Tag Archives: Chicago region

McMansion owners in the Chicago suburbs get cheaper ComEd rates than city-dwellers

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Crain’s Chicago Business highlights an interesting part of the regulations for ComEd: a suburban homeowner pays a more advantageous rater than a city resident.

The reason: The price to reserve “capacity”—the right to buy electricity during peak-demand periods—will soar next June. That rising cost, which is embedded in the energy price on customers’ electric bills, will hit households consuming small amounts of power far harder than owners of large homes using a lot of electricity. Residents of wealthy suburbs with larger, high-consumption homes could well pay 1 to 2 cents per kilowatt-hour less for electricity than city residents.

Why? ComEd allocates the capacity charge evenly among all residential customers regardless of their usage. So the owner of a city bungalow consuming 500 kilowatt-hours per month pays the same dollar amount for capacity as the owner of a McMansion in the suburbs using three times as much. The McMansion owner’s total electric bill will be higher than the bungalow owner’s, but the McMansion owner will pay less per kilowatt-hour because the added capacity charge makes up a much smaller percentage of the total.

This disparity hasn’t been an issue to date because capacity costs have been unusually low over the past two years. But the price for capacity in PJM Interconnection—the 13-state power grid that includes northern Illinois—will rise 350 percent for the year beginning in June 2014. That will have a bigger impact on towns and cities with lots of small-usage households such as Chicago than it will on suburbs featuring larger homes…

Evidence of “have” and “have-not” municipalities already is starting to appear. Two wealthy north suburbs with many large homes, Bannockburn and Kildeer, last month locked in an energy price for their residents of just below 5 cents per kilowatt-hour for the next two years beginning in September. By contrast, under the Integrys contract, Chicago residents pay 5.42 cents, or 8 percent more. And next May, when the city must reprice the deal, it’s expected to struggle to beat a ComEd price that will approach 7 cents.

The article doesn’t answer the most basic question: how did this disparity end up in the regulations in the first place?

The article suggests that people in the city or suburbs should be paying the same electricity rate. It is only fair to pay equally. But, I wonder if some wouldn’t argue that the suburbanites who are more spread out, require more infrastructure to reach this larger area, and tend to live in bigger houses should actually be paying higher rates. Couldn’t that be written into the regulations? This may not be politically popular but I imagine the argument could be made. Indeed, using the term McMansion in comparison to the humble Chicago bungalow leans in this direction by referring to unnecessarily large homes.

Average new US house over 2,500 square feet; average new Chicago area house 2,650 square feet

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Here is an update on the average (not the median) new house size in the United States and in the Chicago region:

As a result, the average new home completed last year was 2,505 square feet. That represents the third annual increase in square feet and puts the average home size on par with where it was in 2008. Average home size peaked in 2007 at 2,521 square feet…

In the Chicago area, the average size of homes being built today is about 2,650 square feet, down from the 2,800 to 3,000 square feet constructed during the housing boom, according to Chris Huecksteadt, director of the Chicago region for Metrostudy, a housing research firm.

The US average is not surprising but it is rarer to see see figures for specific metropolitan regions. The higher than average new housing size in the Chicago area is likely related to the wealth of the metropolitan area but its lack of recovery compared to the national average suggests the region hasn’t bounced back as much as some other regions.

Suburbs wooing the Chicago Cubs highlights the regional nature of sports teams and stadiums

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The Chicago Cubs moving out of the city seems unlikely. But, that hasn’t stopped several Chicago suburbs from suggesting they would be willing to work out a deal with the Cubs to build a new stadium:

What the soliciting suburbs believe — and sources close to the Cubs confirm — is that the siblings of Cubs Chairman Tom Ricketts are souring on Chicago and growing increasingly concerned the deal will be modified in a way that denies the team the revenue it needs to renovate Wrigley without a public subsidy…

“If this deal looks like it’s going down in flames or not getting done in a reasonable time, Tom will invest in ‘Plan B’ locations. He’d still work with the mayor on a city site. But, maybe not in Wrigleyville. I know people don’t believe it. But, it’s true,” the Cubs source said…

Aides to Mayor Rahm Emanuel privately dismissed this week’s public solicitation from DuPage County Board Chairman Dan Cronin as a Cubs-orchestrated negotiating ploy.

