-- Connecting the dots between our economy, government and business --
See our own companion piece on this topic linked here.
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Ghost town. Downtown is dead.
As the author discusses, how much will Sheeetcago lose in property taxes when all of these LaSalle Street properties are eventually written down?!
Ken Griffen warned the Chitty officials about the high crime. They told him not to let the door hit him in the A$$ and it didn’t.
Good luck turning them into condos. It’ll cost you a 100k to simple put in a toilet etc. The very banks that they’ll be looking to finance such conversions will be wiped out by the demise of that very same real estate. CR is a 20 Trillion$ market.
That’s my understanding — that the plumbing in a typical office building is inadequate for residential, and that just the cost of that upgrade is huge.
And, of course, the conversions would require union labor and many, many city inspectors. Sounds like a gold mine to me!
Lightfoot administration intends to convert LaSalle St business corridor into “30% affordable housing” multi-family land-use, even requiring a grocery outlet in each converted office tower. This will be accomplished via tax-credits, meaning that these downtown Class B and Class C office buildings will no longer significantly contribute to RE tax-roll, and no longer available to be demolished and rebuilt as new Class A office towers, so forever crippling future RE tax-base of downtown LaSalle St corridor. So short-term “fix” is actually long-term disaster for both viability of downtown tax-base, and future land-use flexibility. Notion of converting downtown high-rise office buildings… Read more »
Spot on Streeterville. Once upon a time people were expected to and did provide their own housing. Now they expect to the government to provide it (via taxing someone who currently provides for his family).
Any place that did this in the past (think those drab grey Soviet style) housing complexes in Eastern Europe were nothing to aspire to.
It is past the point of no return. Downtown is now Deadtown.
I know someone that manages a building on LaSalle St. She said all this talk of turning LaSalle St office buildings into mixed income residential is hurting their ability to lease vacant space. It’s an A building too not a B or C.
You are absolutely correct. What law firm, accounting firm or class A marketing, advertising or consulting firm is going to locate their HQ in a building that is know as a low income housing project? Totally hairbrained idea from a bunch of incompetents in City Hall who know nothing about real estate, zoning, economic development or housing. “Affordable ” housing tenants don’t support bars, restaurants, downtown clothing stores or any high end retailers, so you will end up driving all of them out as well.
Racially diverse neighborhoods work, economically diverse don’t. Retailers target an income bracket. When that bracket doesn’t have the minimum number of potential customers then that market is a no go. And then you have to look at the occupancy cost. You think Dollar Tree will pay $30/psf rent + high real estate taxes + high insurance to be in downtown for a limited number of customers.
It all make sense if you think of outgoing Lori and incoming Brandon as mini-Hugo Chavezs, promising to house the poor in the fanciest business districts in Chicago. The destruction is intentional. They know what they are doing and they are doing it for votes. And in a city with high poverty rates and simmering racial animus (usually going only one way, black animus towards whites), these kinds of ideas are wildly popular. And running on these platforms wins enough votes to keep you in the game, with the voter fraud to push you into the W.
“…where Chicagoland home price appreciation has been consistently among the worst-performing markets in the country.” Low demand in a superinflationary real estate market will keep prices low. As I’ve explained, natives are leaving – it’s evident everywhere you look – and the new residents, only partially replacing the departing, are mostly poor third world immigrants. That’s why the pizza joint in your town now serves tacos and strip malls formerly filled with all kinds of small businesses are 2/3rd empty with maybe a Boost Mobile and a hispanic grocery store. Our leaders gaslight us and describe these places as thriving,… Read more »
There are significant cost advantages of having a workforce be remote or hybrid, particularly in business services. Many of the large accounts are outside or headed outside of the city. The crime and high taxes and rotten schools only accelerate the downward spiral for the city. The day Pritzker and Lightfoot handed over the Mag Mile to the mob was a tipping point.
Mark, thank you for requesting the comments from the Professor. I respect people in Finance who say it the way they see it.
Prof. Pagliari, isn’t mincing words when he says Detroit can’t happen here. But Detroit is only partially explains the situation, with Caracas and Cape Town being good examples too.
https://www.theguardian.com/cities/2018/dec/18/the-fallen-metropolis-the-collapse-of-caracas-the-jewel-of-latin-america