Tag Archives: tax revenue

Filling empty shopping mall space with Amazon

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Amazon might be coming to a shopping mall near you:

group of people walking inside building

Photo by Laurentiu Robu on Pexels.com

The talks have focused on converting stores formerly or currently occupied by J.C. Penney Co. Inc. and Sears Holdings Corp., these people said. The department-store chains have both filed for chapter 11 bankruptcy protection and as part of their plans have been closing dozens of stores across the country. Simon malls have 63 Penney and 11 Sears stores, according to its most recent public filing in May…

Amazon fulfillment centers wouldn’t draw much additional foot traffic to the mall, though some employees could eat and shop at the mall. That is why landlords have preferred to replace department stores with other retailers, gyms, theaters or entertainment operators. Yet many of these tenants are struggling to survive during the pandemic and aren’t in expansion mode.

Simon would likely rent the space at a considerable discount to what it could charge another retailer. Warehouse rents are typically less than $10 a square foot, while restaurant rents can be multiples of that. Depending on when the leases were signed and their locations, department-store rents can be as low as $4 a square foot or as high as $19 a square foot…

Malls’ strategic locations often make them attractive as distribution hubs. Many are near main highways and residences. Amazon has already acquired the sites of some failed malls and converted them to fulfillment centers. FedEx Corp. and DHL International GmbH have done the same.

Dying shopping malls need businesses willing to rent space. But, as the article notes, Amazon is an odd choice: they are partly responsible for the decline of traditional retailers, they may or may not bring in customers for other businesses, and they can ask for lower rental rates. But, what choice do many malls have?

I am trying to imagine former shopping malls that become Amazon centers with more life to them than the typical warehouse setting. The former department stores and other retail spaces can mimic large warehouse spaces while the walkways, fountains and other features, and occasional other tenant provide variety and recreational space for employees. Think tech campuses with a warehouse/shopping mall feel. Or, go further: as shopping malls consider adding residential space, why couldn’t Amazon convert some of the mall space into living quarters for workers? (Perhaps this also lends itself to dystopian visions.)

Not mentioned here: how local governments would like the conversion of retail or restaurant space – good for sales tax revenue – to warehouse space.

Suburban movements fight for and against selling marijuana in communities

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Chicago area suburbs considering whether to allow marijuana sales within municipal boundaries have encountered efforts from residents on both sides of the issue:

An “Opt Out” movement that began in Naperville has spawned similar efforts in several other communities across the North, Northwest and West suburbs, pleading with city councils and village boards to ban the sales of adult-use marijuana within their boundaries…

An “Opt In” movement, though in some cases less overtly organized or connected, is present in many places, too, and just as passionate about its message that recreational marijuana stores should be allowed…

At the heart of the opt out effort, supporters say, is a desire to protect children from the potential harms of normalized marijuana use..

Supporters promote the value of potential tax revenue for municipal projects and point out marijuana use and possession will be legal no matter where the stores set up.

Three quick thoughts:

1. It sounds like the speed by which these efforts have coalesced across suburbs is partly attributable to social media. Through different platforms, it is relatively easy to promote a particular message and alert supporters about local meetings.

2. Pitting the safety of children versus potential revenue for suburbs pits important suburban values against each other. Arguably, the suburbs are all about kids: the whole structure is set up to help them get ahead, to do better than their parents, to have good educational opportunities within a safe and family-friendly environment. At the same time, budgets are tight in many suburbs and extra revenue could help provide all sorts of civic goods (including reducing the tax burdens of residents). Which argument wins out may depend on how the suburb sees itself.

3. It is hard to know at this point where the dispensaries might be located, with or without decisions made by individual communities. At first, Illinois will award 75 licenses. Given the population of the Chicago region plus the wealth present in numerous suburban communities, where will firms want to open shop? Is it as simple as going for the wealthiest customers within a certain radius of the store or are there other considerations of the best locations for marijuana dispensaries?

Suburbs do not want to sully their character by allowing marijuana sales

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Selling marijuana may soon be legal in Illinois but this does not mean suburbs necessarily want to be places where this happens:

Naperville, Lake Barrington and Bloomingdale plan to officially ban sales, Libertyville leans toward the same and the mayor of Batavia said he will issue a veto if necessary.

Des Plaines officials have expressed concerns and are doing more research before deciding, which also will happen in Lincolnshire and Bartlett.

To date, only South Elgin and Elburn said they are OK with allowing one marijuana retail store…

Municipalities can choose to not allow marijuana stores within their boundaries, or can enact “reasonable” zoning ordinances and regulate how many and where they are located. That can include minimum distances from “sensitive” locations such as colleges and universities, the law states.

