Trying to add round-the-clock, year-round activity at a suburban football stadium

If the Chicago Bears are to move to the suburbs, the change would not just include a stadium: the land all around would be valuable and needed to generate the kind of revenues the team and community would hope for:

Photo by Juan Salamanca on Pexels.com

SoFi Stadium was built on the former site of Hollywood Park racetrack, presenting a solid comparison to Arlington Park. According to Noll, the reason SoFi Stadium is in position to be financially successful is the mixed-use development also being built on the property.

Noll believes a stand-alone stadium is no longer a realistic option for NFL franchises because a $5 billion stadium can’t be financed by eight football games a year and the random big-name concert. Year-round revenue must be part of the package…

Glendale city officials, for example, added residential neighborhoods to the area so the entertainment establishments would be frequented at night and on weekends when no game is in town. They added office space so workers would patronize the restaurants in the daytime and not take up parking at night.

“If you’re not able to capture benefit in a meaningful way outside of the football games, it’ll be an expensive proposition,” Phelps said. “We’re seeing tremendous growth in and around the stadium, kind of creating this sports and entertainment hub. I think that’s the future where these kinds of venues are going.”

Creating this sort of suburban entertainment center is a dream of many larger suburbs. Not only would this boost the status of the community, it would add jobs and tax revenues. Metropolitan areas only have so many stadiums and major revenue generators and this could be viewed as a once-in-a-lifetime opportunity (or gamble).

But, this would also be a major change. The article noted that this site in Arlington Heights is surrounded by residences; would a mixed-use area of denser housing, restaurants, and entertainment venues be welcomed? Can Arlington Heights go full[speed into such a project?

As the article notes, it could turn out poorly. There is a lot of money at play. Getting any taxpayer dollars involved could be a risk. It all could take time to develop fully into a true center for suburban football as opposed to a football stadium stuck in the middle of single-family homes near highways.

Given all the history of the Bears in the city, I would be more than 50% confident that they stay in Chicago. The allure of a new, large stadium that could serve other uses much of the years is incredibly appealing. There is money to be made in the suburbs. But, it would certainly be a change for all involved, including Chicago leaders who would have much to answer for if the Bears become the Chicagoland Bears.

Finding housing in former strip malls and big box stores in California

In a state with a need for cheaper housing, some in California are looking to commercial properties along main roads:

Photo by Priti Singh on Pexels.com

Joe DiStefano sees boulevards like El Camino Real as more than just spots for takeout or an oil change. He sees a “perfect storm of opportunity.” Cofounder and CEO of UrbanFootprint, a software company that builds urban planning tools, DiStefano has done numerous studies on the housing potential hiding in California’s commercial strips. According to UrbanFootprint’s analysis of El Camino Real, this lone corridor could theoretically accommodate more than 300,000 new units if the road was upzoned to allow residential development and its parking lots and big-box stores became low-rise apartment complexes…

Converting underutilized retail and office space into apartments is not a novel idea, but it’s gaining fresh attention from California lawmakers, especially as pandemic-fueled e-commerce and remote work trends continue to empty brick-and-mortar stores and business parks across the state. In December, California State Senator Anna Caballero, who represents the Central and Salinas valleys and cities such as Merced, helped introduce Senate Bill 6, which would fast-track the creation of walkable infill development and make it easier to turn land zoned for commercial uses into housing. Another member of the state’s legislature, Assemblymember Richard Bloom, has a similar proposal to encourage commercial-to-residential conversions, Assembly Bill 115. (California has a bicameral legislature.) And Senator Anthony Portantino introduced AB15, which would incentivize turning vacant big box sites into workforce housing…

But more than 40% of commercial zones in California’s 50 largest metros prohibit residential development, according to a recent report from the Terner Center for Housing Innovation at Berkeley. “Residential Redevelopment of Commercially Zoned Land in California” highlights the growing potential of such rezoning proposals. “It’s a perfect infill option,” says David Garcia, a co-author and policy director at the Terner Center. While legislation like these proposed bills hasn’t been passed in other states, he believes they address a universal problem. “You’re really plugging in gaps left by shifts in the commercial marketplace, by Covid and the shift to e-commerce.”

There are three main types of projects ripe for this kind of reuse, Garcia says: commercial strips in more urban areas, often along existing transit lines; former big box retailers in more suburban areas; and vacant land in the exurban landscape that’s been reserved for future development. Researchers found there was actually more acreage of available commercial space per person in more suburban/outlier areas, an opportunity that, if paired with increased investment in transit, could quickly bring more density and valuable walkable development to fast-growing and diversifying suburban centers, some of which have already done a relatively good job of building new housing. “Instead of thinking about a bill like this as another state mandate cities need to adhere to, it should be looked at as a tool for doing the good planning they need to do anyways,” Garcia says. 

