CHICAGO | General Discussions

[Vlajos]

Plan to triple real estate transfer tax gets big backing

"A major Chicago civic group is endorsing a proposal to move to a graduated rate of up to 3.3 percent that would apply not just to "mansions" but commercial property worth at least $5 million.

A major Chicago civic group is throwing its support behind a plan to more than triple the size of the city’s real-estate transfer tax on many sales—a move the group says would raise $150 million a year to fight homelessness but one which would hit buyers and sellers of large office buildings and other commercial property with a new tax bill of millions and sometimes tens of millions of dollars."

https://www.chicagobusiness.com/greg...ts-big-backing

Interesting idea that probably makes some sense, other than the money being used to "fight homelessness". WTF!?!?!?!? The city needs to raise funds to pay pensions, we can't afford new programs and spending.

[the urban politician]

It's a terrible use of money

Use it for something useful, like international marketing of Chicago to the world

[the urban politician]

^ Nice! That's one of the nicer condo buildings--no large podium.

Looking at the website, multiple condos in the millions.

I was just reading in Crains today how multimillion dollar homes in traditional suburban wealthy enclaves continue to have to slash their prices.

It's impossible for these high end condos/townhomes, etc downtown to not be playing a big role in this. Actually, a part of me wonders if downtown luxury is even sapping a bit of life out of the Lincoln Park luxury housing market? Probably not nearly as dramatic as what is happening in the burbs, but we do hear about price cuts for Lincoln Park real estate as well.

I do hope the market equilibrates, though. Having one area of town drain life out of another does not make for a healthy region--especially given how badly our State needs the tax dollars. A zero sum game will not help.

[LouisVanDerWright]

Actually it will help when Lincoln Park and other areas (wicker, Logan, etc) become an ultra vibrant integrated entertainment district for the region. Rich people can live in uppity suburbs in any city, even small places like Detroit or Milwaukee. There are very few places like the city of Chicago between downtown, the lake, Belmont, and Milwaukee.

As I say over and over again, it is not a zero sum game. Moving all these people in from the suburbs into close proximity to one another creates more amenities for them which creates more jobs and also makes the area even more appealing to wealth. Moving all these people into close proximity to one another gets them in contact with one another (at the local amenities) which means more business deals get done, more innovation occurs, instead of everyone pulling into their shitty suburban garage at 5PM every night and checking out. All of these movers and shakers living in Lincoln Park or Wicker Park means 30 or 45 minutes each way more time in each of their lives. That's more time to work, more time for family, more time to spend. More efficient.

No, it's not at all zero sum, not in the slightest. All of these effects are exponential because each amenity that opens up has a non-zero effect on the desirability of the area and in turn has a non zero effect on demand for more amenities (i.e. they employ people who will then spend some of their money going to other shops or restaurants or who may in turn advance their careers and open another shop or restaurant or even innovate and build on what they learned creating new categories of entertainment or dining).

So no, stop calling it zero sum because it certainly is not.

[gandalf612]

Originally Posted by LouisVanDerWright

So no, stop calling it zero sum because it certainly is not.

Couldn’t agree more. Perfectly explained.

[the urban politician]

Originally Posted by LouisVanDerWright

Actually it will help when Lincoln Park and other areas (wicker, Logan, etc) become an ultra vibrant integrated entertainment district for the region. Rich people can live in uppity suburbs in any city, even small places like Detroit or Milwaukee. There are very few places like the city of Chicago between downtown, the lake, Belmont, and Milwaukee.

As I say over and over again, it is not a zero sum game. Moving all these people in from the suburbs into close proximity to one another creates more amenities for them which creates more jobs and also makes the area even more appealing to wealth. Moving all these people into close proximity to one another gets them in contact with one another (at the local amenities) which means more business deals get done, more innovation occurs, instead of everyone pulling into their shitty suburban garage at 5PM every night and checking out. All of these movers and shakers living in Lincoln Park or Wicker Park means 30 or 45 minutes each way more time in each of their lives. That's more time to work, more time for family, more time to spend. More efficient.