“This is all manufactured to gain leverage,” said a top mayoral aide, who asked to remain anonymous.

Last month, Ricketts threatened to move his team out of Wrigley and Chicago if he doesn’t get the outfield signs he needs to bankroll a $300 million stadium renovation without a public subsidy.

This comes after the announcement this week that DuPage County has two potential sites for the Cubs. But, little extra information about these plans were provided.

But, I think a more interesting take is the regional nature of sports teams and stadiums. Sports teams these days are really regional entities, particularly considering that more people live in the suburbs than central cities. It is unusual to have a team like the Cubs so closely tied to a specific neighborhood. Additionally, cities often see sports stadiums as economic engines, even though research suggests spending lots of taxpayer dollars on stadiums doesn’t pay off for communities. On one hand, it is not all that different than fighting over big box stores or corporate headquarters because of the supposed economic benefits. Yet, on the other hand it is a constant status symbol. Could the city of Chicago really afford in terms of prestige to lose the Cubs? I don’t think so. Would a suburb get a big status boost from hosting the Cubs? Possibly. If a suburb was able to woo the Cubs, I imagine they would trumpet this fact and try to build around it for decades.

This has happened before in Chicago. When the Chicago Bears were looking for a new stadium from the 1970s to the early 1990s, several suburbs were involved. The Bears ended up getting a decent enough deal from the city to stay. (Maybe they should have pushed harder. They have the smallest NFL stadium in terms of seats and with it also being an open-air facility, this limits its Super Bowl possibilities in the future. Also, the facility is still owned by the Chicago Park District and this has led to issues over the years.) Again, it is hard to imagine the Chicago Bears, a historic NFL franchise, playing out in the suburbs next to a major highway. What would have been a boon for a suburb would have been a big perceived loss for Chicago.

In the end, these sorts of negotiations can pit cities against suburbs in similar ways to fighting over business opportunities. But, rather than arguing about just money, sports teams are viewed as public goods that belong to a region. Perhaps the worst possible outcome is for the region to lose a team to another region altogether. The second worst outcome might be for the big city to lose the stadium to an upstart suburb.

Better to expand Metra service to Oswego and Yorkville or use money to solve problems within the region?

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Discussion is growing about expanding Metra commuter rail service to Oswego and Yorkville but where the money will come from is an issue:

Metra board directors on Friday supported increasing a consulting contract by $439,631 for a total of $2.26 million to review the Yorkville option. The funding for the engineering study comes from a federal grant, earmarked in 2003 by former House Speaker Dennis Hastert of Yorkville.

The agency has been considering locating stations in Oswego but Yorkville is being added since it offers an optimal site for a yard to house trains. Montgomery is also in the mix as a new station.

But how to pay for operating the expansion and related construction — since most of the route is outside the six-county region that Metra serves — is an unknown. A sales tax in Cook, DuPage, Kane, Lake, McHenry and Will counties subsidizes part of the costs of running Metra, but it isn’t levied in Kendall County…

Oswego Village Administrator Steve Jones said the Metra station was “extremely important. Up until the housing crash, Oswego and the immediate area was one of the fastest-growing areas in the country. As residents move to the area, they have some expectations for transportation for employment and cultural matters … just being linked to the city.”

Since Oswego and Yorkville have been growing, this makes some sense. Yet, I wonder if it wouldn’t be better to find money, grants and otherwise, to expand train service within the six county region. As currently constituted, Metra service is based on a hub and spokes model where riders have to go into the city before heading back out. Why not find money to develop belt lines where riders can move between job centers, particularly places like Naperville, Schaumburg, and Hoffman Estates as well as O’Hare Airport? Indeed, there are already plans for such a line that involve expanding an existing beltway rail line. Read more here about the STAR Line.

More broadly, this is a question of whether officials should encourage continued expansion of metropolitan areas through the construction of new infrastructure or help deal with the existing issues of metropolitan regions. People may choose to move to places like Oswego or Yorkville but officials don’t necessarily have to find the money to support it.

