Local residents oppose a casino at three proposed Chicago sites

As Chicago leaders consider where a new casino in the city might be located, local residents expressed their concerns:

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Earlier this month, the city held town hall meetings for each of the three proposals and got an earful from neighbors opposed to a casino being built close to their homes. Their overwhelming message: Not in my backyard.

“This casino does not belong in a neighborhood,” said Antonio Romanucci, a resident of River North, where the Bally’s casino would be built, if approved. “You are putting a square peg into a round hole.”

Others at the Bally’s meeting raised concerns about traffic, crime and noise from concerts…

And while The 78 is marketed as an entirely new neighborhood, residents from the South Loop, Chinatown and Pilsen spoke in opposition to including a casino in the already approved megadevelopment.

“This is a once in a lifetime opportunity. Don’t blow it on a casino,” said an 11-year-old named Sean, who spoke at the town hall for the Rivers 78 proposal. “A casino does not make a neighborhood. Things that attract families are what make a neighborhood.”

Last week, Lightfoot responded to the community blowback saying there is always “a level of NIMBYism” with large development projects.

Generally, communities and cities tend to like developments that will generate significant revenues. People spend money at casinos and using the property to generate revenues is preferable to having vacant properties or ones with limited revenues.

However, a casino is not a typical land use. They are relatively unusual. They can attract a lot of visitors. They can be viewed as encouraging vice and unsavory activity.

So, the mayor’s claims that this is just NIMBYism might not work with a more unusual land use like this. Sure, residents tend to complain about changes to traffic, lights, noise, and property values with a new nearby development, but does anyone want to live next to a casino?

Watching the decision-making process on this one might just make a fascinating case study for urban scholars for years to come.

The complications of switching over from Disney self-governance in Florida to local government

With the Florida legislature voting to strip Disney of its self-governance status regarding the Disney World land, what might this mean for local governments?

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The counties, on June 1, 2023, would assume all of Reedy Creek’s assets and liabilities and become responsible for providing all of the services currently handled by the district, CNBC reported.

Currently, Disney finances the services supplied by Reedy Creek, which would normally be funded by local municipalities. The company, instead, charges itself property taxes to finance its service and pays the Orange County Sheriff’s Office for law enforcement.

Once Reedy Creek is dismantled, local taxpayers and municipalities would likely be responsible for those services.

’Removing district could transfer $2billion debt from Disney to taxpayers and could potential have an enormous impact on Orange and Osceola residents!’ State Sen. Linda Stewart, who voted against the bill, tweeted Wednesday.

However, Rep. Fine told Insider he believed taxes could go down because the measure was ‘eliminating a layer of government’.

Walt Disney World already pays property taxes to Orange and Osceola counties, so that would not change, however the counties would get to collect the tax revenue Disney currently pays to itself.

The transfer of revenues, services, and infrastructure from a private entity to a set of local governments might take some time to sort out. Who will be responsible for what? How do the revenues compare to the costs required? How does this require local governments to adjust?

Let’s say this process is a complicated one. Does this affect the experience of visitors to Disney properties or to local residents?

While this is a national culture wars story at the moment, it would be interesting to hear from local officials on what they think of this or how they anticipate this working out. Very few local officials would want to lose a major company from their land. Would they vote against their own local economic and political interests in the service of sending a message to Disney?

As technology changes, municipalities change their ways to capture tax revenue

More Americans are streaming television and movies. This means municipalities need to reconsider cable taxes. Here is one example from the Chicago suburbs:

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Village trustees Monday voted 4-2 to approve the 5% entertainment tax as part of its upcoming budget. The tax would take effect July 1.

Village officials budgeted $25,000 in revenue from the new tax, which would tack 77 cents onto a standard monthly Netflix subscription costing $15.49 or 15 cents to an Amazon video rental costing $2.99.

