What redevelopment will suburbs pursue with COVID-19 induced vacancies?

The COVID-19 pandemic is accelerating a number of trends already troubling many communities: struggling brick-and-mortar retailers, filling vacant office and commercial properties, and budget uncertainties. What might this lead to as suburbs consider redevelopment? A few possible directions.

Photo by Pixabay on Pexels.com
  1. Desirable suburban communities – those with wealthier residents, more white-collar and professional workers, higher quality of life, and stronger economic bases – will do better at attracting and following through on redevelopment.
  2. The “easiest” answer in many suburbs might be to redevelop office or commercial properties for residential units. Given the needs for affordable housing or cheaper housing in many metropolitan areas, many suburbs could fill residential units. They may not want to for several reasons: residences do not bring in sales tax money and services are different for residences, including having more students in local schools. Plus, “affordable housing” implies certain things about the residents and the units that might not be palatable to some communities. But, if the primary goal is to put property to use, this might be the way to go.
  3. Mixed-use redevelopment that combines residential and retail or office space will continue to be attractive. However, these opportunities might be limited to already-advantages suburbs or particular properties that have certain advantages (large enough to create a self-contained community, access to highways and other transportation options, etc.).
  4. Certain properties may just present particular problems. Three come to mind quickly: shopping malls, empty big box stores, and sizable office parks or campuses. A number of communities have tried to tackle each of these (as one example among many, see this shopping mall post here) but the size of the property and their particular configuration present problems. There may a glut of new kinds of suburban properties that present their own issues: restaurants (both sit-down and fast food), strip malls, and movie theaters. Again, the ways the space was initially configured for these specific uses can make it difficult to pursue retrofitting.
  5. Converting private spaces into more public spaces. Imagine the shopping mall to public skating rink or office campus to park. These may have very positive long-term benefits including spaces for civic engagement, leisure, and interaction with nature. Yet, given the state of municipal budgets with COVID-19, it might be very hard to find money to purchase or use what was once private property.

If there are numerous vacant properties in suburban areas post-COVID-19, this will present a challenge for communities. Are there enough uses for these properties? How willing are suburbs to convert land from one use to another as they consider the “best use” for the community?

Research on the power and influence Democratic mayors do or do not have

Emily Badger sums up research looking at how much big cities are affected by having a mayor from a particular political party:

https://www.nytimes.com/2020/09/02/upshot/trump-democratic-cities.html

Numerous studies suggest that the partisanship of mayors has limited effect on much of anything: not just crime, but also tax policy, social policy and economic outcomes.

The researchers Justin de Benedictis-Kessner and Christopher Warshaw have found that Democratic mayors spend more than Republican mayors. “But the differences are pretty small,” said Mr. Warshaw, a political scientist at George Washington University. “They’re not enough to drive large differences in societal outcomes in things like crime rates.”

This is partly because mayors are constrained in their ability to execute ideological agendas. Cities can’t run deficits. States limit their authority to raise taxes and enact laws on many issues. And cities lack the power the federal government has to shape labor laws, or immigration policies that can affect their population growth…

Cities have been faced with problems far beyond their making. Deindustrialization and globalization wiped out many middle-class factory jobs, destabilizing neighborhoods of blue-collar workers. The federal policy of highway construction enabled both taxpayers and employers to leave cities. Federal housing policies dissuaded or prevented Black residents initially from joining them, cementing patterns of racial and economic segregation that persist to this day…

There are plenty of fair critiques of decisions that Democratic mayors do control — regarding charter schools, or how equitably they deploy city resources, or whether their zoning laws and school policies perpetuate segregation. And there is room to criticize the Democratic Party’s failure to devise a coherent federal urban policy.

Disentangling this from the current political moment and debate about running cities, a few themes from the article stuck out to me:

  1. One argument is that mayors are more interested in pragmatic day to day city processes than larger ideological concerns. Mayors themselves make this argument. If a mayor cannot help solve a particular local problem, they may not be in office for long, regardless of what party they align with.
  2. Cities are stuck between multiple bodies of government. A city may be nested within a county (and this is what might make city-county mergers appealing), a state, and then the federal system. On one hand, cities are essential to our modern society – they are economic engines, centers of culture, gathering places for residents and jobs, anchors of entire regions, etc. – but their city interests must be negotiated with other bodies of government above them. Putting it in more sociological terms, cities are between macro and micro social scales yet often are viewed as macro entities and have some capabilities at the macro level (I am thinking of conferences of mayors, transnational conversations between mayors and other mayors or heads of government, etc.)
  3. As a graph in the article shows, there are more Democratic big city mayors than Republican big city mayors and this has been true for decades. Do Republicans want to be mayors of big cities? Also noted in the story: Republican policies and appeals have been made to suburbanites and rural voters for decades, less so to urban residents.
  4. This is not a new political issue; the United States has a long-standing divide regarding cities that goes back to the founding of the country. For more on this as it played out in the twentieth century, I recommend the 2014 book Americans Against the City by historian Steven Conn.

