Considering whether a $300,000 home is affordable or attainable, Naperville edition

The approval of a new development in Naperville touches on a broader topic in the suburb in recent months: affordable housing. Who would be able to purchase a residence in the 200+ units?

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Councilman Patrick Kelly, the lone dissenting vote, objected to the lack of affordable housing in the 227-unit development, a “missed opportunity” that could have helped efforts to diversify the city’s housing stock.

State law requires 10% of a town’s housing supply to qualify as affordable. Naperville falls shorts at an estimated 7.5%…

The townhouses will be priced from the $300,000s. While the project doesn’t provide, by definition, affordable housing, Councilwoman Judith Brodhead said it “does fit the category of attainable housing.”

“Certainly, there’s not new construction, anything that you can find in north Naperville, in that kind of price range,” Whitaker said.

Much of the opposition to the proposal for an empty piece of land has centered on the possible environmental impacts. The property in question backs up to a Forest Preserve and there are bird and animal habitats nearby.

But, the affordable housing question is an interesting one. In wealthier suburbs, affordable housing does not necessarily mean housing for poorer residents. Such communities could not like affordable reasons for a number of reasons including who might live there and how smaller and/or cheaper homes might affect other homes in the community.

And there are ways to push off affordable housing. For example, zoning in particular ways can limit the number of residences that are cheaper. Another way is to recast what affordable housing is. Remarks, like the one above in the quoted section, are not unknown in Naperville. See this example from last July. Naperville is a desirable community: it is wealthy, has good schools, has an exciting suburban downtown, has lots of parks. Even as a large suburb, it has a lofty status. According to 2019 Census estimates, the median home value is over $416,000.

With all of this, a townhouse at $300,000 is a lower price. Units on this kind of land in a community like Naperville could go for a lot more. Yet, is $300,000 attainable for all the people who want to live in Naperville? Or, the people who work in Naperville? It is cheaper – but is it affordable?

There are limited ways to force suburbs like Naperville to construct housing that is affordable. President Biden wants to offer more carrots in this area. Public pressure from residents and organizations could push Naperville leaders to address this more fully. Naperville has served as a center of suburban protests before. But, there will always be questions of how such units would fit with the character of the existing community, what it means for existing units and residents, and who might live in such housing.

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.

How to (not?) add a parking garage to a charming suburban downtown

The suburb of Wheaton, Illinois is considering adding another parking garage to its downtown. How does one add a large parking structure to a quaint downtown?

The idea of a parking garage is highly conceptual, one element of a broader study on parking needs, restrictions and the existing inventory downtown. The goal is to stay ahead of parking issues as new businesses take over long-vacant properties and bring more visitors to the shopping and dining district, especially on weekend nights…

City planners say replacing a surface lot behind city hall with a parking garage is a viable option because it’s city-owned property, eliminating the cost of land acquisition. It’s also tucked away from the main downtown arteries but still within walking distance of a Hale Street restaurant row.

Suess said a city hall garage would address neighborhood concerns about overflow parking on residential streets around Memorial Park, a summer magnet that recently underwent a $5 million restoration, the centerpiece of which is a new band shell…

Other council members said they still want to consider another location that’s been floated for a parking structure over the years: the east surface lot of the Wheaton Public Library.

There are practical matters that any community would need to consider: how much parking is needed? What is the cost of the structure? Is this the right location?

There are also bigger questions about what a suburban downtown is supposed to be. Many downtowns would like to have more people visit and spend money in shops, restaurants, and festivals. But, more people and traffic can change the atmosphere. This means more cars. Where to put them?

Parking garages offer a possible solution as multiple stories can pack in more cars than street parking. Wheaton already has a few parking garages so this is not a new idea. But, parking garages are rarely attractive structures. Do they fit in with the surrounding streetscape?

The proposed location above tries to mitigate some of these issues. Wheaton has done this with other parking garages; tuck them behind other buildings so they are not as visible. The proposed garage would be behind City Hall, hiding is from a main stretch of Wesley Street. Yet, it then backs up to residences on the west side, is on a different scale than City Hall to the south, is visible from Memorial Park (site of festivals and events that would drive people to the garage), and is across the street from a school and its green space to the north.

The other proposed site mentioned above has some similar issues. While it would be next to the library on one side and across the street from a multi-story apartment building on the other side, it faces single-family homes on the other side and smaller apartments on another.

