinois languishes.” Yet, somehow the Chicago region with its 9+ million people hangs on and the city is continually ranked as one of the top 10 global cities in the world.

One side note: part of northwest Indiana is in the Chicago metropolitan region. According to this campaign, some might get the best of both worlds: the residents and businesses get the lower taxes, less political gridlock, and less debt yet get to take advantage of the jobs and other opportunities the Chicago area offers. In the long run, a significant decline in Illinois or Chicago’s fortunes probably would have some residual negative effects not just on northwest Indiana but also the entire state.

Insight into the highest status western suburbs of Chicagoland

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An Internet journey led me to West Suburban Living‘s 2015 Best of the West which included this question to readers:

TOWN YOU’D WANT TO LIVE IN (OTHER THAN YOUR OWN)

Best: Geneva
2nd: Naperville
3rd: TIE: Glen Ellyn and Hinsdale
Other Favorites: Downers Grove, Elmhurst, Geneva, St. Charles and Western Springs

I’m sure there are all sorts of sampling issues here: who exactly reads this magazine and who votes? Yet, this may just provide a hint into how suburbanites in the western suburbs view their communities. All of these suburbs mentioned are majority white and pretty wealthy. They all have downtowns and fairly long histories (they were all founded before post-World War II suburbanization). Generally, they have high scores in quality of life: good schools, parks, good local services, low crime, nice houses, relatively competent local governments.

Sampling issues aside, this may get at the social status ranking of western suburbs. Or, at least, it hints at the geographic and lifestyle aspirations of the voters.

What is the economic benefit of O’Hare Airport to the Chicago region?

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Noise complaints may be up but local officials say O’Hare Airport has a big economic impact:

Chicago estimates O’Hare contributes more than $38 billion to the economy of the six counties and sustains about 450,000 jobs directly and indirectly. Airport expansion could generate an extra $18 billion and create 195,000 new jobs, the city projects.

Mayor Rahm Emanuel, in a speech to the City Club in June, attributed recent economic successes to O’Hare and Midway International Airport. “Out of the 10 major metropolitan areas (in the U.S.) last year, Chicagoland had 12,000 businesses created,” Emanuel said. “That’s No. 2 in the United States.”

I’m guessing these statistics won’t quiet the critics of the new noise patterns yet it should remind the region’s residents how an airport might indirectly help them all beyond providing easier and cheaper access to points around the globe.

Continuing to see Illinois highways as growth and job generators

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The selection of a new executive director of the Illinois Tollway suggests the agency wants to continue to push growth:

Greg Bedalov, president and CEO of Choose DuPage, an economic development organization, will take over as executive director at the agency, officials said…

Rauner’s pick for Chairman Bob Schillerstrom told the Daily Herald that economic growth and job creation go hand-in-hand with the tollway.

It’s expected Bedalov will reflect that philosophy as the tollway heads into the third year of a massive $12 billion road building program…

In a 2012 op-ed piece for the Daily Herald, Bedalov talked about communities collaborating in the region instead of competing to create jobs.

“It is critical that local and county economic development agencies work collaboratively with state and federal agencies to uncover additional opportunities for economic wins,” he wrote.

This sounds like a growth machine approach to building tollways: providing increased capacity for vehicles will lead to new economic opportunities for businesses who want access to such transportation options, workers who can reach jobs more quickly, and developers who can develop and build nearby. The argument here is that this can be good for the entire region as the benefits of improved or new tollways would extend across communities.

Quickly, some possible objections:

1. It is really difficult to build new tollways in a region that is already largely developed. It is costly (acquiring land, environmental studies, increasing construction costs) and takes a lot of time.

2. Adding highway capacity just increases traffic: people see more available roads and drive on them. Why not put some of this transportation money into mass-transit and denser developments that could benefit from an economy of scale?

3. Who really benefits from such construction? The firms getting the contracts and the developers? How exactly do the benefits trickle down to the average resident?

“Touring the Deep Tunnel and Thornton Quarry,” one of the largest civil engineering projects in the world

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Given the recent rain and flooding in the Chicago region, this seemed apropos: one journalist describes a recent tour of the Thornton Quarry and Deep Tunnel complex south of the city.