This might be hard sell before COVID-19 but the severe issues for retailers and businesses may make a lot of properties available.

Even with these issues, I wonder how many communities would quickly give up commercial properties to be rezoned for residential use. Many communities rely on commercial properties along major roads for sales tax revenue. If commercial property disappears from the local zoning map, how would a community make up those revenues?

Of course, providing possibly cheaper housing could be desirable to residents, even if it comes at the expense of commercial properties. And new residential units might even revive some local commercial activity.

If this is enabled at the state level, it would be interesting to see how quickly communities and developers would move. Vacant property is not desirable for any municipality. Would this move more quickly in certain kinds of communities compared to others?

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?

The coming budget reckoning for big cities

A new analysis suggests particular big cities will suffer losses in tax revenues due to COVID-19:

Describing the study results more:

What matters more in this pandemic moment is how a city generates money: Those highly dependent on tourism, on direct state aid or on volatile sales taxes will hurt the most. Cities like Boston, which rely heavily on the most stable revenue, property taxes, are in the strongest position — for now.

The estimates, to be published in the National Tax Journal by Mr. Chernick, David Copeland at Georgia State University and Andrew Reschovsky at the University of Wisconsin, are based on the mix of local revenue sources, the importance of state aid and the composition of jobs and wages in each city. The researchers predict average revenue shortfalls in the 2021 fiscal year of about 5.5 percent in a less severe scenario, or 9 percent in a more severe one.

Tax revenues can come from a variety of sources. Like recommendations for individual investors to diversify their portfolio, municipalities can benefit from a broad tax base that is not too reliant on any one sector. As the analysis suggests, relying on one single source can cause problems when that area experiences a downturn. (At the same time, creating such a robust and resilient local economy might be very difficult to do given historical patterns, current conditions, and competition in the future.)

The color coding of the graph above is interesting in that it implies that there are a number of cities that Republicans should care about helping. I wonder how this will play out: even as Republican senators would want more municipal tax revenues, it does not necessarily mean that they are pro-city or would want to go out of their way to provide funding. Are Republicans more in favor of seeing the fate of cities and suburbs as tied together when their cities are at risk?

The budget gap facing Chicago area suburbs due to COVID-19

An online forum with House leaders provided details on how suburban budgets in the Chicago area are affected by COVID-19:

Not only are sales taxes plunging but costs of preventing the respiratory disease are mounting, suburban leaders explained to House Majority Leader Steny Hoyer at an online forum hosted by U.S. Rep. Sean Casten Monday.

Glen Ellyn expects a 20% to 25% reduction in revenue over the next three to six months in the general fund, half of which goes to the police department, Village President Diane McGinley said…

Algonquin Village President John Schmitt said not only is the village shelling out for items like face masks but so far there’s been a 26% reduction in sales taxes revenues…

He noted Hanover Park is facing about $242,000 in COVID-19 expenses and a drop of almost $5.6 million in taxes.

If a retailer or business cannot open or sell at the same level as prior to the pandemic, this affects all sorts of outcomes. As noted above, communities have limited numbers of ways to fill this budget gap. They can look to governments above them – states, the federal government – but that puts their fate in the hands of others and that money may not come quickly or in sufficient amounts. In the short-term, this likely means putting off projects. Longer-term, it could mean some hard decisions about services and local amenities that suburbanites enjoy or think are essential.

The tax revenues might just be the tip of the iceberg; if retailers have to close (already an issue from urban shopping districts to shopping malls), this puts pressure on landlords as well as on communities to fill vacant space (already an issue in suburban communities whether filling big box locations or office parks) both to generate revenue and avoid the appearance of economic loss or blight. Local jobs are affected.

It will be interesting to see if these budget issues widen the gap between suburbs with a lot and those with less. There is already a bifurcated suburban landscape: some communities really struggling and some with a lot of resources, amenities, and status (and many somewhere in between). Those who have more can likely weather this storm better than the suburbs already struggling.

Changed suburban spending because of COVID-19, Naperville edition

While most public attention with COVID-19 has focused on big cities and countries, numerous suburbs will deal with the effects of the pandemic as well. Here is how Naperville, a large and well-off suburb, is planning to tackle a budget gap:

The city of Naperville is shaving nearly $25 million off its 2020 budget in the wake of the economic downturn caused by the coronavirus pandemic…

City Manager Doug Krieger said some of the projects were selected to be postponed because they’re considered “nice-to-haves” and aren’t expected to cost significantly more to be completed in future years. One major project, a $2.6 million plan to improve downtown streetscapes, was included on the list for deferment because “the downtown merchants did not want to proceed” with it in light of the pandemic, he said.

