Violating suburban boundary agreements

One Chicago suburb is accusing another of violating a long-term boundary agreement in order to pursue a sizable property formerly occupied by a notable company:

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Glenview officials indicated the Allstate campus is described as Territory D within the Milwaukee Road and Sanders Road Corridor Agreement between the two communities, which specifies that Glenview alone has the right to its annexation and that Prospect Heights shall not object to Glenview’s annexation.

But David Just, community engagement manager for Glenview, said Prospect Heights notified his village in late March that it intends to seek annexation of the former Allstate campus itself…

“We are disappointed to learn that Prospect Heights is now attempting to annex the former Allstate campus,” Jenny said. “This violates our long-standing agreement and partnership with Prospect Heights, and our community intends to take any and all actions necessary to enforce the terms of the agreement that governs annexation and development of this property.”

The statement added that Glenview strongly encourages Prospect Heights to respect the communities’ long-standing partnership and continue to abide by the promises made when the agreement was negotiated and approved.

Based on what I read, this strikes me as having two dimensions. There could be a legal dimension involving boundary agreements and annexations. How might the law and courts look at land between communities that could be claimed by both community or either community?

The second area involves interactions between communities in the long-term. Will Glenview and Prospect Heights see each other differently for years because of this? Will one community do something in response?

Suburban land is valuable, particularly if developers have plans for a land use that will generate additional revenues. Suburban communities are in competition for business and revenues so an opportunity like this might be too good to pass up, even if it ruffles the feathers of other actors. Given a good chance to secure a new development, how many municipalities would abide by agreements?

“60 Minutes” on the 4+ million housing units needed in the United States

This past Sunday, 60 Minutes addressed the sizable need for housing throughout the United States:

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Daryl Fairweather: We are not building enough housing for everybody who needs a place to live. We built fewer homes in the 2010s than in any decade going back to the 1960s, and at the same time millennials are the biggest generation and they’re entering into home-buying age. Millennials aren’t living in their parents’ basement any more or shacking up with roommates, they want a place of their own, and we didn’t build any housing for them in the last decade because we are still so traumatized by the last housing crisis. We didn’t put any investment into housing…

Daryl Fairweather: The government has estimated that we are short about 4 million homes in this country, and that number is likely growing, especially since the pandemic.

In my opinion, the emphasis in the rest of the segment on institutional buyers is a weird way to go given the numbers cited above. If we need over 4 million housing units, it seems like more of this falls on developers, builders, and communities to open up opportunities for new housing for millennials and others who really want it.

I wonder how much of this now works like it seems to in the auto industry. Auto makers have shifted to making trucks and SUVs because there is demand and a higher profit margin. These vehicles are not greener but there is a lot of money to be made. Is the same true of starter homes? Smaller units simply do not bring in as much money as a larger house with more amenities. And, if builders and developers have to go through a significant process to purchase land, get approval, and go through construction, wouldn’t they want more money at the end?

I think we should ask about the civic responsibility of those who can approve homes and/or build homes. Don’t we need more housing? Shouldn’t this be a shared responsibility across actors? Why are so many Americans willing to get into their particular housing unit and then shut the door to those who want a similar opportunity?

A developer describes the difficulty in redeveloping a suburban shopping mall

A developer describes the challenges they face in planning a new future for what used to be Charlestowne Mall in St. Charles, Illinois:

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“The redevelopment of a vacant enclosed mall is one of the most difficult undertakings in real estate development,” he said. “The Wall Street Journal ran an article a few weeks ago describing how none of the options for a mall makeover are easy. Conversions to other uses are complex and capital intensive. Unless there is a great shortage of land in an area, most developers would much prefer to buy land and avoid the expense, time and complexity of tearing down an old mall.”…

He said the challenge is to figure out how to redevelop the mall in an economically feasible way that pays for an estimated $35 million in redevelopment costs while maintaining the existing commercial uses during reconstruction and satisfying the city’s desires for something that will serve the needs of the residents of St. Charles.

The developers plan to initially foot the bill for those redevelopment costs. But to make the project financially feasible, he said a tax increment financing district will have to be put in place…

“A tax increment financing district must be established to pay over time for the estimated $35 million cost of demolition and reconstruction of site improvements that are necessary to accommodate many uses for the property,” he said. “This is exactly the purpose for which TIFs were created. Without a TIF, the redevelopment of the mall is not financially possible.”

