CHICAGO | General Developments

[Khantilever]

Originally Posted by LouisVanDerWright

Since there are now fewer sites available to build on the value of the remaining sites increases (less supply = higher price) and the owners of these properties are incentivized to sell, not forced to.

In partial equilibrium, that makes sense. But in general equilibrium, or in the long run after all other factors adjust, the value to other properties can easily fall as a result of preservation. It depends crucially on how substitutable these parcels are for one another (obviously the “historical” sites are superior, all else constant, else they wouldn’t be the ones facing redevelopment pressure). It also depends on how large the benefits of preservation are, I.e. do people care, and more generally how harmful the reduction in expected future density is to other properties. For example, land near the West Loop is increasingly expensive in *expectation* of lots of development there that would bring people and traffic to adjoining areas; so if development were to be suddenly limited, it could reduce their values.

It’s also not clear why one would be more likely to sell when the value increases. When one holds on to their land they’ve taken a long position, meaning they expect a future increase. If the benefits of preservation take a long time to develop, then that could mean that other properties’ values will be rising over a longer time frame than before—thereby discouraging selling. Regardless, it’s not important who owns the land. Once the time is ripe to develop the owner will sell to a developer (because that’s when developers’ bids should be highest), barring distortions from taxes or other policies that misalign incentives.

[PKDickman]

Originally Posted by LouisVanDerWright

Then there shouldn't be any issue with gentrification since it lowers taxes on existing neighbors houses?

That might be true, if you were the only only one.
If their assessments go up because of your gentrification, then they too are paying a higher percentage of the levy.
The place where the taxes go down is a vacant lot at 63rd and Damen.

[BrinChi]

Originally Posted by ChickeNES

https://en.wikipedia.org/wiki/Land_value_tax

Yes please!

[VKChaz]

Originally Posted by Kumdogmillionaire

Are there numbers on how various cities have done side-by-side for preservation, or is this just conjecture? (honest question)

You can compare the number of landmarked sites between cities as a kind of proxy. For example, NYC which has a stronger preservation mentality lists over 36,000 in total. Using a per capita comparison of other cities to Chicago is obviously far from an apples to apples comparison given differences between cities and their histories, but it might give you some idea of the relative state of preservation.
http://www1.nyc.gov/site/lpc/designa...ignations.page

[Kumdogmillionaire]

I honestly didn't think of NYC as a strong preservation mentality with how many old building tear downs there have been this cycle for new supertall skinnies.

[10023]

Originally Posted by Kumdogmillionaire

I honestly didn't think of NYC as a strong preservation mentality with how many old building tear downs there have been this cycle for new supertall skinnies.

NYC just has a lot more old building stock though.

[LouisVanDerWright]

Originally Posted by 10023

NYC just has a lot more old building stock though.

As a percentage of total building stock, probably not though. Chicago hasn't seen nearly the amount of urban development since WWII that NYC has and what we have had has been highly concentrated on the Noth side. There are whole sides of the city where 99% of the housing stock is prewar.

[marothisu]

Originally Posted by Kumdogmillionaire

I honestly didn't think of NYC as a strong preservation mentality with how many old building tear downs there have been this cycle for new supertall skinnies.

It completely depends on where you are. Greenwich Village for example is very preserved and they have pretty strict rules around there. My area, Upper West Side, is mostly older buildings and some blocks are really beautiful (my block for example). The stuff they aren't preserving for the most part is stuff in parts of Midtown where most tourists are, and also areas in Lower East Side, East Village, etc...and various parts of Brooklyn here and there. For the most part, things get preserved which is both a good and bad thing. The unfortunate part is when you are looking at actually living somewhere and there's truly a lot of old but not in great condition places out there. Chicago is better in that regard easily in my opinion, but NYC does a pretty good job of preserving old buildings.

However, I guess if you were to compare parts of Midtown with parts of downtown Chicago then you wouldn't find tons of difference in terms of preservation. I don't think people in either places have any trouble tearing down older low rise buildings for new developments.

[marothisu]

I calculated the neighborhood totals from Realtor.com for May. An H next to the name indicates this month was a high in total for the last 9 months (as far as my data goes back).