The start of municipal budget issues due to COVID-19? The case of Chicago

COVID-19 has disrupted a lot of life in the United States and it will have consequences for municipal budgets. Here is how Chicago mayor Lori Lightfoot describes the fiscal impact:

Google Street View of Chicago City Hall, June 2018

Citing the “catastrophic collapse of our local and national economy” because of COVID-19 and damage to local businesses from civil unrest, Mayor Lori Lightfoot on Monday laid out a $1.2 billion shortfall for what she called Chicago’s “pandemic budget” in 2021…

The ongoing coronavirus crisis has also spiked the 2020 budget shortfall to nearly $800 million, Lightfoot said. She said that deficit would be filled using relief funds and other unspecified aid from the federal government, in addition to debt refinancing, and borrowing…

In laying out the 2021 shortfall, Lightfoot cited dire numbers — more than 900,000 Chicago-area residents filed for unemployment since the start of the pandemic, while personal services, hospitality and tourism industries “are still seeing a fraction of their typical revenues and some businesses have sadly closed with no hope of coming back.”…

The bad news has seemed inevitable for months, as tax receipts plummeted with large parts of the economy shut down and spending in Chicago by tourists and conventioneers cratered throughout the summer because of the pandemic.

Chicago has its own particular challenges but the COVID-19 shortfall is one that many communities in the United States, big and small, will experience. Local governments tend to want to diversify their tax base so that they are drawing tax revenues from multiple sources. COVID-19 interrupts or limits a number of these streams: money from visitors (who stay in hotels, visit sites, eat), sales tax revenues (derived from businesses from residents and visitors, who are affected by employment and travel opportunities), and property tax revenue (could be affected if people are moving in or out affecting demand plus whether residents and landlords are able to pay their bills). Furthermore, right now this is posed as an issue for the current budget; what is the effect for months or years down the road as cities and communities try to rebound and/or continue to battle COVID-19?

Closing these COVID-19 shortfalls will provide unique opportunities for politicians. This article suggests all options are on the table; yet, I am sure most, if not all of the politicians involved, have particular budget options they would not consider. Many municipal governments will hope there are extra resources available from above, perhaps from the county, state, and federal governments. Yet, all levels of government are likely to feel the impact of COVID-19. And with the current discord between the White House and big city leaders, it is hard to imagine what a palatable plan for the federal government and municipal governments to work together would look like. Could this/should this be a major issue on the November 2020 campaign trail as multiple levels of government look to address COVID effects?

Less restaurant and retail business, lower local sales tax revenue

The ongoing effects of COVID-19 on business activity, particularly restaurants, will impact communities:

Restaurant dining room closures resulting from the coronavirus pandemic are wreaking havoc on the industry’s bottom line and upending the lives of many working in the service industry. Those losses also will be felt by communities that rely on restaurant sales taxes and special food and beverage taxes to help fund municipal services. Some suburbs will feel the effects much more than others because of how heavily they rely on such taxes.

Sales taxes at restaurants and bars contributed more than $2 million a week to 83 suburbs, a Daily Herald analysis of 2019 tax records on the Illinois Department of Revenue’s website shows.

In a dozen suburbs, sales taxes from restaurants and bars represented more than 20% of all their sales tax revenue last year…

“It’s not just restaurants and bars, though,” said Rob Karr, president and CEO of the Illinois Retail Merchants Association, pointing out many sources of sales tax have had sharp drops. “Everybody in the retail sector has been negatively impacted, aside from groceries.”

With more Americans eating out in general, the ability of restaurants to draw visitors from other communities, and connections between eating and other recreational and cultural activities, eateries can be important sources of revenue.

Communities can aspire to have a diverse tax base where they draw tax revenues from a variety of sources, including sales taxes and property taxes. At the same time, some communities develop niches where they focus on one business sector or they have a historic strength. Diversification may be difficult to achieve and depend on a variety of forces including actions by local officials and leaders, the demographics of the community, historic patterns, and actions by business owners and larger economic forces. In other words, the character of a community’s tax base develops over time, can change, and at least in part depends on outside actions and forces beyond a community’s control.

It will also be interesting to see where the budget issues that municipalities face fall among the other economic concerns. Sales tax revenues are part of the picture but so might be property values if businesses need to close and there are not other businesses to take their place. If the federal government and states are also facing big hits to revenue, what might happen to municipal budgets?

Suburban municipalities to take own actions regarding COVID-19?