In addition, he said a revenue stream must be created to pay for the project’s costs. After analyzing the situation, the developers said the revenue stream must come primarily from real estate taxes generated from at least 500 residential units.

The American shopping mall is in bad shape. Redevelopment ideas have been circulating for years and malls have added restaurants, entertainment options, and housing. But, as the above suggests, this is not necessarily an easy task. Shopping malls were supposed to be good for communities, providing shopping, a place to gather, and tax revenue. Redevelopment offers the possibility of a brighter future but it requires work.

It is not surprising to hear that a developer wants help in redeveloping the property. This will help them make money. It is common practice in many communities to offer such help, particularly for important properties. At the same time, this property has some value. Malls are typically located on valuable land, often at the confluence of major roads and adjacent to other shopping and restaurants but also possibly near housing. Would a TIF and other incentives make sure the developer sees a profit or has a bigger profit?

Considering this proposal is part of a long process. See earlier posts about the troubled Charlestowne Mall here and here. Trying to revive a mall, finding a developer to significantly alter the property, and then seeing how it all works can take years. This particular mall may only be in the relatively early stages of this with years to come before residents and visitors see a transformed location.

Where are the heights, mounts, hills, and ridges referenced in the names of Chicago suburbs?

WBEZs’s Curious City looks into the elevation implied by the name of multiple Chicago suburbs:

Mount Hoy offers views of Chicago thirty miles to the east.

For real: Highland Park, Park Ridge, Arlington Heights, Mount Prospect, Prospect Heights, Palos Heights, Chicago Heights, Ford Heights, Barrington Hills, Palos Hills, Rolling Meadows.

And before you say: “But wait! There is some elevation out in the ‘burbs!” Let’s make something clear: You’re not wrong. Chicago’s Loop is at about 570 feet above sea level, and the high point of Cook County is near Barrington Hills at 950 feet. That height difference is just under 400 feet, and that’s spread over 40 miles. If we were talking about any other state in the country (besides Florida) you’d barely notice the difference. In other words, in Illinois, the default standards are low for what’s considered high…

Chicago suburbs end up with names that imply elevation in these two ways: crowd-sourced rebranding and straight-up marketing…

One-hundred years ago we named places very differently, Callary says. Places were named after a town founder, or family member, or after something that indicated the place’s actual, physical presence in the world. Today, it’s more common to name a place after what you want it to be, rather than what’s actually there.

Real estate development is a powerful driver. How could developers and communities differentiate themselves from the hundreds of other suburbs in the Chicago region? Pick an idyllic name and hopefully the moniker plus the new development brings in people and businesses. The image of a mountain or hill would be an attractive one; they are both pleasant to look at and offer vistas from the top.

While none of the communities near me are named after a higher elevation, this story did remind me of the highest height around (see the picture above): a small hill made out of a landfill. Because the area is so flat, on a clear day you can see the tallest buildings in downtown Chicago thirty miles to the east. All this from an artificial 150 foot hill:

Starting in 1965 trash collection agencies and community members were invited to drop off junk and other discarded garbage items. At the end of each day county workers spread the clay, which they had excavated, onto the growing pile of garbage named Mount Hoy after the pioneering family.

Mount Hoy quickly earned its nickname of Mount Trashmore. As the Chicago Tribune article in 1973 announcing the competition of the project read, the hope was to create a popular ski destination by literally “turning garbage to ski slopes.” Although the idea seems a bit farfetched, the City of Evanston was undertaking a similar project and many were trying to convince the City of Chicago to do the same thing.

Overall three millions cubic yards of garbage and clay went into Mount Hoy, becoming a 150 foot hill. By 1974 Mount Trashmore was supposed to host four ski slopes, a snow machine and a chair lift along with two toboggan slides, however a less elaborate setup welcomed skiers and tubers to the area.     

Ignore the venting for the gasses in the landfill and it is almost like a real hill…if we know what those are in northeastern Illinois.

Developers not willing to build a particular Chicago project because of affordable housing requirements?