Wheaton wants its downtown to exist on a particular scale so that it remains an attractive place for residents and visitors. More broadly, the community protects its character as a quieter, single-family home community (see how a discussion about zoning along a main thoroughfare played out). The city also wants to bring in people and address parking issues which can mar the experience on streets and in nearby residential neighborhoods. Is a four story parking garage the answer? Local leaders and the community will have time to discuss and decide.

The later costs of sprawl

One writer suggests the sprawl of the Sun Belt leads to significant costs down the road:

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Over time, growth has reduced those advantages. Jobs and people moving to states like Texas and Georgia slowly bid up the price of land and labor. Ample spare capacity for land and transportation infrastructure — think six-lane highways — let sprawl be a growth outlet for decades, but over time congestion and distance from airports and job centers raised the cost of sprawl as well. The 2008 financial crisis arguably busted the sprawl model in the largest Sun Belt metros of Houston, Dallas and Atlanta, where until the onset of the pandemic single-family building permits had lapsed to 35% below the 2006 highs, despite those metros still having reputations for sprawl and fast growth…

What’s needed to maintain past growth momentum and meet the expectations of these new populations is a continued push up the value chain towards local economies based on knowledge work, with higher-paying jobs and college-educated workers. The specific services or investments needed to lure these types of jobs and workers will shift with the political winds — it might be a greater investment in schools and universal pre-K programs today, and transportation infrastructure tomorrow. It’s the same kind of policy arms race these communities have been accustomed to for decades, only with more services replacing low taxes as the policy lever.

For now, the most likely tweaks to the governance model will probably be incremental — stormwater improvements, sidewalk construction and other “complete streets” projects, modest increases to educational funding — simply because the votes aren’t there to raise taxes enough for the kind of revenue needed for bigger changes.

But these tensions aren’t going away. It’s eventually going to require larger investments than current leaders and older voters are willing to make. Ultimately, the choice for these communities is to spend the money needed to stay competitive in the new arms race, or lose out to places that will.

In the United States, growth is good. Communities need to grow to show that they are exciting, thriving places. New residents and businesses signal good things to come.

But, the piece quoted above notes the longer-term possibilities of such growth. What happens after the fast growth slows or ends? Is it sustainable? How do communities switch from fast growth to mature growth or stability? My own research in the Chicago suburbs suggests this is not necessarily an easy switch. When the land starts to or does run out, communities have to make important decisions. Should they grow through increased density and/or allow taller buildings? How much will it cost to maintain all of the existing infrastructure? How much redevelopment or teardowns will take place? Even during the high growth periods, the costs can increase – see battles within sprawl over the costs for new schools and who pays – let alone as the sprawling areas age.

More broadly, what happens to sprawling suburbs decades after the sprawl has ended? We can now look back at numerous postwar suburbs and see what happened. The Levittowns always draw some attention for the ways they changed and are still the same. Many of these suburbs are over a half century old (though others are newer). These communities revolve around single-family homes and driving, among other things, and this might continue for decades. Or, it might not if conditions and ideologies change.

“Unprecedented volume of public participation” regarding development plans for Naperville mosque

Updating a case I wrote about in a 2019 article, further plans for a property owned by the Islamic Center of Naperville on the suburb’s southwest side have drawn a lot of public comments:

Google Maps

The Islamic Center of Naperville, or ICN, is seeking zoning variances so members can develop a mosque, school, multipurpose hall, gymnasium and worship-area expansion in five phases over the next 40 years…

Naperville city planner Gabrielle Mattingly said the city received “an unprecedented volume of public participation” for the hearing, including nearly 2,000 names in support or opposition, 770 written comments and 160 people who signed up to speak…

The commission was able to spend 20 minutes at their meeting this week scrolling through the 1,610 signatures favoring ICN’s plans and the 305 in opposition…

ICN’s development plans show the first phase, expected to start this year, includes constructing a two-story mosque with 26,219 square feet of space to provide space for 692 worshippers, said Len Monson, the attorney representing ICN. It also will include space for offices, conference rooms, storage, multipurpose spaces and washrooms.

One interesting aspect of this proposal is that it lays out several stages that progressively increase the size of the mosque over the next forty years. Building in stages could make sense for a lot of religious groups: they could wait and see how many people are attending and it could help spread out the need for financial resources.