The moves will help the city offset anticipated declines in revenue sources — such as sales tax, food and beverage tax and motor fuel tax — as residents and businesses continue to follow the stay-at-home order…

Other work that will not take place this year includes $9 million in water meter-reading technology upgrades, a $7 million road widening project on North Aurora Road and $1.1 million of work toward a park at 430 S. Washington St. to be built in conjunction with North Central College, as well as smaller projects such as LED lighting conversion, tree planting, electric vehicle charging stations, flooring replacements and conference room IT and electric upgrades.

Suburbs and other municipalities can generate tax revenue through several sources (as noted above). Property taxes are affected by property values, which appear at this point appear to be holding firm during COVID-19. Sales taxes are generated by local businesses; this will certainly be down in communities (though the decline of retailers was already an issue). Food and beverage taxes will be down. And the number of people buying gasoline – feeding into the motor fuel tax – is down (and projections for the state’s funding through this suggest a big dip). In Illinois, we are near a third month of reduced business and social activity and this will make a big dent in municipal finances.

At the same time, based on the descriptions here, it sounds like an average resident of Naperville would not even notice that these improvements are not addressed this year. Of course, it could create a backlog for future years – pushing projects down the road means other planned projects might be delayed later – but the focus is on helping to address the current issues.

Naperville may be an unusual case compared to many other suburbs. It is a big community with a lot of successful businesses. The local government prides itself on being well-run and stable. It is not clear how long Naperville could continue to work through budget shortfalls but it is likely better prepared for this than many places.

This means that many municipalities could be facing tough questions in the months ahead about local projects and local funding. If the federal government and states are struggling with missed revenues, this will certainly affect municipalities who have to address local budget issues.

A new suburban Walmart comes with tax revenue, crime, and economic development

How exactly does a new Walmart change a suburb? Here are at least a few factors to consider:

From its opening day to June 30, 2017, officers responded to 445 calls for service at Walmart, 166 of which resulted in arrests, according to records obtained by the Daily Herald. That means police were called to the store an average 1.2 times per day in its first year…

Walmart announced in 2012 its plans to close an East Dundee store and build the Carpentersville supercenter less than three miles away, prompting a lengthy legal battle between the company and the two villages. Walmart is expected to receive $4.3 million in tax increment financing funds ­– property taxes above a certain point in the area that would have gone to local governments — for the new store…

Though he declined to disclose specific sales numbers, Rooney said the new Carpentersville store has generated more sales tax revenue than East Dundee reported losing…

Already, the supercenter has significantly increased traffic and economic interest on the village’s east side, he said. Plans are moving forward for constructing a new five-tenant building and an O’Reilly Auto Parts on the store’s outlots.

To be honest, many suburbs cannot afford not to welcome Walmart into their communities. It is rare to find a user for a decent sized portion of land along a major road that will bring in so much tax revenue and provide jobs. The increase in crime can be chalked up as simply part of doing major retail business (I assume there may be bumps with other major retailers or shopping malls) and may not be a huge issue if it is largely isolated to the Walmart site.

In the long run, there are additional factors to consider including the local business climate with the behemoth Walmart in town (more competition for certain businesses), the opportunity cost of what else might have operated on that site, and the image of having a Walmart and related businesses. There is a reason more exclusive communities turn down big box stores and large strip mall areas. Furthermore, the fate of East Dundee could soon befell Carpentersville; if Walmart eventually wants a better deal or a bigger store, they can simply move and bring their benefits (and problems) to a different suburb.

As I suggested above, given these short-term and long-term outlooks, most American suburbs would choose to welcome Walmart. From whence the Walmart came does not matter while the tax receipts can be blinding to many.

Automated jobs could reduce tax revenues

I don’t know how accurate these figures are but it is an interesting argument: people might worry about losing jobs to automation but what about losing tax revenues?

The United States is in danger of losing more than one-third of its tax base thanks to increasing automation in both manufacturing and service sectors. Self-driving vehicles, self-serve kiosks, increases in manufacturing and energy production efficiency, and declining retail numbers all contribute to what is likely going to be a significant problem in the coming decades…

Conservative estimates put future job losses at 20 million with some estimates going up to as high as 70 million. When someone loses their job, they stop paying taxes, while their employers stop paying payroll and other types of taxes at the same time. Compounding the issue is the fact that many people who lose their jobs start to depend on the economic support of the government, along with their families…

A growing population and dwindling jobs will result in much higher levels of unemployment in working-age adults than we see now. To top it off, the number of people on either side of the working-age spectrum (under-18, over-67) are growing substantially. Something has to give at some point, whether that means the advent of a basic income system or substantial corporate/capital taxes, the transitional period we are currently in cannot last forever.