Chicago, like many American cities, asks developers of particular projects to include a portion of the space for affordable housing. But, developers argue this may make an entire project not worth their while. Here is a recent example from proposed developments on Chicago’s North Side:

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But those fees and the sites’ location within a pilot area where there are higher affordable-housing requirements – 20%, all on-site – have made some projects difficult to finance. The 700 W. Chicago project also has been made more difficult by the COVID-19 pandemic, which leaves a record level of vacant office space in downtown Chicago…

Omni Group appears to have been able to overcome financing challenges in part because it negotiated a lower purchase price for the site – $38 million, down from an initial $50 million deal with Greyhound – in response to the affordable-unit requirements

The firm is also known for keeping apartment buildings it develops, rather than selling them after they’re built and filled with renters. The decades-long investment strategy may help offset the 500-plus affordable units, which typically lose money for developers because of high construction costs.

The affordable housing requirements are not the only factor at work here but they are a regular part of proposals in many locations. The goal is to have some of the benefits of a new development in a desirable urban location – a valuable asset – address the important issue of affordable housing. If developers have no or little interest in constructing affordable housing on its own, the construction of desirable projects can still help lead to affordable housing.

What would be very interesting to know is how exactly the money, including financing, costs, and profits, works out with the requirements for affordable housing. Can the developers here not make any money or does it reduce their profits below acceptable levels? It is one thing if money will be lost but another if the affordable housing requirements limit the profit. How much return do they expect on a large project like this? Is the goodwill of participating in providing affordable housing worth anything (status, money down the road, favorable approaches to future projects, etc.)? While this is likely firm-specific proprietary information, I imagine some money still could be made.

Who exactly designs “zany McMansions”?

Are architects capable of designing McMansions?

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Pro tip: One of the more fun ways to hunt for real estate is to go to your favorite site and search the keyword “architect.” You’ll end up with a lot of zany McMansions, but among the chaff are some well-pedigreed gems.

While this sounds like an interesting exercise, it brings up an important question. Who exactly is designing the McMansions that critics revile?

One of the biggest critiques of McMansions is that they are poorly designed and their architectural quality is suspect. This might come in the form of odd proportions or a mish-mash of styles or a blending of features. Instead of a pleasing aesthetic, the McMansion presents a mass produced version of something that tries to nod to established homes but only succeeds in aping such residences.

Typically left unsaid in these critiques is who exactly put together these unpleasing designs. Often the designs for homes come from builders or developers. What they have in mind when designing a home may not be the same as architects.

I would guess that architects would prefer that more single-family homes are designed by architects. Not only would this supply more work, it would have likely lead to more architecturally coherent homes. The emphasis might be less on providing space, an impressive front, and the most bang-for-your-buck, and instead focus on beauty plus functionality. Of course, some homes could l look great in the eyes of some and not be very desirable (see some modernist structures).

Perhaps more of the focus should come back to builders and developers: what could they do to provide the features American buyers want while also designing more architecturally pleasing homes? The same McMansions might not be so bad for many if they had a better design or fit the neighborhood better. Some would still object to the size of the home – is it really necessary to have 3,000-10,000 square feet? – but at least it would not be in danger of easy attacks. The architectural coherence could affect the price point but might also help the long-term reputation of the neighborhood and builder.

Argument: Trump “is acting like a real estate developer”

Want to understand the behavior of President Donald Trump? Megan McArdle suggests he is simply doing what a real estate development might do:

Because what you see on TV shows about house-flippers is, writ large, the nature of the whole business: To compete in a highly capital-intensive industry, almost everyone takes on a lot of debt. Like most real estate people, Trump loves debt — “There’s nothing like doing things with other people’s money,” he told a rally in 2016. “Because it takes the risk, you get a good chunk of it and it takes the risk.”…

That’s why the real estate business rewards a certain willingness to put everything you have on a long shot; if you can’t cheerfully take risks with horrific potential downsides, you need a different job. The best argument for this approach is that some problems can’t be solved any other way — if developers demanded steady, predictable incomes like the rest of us, most of America would still be farmland.

In its best form, the developer’s way of thinking can achieve the impossible — or at least what the more staid and methodical folks said was impossible. I opposed moving the U.S. Embassy to Jerusalem and was at best ambivalent about sticking with Kavanaugh, but I have to admit that the apocalyptic doom predicted by Trump’s opponents has so far failed to materialize, while the political gains were immediate, and large.