Underwater mortgages slow housing recovery in Chicago area

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Crain’s Chicago Business highlights an issue that is slowing the real estate market in the Chicago area: homeowners with underwater mortgages.

More than 506,000 Chicago-area homes—or one-third of the market—were underwater as of the fourth quarter, according to California research firm CoreLogic Inc. That’s up 7.6 percent from the previous year.

Underwater properties are bogging down a residential market that’s clawing back from its post-crash ditch. By opting to stay put, these homeowners are removing a substantial portion of potential saleable properties from the market, limiting choices for those who are ready to buy…

Rising prices ultimately will push more underwater homeowners to sell, Mr. Humphries says, but it’ll be a while before prices get anywhere near the levels seen in the market apex of just a few years ago. The S&P/Case-Shiller index of single-family homes, a closely watched barometer of values, in February stood 34 percent beneath its September 2006 zenith.

For buyers, meanwhile, the process of finding and closing on a home has become a scrum—and it’s likely to stay that way for a while. This spring, showings are drawing crowds and bidding wars, and fast sales are common, buyers and brokers say.

I wonder how much of this is tied to the psychology that people feel losses, such as the value they may have lost in their house’s value, more than equal gains. What tactics could be used to convince people that they might be better off getting out of the mortgage? I’ve seen one such argument: the value loss on a smaller house is likely to be less in absolute dollars and then homebuyers could benefit from larger drops in prices for larger houses.

Mapping Chicago area income inequality by Metra route

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Crain’s Chicago Business put together an interactive map that shows income levels by Metra train stop:

The geographic disparity in Chicago’s wealth can be seen by tracking household income in the ZIP codes of Metra train stations. The Union Pacific North and Milwaukee District North lines pass through some of the wealthiest ZIP codes, while the Metra Electric and Rock Island lines go through some of the poorest.

Several quick thoughts:

1. This reflects historic settlement patterns in the Chicago region.

2. I wish there was another set of data layered on top of this: daily ridership from each stop. This way, we could see if income is related to ridership. Could these mass transit lines primarily benefit people from wealthier areas in the Chicago region? In other words, do these commuter lines reinforce income differences? Are these train lines generally a boon for communities compared to Chicago suburbs without commuter train stations?

3. Of course, looking at ZIP codes of the train stations is inexact. Depending on the location of the station, people might drive from other zip codes. What we really need is more exact information from riders themselves: where do they live, what is their income, why do they utilize this particular stop, etc.

4. Also, why use average household incomes rather than median household incomes? Using the average likely increases the variation among train stations but also allows outliers in income to have more influence in the data.

h/t Curbed Chicago

New eight-part CNN documentary series on Chicagoland

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CNN ordered a new series directed by Robert Redford that looks at Chicago:

In Chicagoland, executive producers Robert Redford and Laura Michalchyshyn team with Brick City filmmakers Marc Levin and Mark Benjamin in an eight-part series about “a city generating change and innovation in social policy, education, and public safety – to meet national and local challenges.”

According to CNN’s release, Chicagoland will capture “the riveting, real-life drama of a city looking to unite at this critical moment in the city’s history. In the aftermath of a countrywide economic collapse, Chicago faces the challenges of improving its public education system, and neighborhood and youth safety. Can the city’s leaders, communities, and residents come together in ways that expand opportunities and allow aspirations to be realized?”

In a statement, Redford praised Chicago mayor Rahm Emanuel: “The vibrant culture and opportunities inherent in this 21st century, world-class city run alongside profound daily challenges. Much of it falls on the shoulders of its tough, visionary mayor, his team and people doing heroic work in neighborhoods throughout the city. Chicago has always had a rhythm all its own. It’s a city that wears its heart on its sleeve and I am honored to be a part of telling this story.”

“Chicago is the quintessential American city and where it goes tells us a lot about where our country is going,” added series producer Levin.