Something to keep an eye on. I could imagine this causing particular problems at the local level as less federal and state money is available at the same time that residents may have a harder time paying property taxes and other local fees.

How many suburban entertainment centers can one region have?

Schaumburg is looking into creating a new entertainment district out of underused properties:

Schaumburg trustees Tuesday approved a $6.58 million offer to buy the two single-story office buildings just north of the village’s convention center and Renaissance Hotel to help develop a new entertainment district and reconfigure Thoreau Drive.

The 110,000-square-foot Woodfield Green Executive Centre lies on the north side of Thoreau Drive and just across Meacham Road from Zurich North America’s new headquarters…

The long-term plan is to hold the property to sell to one or more developers interested in building more restaurant and other entertainment venues near the southeast corner of Meacham and Algonquin roads.

This sounds like a typical suburban strategy today: take properties that are not doing well or even abandoned (see efforts to utilize closed grocery stores) and start generating revenues through new entertainment use. Stores come and go but theaters and restaurants can come together to create a vibrant distract that will generate property and sales tax revenues for years to come.

This did lead me to a question: within the Chicago metropolitan region, how many entertainment districts can the region support? If many suburbs are trying to pursue these goals, can most of them sustain successful districts? There are already a number of successful or established districts: Evanston, Arlington Heights, Schaumburg and Woodfield, Rosemont, Gurnee Mills, the Oak Brook-Yorktown corridor, Naperville, plenty of other downtowns with lively scenes and regular festivals and events (Geneva, Aurora, Elmhurst, etc.) and countless shopping centers that are transitioning to lifestyle centers. I assume there is a saturation point where these districts start losing people to each other. Of course, this might be mitigated by two factors: (1) continued population growth so that everyone can share from a growing spending pie and (2) specialization among entertainment districts that could help each remain competitive.

Another thought: how often do entertainment districts simply reproduce existing patterns of wealth and the distribution of higher-end commercial properties?

Balkanized suburbs and declining local revenues

A story about several suburbs outside Philadelphia highlights a problem facing many suburban communities: how can they counter declining revenues when residents and businesses move away?

Pennsylvania’s Delaware County is a crazy quilt of municipalities. Just to the west of Philadelphia, it is home to some of the oldest suburban communities in America. It is dense, with more than half a million people packed into townships and boroughs as small as a half square mile. Such tight confines can make governance difficult under any but the best conditions.

If a neighborhood starts to change in a way its middle-class residents don’t like, they can move a few miles to a newer house, a better school district, and lower property taxes. The communities they leave behind are faced with the impossible math of declining revenues, rising taxes, and an increasingly needy population…

But Hepkins’ most attainable plan is his ongoing effort to lash Yeadon together more tightly with its neighboring municipalities. He dreams of creating a non-profit 311 call center that could cover the six eastern Delaware County municipalities served by the William Penn School District. This centralized office could connect residents with immigration, veteran, and senior services…

The mayors of Lansdowne and East Lansdowne have been receptive to Hepkins’ advances, but his other three counterparts are hesitant. Even if the local politicians do overcome their own parochial interests, it’s an open question how much resource-sharing between six struggling municipalities would accomplish. A system incorporating the region’s more prosperous communities would be far more advantageous, akin to the revenue-sharing policies utilized in the Twin Cities metro region. But nothing like that is being seriously discussed in the Philadelphia area.

Several thoughts come to mind:

  1. This is a reminder that suburbia is much more diverse than the standard image of white and wealthy communities. Suburbs have increasing numbers of non-white and poor residents and there are various types of suburban communities ranging from bedroom suburbs to industrial centers.
  2. Local governments are often very reliant on property taxes. And Pennsylvania has a lot of local taxing bodies though it trails Illinois. Thus, suburban communities are very interested in wealthier residents as well as businesses that can bring in money through property taxes and sales tax revenue. This creates a kind of competition that is difficult for everyone to win.
  3. A number of metropolitan regions and urban communities in the United States have considered ways to band together to tackle common economic and social issues. This can be hard to do because one of the features people like about the suburbs is having more local control. Moving local revenues to another community – even if it is needed or might benefit the region as a whole – can be a hard sell, particularly in better off suburban communities.

I suspect we’ll see more and more stories like this in the years to come.