Top areas
1. Near North Side: 304 sales (H)
2. Lakeview: 300 (H)
3. West Town: 238 (H)
4. Lincoln Park: 180 (H)
5. Near West Side: 151 (H)
6. Logan Square: 134 (H)
7. Uptown: 100
8. Edgewater: 98
9. Near South Side: 97 (H)
10. Austin: 87
11. Irving Park: 81 (H)
12. Portage Park: 79 (H)
13. Lincoln Square: 78
14. North Center: 76 (H)
15. The Loop: 73
16. Avondale: 67 (H)
17. West Ridge: 66
18. Belmont Cragin: 63 (H)
19. Norwood Park: 60
20. Garfield Ridge: 54 (H)
21. Dunning: 52
22. Rogers Park: 48
23. Chicago Lawn: 45
24. Albany Park: 44 (H)
25T. Auburn Gresham: 43
25T. South Shore: 43

Areas not listed with high months being May 2018 in last 9 months: Beverly (39), Washington Heights (35 - tied), Clearing (34), Mount Greenwood (34), South Chicago (32), Hyde Park (32), Edison Park (29), Woodlawn (27), Douglas (24), Montclare (19), South Deering (14 - tied), Hegewisch (11 - tied), Pullman (8),

Biggest increases from April 2018 to May 2018
1. Lakeview: +67 sales
2. Logan Square: +31
3. Near South Side: +30
4T. Avondale: +29
4T. Lincoln Park: +29
6T. Irving Park: +22
6T. Norwood Park: +22
8. Austin: +19
9. Kenwood: +18
10T. Beverly: +17
10T. Edison Park: +17

Biggest decreases from April 2018 to May 2018
1. Jefferson Park: -26 sales
2. Edgewater: -19
3. Loop: -18
4. Calumet Heights: -14
5. Auburn Gresham: -10
6. Greater Grand Crossing: -9
7. Grand Boulevard: -8
8T. East Garfield Park: -7
8T. Englewood: -7
8T. Roseland: -7

$1M+ Sales (includes small/small-ish multi unit buildings too)
1. Near North Side: 44
2. Lincoln Park: 29
3. West Town: 20
4. Lakeview: 19
5. Logan Square: 18
6. North Center: 14
7T. Near South Side: 9
7T. Near West Side: 9
9. Lincoln Square: 8
10. The Loop: 4
11. Uptown: 3
12T. Edgewater: 1
12T. Hyde Park: 1
12T. Irving Park: 1
12T. Kenwood: 1
12T. Rogers Park: 1 (Multi family)
12T. West Ridge: 1 (Multi family)

[Kumdogmillionaire]

Great posts as usual marothisu!

[10023]

Generally speaking you do want to look at year over year comparisons, though, given the seasonality of real estate transactions in a place like Chicago.

[marothisu]

Originally Posted by 10023

Generally speaking you do want to look at year over year comparisons, though, given the seasonality of real estate transactions in a place like Chicago.

Obviously, but perhaps you missed when I said I only have back 9 months (to September 2017).

[10023]

Originally Posted by marothisu

Obviously, but perhaps you missed when I said I only have back 9 months (to September 2017).

I get it. And if the data can be collected for another several months, the comparisons will start to get more interesting. But 9 months of data like this isn’t a time-series, it’s a snapshot.

[Jibba]

Originally Posted by PKDickman

If you fix up an abandoned 3 flat in Douglas Park, when you're done, the taxes on that property might double, but the city does not see one extra dime. All that happens is that everyone else has their taxes lowered by an infinitesimal amount.

Can you elaborate on this? Or link to a source that I could read myself?

[the urban politician]

Indonesian Consulate moving to Fulton Market from the Loop:

http://www.chicagobusiness.com/reale...d-to-indonesia

Interesting how much this area is changing...

[10023]

^ That’s not good news. Nothing kills activity in an area like diplomatic missions.

[PKDickman]

Originally Posted by Jibba

Can you elaborate on this? Or link to a source that I could read myself?

Here's Illinois' PTELL technical manual,
https://www.google.com/url?sa=t&rct=...Pew-pms-JtC2OO

Cook County came under PTELL in '95 for the '94 tax year.
Chicago, as a home rule body, is not technically under PTELL but we wrote our own identical ordinance the same year. The city council edited it a few years ago to allow us to raise our levy for the express purpose of paying off pension obligations.

Below are the sailent sections.

Realize that when they talk of tax increase they are speaking of increases in the total levy or extension for each taxing body.