On Saturday, I joined the Southeast Environmental Task Force (SETF) on one of its tours of Chicago’s goliath infrastructure. The tour featured the future site of the Thornton Composite Reservoir, the largest such reservoir in the world, and a Deep Tunnel pumping station 350′ below ground at the Calumet Water Reclamation Plant. Both are part of the Metropolitan Water Reclamation District (MWRD)’s gargantuan Tunnel and Reservoir Plan, the multi-decade, multi-billion dollar project designed to protect the Chicago region from the flooding and pollution caused by overflowing sewer and stormwater infrastructure…

After this brief greeting, we drove to the former Thornton Quarry in the south suburban city of Thornton. The quarry, which is one of the largest aggregate quarries in the world, is still being actively mined nearby; however, the MWRD has acquired two significant portions of the area for the Deep Tunnel project. The resulting reservoir will hold 7.9 billion gallons of water, which MWRD Principal Civil Engineer Lou Storino estimated is the equivalent of 36 Soldier Fields. While on site, staff mentioned that we would be one of the last tours to descend to the base of the quarry, which will enter into operation shortly.

Tourists may find man-made sights like Hoover Dam impressive but Chicago area residents don’t have to go far to see similarly impressive projects. Not that the public could simply walk into the Deep Tunnel complex but you can glance at the quarry from the I-80/94 corridor. The Deep Tunnel project was quite costly and time-consuming but represents an effort to more effectively drain water away from Chicago, an on-going concern that even one of the largest civil engineering projects can’t solve on its own. This is what you get when you build a 9+ million metropolitan region centered on a swampy area near Lake Michigan…

Around 25% of Chicago area mortgages still underwater

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The numbers aren’t as bad as two years ago but the sizable number of underwater mortgages in the Chicago region still present a problem for the housing market.

One-quarter of homes with a mortgage in the Chicago area, and almost 24 percent in Illinois, are “seriously” underwater, meaning homeowners owe at least 25 percent more on the loans than the property’s value, according to data released Thursday.

The report from RealtyTrac, which shows the percentage of underwater homeowners growing in most parts of the nation, helps explain why more homes are not coming on the market, despite the desires of would-be sellers. They simply don’t have the equity in their properties to be able to sell them unless they bring cash to the closing table or get approval from their lender for a short sale.

Also driving up the percentage of underwater borrowers is the slowing rate of appreciation that many housing markets are seeing, a trend that economists say is a return to more normalized boosts in housing prices. In the Chicago market, median prices of home sales in March posted a dramatic year-over-year spike after eight months of flat or declining prices.

Outside of the booming housing markets, these underwater mortgages are going to take a long time to clean up. In other words, that big drop in housing values with the economic crisis has long-lasting consequences.

I know this isn’t going to happen but I would love to see numbers on whether it might be possible that the new housing industry could receive a jumpstart through a mass mortgage reduction plan. If enough people could get out from under the underwater mortgages and sell their own homes and move (maybe this would be a requirement for getting a mortgage reduction), could this be a net economic gain in the end?

Trends in the slowly improving housing market in the Chicago suburbs

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The Daily Herald reports on the slow growth in real estate transactions and construction in the Chicago suburbs:

Sales of existing homes were on the upswing in February, climbing 1.2 percent from January and 4.7 percent from a year ago, according to the National Association of Realtors.

The tactics of builders and developers have changed:

The result is that buyers are seeing new houses of smaller square footage loaded with amenities such as wood floors, high-end appliances, specialty cabinets, spa-quality bathrooms, upscale windows and trims, and the latest wireless communication and entertainment technology.

Two groups of buyers are driving this trend: older millennials tired of paying rising rents and ready to raise a family, and baby boomers at or near retirement and looking to downsize…

Like other developers, Pulte is focusing on building in closer-in suburbs rather than massive subdivisions on the fringes…

Toll Brothers also has a limit on how far out it will develop, said Keith Anderson, Midwest group president.

“Elgin is as far as we will go. We’d rather pay more for the land and build closer,” Anderson said.

Or, put differently, there are not enough buyers and sellers putting pressure on builders and developers to construct homes further in the hinterlands in the Chicago region. In contrast, those buying homes have different expectations as well as the means to purchase more in-fill properties. This provides more evidence – from the higher economic end of suburban homeowners – that the bifurcated housing market continues.

Recommendation that many Chicago area highways have 60 or 65 mph speed limits

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A new investigation from an state agency suggests speed limits on several Chicago-area highways should be raised:

Higher speed limits on parts of I-294, I-88 and I-355 were recommended for approval Thursday by the Illinois Tollway’s customer service and planning committee.

According to the state’s vehicle code, the tollway is required to conduct an engineering and traffic investigation before raising its maximum speed limits.