“This is a modern version of the original telecommunication tax,” Village Administrator Erika Storlie said, adding that the village has seen a decrease in taxes collected from cable subscribers as more people drop cable television in favor or streaming services…

Chicago adopted an entertainment tax charging 9% on streaming services in 2015. In March, a judge dismissed a lawsuit filed by Apple Inc. challenging the tax. Though Apple’s complaint was dismissed, the judge left the door open for Apple to file an amended complaint.

Evanston, where Storlie served as city manager before coming to East Dundee, has charged a 5% entertainment tax on streaming services since October 2020.

Several thoughts about this:

-This is a relatively small tax in this community: the story above suggest its will generate $25k in revenue. Even in a small suburb, the money this generates will only do so much?

-I could imagine the argument that infrastructure is required to provide streaming services and taxes like these would help communities cover these costs. (I could also imagine – very faintly – the logic of a vice tax to limit the hours upon hours that Americans spend in front of televisions and screens…but limiting television watching via taxation seems somehow un-American. )

-I do not recall seeing much about public discussions of such taxes within communities. Is the tax so small that it does not attract much attention? Do residents not have a compelling argument against a streaming tax?

-Entertainment taxes are sometimes used for visitors or more public activities such as tickets for sporting events or theater shows. A streaming tax is aimed more at residents than visitors.

Many municipalities need consistent tax revenue streams as they look to provide services and balance budgets. This is one way to help achieve that goal.

“Dark stores” arrive on the urban landscape

The brick and mortar retail establishment has a new member popping up across communities: “dark stores.”

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These ghost storefronts—often called “dark stores”—are warehouses in all but name, yet they look markedly different from the gargantuan spaces where older online grocery companies like FreshDirect store their goods. Traditional warehouses are zoned to regions outside of commercial districts, meaning they will be set apart from areas with lots of walking traffic. Dark stores are located in retail storefronts on main streets, near the heart of busy neighborhoods, but they serve only ecommerce customers. And they’ve gone from a niche phenomenon discussed largely in retail industry circles to a feature of major American cities.

The rise of dark stores directly parallels the acceleration of ecommerce as a whole, especially in the grocery industry. Online sales represented 13 percent of all grocery spending in 2021, a new high, and dark stores are designed to make the delivery process smoother…

Dark stores—sprouting up in former butcher shops, convenience stores, gyms, and mattress retailers—are taking up spaces once designed to be open to the public. That shift from far-flung warehouses to accessible retail storefronts has city planners on edge. Because dark stores sit at the confusing intersection of being technically occupied, but functionally empty, they risk entrenching the worst impacts that vacant real estate can have on a community.

The fear is that dark stores, like vacant storefronts, could puncture a hole in the social landscape of a neighborhood. Vacant storefronts are bad for cities. When there are a lot of them in a tight vicinity, they mean that fewer people will walk down the street, and fewer connections between neighbors will happen. “Having people out on the street increases public safety, because more people see things that are happening,” said Noel Hidalgo, executive director of BetaNYC. “That level of social engagement makes cities safer and makes places safer.” Accordingly, neighborhoods with high numbers of vacant storefronts see increased crime rates, fire risks, and rodent activity.

I wonder how municipalities will respond to this because of the revenues such dark stores might generate. It is one thing if other retailers or businesses want to use these spaces. But, if dark stores are occupying commercial space and generating money through paying property taxes and sales taxes plus adding jobs, will they be as concerned about the social fabric? It can be difficult to fill vacant commercial properties, particularly spaces like grocery stores.

So out of the concerns expressed above, I could imagine cities limiting the number or density of dark stores within different kinds of zoning. Or, what if there was a whole block of dark stores and then none for a decent distance from there? If e-commerce is here to stay and needs to be close to those who order, perhaps warehouse districts need to be spread throughout communities at regular intervals or near transportation hubs.