The PTELL limits the yearly increase in a non-home rule taxing district’s property taxes billed.
The annual tax increase for PTELL taxing district is limited to 5 percent or the rate of in­flation, whichever is less. The PTELL slows the growth of property tax revenues to taxing districts when property values are increasing faster than the rate of inflation. As a whole, property owners have some protection from tax bills that increase because the market value of their property is rising rapidly.



PTELL taxing districts do not get less money; they just cannot raise as much from property taxes as they would be able to without the PTELL.
Generally, the yearly increase in taxes a district may bill for PTELL funds is limited to the rate of inflation. The law does allow amounts greater than inflation to be billed in each of the following situations:
New property (generally new construction) is added to the tax rolls.
The taxing district annexes property.
Voters approve one of four referenda allowed under the PTELL to increase the taxes billed.
A Tax Increment Financing (TIF) district expires. (The amount that had been available as the TIF increment is then available to the taxing district.).
The county clerk makes these allowances when the tax rate is computed.

“New property” includes the assessed value of
new improvements or additions to existing improvements on any parcel of real property that increased the assessed value of that real property during the levy year. It does not include maintenance and repair.

[Jibba]

Originally Posted by PKDickman

Here's Illinois' PTELL technical manual,
https://www.google.com/url?sa=t&rct=...Pew-pms-JtC2OO

Cook County came under PTELL in '95 for the '94 tax year.
Chicago, as a home rule body, is not technically under PTELL but we wrote our own identical ordinance the same year. The city council edited it a few years ago to allow us to raise our levy for the express purpose of paying off pension obligations.

Below are the sailent sections.

Realize that when they talk of tax increase they are speaking of increases in the total levy or extension for each taxing body.

The PTELL limits the yearly increase in a non-home rule taxing district’s property taxes billed.
The annual tax increase for PTELL taxing district is limited to 5 percent or the rate of in­flation, whichever is less. The PTELL slows the growth of property tax revenues to taxing districts when property values are increasing faster than the rate of inflation. As a whole, property owners have some protection from tax bills that increase because the market value of their property is rising rapidly.



PTELL taxing districts do not get less money; they just cannot raise as much from property taxes as they would be able to without the PTELL.
Generally, the yearly increase in taxes a district may bill for PTELL funds is limited to the rate of inflation. The law does allow amounts greater than inflation to be billed in each of the following situations:
New property (generally new construction) is added to the tax rolls.
The taxing district annexes property.
Voters approve one of four referenda allowed under the PTELL to increase the taxes billed.
A Tax Increment Financing (TIF) district expires. (The amount that had been available as the TIF increment is then available to the taxing district.).
The county clerk makes these allowances when the tax rate is computed.

“New property” includes the assessed value of
new improvements or additions to existing improvements on any parcel of real property that increased the assessed value of that real property during the levy year. It does not include maintenance and repair.

So in your Douglas Park example, the increase in taxes (the balance beyond inflation) owed on the newly rehabbed and up-valued property cannot go to the city, and so to make the math work they reduce the other properties in the district by this amount? I.e., the owner of the rehabbed building is still paying a tax increase, but the district as a whole is not generating additional funds for the city?

[PKDickman]

Originally Posted by Jibba

So in your Douglas Park example, the increase in taxes (the balance beyond inflation) owed on the newly rehabbed and up-valued property cannot go to the city, and so to make the math work they reduce the other properties in the district by this amount? I.e., the owner of the rehabbed building is still paying a tax increase, but the district as a whole is not generating additional funds for the city?

Precisely. If the city's levy is one billion, next year it can only get one billion plus inflation.
If the assessed value of half of the city doubles, the only difference is that half pays 2/3 of the levy and the other half only pays one third.

[ardecila]

Originally Posted by 10023

^ That’s not good news. Nothing kills activity in an area like diplomatic missions.

Chicago isn't Washington, London or New York. These are usually small token offices. I'm sure they have security needs and they will demand a couple dedicated consulate parking spots, but the impact should be minimal on Fulton Market.

As a counter-example, the Mexican consulate is at Ashland and Jackson. Obviously Chicago has a very large Mexican population so this is a busy facility. The presence of Mexican consulate is actually a good thing in an area that is otherwise dominated by auto-oriented healthcare facilities and trade union offices. Not only does it support a Mexican bakery and a restaurant (with a nice patio!), it has also encouraged individual Mexican provinces to open promotional offices nearby to encourage business and tourism.