Imagine a suburban landscape starting in January where marijuana is primarily sold in communities that are not as wealthy and/or white. Does this lessen their reputation and bolster the status of communities that do not allow sales?

It will be interesting to see if the communities that are now saying no continue to hold out against marijuana retailers in order to preserve a particular character. The carrot being offered is extra sales tax revenue that municipalities can collect. A wealthier suburb might see adjacent communities benefiting from extra funds and decide they want a cut of it. Or, perhaps they do not see that other suburbs are viewed negatively because they allow marijuana sales so they decide to jump in.

Suburban car dealer limited to 75% of sales must be over $75k

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The suburb of Burr Ridge has some price restrictions for a used car dealership:

The proposal would place the pre-owned luxury car dealer under a two-year probation period to see how a $10,000 minimum sales price would work. Under terms of a 2013 special use permit granted for the dealership, cars may not be sold for less than $30,000, and 75 percent of the vehicle sold must have an average sale price of $75,000 or higher, said Mayor Mickey Straub. The average price of a car in the show room needs to be $87,500, he said…

The dealership has maintained a $79,000 average sale price on its vehicles, but it is losing sales when it cannot trade in vehicles under $30,000, said Mutie Sughayar, Global Luxury Imports owner.

Residents expressed their concerns with traffic around the car dealership and the perceived image of the village if the minimum vehicle sales price is decreased…

“It was one of the stipulations that would ensure that the business remain a luxury used car dealer with minimal foot traffic,” said Mary Bradley, another resident.

Some suburbs want car dealers because they can generate a lot of tax revenue. Others think they are eye sores and project a certain kind of image. Burr Ridge is not alone in this; the city of Wheaton also worked to avoid the numerous car dealers along Roosevelt Road in Glen Ellyn. But, I’ve never seen price restrictions for car dealers like these enacted in Burr Ridge. Raising concerns about traffic are common in NIMBY situations even as this car dealer is close to an I-55 exit where there are plenty of other businesses and County Line Road has to have moderate traffic to make these businesses worthwhile. The negative image of the car dealer is likely the more important culprit in this community with a median household income of $115k.

Perhaps the only worthwhile car dealers in wealthy suburbs are ones that solely sell expensive vehicles to a limited number of people. Talk about exclusive…

Who pays in and receives tax money for transit in the Chicago metropolitan region

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Amidst the fight over tax dollars for mass transit in the Chicago region, here is a breakdown of where the tax money comes from and who gets to spend it:

Metra, the CTA and Pace receive around half of their operating revenues from fares, but most of the remainder comes from sales taxes. It’s calculated using unbelievably complicated state formulas that incorporate geography into divvying up the spoils. However, a 2008 state law change raising the sales tax left the disposal of some of the money up to the Regional Transportation Authority. That’s meant power struggles the last two years.

A look at 2012 sales tax dollars received by the RTA shows that 27.5 percent of that revenue derives from Chicago. The biggest chunk, or 50 percent, comes from suburban Cook County. Elsewhere, DuPage County contributed 8.6 percent, Lake 5 percent, Will about 4 percent, Kane about 3 percent and McHenry not quite 2 percent.

There are two different ways to interpret those numbers. Cook County, including Chicago, delivers 77 percent of transit funding. Or — the suburbs combined provide 72 percent of transit funding compared to Chicago.

In terms of revenue going out in 2014, the CTA will get $661 million in operating funds from the RTA, Metra receives $365.4 million, and Pace $151.6 million. When you cut up that pie, it’s 56 percent CTA, 31 percent Metra and 13 percent Pace.

So it sounds like complaints from DuPage County about the money they are contributing is a smaller slice of the pie overall – it is suburban Cook County that is chipping in the most.

Another issue: suburbanites might complain that they are not getting in return the money they put in but isn’t more expensive to run good mass transit in the spread-out suburbs? In other words, if the collar counties wanted mass transit similar to that of Chicago, wouldn’t it cost more from everyone?

Determining how Illinois road money should be split between Chicago area, downstate

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The Chicago Metropolitan Agency for Planning argues Illinois needs to change its formula for how it apportions road money between the Chicago area and downstate:

A deal hammered out by the state’s top politicians in the 1980s means that 45 percent of all transportation revenues go to the Chicago metropolitan area and 55 percent is allocated to downstate Illinois.

CMAP wants to change the status quo with a performance-based system using population, congestion, pollution and economic impact as criteria when it comes to doling out dollars for significant projects such as new highways, bridges and interchanges or additional lanes…

The agency points out that the metropolitan region comprises 65 percent of the population and contributes about 70 percent of the state’s income tax and 65 percent of its sales tax revenues.