As different government bodies look to act in response to the spread of COVID-19, I was struck by the number of large cities and states that are acting (including the state in which I live). At the same time, I wonder: how are suburban communities responding?

A few thoughts:

-Many suburban communities have limited capabilities and cannot do a whole lot. They may have limited budgets, a relatively small number of employees, and not much power to compel action. Still, decisions to close public spaces – such as libraries, city/village/town halls, community centers – matter to the everyday lives of lots of people.

-Yet, some bigger suburbs in the United States are as large as small big cities. Their actions can be very consequential and they have more budget room to address issues. At this point, the news has primarily focused on the biggest cities in the United States but this matters for numerous other communities over 100,000 people (to use an arbitrary cut-off point for a larger community).

Americans tend to like local control and government but at the speed that a virus can spread and across political boundaries, individual actions across hundreds of American suburbs might not add up to much. Hence, people look to the state and federal level to mobilize resources and direct action.

-What is the role of metropolitan regions in all of this? The City of Chicago can act and affect millions of residents and workers but there are roughly seven million more people in the region. Counties can act and affect more residents. But, then the next level of action regarding COVID-19 seems to be at the state level. Are metropolitan regions working together or is the general lack of metropolitan cooperation revealed again in a time of crisis?

Bringing the City Council meeting to a (participatory) stage

I have read through decades of City Council and other local commission minutes for research projects. Thus, I was intrigued to find out a playwright had taken real City Council experiences and put them together into a participatory performance:

Inside a hushed theater, a voice on the loudspeaker instantly lets the audience know this isn’t your typical performance.

“By joining us tonight” a soft female voice says, “you’ll be standing in for someone who was actually part of a local government meeting somewhere in the U.S. in the last three years.”

The show, for the most part, doesn’t use actors. Instead, theater goers are asked to volunteer to play the role of city council members, the mayor, and regular citizens at a city council meeting. The performance is staged just as if it were a real meeting, with real people participating in a play that reflects the good, the bad, the ugly, and the sometimes nail-biting tediousness of participatory democracy…

“How do you take someone whose way of speaking or obvious demographic might be very different from yours and respectfully put it in the room?” Landsman asks. “How do you give voice to someone else’s language? For me it’s like walking a mile in their shoes – verbally.”

I would love to see this and to participate. The play takes something mundane to most people and provides an opportunity to see how things work and different people approach their community.

Here is why this has the potential to matter: Americans say that they like local government but their involvement is often limited (as exhibited by low turnout rates for local voting). And much of the time in local government boards, committees, and groups may involve arcane discussions of local ordinances, approval of paying bills, and odd local political or interpersonal disputes. Yet, these meetings help shape the character of communities. Even if there is a sizable public discussion about a development project or an annexation or a significant change, it is in the local government meeting that the vote actually takes place. These discussions and decisions can make a difference and set a community down a particular path for decades.

I would guess those who see this play do not immediately show up at all the local meetings eager to observe. However, at the least, it could help reveal some of the local processes that have the potential to impact all of our lives and communities.

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.

What community wants to actually fine residents for not shoveling their sidewalks?

Shoveling sidewalks in front of residences and businesses is important for pedestrians. Many communities have penalties on the books for those who do not clear their sidewalks, including Chicago:

Property owners in the city are legally required to shovel their sidewalks after it snows. And on the South Side, one alderman has been out cracking down on the problem.

Ald. Ray Lopez has been out in his 15th Ward neighborhoods since Tuesday, directing Streets and Sanitation workers to problem spots to hold people accountable.

Department workers were writing tickets to home and business owners who did not comply. Fines range up to $500…

Thirty two businesses got ticketed in the 15th Ward Tuesday, and Lopez said he expects there to be just as many Wednesday.

Even if neighbors get mad at a lack of shoveling, who wants to be the politician or local official who gives tickets to homeowners for this offense? From the information provided in the article above, it looks like the tickets were issued to businesses. It could be argued that businesses have a strong obligation to snow as it would be good for potential customers and they are often located in areas where there are more pedestrians (street corners, commercial areas along busy streets, etc.). But, imagine the optics of giving a ticket to an elderly homeowner or a single mother with multiple small children. Americans may like local government but not when that government appears to be heavy-handed.

A similar comparison might be fines many communities issue regarding long grass. If people do not keep their lawn below a certain height, some communities will come mow that lawn and then send a sizable bill. Neighbors do not like the message tall grass sends (regular lawn maintenance suggests a certain standing). I do not know the recidivism rates after this is done; it would be interesting to know if this helps promote more lawn mowing in the future.

Or, consider traffic tickets. Many drivers speed but few want to be ticketed if they are swept up in efforts to generate revenue for the community, outsiders are targeted, or routine acts are criminalized. Arguments can be made about safety and the good of the community might I would guess few people support getting a ticket.