Some quick thoughts:

1. Generally, the term “Chicagoland” is used to refer to the entire metropolitan region of over 9 million people, not just the city of Chicago. But, it sounds like the series is primarily about the city. It would be interesting if there was some focus on the region as a whole…

2. The last quote from the producer fits with a common image of Chicago: Chicago is a truly American city with the possible strengths and weaknesses that come as being part of the United States as well as being located more in the center of the country. Chicago has had this image for at least a century now and it sounds like the documentary will continue this idea.

3. I wonder how laudatory or critical the documentary will be. How much criticism or praise will local politicians receive? How much of the documentary will talk about positive aspects of the city/region versus the present challenges?

4. Connected to #3, will the documentary be more like the recent biting book review in the New York Times or sounds more like Chicago boosters?

“Five reasons to expand Chicago transit now”

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The “vice president of policy at the Center for Neighborhood Technology in Chicago and vice chairman of the Chicago Transit Authority” gives five reasons for why mass transit needs to be expanded in the Chicago area:

Why expand transit? Why now? Five reasons: increased efficiency, improved individual and regional economies, and jobs, jobs, jobs.

Cook County’s current transit system allows hundreds of thousands of residents to get to and from their destinations in a safe, efficient and affordable way every day. Unfortunately, four out of five of the region’s biggest job centers outside of downtown Chicago are underserved by transit. People traveling to work or school in these suburbs have no choice but to drive. The resulting traffic leads to wasted time and wasted money. Expanding and improving the region’s transit system will increase commuter choice, decrease congestion, connect businesses to transit locations and reduce the number of individuals without vehicles who are, in effect, excluded from the job pool.

But it can be more than that. Transit expansion, from my perspective — which includes decades of experience in transportation and community development issues, as well as service to the Chicago Transit Authority board — must be part of a wider strategy around transit-oriented development. That is, transit expansion should be accompanied by development that integrates residential, office, retail and other amenities into walkable neighborhoods within a half-mile of quality public transportation.

This type of development tends to be more economically resilient than others, as evidenced by the Center for Neighborhood Technology’s study for the American Public Transit Association and the National Association of Realtors. Between 2006 and 2011, the report found, average sales prices for residential properties within walking distance of a transit station outperformed the region by an average of 42 percent. In Chicago, home values in transit-served areas performed 30 percent better than the region. That’s real money for local tax bases, not to mention homeowners’ wallets.

Add to this a recent analysis by the Brookings Institution that makes a clear case for transportation infrastructure investment as an economic development strategy. It’s a popular, and smart, play these days. Other countries, both developing and developed, are doubling down on investments to build and upgrade their transportation infrastructure. They see it as the path to long-term sustainable growth. We need to see, and do, the same.

One big problem the Chicago area faces in this regard is the general orientation of transit toward Chicago. If you are out in the suburbs, transit lines tend to run into Chicago. This is good for accessing jobs and other amenities in Chicago but with more jobs and residents in the suburbs, it is quite difficult to travel by transit from suburb to suburb. If the population growth is in places like Aurora, Plainfield, McHenry County, and Kendall County, how are those residents to use mass transit to get to suburban job centers like Naperville, Schaumburg, Hoffman Estates, Northbrook, etc.? Local bus service tends to run between train stations and local amenities and despite several decades worth of experimentation, there is not high sustained levels of transit between suburbs. Some things could probably be done fairly quickly, like finding the substantial funding to implement the STAR Line that would connect Joliet to O’Hare through the western suburbs on the EJ&E tracks, but on the whole, this probably requires long-term money and planning.

The money question is just that: where is the money for this going to come from? Lots of people agree with investing in infrastructure, particularly for improving quality of life issues like traffic and congestion, but are they willing to pay for it or give up other priorities?

Chicago area housing starts up 37%; still one-fifth of “normal”

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The good news: Chicago area housing starts are up. The bad news: housing starts had slowed so much in recent years that this is nowhere near “normal.”

Housing starts in the first quarter in the Chicago area rose 37 percent, which puts the local housing market on track to build 4,000 homes this year, the best performance in three years, according to Metrostudy, a housing research and consulting firm.