Yet, in IDOT’s 2014-2019 multimodal transportation improvement program, about $3.1 billion — or 45 percent — out of $6.9 billion goes to District 1 including Cook, DuPage, Kane, Lake, McHenry and Will counties, CMAP planners said…

“It’s a very bad idea,” said Republican Rep. Dwight Kay of Glen Carbon. “The needs of southern Illinois in terms of total miles is far greater than in the suburbs or in Chicago. I would be somewhat dismayed if not shocked to think anyone would propose changes. We have hundreds of bridges that either need to be replaced or are older and in disrepair.”

My first question is how lawmakers came to a 55/45 split in the first place. I would hope this agreement was based on some hard numbers but perhaps they were the only figures that everyone could agree on?

It sounds like the current debate would shape up like this: downstate lawmakers argue they have plenty of road miles and infrastructure to maintain while Chicago area politicians argue they put in a majority of the money and have a majority of the population. Do Illinois lawmakers even have the ability to discuss something like this even in the midst of other major money woes? Wouldn’t this simply inflame the ongoing Chicago versus downstate debate? I suspect this won’t be on the front burner even if infrastructure is a growing conversation piece around the country.

Illinois Governor suggests freezing money provided to local governments from Illinois income tax

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Economic times are tough so Illinois Governor Pat Quinn has floated the idea that the state limit how much income tax is shared with local governments:

Gov. Pat Quinn has proposed that the state bolster its own troubled finances by freezing the amount of state income taxes shared with local governments at 2012 levels, which could cost some towns hundreds of thousands of dollars.

Quinn estimates the plan would generate an additional $68 million for the state budget. Because income taxes are disbursed on a per capita basis, the impact to local budgets would be $5.30 per resident, according to the state.

But the Illinois Municipal League estimates the impact would be more than twice that — a $148 million payday for the state, but an $11.50-per-resident cut to local budgets…

Illinois’ income tax, enacted in 1969, was meant to be a shared venture between the state and local municipalities, said Larry Frang, executive director of the Illinois Municipal League. Both the state and local governments alike felt the effects of any dips or spikes in revenue, he said.

This is not a huge surprise given the issues of tax revenue facing various levels of government. To some degree, local governments should get used to this. Plus, if local government is at least partly about local control, then how much do some communities want to rely on money from higher levels of government anyway? On the other hand, raising property taxes and introducing new fees is not attractive to local governments.

Thinking more broadly about the connections between local and state government, does these ongoing economic issues suggest the relationships between the two bodies are more fragile than we might think? When times are good, this probably doesn’t come up much. What recourse do communities, or lower levels of government, have to fight back if the higher level of government, like the county, state, or federal government alter the existing relationship?

Chicago group hopes for 70 million tourists in the city by 2050

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Phil Rosenthal writes about a new plan from Choose Chicago to significantly boost tourism in the city:

Bruce Rauner, Choose Chicago’s chairman, told the Chicago Tribune’s Kathy Bergen the goal is to increase the number of annual visitors, which was close to 44 million in 2011, to 70 million a year. Not even Mayor Rahm Emanuel, who has said he would like to see 50 million visitors by 2020, is that ambitious.

On top of ongoing efforts to attract marquee sporting events and cultural attractions, conventions and other attention-getting visitor magnets, privately funded proposals are reportedly being discussed, such as glass-encased gondolas strung high above the Chicago River, light shows that play out across the city’s skyscrapers and bridges, a ritzy downtown casino (if gambling in Chicago is legalized), a jazz and blues hall of fame, and more.

Some of it undoubtedly is best left on the drawing board. We’re Chicago, after all, the heart and crossroads of America. We want to be in a class with Paris, France, not the Paris Las Vegas Hotel and Casino. There’s already plenty to see and do here to fill Ferris Bueller’s three-day weekend, and there is a danger in trying too hard.

Just as dangerous, however, is in not trying enough. There is a lot of competition for tourism money at home and abroad and, depending which way the economy turns, not necessarily a growing pot of disposable cash for destinations to divvy up. Nothing wrong with trying things, so long as those things don’t erode the image and good will that already exist. This challenge is going to require more than some ads and a halfhearted slogan, like: Chicago — A Better Destination Than Wherever Your O’Hare Connection Would Take You.

Rosenthal hints at the real reason behind this push. It is isn’t just about raising the profile of Chicago or making sure Chicago is considered to be a world-class city. It is about money from tourists visiting attractions, staying in hotels, eating meals, and shopping. It is about tourists going to conventions and taking vacations that include spending money.