Then again, there’s a reason most of us don’t live like real estate developers, or want to. Bankruptcy is a sadly normal fact of life in the real estate business, which is why Trump can tout his extensive experience negotiating with creditors. The cost of gaining wins with big bets is that you never know when you might lose everything.

Analyzing behavior and motives from afar is a difficult task. Yet, this argument raises some interesting questions:

  1. Could an average American describe how a real estate developer operates? A few might be known to a broad number of people but I’m guessing many operate behind the scenes. And these developers can significantly effect communities.
  2. It would be interesting to know how the president polls among real estate developers. Would they proudly call him one of their own? Would they recognize the approach?
  3. Are there examples of other real estate developers who became political leaders? If so, did they act in similar ways?
  4. Is there a way to quantify or easily explain the amount of influence real estate developers have had in cities or places? Donald Trump was a big name developer: widely recognized, some degree of wealth, and a number of large buildings with his name on it. Yet, how much did he influence New York City or other locations?

 

If a megaproject proposal doubles the number of onsite affordable housing units in a bid to get approval, doesn’t this mean the profits will be substantial?

The latest proposal for the Lincoln Yards project on Chicago’s north side will now include 600 on-site affordable housing units – 300 more than before:

It will be the largest on-site commitment in the 16-year history of Chicago’s affordable requirements ordinance, according to Ald. Brian Hopkins, 2nd. Hopkins will join the Chicago developer and affordable housing advocates to announce the revised plan in a news conference Tuesday morning at City Hall…

Sterling Bay wants to build about 15 million square feet of commercial and residential buildings on 54.5 acres of riverfront land along Lincoln Park and Bucktown. That includes 6,000 residential units on the sprawling site between North and Webster avenues…

Under the compromise unveiled Tuesday, Sterling Bay will provide 600 on-site affordable units, while the maximum number of off-site units it will provide within 3 miles decreases to 300, from a previous 600. The Affordable Housing Opportunity Fund payment remains unchanged.

Half of Sterling Bay’s $39 million fee will support construction of about 1,000 affordable units citywide, and the other half will support 15 years of rental subsidies for 130 very low-income families through the Chicago Low Income Housing Trust Fund, according to Hopkins.

Two quick responses:

1. If the developers can offer more onsite units, then Chicago should probably think hard about increasing its requirements. The developer is still very interested in the project even with providing more on-site units.

2. This project must really be projected to turn a nice profit if these last-minute adjustments can be made. Perhaps it is all about negotiating – offer a low figure and then it looks nice if you adjust up – but developers tend to want to get plenty of profit by the end.

On the whole, when these kinds of prime properties come up for development and/or a developer gets a big idea, there could be better ways to ensure there is more affordable housing included in what is eventually built rather than just settling for a relatively low figure. Even with more land devoted to affordable housing and parks, the plans still provides plenty of room for money to be made. Would Sterling Bay be scared off if the affordable housing requirements were higher and, if so, would other developers jump right in to develop such a property?

Building amenity-filled suburban apartments to encourage community

Some suburbanites may not just expect more amenities in apartments; the larger push may be toward creating community rather than just rental units.

Tony Rossi, president of M&R Development, the company behind the Wilmette and Itasca properties, agrees that the “explosion of amenities” seen downtown is starting to take hold in the suburbs as well. He said rent in the suburbs is usually two-thirds of rent in the city, but newer buildings with extra features will have a higher price tag. Martin pays about $1,925 a month for her one-bedroom and underground parking…

Greenberg developed the project with more than 20 years of hospitality experience and considers design a key factor in changing the vibe and perception of suburban rental living. For example, adding color and art to corridors in apartment buildings, as hotels do, makes all the difference, he said.

And while some suburban developers merge residential and retail in the same physical structure — think storefronts at street level and housing on top — Greenberg said 444 Social is unique because the apartment building is new and located near (but not connected to) existing commercial facilities, like Regal Cinemas next door. It also has natural elements, like forests and a lake, nearby.

“This goes to part of the DNA of this place,” Greenberg said. “If you want to be happy, if you want to live a healthy life, if you want to stay active, you got to be social. … That is what is missing in apartments where it’s downtown or in the suburbs where you just go to a place and hole up. Here we’re actually creating a community, so it’s pushing that experience.”