Keep the suburban shopping mall alive by charging current shoppers an extra 1% tax

Leaders in Skokie, Illinois want to approve a new 1% tax for purchases at Old Orchard mall in order to help keep the shopping mall going:

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Skokie lawmakers during their Feb. 7 village board meeting voted 7 to 1 to make the mall a “business district,” under Illinois’ Business District Development and Redevelopment Sales Tax provision, allowing businesses there to charge an extra 1% sales tax. The board will take a final vote on the proposal in March.

The $5 million generated annually by the additional 1% sales tax will be used by Westfield to do about $120 million in upgrades and rehabs in the mall, which is the largest tax generator in the village.

Mayor George Van Dusen said the new tax and upgrades are essential if the mall is going to remain viable…

Creating a “business district” includes designating the area as “blighted” to facilitate development and redevelopment by imposing an additional tax, Village Manager John Lockerby told the board.

“The viability of the mall is critical to the community, applicable school districts as well as other units of government,” he said, adding that the initiative will set the mall up for long-term success.

Shopping malls, in general, are struggling and not all will survive. This move is intended to help keep Old Orchard going amid tough conditions with COVID-19 and online retail.

But, this is an interesting choice. Here is a few reasons why:

  1. It takes money from private consumers to fund private development through and to ensure local tax monies. The profits go to the mall developers and the community benefits from ongoing tax revenues, jobs, and shopping opportunities. Would this be appropriately termed a “public-private partnership” or a “taxpayer subsidized” project?
  2. As the article notes elsewhere, other communities could use similar tactics to establish “business districts” and keep their own shopping centers alive. Does this just keep the competition going?
  3. The goal is to keep the mall going because it is already there. Is it a sunk cost? What other good might be done in the community with $5 million annually?

City government funded by cryptocurrency

At least one leader in Miami thinks the city can raise substantial revenue through partnerships with cryptocurriencies:

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The lofty idea is the byproduct of a cooperation with CityCoins, a nonprofit that allows people to hold and trade cryptocurrency representing a stake in a municipality. By running software on their personal computers, CityCoins’ users mint new tokens and earn a percentage of the cryptocurrency they create. A computer program automatically allocates 30 percent of the currency to a select city, while miners keep the other 70 percent.

Since the nonprofit unveiled “MiamiCoin” in August, it has sent about $7.1 million to Miami. (City commissioners agreed to accept the donations on Sept. 13.)

While the program is still in its infancy, Suarez (R) estimates the effort could generate as much as $60 million for Miami over the next year and ultimately “revolutionize” how the city funds programs that address poverty and other societal issues…

Over the past year, several financial and tech firms set up offices in the city, including Goldman Sachs, SoftBank and Blackstone, according to Suarez. In June, the crypto wallet Blockchain.com announced it was moving its headquarters from New York City to Miami, citing the city’s “welcoming regulatory environment serving as a hotbed of crypto innovation,” the company revealed in a news release. That same month, the stock-trading platform eToro announced plans to establish offices in the city.

In many ways, this is a continuation of what cities have tried to do for decades: diversify their tax base and/or become a leader in a certain industry or sector, particularly in a new area. All of this helps bring in new tax revenues, jobs, and provides a certain status for the city.

Because of its growth in recent decades plus expectations that it will continue to grow, many American cities want to attract tech companies and grow the tech sector in their own community. If cryptocurrency is the new hot thing, everyone wants that.

On the other hand, chasing after the new thing does not always work out. Some cities will succeed in becoming cryptocurrency hubs, others will not. In a few years or decades, we can better assess Miami’s efforts. How much does cryptocurrency, or any tech business, need to be anchored in a particular place as opposed to conducting their business online or through a more distributed set of locations?

Additionally, cities are also interested in ways to generate easy revenue. When I read this article, I also thought of tourism. Many cities want to play in this game because there is a lot of money involved and visitors come, spend money, and then go home and do not require the long-term services that come with population growth. But, tourism is also dependent on factors like weather, pandemics, broad economic patterns, and more. Is cryptocurrency the newest easy money?

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:

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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:

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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?