No, it's not at all zero sum, not in the slightest. All of these effects are exponential because each amenity that opens up has a non-zero effect on the desirability of the area and in turn has a non zero effect on demand for more amenities (i.e. they employ people who will then spend some of their money going to other shops or restaurants or who may in turn advance their careers and open another shop or restaurant or even innovate and build on what they learned creating new categories of entertainment or dining).

So no, stop calling it zero sum because it certainly is not.

You clearly just don't get what I mean when I state 'zero sum game'.

Yes, it feels good to say this, but at the end of the day I'm so far only seeing evidence that luxury condos downtown are making it hard for luxury property to sell elsewhere. It's a zero sum game in the sense that the property tax pool still stays the same, just shifting. Kinda a key issue here when we've got a bankrupt State.

[LouisVanDerWright]

Originally Posted by the urban politician

You clearly just don't get what I mean when I state 'zero sum game'.

Yes, it feels good to say this, but at the end of the day I'm so far only seeing evidence that luxury condos downtown are making it hard for luxury property to sell elsewhere. It's a zero sum game in the sense that the property tax pool still stays the same, just shifting. Kinda a key issue here when we've got a bankrupt State.

If anyone wants to discuss this further, feel free to respond in the "politics" thread.

But it doesn't stay the same, not if the concentration of wealthy in the core makes the core more attractive. Chicagoland as a whole is gaining more wealthy residents because of what is happening in the core. Yes most are coming in from the burbs, but large numbers of people from outside the metro are also being attracted. Just look at the corporate C suite relocations to downtown we have seen. You don't think a Conagra HQ sold a few multi million dollar condos in the area? Those relocations to downtown are being driven by the dynamism of the Loop and environs.

Even if no additional wealthy are added, the efficiencies I described above will still result in more output with the same number of residents. Even if there were always 10,000 $1 million + homes in Chicagoland and now there's 5,000 in the city and 5,000 in the burbs instead of 2,000 in the city and 8,000 in the burbs, that's still 3,000 more multi millionaire households living in close contact with each other who will do more business, spend more money, start more ventures with each other, etc.

It's ironic that you deny this because it's the process that is paying the bills at your investments around downtown. Even if we aren't gaining new households (which we are) the dense ecosystem of services is employing thousands of people who make decent wages (i.e. you have Au Cheval or Big Star paying $15-20 an hour instead of Perkins and McDonalds paying minimum wage in the burbs) results in increased demand for housing which grows the tax base.

The effects of this process are manifold and explain the existence of cities in general. I will argue all day that the reason Chicago is confronted with the problems it has today in the first place was that we flushed the basics of economies of agglomeration down the drain in the post war era. If Chicago had never carved out it's core with projects and freeways and suburbanized as intensely as it did, it would already be recovered in the way NYC or SF or European cities that chose to rebuild in the old style already have. We are behind the curve because we took the sprawl to the extreme. The sooner we re-condense the sooner we will regain our footing and start attracting migrants en masse. Unfortunately that process is going to require allowing some of our most superfluous suburbs to shrivel up and die. Sorry Barrington, you are gonna have to revert to a cow town on the edge of the city again...

[moorhosj]

Originally Posted by the urban politician

It's a zero sum game in the sense that the property tax pool still stays the same, just shifting. Kinda a key issue here when we've got a bankrupt State.

If anyone wants to discuss this further, feel free to respond in the "politics" thread.

Let's not cloud the discussion, property taxes are a local tax. Highland Park is hurting because rich, young families prefer to stay in the city, but the state is receiving the same income taxes.

[the urban politician]

Originally Posted by LouisVanDerWright

But it doesn't stay the same, not if the concentration of wealthy in the core makes the core more attractive. Chicagoland as a whole is gaining more wealthy residents because of what is happening in the core. Yes most are coming in from the burbs, but large numbers of people from outside the metro are also being attracted. Just look at the corporate C suite relocations to downtown we have seen. You don't think a Conagra HQ sold a few multi million dollar condos in the area? Those relocations to downtown are being driven by the dynamism of the Loop and environs.