When the Islamic Center of Naperville requested in 2011 that Naperville annex this land with the goal of eventually constructing a facility on the property, neighbors expressed concerns. The City Council unanimously approved the request but the reactions in Naperville occurred around the same time as several other mosque proposals in DuPage County encountered opposition.

Additionally, this property is surrounded on all sides by residences. I have found in my research that locations near homes tends to increase concerns raised by community members. In Naperville and numerous other communities in the United States, residents used to nearby open spaces or agricultural land can hope the land always stays in that form rather than become home to a new building or development.

It is hard to know from this article how many of the public comments are in support of the proposed changes and how many are opposed. Even if the number of supporters is large or a majority, that would still suggest a sizable number of people with concerns.

How are suburban apartments designed with COVID-19 in mind different?

A proposed apartment building in downtown Glen Ellyn, Illinois includes several features in response to COVID-19:

The latest iteration creates dedicated, work-from-home spaces inside apartments. South Bend, Indiana-based Holladay Properties is looking at installing voice-activated elevators to limit touch points. The project also would incorporate small conference rooms and phone booths where residents could take a call or prepare for a presentation.

“It’s hard to ignore the global pandemic,” Holladay Vice President T. Drew Mitchell said. “It’s in front of us everywhere, so some of the things that we’re doing inside of the units is sort of a reaction to that.”…

“What we’ve encountered in our product in suburban Chicago is overwhelming demand,” said Mitchell, who’s based in the firm’s LaGrange office. “We have a waitlist right now at Burlington Station in downtown Downers Grove, and what we’re seeing unfortunately for Chicago is people are returning to the suburbs.”

In Glen Ellyn, rents would range from about $1,400 to nearly $3,000. Glenwood Station amenities would target young professionals working in the city, empty nesters seeking a lower-maintenance lifestyle and other demographic groups.

From the picture provided, this looks like a fairly typical apartment building for a wealthy suburban downtown. The building is not too tall; height is a problem in many suburbs as residents do not want structures to dwarf other buildings, particularly houses). There is room on the sidewalk for pedestrians with streetlights and plantings. While there is some variation to the exterior, the design is not too crazy for a bedroom suburb. The building is not too large; there are just 86 units. There are American flags flying at the street corner.

The changes, according to the article, seem to focus on interior spaces. If you live in an apartment, how do you find space to separate home and work? This may be easier in large homes. What additional spaces could an apartment building or complex contain that gives residents some variety without having to leave? The suggestion above is to provide private spaces elsewhere in the building. It will be interesting to see how apartment developers and owners will in the future modify public spaces – gyms, pools, gardens, dog areas, party rooms, etc. – when restrictions may not allow apartment dwellers to use them in the same way.

What is missing from the COVID-19 apartment approach? Given the economic insecurity and the housing pressures many feel, will apartments be cheaper? These are not cheap apartments according to the story. Will this bring different kinds of people to Glen Ellyn than who might have typically moved there? The amenities are said to be geared toward the types of people suburbs often want to attract as opposed to affordable housing that would better serve those who truly need decent housing.

In other words, suburban development continues in fairly normal ways: the developer gets TIF financing, the city gets a building that fits its character and aesthetic, and suburban downtowns become a little denser.

From quaint suburban neighborhood to sprawl imposed on the land in ten minutes

A recent suburban drive showed me the variety in the built suburban landscape – all within ten minutes. Here is the first residential neighborhood I drove through, right near a downtown:

Tree-lined streets, older homes, walkable, pleasant sidewalks for pedestrians, a two lane road.

But, as I continued down this road, I soon found myself in a different suburban landscape:

Green space on one side, houses on the other side within subdivisions, fewer trees, a wider arterial road with a higher speed limit, power lines on one side.

The local context matters in this case: the first picture is near the downtown of a suburb where the land was first settled in the 1830s and the community was incorporated several decades later. In contrast, the second picture is land more in between suburbs where homes and subdivisions were constructed later. They are good illustrations of the different waves of suburban settlement as discussed by Dolores Hayden in Building Suburbia.

Though these are very different settings, they are now all grouped together as “suburbs.” They may even exist within the same suburban municipality; some suburbs are all sprawl, some are all denser areas, many have a combination of both. The interests of the homeowners in one setting may not match those in the other.