Even further behind this story is the idea that tourism is sometimes presented as close to a zero-sum game. Particularly in this economy, an average tourist who goes to Chicago might not be going to St. Louis or Nashville or somewhere else. With limited dollars to go around, Chicago has to successfully compete. However, the whole secret might be to attract new tourists. This might be younger people who are starting out, want to see exciting places, and might consider Chicago. (Does Navy Pier cut it with this crowd?) This might be international tourists, particularly from countries with growing middle-classes such as the BRIC nations.

In the end, tourism is big business and is an essential part of a global city’s economy.  Chicago has to either grow its market share or find new customers. Preferably both.

Is downtown Naperville really unsafe at 10 PM?

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Is downtown Naperville an unsafe place? According to the Naperville chief of police, recent efforts by the department and other interested parties have helped make the downtown safer late at night:

Naperville police Chief Robert Marshall is just five months into his revamped downtown enforcement plan and he and city leaders already are calling it a success…

Beginning in September and running through mid-January, four additional officers were moved downtown between 10 p.m. and 3 a.m. Fridays and Saturdays to focus on disorderly conduct issues, public intoxication and urination, and underage drinking. According to Marshall’s memo, the officers contributed 591 hours of additional police coverage and cost the city nearly $35,000 in overtime costs.

“Last year we had a tragic murder, an armed robbery and two very violent beatings that sent all participants to the hospital,” Marshall said. “As far as violent crimes go, that is a very low number, but our goal is zero. And in the five months since we’ve enacted our plan (in September), that’s exactly what we have.”…

“There is a perception that it’s not safe to come downtown after 10 p.m.,” Pradel said. “Our police are doing their part and we’ve told the business community they are also responsible to make that perception go away.”

I am particularly interested in this quote from Naperville’s mayor who discusses the perception about Naperville’s downtown late at night. This violence could be quite jarring in a community like Naperville that is both quite wealthy and quite safe for a community its size. Who exactly is worried about the downtown at night? Perhaps it is Naperville residents who like the residential nature of the suburb and buy into the small town charm leaders claim Naperville possesses. Perhaps it is possible visitors who will take their money elsewhere. In these sorts of discussions, I haven’t seen any numbers about a downturn in business in Naperville – is this about perceptions or an actual loss of business?

Overall, this seems to come back to an issue I’ve raised before: how can a community like Naperville (and other upscale suburbs face similar issues – see here) both encourage business and cultural activity while also protecting the residential charms of their community? Bars and restaurants can bring in large amounts of money into city coffers. Many communities would love to have the number of restaurants and visitors that Naperville attracts. Yet, this can also bring trouble, particularly when bars are involved.

For now, Naperville leaders seem happy with their new approach that minimizes violence but keeps the money flowing in. Perceptions and reputations are important as suburbanites can spend their money in plenty of places other than Naperville.

What does Naperville gain by scheduling its first marathon?

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Naperville is a decorated suburb: it is unusually large and wealthy compared to most suburbs, has been recognized by a number of publications for its better traits, and has a lively downtown. Now the suburb is adding another feature: it has scheduled its first marathon for November 10, 2013.

“Naperville has a great running community but they’ve never had a marathon, for whatever reason,” said Bob Hackett, who has organized the Fox Valley Marathon in St. Charles for the past three years. “We realized that as great of a city as Naperville is, it’s lost without one, so we’re making it happen.”Hackett said organizers first approached the city two years ago but found the special events planning calendar already booked solid.

The 26.2-mile course has yet to be finalized, but Hackett said it will start near 95th Street and Book Road and wander south into Plainfield and unincorporated Will County before heading back north into Naperville. The course will take runners along a variety of streets and through forest preserve property…

“The course should be somewhat flat and fast, but it will have its rolling hills and challenges,” Hackett said. “It will be a Boston-qualifying race, so there’s an opportunity for runners to put together a fast race if they’re looking to head to Boston.”…

Hackett said the Fox Valley run has drawn as many as 7,500 runners, but the first Naperville event will be capped at 4,000. He doesn’t think they’ll have any trouble hitting that mark.

There are several ways this race could help boost the prestige of Naperville;

1. This could bring in more people and attention to Naperville. All this could translate into more tax revenue and status.

2. This suburban marathon is connected to the Boston Marathon, a prestigious race. Additionally, there are a limited number of Boston-qualifying races. Check out this list of 2012 marathons and the number of qualifiers for Boston each race produced: many of these races are city races, not suburban races.

3. It will be interesting to see how Naperville tries to tie this to existing recreational and outdoor activities in Naperville. While it is a relatively flat Midwestern town, Naperville has a popular Riverwalk along the DuPage River and numerous parks and Forest Preserves (particularly the 1,867 acre Springbrook Prairie).

This seems like a win-win of the community: runners get a local race, the city of Naperville gets a marquee event to add to the schedule, and the event is on a Sunday morning so shouldn’t disrupt too much of normal suburban life.