The investigation — which took factors like prevailing speed, high-crash segments, access point density and the volume of traffic congestion into consideration — determined that the 70 mph maximum that is allowed by the state is not a “safe and reasonable increase in the speed limit” for certain sections of the highway…

Once all the necessary approvals are complete the Illinois Secretary of State can publish the updated rules and the new speed limit signs can be installed. Tollway officials estimate that the new speed limit signs could be posted this summer.

It sounds like safety concerns led to this slight increase. But, I would be interesting in seeing this study as the reasoning behind a slight increase is not clear. If prevailing speed is a factor, we know that a good number of Chicago-area highway drivers still go faster than the new 60 or 65 mph speed limits. How many more crashes and deaths will occur with a 60 or 65 mph speed limit? Does this mean Illinois is not joining the move toward zero-death roads? And if there is more damage, how is the positive side calculated (less time lost, less congestion, etc.)? At the same time, raising the speed limits won’t necessarily lead to faster driving; evidence from Michigan suggests people will continue to drive at the speed at which they feel comfortable.

Suburban communities add business district taxes but what are developers doing with the money?

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A number of Chicago suburbs have instituted business district taxes that partially funnel money to developers:

The business district tax is becoming more common as municipalities struggle to recover from the Great Recession and loss of shoppers to the Internet. Leaders in both Roselle and Villa Park initiated 1 percent business district taxes within the past year, the maximum rate on districts that cannot exceed 1 square mile. In some suburban locations, the additional business district tax can raise the sales tax to 9.25 percent, equal to the sales tax in Chicago…

Bloomingdale has two such districts. One adds a 1 percent sales tax to purchases inside Stratford Square and another adds the same percentage at Indian Lakes Resort, where it’s used to help pay off $4.8 million in village-issued debt that went to the resort for improvements…

Last year, the village paid the owners of the mall $1,199,151, which is more than 95 percent of all the money generated by the business district tax. Since the tax was implemented, the village has paid the mall owner more than $8 million. According to village finance records, the mall owner still is owed more than $11 million…

Lombard has a similar deal with its mall owner. The village instituted a 1 percent business district tax almost a decade ago. It helps push the sales tax rate at Yorktown Center mall to 9.25 percent.

Lombard’s deal allows up to $25 million in business district taxes to be rebated to Yorktown’s owner through 2024, in exchange for an addition that was built onto the mall where an abandoned Montgomery Ward once stood. So far, the mall’s owner has received almost $4.2 million from the business tax…

Taxpayers in Oakbrook Terrace are the ones with skin in the game. The city borrowed nearly $8.2 million to spur development of the Oakbrook Terrace Square Shopping Center. City officials did not return calls seeking comment about the city’s stake in the shopping center. However, according to the city’s budget documents, the investment has yet to pay off.

Given the problems facing the American shopping mall as well as the financial difficulties facing many suburbs, perhaps these suburbs think such taxes are necessary to help keep sales tax generators in the community. Yet, if the extra money generated is given to developers who then line their own pockets, how much is the local taxpayer helped? This raises similar questions to giving corporations tax breaks to locate their headquarters or facilities in suburban communities. Few politicians or residents want to lose a potential tax revenue generator – especially a large shopping mall, even if they are relatively ugly and detract from local businesses given their reliance on chain stores – but there is often little public discussion of the trade-offs involved with the tax breaks.

Are there suburban shopping centers that don’t have such a tax and if not, do they advertise to this effect?

Where are the ubiquitous Chicago pothole stories?

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As we emerge from winter, I thought today that I haven’t seen many pothole stories in the Chicago media. These are typically a staple of news coverage – see examples here and here. Here are some reasons why there may not have been so many stories this year:

1. The communities in the Chicago region did such a fine job filling potholes in recent years that the problem wasn’t so bad this year. This could be true; there are ways to address potholes that solve the problems for the longer term. Yet, the problems were acute in recent years and it sounded like municipalities were trying to fix things as quickly as possible plus there were added costs with salt supplies.

2. Other concerns have dominated the news. Perhaps it was the cold weather and snow cover. Perhaps the transportation news was dominated by future construction on areas like the Jane Byrne Interchange, I-90, and the proposed Illiana Expressway.

3. The weather has been so cold that potholes haven’t really formed yet since the roads were not thawing and freezing. Perhaps the potholes will really start emerging this week.

4. Perhaps I missed all the pothole stories?