Welcome in Amazon, look for other businesses to follow?

Amazon will soon open a new facility in Palatine, Illinois and get a tax break to do so. That is normal. This other part caught my attention: the suburb hopes Amazon’s arrival helps spur more development.

Amazon will move into a warehouse and distribution facility under construction off Hicks Road south of Northwest Highway, and Palatine officials hope the online retail giant’s arrival sparks more development in that industrial area.

“This is a good bit of news for us, for sure,” Mayor Jim Schwantz said Monday. “It’s the right kind of use for that area. It’s a light draw on our services. It’s not going to take a ton of water. It’s not going to take police or fire calls. We know Hicks Road is built to be able to handle the additional traffic.”

Lots of communities want Amazon to move in. They bring jobs, they fill warehouses, and they bring a big name. Just remember all the cities that put together plans to try to allure Amazon HQ#2.

But, this is another dimension of having a successful company move into your community: it could lead to further growth. Having Amazon puts you on the map. Companies could choose from dozens of warehouse or manufacturing locations in the Chicago region. But, if Amazon is already there, this may attract other firms. Success begets success, growth leads to more growth.

Another example, perhaps two decades in the making: suburbs and neighborhoods all wanted a Starbucks. Not only would this bring in sales tax revenue and more shoppers. It put a place on the map. It suggested the place was cool enough, was up and coming or had an established set of well-off residents. Starbucks could pave the way for other similar businesses that would bring in or provide for a certain crowd.

Or, think about headquarters. These facilities may not have that many employees or may just be an office building but being home to headquarters, as opposed to branches or locations, is something special. Headquarters attract headquarters. They signal something.

A typical Amazon facility is not going to be flashy. It is not going to attract many visitors or shoppers. However, it will add to a community’s tax base, provide jobs, and help the community say they are home to one of the most important companies in America. That Amazon distribution center may be the start to something greater.

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.)

The millions in tax incentives Naperville has offered to keep businesses

According to the Daily Herald, Costco has requested $5.5 million in tax rebates from Naperville in order to open a second store on the site of a former Kmart. This might fi with the incentives Naperville has offered to businesses since 2008:

Marriott

Total incentive offered: $10 million

Total incentive paid: $2,865,000 in hotel/motel tax and sales tax rebates

Expiration: When total is met or 20 years after agreement started in 2012

Hotel Arista/CityGate Centre

Total incentive offered: $7.5 million

Total incentive paid: $2,545,000 in hotel/motel tax and sales tax rebates

Expiration: When total is met or 20 years after agreement started in 2008

Hotel Indigo/Water Street District

Total incentive offered: $7.5 million

Total incentive paid: $965,000 in hotel/motel tax and sales tax rebates

Expiration: When total is met or 20 years after agreement started in 2018

Embassy Suites

Total incentive offered: $7.4 million

Total incentive paid: $1,457,000 in hotel/motel tax and sales tax rebates

Expiration: When total is met or 20 years after agreement started in 2015

Main Street Promenade

Total incentive offered: $1.4 million

Total incentive paid: $306,000 in sales tax rebates

Expiration: When total is met or 25 years after agreement started in 2013

There are a couple of ways to look at this. Perhaps this is just the cost of doing business these days. Big businesses can ask for tax breaks or incentives, plenty of places are willing to offer them, and everyone can still think that they win. For some companies and some communities, this money might just be a small drop in the budget.

On the other hand, it is striking that Naperville has to play this game. This is not a desperate suburb looking for jobs or a turnaround. This a large, wealthy suburb with a lot of accolades. And yet, to get a Costco which would provide tax monies plus fill an annoying vacancy on a stretch the city would like to improve, the city is being asked to provide millions of dollars in breaks to make it worthwhile for Costco. And if Naperville does not pony up, do they just locate in a nearby suburb?

Looking at the list of businesses for which Naperville has provided incentives, four of them involve hotels and a few involved newer developments. Competition is tight in a number of sectors, particularly among retailers and filling suburban vacancies. Again, maybe this is what it takes to keep businesses happy, jobs in town, and some tax money flowing.

Naperville will decide on this soon.

UPDATE 2/19/20: Naperville approved the deal and one leader spoke of the move as providing a catalyst to revive the Ogden Avenue corridor.