Even if no additional wealthy are added, the efficiencies I described above will still result in more output with the same number of residents. Even if there were always 10,000 $1 million + homes in Chicagoland and now there's 5,000 in the city and 5,000 in the burbs instead of 2,000 in the city and 8,000 in the burbs, that's still 3,000 more multi millionaire households living in close contact with each other who will do more business, spend more money, start more ventures with each other, etc.

It's ironic that you deny this because it's the process that is paying the bills at your investments around downtown. Even if we aren't gaining new households (which we are) the dense ecosystem of services is employing thousands of people who make decent wages (i.e. you have Au Cheval or Big Star paying $15-20 an hour instead of Perkins and McDonalds paying minimum wage in the burbs) results in increased demand for housing which grows the tax base.

The effects of this process are manifold and explain the existence of cities in general. I will argue all day that the reason Chicago is confronted with the problems it has today in the first place was that we flushed the basics of economies of agglomeration down the drain in the post war era. If Chicago had never carved out it's core with projects and freeways and suburbanized as intensely as it did, it would already be recovered in the way NYC or SF or European cities that chose to rebuild in the old style already have. We are behind the curve because we took the sprawl to the extreme. The sooner we re-condense the sooner we will regain our footing and start attracting migrants en masse. Unfortunately that process is going to require allowing some of our most superfluous suburbs to shrivel up and die. Sorry Barrington, you are gonna have to revert to a cow town on the edge of the city again...

^ I totally understand your argument--heard it before a multiple times and it makes theoretical sense.

But in the end I think it's mostly conjecture. I don't know if we have any evidence that we will see greater output and greater wealth generation by simply putting more wealthy households within close proximity to eachother.

And yes, of course I invest in the city--I still think that's where the future of the region's best and brightest will be. But I am not motivated by a disdain for the burbs. The burbs may lose some of their allure but they ain't going anywhere no matter how much you keep saying it; nevertheless I will always root for the city.

[the urban politician]

Originally Posted by moorhosj

Let's not cloud the discussion, property taxes are a local tax. Highland Park is hurting because rich, young families prefer to stay in the city, but the state is receiving the same income taxes.

Thanks for pointing this out, my mistake on that

[LouisVanDerWright]

Originally Posted by the urban politician

^ I totally understand your argument--heard it before a multiple times and it makes theoretical sense.

But in the end I think it's mostly conjecture. I don't know if we have any evidence that we will see greater output and greater wealth generation by simply putting more wealthy households within close proximity to eachother.

And yes, of course I invest in the city--I still think that's where the future of the region's best and brightest will be. But I am not motivated by a disdain for the burbs. The burbs may lose some of their allure but they ain't going anywhere no matter how much you keep saying it; nevertheless I will always root for the city.

Except we have over a century of research on the concept of economies of agglomeration. This is not some made up theory of mine, this is accepted fact in the world of real estate economics and can actually be measured and has been measured by economists. You can actually distill from data the effects of these theories by looking at how different cities grow over time. This theory of Economies of Agglomeration is generally accepted as the basic reason as to why cities exist at all. Wouldn't you think that if the opposite were true, humans would choose to locate as far apart from one another as possible (like wildcats or other territorial apex predators) and defend their territories against incursion so as to not lose resources to competitors? We are the only apex species where we see massive gains in survival odds by clustering intensely together and that's because we have culture. Culture being the exchange of information and strategies between individuals over time. The more individuals you pack the closer together, the more ideas you get (the more culture) and the more total output occurs from that society.

I've got a great urban economics textbook for you to read if you really want to read more about this. I would also encourage you to read Jane Jacob's Death and Life of Great American Cities which describes the exact same effects but from an urban planner's perspective. Or you can just google it and find thousands of studies on this:

https://www.google.com/search?q=stud...hrome&ie=UTF-8

[the urban politician]

Originally Posted by LouisVanDerWright

Except we have over a century of research on the concept of economies of agglomeration. This is not some made up theory of mine, this is accepted fact in the world of real estate economics and can actually be measured and has been measured by economists. You can actually distill from data the effects of these theories by looking at how different cities grow over time. This theory of Economies of Agglomeration is generally accepted as the basic reason as to why cities exist at all. Wouldn't you think that if the opposite were true, humans would choose to locate as far apart from one another as possible (like wildcats or other territorial apex predators) and defend their territories against incursion so as to not lose resources to competitors?