Still, a normal number for new-home starts in the Chicago area is 18,000 to 20,000. “We’re one-fifth of that. We’re a long way from being normal,” said Chris Huecksteadt, director of Metrostudy’s Midwest markets…

A lack of quality inventory and bidding wars among resale homes have caused some consumers to change their focus and consider buying newly constructed homes. Several local builders report that they’ve started homes as spec or model homes and the properties have gone under contract before the drywall is up…

Because of that kind of demand, as well as a recent spike in lumber prices, some local firms are raising prices by $5,000 to $20,000 per home to help offset the cost of materials and to maintain or improve their profit margins. No one is getting too aggressive with price hikes, though, because it might lead to problems with appraisals and mortgage financing.

This may be the new normal for quite a while. As the end of the article notes, it may be difficult to generate consistent demand until there are more jobs.

When I see figures like this, I always think about the existing housing stock. Does this automatically mean that the available number of houses is really low? Or, is there a growing interest in recent years among buyers to forgo the problems existing houses may have and instead pay a little more to get a spot-free home? If some of the existing housing stock is going unpurchased, what then happens to those homes? Some people may not be able to move while other houses, particularly those in more disrepair and neglect, could become a drag on some neighborhoods.

Plans in the Chicago region to help mitigate future flooding

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With the flooding that took place in the Chicago region in recent days, it is reasonable to ask what is being done to limit flooding in the future. Here is one answer from a regional expert:

Asked if costly and disruptive transportation chaos is inevitable, Josh Ellis, a stormwater expert with the Metropolitan Planning Council, offered some rays of hope.

“We can definitely do better. I’m not sure we’re willing to invest the amount of money needed to have an infrastructure that truly withstands a 100-year storm. When we built most of our infrastructure it was for a five- to 20-year storm standard.”

What’s slightly depressing is that current Metropolitan Water Reclamation District infrastructure and projects under way, including tunnels and reservoirs, will provide about 17 billion gallons of storage, Ellis calculates. Compare that to the 70 billion gallons or so that roiled Cook County alone in storms Wednesday and Thursday.

“Even when the Deep Tunnel is complete, the numbers don’t add up in our favor,” Ellis said. “We can do better, but I’m not sure we can ever solve this and have zero problems.”

So what can we do?

As individuals, it can come down to reducing the impermeable pavement on your property or cultivating a rain garden that holds stormwater temporarily.

On a wider level, it’s going to take expanding municipal stormwater systems, creating stream-side ponds to store rainfall and investing in green infrastructure, Ellis thinks.

“It’s about finding other places to put the water other than in big pipes … that’s what green infrastructure is,” he said. “It’s about finding ways for natural vegetation to prevent water from entering the storm system.”

Likely candidates for ad hoc stormwater storage include public entities with a lot of land — from schools with athletic fields to park districts.

The causes and consequences of flooding like this can be traced to human development. Critics of sprawl have noted for decades that flooding is one pernicious side effect: cover land with houses and asphalt and there is less place for water to go. Cover up natural wetlands and build close to waterways and this is going to happen every so often. Think of the concept of a retention pond; it is an admission that we have altered the natural landscape in such a way that we need to create a space for excess water to go.

I know some critics of sprawl would say the answer is to have less sprawl. Since this cat is out of the bag in many places in the United States, Ellis’ answers above are interesting: a combination of large-scale, regional projects would help as would more individual and municipal actions. Large projects like Deep Tunnel are impressive but they aren’t silver bullets. I’ve noticed more nearby communities have moved toward combining park land and floodplains. Thus, if flooding occurs, not many buildings are hurt and fewer people need to be evacuated.

This could also lead to broader questions: who is responsible for the flooding and its effects? Should individual homeowners bear the burden of protecting themselves and cleaning up? Should local communities? How about regional entities – how much power should they have to tackle such issues? This sort of problem requires coordination across many governmental bodies, calling for metropolitan approaches. It still strikes me as strange in the United States that individual homeowners may not know much at all about the flooding or water problems their property might have.

For a longer look at flooding and water issues in suburban sprawl, I highly recommend Adam Rome’s 2001 book The Bulldozer in the Countryside.