All of this can put local officials in a tough position. These problems, unshoveled snow, long grass, and bad driving, can create dangers and resentment in a community if not addressed. But, fines may not be the best way to prompt action. Tomorrow, I will consider other options for clearing sidewalks beyond fines.

Considering housing shortages and gentrification together

An MIT economist looks at the relationship between gentrification and a shortage of cheaper housing:

Unsurprisingly, the geography of a place and the community residing there are linked. Along the most measurable dimensions, richer people tend to live in places with attractive geographies. Conversely, places with undesirable attributes like industrial or transportation pollution, poor access to jobs, and uninviting climates are usually left for the poorest and most marginalized.

Usually—but not always. Occasionally, physically attractive locations come to be occupied by low-income communities, immigrant communities, black communities. Neighborhoods like these are ripe for gentrification. Changes in labor markets, large investments by public or private institutions, or even just changing preferences among the wealthy move these neighborhoods into the sight lines of richer people, and then they gentrify.

The housing shortage, meanwhile, is a region-wide round of musical chairs, in which the winners sat down before the music even stopped. Whereas gentrification reshuffles which communities occupy which parts of the city, the housing shortage can operate at the scale of cities and regions as well as neighborhoods…

Policies introduced to fight gentrification—rent control and tenant protections—may ameliorate the effects of neighborhood change, but they won’t build new homes. We must allow new construction somewhere, despite the changes this will bring. Of course, we must do so in a way that avoids gentrification.

Four quick thoughts on this argument:

1. This reminds me of my post from the other day comparing the perspective that there is not enough housing and there is plenty of housing but it is not cheap enough. This piece suggests there are multiple housing issues at work and policies might tackle one particular issue and not others (or even make other housing issues worse).

2. Does the multiplicity of housing issues require that Americans prioritize which issue matters to them most? If middle-class people want cheaper housing, that will lead to different approaches (public policies, legislation, urban planning, decisions by developers, etc.) compared to a consensus that gentrification is not desirable. Historically, Americans have tended to prioritize housing for the middle-class (broadly defined) at the expense of housing for the poor or homeless.

3. To truly address all of these issues, metropolitan-wide approaches are needed. Individual neighborhoods or municipalities are often left to tackle these on their own even though decisions by nearby neighborhoods or municipalities have significant effects on their housing.

4. Additionally, a comprehensive housing policy is needed, not just one that tackles the most important or noisiest issue at the moment. On one hand, many Americans would not want the government to become involved in such issues even as the government has promoted suburban homeownership for roughly a century.

When local government meetings go past midnight

Suburbanites like smaller local government. But, local government meetings or hearings that go past midnight can be inconvenient. A recent example from an Illinois suburb discussing marijuana sales:

Angering residents who showed up in droves to oppose the sale of recreational marijuana in the village, Buffalo Grove trustees at about 1 a.m. Tuesday approved zoning regulations to allow it.

For 4½ hours, residents spoke passionately against recreational pot sales. But in the end, only one trustee, David Weidenfeld, voted against the regulations, which will allow recreational dispensaries as a special use in nonresidential areas — three business districts and the industrial district.

There are two issues at work here. The first is this: the article suggests there was a vocal set of residents opposed to marijuana sales who were not happy with the results. Local residents can become active if they perceive a change in the community will negatively affect their quality of life and/or property values (see recent suburban cases in Glen Ellyn, Wheaton, and Itasca). If the decision does not go their way – and there are plenty of cases where there are vocal residents and leaders on both sides – then resentment and long-term conflict can develop.

But, the second issue is what I want to focus on here: how late the meeting ran. How many residents, even if they are energized by a particular cause, can afford to stay out past midnight at a public meeting or hearing? Staying up that late can put a severe damper on the next day’s activities, particularly depending on jobs, family situations, and health. Residents may feel they need to stay to the end of a meeting to be heard but that comes at a cost.

Local officials may also be in a bind regarding time. Many municipalities already have rules in place so that individual speakers do not run too long and that plenty of people get a chance to speak. There is other business that needs to be conducted at many local meetings, including considering a variety of proposals, approving payments, and considering reports from other staff or committees. The meeting can only start so early as residents and leaders may be coming from jobs, dinner, and other responsibilities. Stretching meetings over multiple days may not be optimal though multiple meetings or hearings can happen if leaders want to provide more opportunities for people to voice their opinions.

In the particular case above, it looks like the public had a chance to speak – 4.5 hours – and therefore the approval could not come until later (and the approval was overwhelming). The late ending may have only rubbed salt in the wounds of those opposed to pot sales. But, as best practice, local officials should work to avoid concluding meetings in the wee hours in the morning.