I've got a great urban economics textbook for you to read if you really want to read more about this. I would also encourage you to read Jane Jacob's Death and Life of Great American Cities which describes the exact same effects but from an urban planner's perspective. Or you can just google it and find thousands of studies on this:

https://www.google.com/search?q=stud...hrome&ie=UTF-8

The economies of agglomeration—a concept that I fully understand—is not even the same topic that we are talking about. That is about concentration of industries. We are talking about clustering of wealthy people.

Anyhow, it’s fine—I love cities and urbanism, so I don’t see any need to debate this against my fellow city lovers. Let’s go celebrate the building boom together and move on from this.

[the urban politician]

I had a chance last year to buy a cheap 3 flat near the Belmont Blue Line, literally 1 block away.

Now that they invested in the new station with the “waterfall” canopy, yet due to that butthole Socialist Ramira Rosa probably blocking any upzonings, look for rents to soar near that station.

Damn I should’ve acted!

Ahhh Rosa. The gift that keeps on giving. The rents will rise even faster. Great leadership

[LouisVanDerWright]

Originally Posted by the urban politician

The economies of agglomeration—a concept that I fully understand—is not even the same topic that we are talking about. That is about concentration of industries. We are talking about clustering of wealthy people.

Anyhow, it’s fine—I love cities and urbanism, so I don’t see any need to debate this against my fellow city lovers. Let’s go celebrate the building boom together and move on from this.

It's not just about clustering of industry, it's about clustering if talent, of education, of human capital, etc etc. It's about labor pools.

[emathias]

Originally Posted by Vlajos

...
Interesting idea that probably makes some sense, other than the money being used to "fight homelessness". WTF!?!?!?!? The city needs to raise funds to pay pensions, we can't afford new programs and spending.

Homelessness comes at a cost, and not just a nebulous moral cost, but a real fiscal cost in dollars and cents.

Most of that real cost is in police enforcement and medical care. Since only some of the medical care for the homeless is covered by the Feds and virtually none of the police costs are, I could totally believe it if a reasonable study of the problem found that it was worth the investment to reduce homelessness here, purely from a fiscal standpoint.

Additionally, homelessness carries a reputational cost for the city. If Chicago made serious headway toward reducing homelessness, it would be positive press for the city. If visitors don't see as much homelessness, they have a better image of the city to take home with them. The value of those is harder to quantify, but they are still real benefits.

Finally, the moral benefit isn't something to completely ignore and carries some amount of financial benefit, too. Not to mention that most of the homeless here have local families who worry about their loved ones. Don't assume that the fact someone is homeless means their family doesn't care about them because that's simply not true in many cases. In many cases families simply don't have the resources to solve the problems that make someone homeless, especially ones caused by mental illness or addiction.

I've gotten to know some of my homeless neighbors here in River North. Almost all of them have local family. A wife, a sibling, a child, a mother, a niece or nephew. There's a chance my ex-husband will become homeless at some point because of the disability his mental illness creates and I can speak first hand about the emotional toll that causes and crippling effect of that constant worry and concern when there's no person or agency that can help.

[BorisMolotov]

The majority of those homeless are due to drug addictions or mental illness. Wouldn't the better way to spend the money be in mental health facilities and care? I realize that these are definitely not mutually exclusive and in many ways go hand in hand, but I'm sick of yet more funding for treating only the symptoms rather than the cause. I wish that there was a massive public campaign to reduce stigma of receiving mental health treatment. If I had my druthers that's what I would spend on.