Four quick thoughts:

  1. Building apartments in certain ways does not guarantee that community will develop. Certain features of units, buildings, and the grounds could help encourage social interaction but it does not necessarily mean that it will happen.
  2. Apartments with more amenities and higher prices are likely to attract certain kinds of residents. Might it be easier or harder to create community among groups with more resources?
  3. I wonder how many residents in such apartments are interested in developing more community as opposed to enjoying a higher level of luxury or feeling that such apartments fit their cultural tastes (with connections to their social class).
  4. Are developers interested more in profits they can obtain through more amenities and higher rents or creating community?

More broadly, see an earlier post on “surban” places.

Could the success of Columbia, Maryland be replicated elsewhere?

Columbia, Maryland is often held up as an unusually successful suburb:

But as Columbia marks the 50th anniversary since the first residents moved in, it has become clear that Rouse got some important things right. As progressive urban planners have turned their attention to the suburbs, they’ve striven to achieve a lot of the same things Columbia already has. The unincorporated town of 100,000 is prosperous and more varied racially and economically than many revitalized urban neighborhoods in cities like New York, Washington and San Francisco, which have become islands of extreme wealth. It turns out that stable, diverse, flourishing communities can exist without short city blocks, warehouses-turned-lofts and beer gardens — and Columbia is the proof…

The “Columbia concept” was innovative in a number of other ways. Instead of having churches or temples, religious denominations shared interfaith centers. (Rouse thought each denomination getting its own plot was a waste of land.) There was even a community health plan that was an early version of an HMO. To maintain open spaces and public facilities, Rouse established the Columbia Association, a nonprofit whose board is elected by residents. The association acts as a quasi-government for the unincorporated town, with hundreds of employees paid through resident dues.

The town was organized but diffuse. Six loosely formed villages, each with a small shopping center and high school, were arranged around the Town Center, whose nucleus was the mall. The village centers catered to residents’ everyday needs, with grocery stores, barber shops, dry cleaners and recreation facilities. Tall signs were forbidden, and power lines were buried to preserve the land’s bucolic appearance. Apartments and townhouses, which were uncommon in suburbs at the time, drew singles, young couples and people with lower incomes than their neighbors in the split-levels and ramblers, a conscious attempt to foster what Rouse and his team called “social mix.” And Columbia was not simply a bedroom community: Rouse Co. executives wooed employers such as General Electric to open offices there.

Not everything worked out perfectly: At one point, Rouse thought he could get corporate executives to move to Columbia alongside their workers, but they largely didn’t. And some of the experiments, such as a minibus system, pilot day-care centers and a women’s center, didn’t pan out. Rouse also fell short of his goal of 10 percent subsidized housing. Still, by 2011, Columbia, flaws and all, had managed to surge past another target of his: a population of 100,000.

Aside from the things cited above, two things stand out to me from this article:

  1. Few developers or builders get an opportunity to plan an entire community. This requires a lot of effort: acquiring land, obtaining permission from local governments, and then seeing a long process through. Instead, much of suburbia is constructed in patches with a developer building a subdivision here while another builds an office park there.
  2. Much of the story of Columbia rests on the shoulders of the developer: James Rouse. Here, he is credited with forward-thinking ideas. He anticipated what might help suburban communities thrive rather than just focusing on profits. (However, I’m guessing he still made a good deal of money.) As noted above, not all of his ideas worked out but many of the key features were his.

On the whole, would it be worthwhile to take these two lessons and apply them to future suburbs? What might happen if developers were given (1) thousands of acres to work with in order to create a full community and (2) the developer had the ability to craft and put into practice a particular vision?

I would venture that some of these master-planned communities would be successful while others might not. Indeed, some of the success might be out of control of the developer and local residents. For example, if the template for Columbia was transported to the Houston region in the 1960s, would it be so successful? Or, if it was plopped into the Bay Area today? Not necessarily given changing regional forces, different demographics, and varied reactions from local officials.

It is interesting to think about how the public narratives regarding urban planning in the last century or so often involve powerful people: Robert Moses, Jane Jacobs, the Levitt family, James Rouse. These narratives are either triumphs or disasters depending on how much influence the person wielded (and how they used it) and how their projects operate decades later. Would a structural view of these individuals as well as urban planning as a whole help us better understand how to contribute to thriving communities?