[emathias]

Originally Posted by BorisMolotov

The majority of those homeless are due to drug addictions or mental illness. Wouldn't the better way to spend the money be in mental health facilities and care? I realize that these are definitely not mutually exclusive and in many ways go hand in hand, but I'm sick of yet more funding for treating only the symptoms rather than the cause. I wish that there was a massive public campaign to reduce stigma of receiving mental health treatment. If I had my druthers that's what I would spend on.

I don't know specifically what Chicago plans to spend on, but the national trend is toward "Housing First," which gets people housed so that they have the stability for other treatments to work.

[Via Chicago]

Originally Posted by emathias

I don't know specifically what Chicago plans to spend on, but the national trend is toward "Housing First," which gets people housed so that they have the stability for other treatments to work.

this was a good examination of how difficult that is to implement without additional support structures along the way (mental health support being a big one)

https://www.pbs.org/wgbh/frontline/film/right-to-fail/

[LouisVanDerWright]

Originally Posted by the urban politician

^ I totally understand your argument--heard it before a multiple times and it makes theoretical sense.

But in the end I think it's mostly conjecture. I don't know if we have any evidence that we will see greater output and greater wealth generation by simply putting more wealthy households within close proximity to eachother.

And yes, of course I invest in the city--I still think that's where the future of the region's best and brightest will be. But I am not motivated by a disdain for the burbs. The burbs may lose some of their allure but they ain't going anywhere no matter how much you keep saying it; nevertheless I will always root for the city.

I'm dealing with an interesting problem right now with a homeless man living on railroad property directly adjacent to my property. The railroad won't handle it and the guy has been apparently living there for over a decade. He has a shed and multiple dogs. Social worker types show up there almost daily delivering him food or otherwise helping him.

One wonders at what point the system is actually about solving these problems and not enabling it. As far as I'm concerned this guy should not be living on the street, the workers know who he is, where he is, but have not been able to place him in housing for over a decade? Surely the waiting list is not that long, surely he could get a section 8 voucher, surely CHA could find him a unit in that time. So what's going on here? How is it not animal abuse to have dogs on chains living outdoors on a railway embankment? How is not human abuse to be providing this guy services for that long knowing it is not a safe or sanitary living condition. The entire encampment is knee deep with trash and you have a guy living outside in the cold in a pile of trash with a bunch of dogs.

But course it's tricky because it's homelessness, he probably doesn't want to be in a shelter. He probably doesn't want to have to do CHA section 8 inspections once a month, etc etc. In order to truly "end" homelessness you'd have to pass a law making it illegal and forcibly arrest some people and take them to shelters or homes where they can't leave. Society is obviously not about to do that, so how do you fix a problem like what I described?

[SIGSEGV]

Originally Posted by LouisVanDerWright

I'm dealing with an interesting problem right now with a homeless man living on railroad property directly adjacent to my property. The railroad won't handle it and the guy has been apparently living there for over a decade. He has a shed and multiple dogs. Social worker types show up there almost daily delivering him food or otherwise helping him.

One wonders at what point the system is actually about solving these problems and not enabling it. As far as I'm concerned this guy should not be living on the street, the workers know who he is, where he is, but have not been able to place him in housing for over a decade? Surely the waiting list is not that long, surely he could get a section 8 voucher, surely CHA could find him a unit in that time. So what's going on here? How is it not animal abuse to have dogs on chains living outdoors on a railway embankment? How is not human abuse to be providing this guy services for that long knowing it is not a safe or sanitary living condition. The entire encampment is knee deep with trash and you have a guy living outside in the cold in a pile of trash with a bunch of dogs.

But course it's tricky because it's homelessness, he probably doesn't want to be in a shelter. He probably doesn't want to have to do CHA section 8 inspections once a month, etc etc. In order to truly "end" homelessness you'd have to pass a law making it illegal and forcibly arrest some people and take them to shelters or homes where they can't leave. Society is obviously not about to do that, so how do you fix a problem like what I described?

Most shelters /section 8 places I imagine don't allow dogs, which puts this gentleman at an impasse if getting rid of his dogs is non-negotiable.