Wednesday, December 8, 2010

Public Meeting: How to Protect Your Condo Association From Foreclosure Damage

 Many thanks to the Edgewater Community Buzz for announcing this meeting. I thought I'd pass it along, and suggest other area bloggers post it, as well.

Time: Thursday Night, December 9, at 7 PM
Place: Park Tower Condominium Association
          5415 N Sheridan Road- Hospitality Room

The 147 and 151 buses stop at the door, and the Berwyn el stop is around the corner at Berwyn and Winthrop. Parking is available for a fee.

This meeting is meant to assist condo owners and managers of condo associations in protecting their buildings financially from the fallout of multiple foreclosures.

Attorneys Eliot G. Schencker and Kristofer D. Kasten of Michael C. Kim & Associates will advise condo owners on how to protect their condo associations from financial damage due to foreclosures in their buildings. The presentation will include an update on new FHA rules, and Q & A will follow.

Monday, November 22, 2010

Can We Afford the 49th Ward RIF: Financing Chicago in the Post-Peak Oil Era

Mega-cities such as Chicago will confront major challenges in the Post Peak Oil era. The core problem facing our largest and most densely populated cities will be economic: we will have to meet rapidly increasing costs in day-to-day operation of our critical systems for transportation, water treatment, emergency response, sewage and waste treatment and disposal, law enforcement, and the maintenance of critical infrastructure necessary to deliver these services, in a climate of rapid and geometric increases in costs due to the draw-down of liquid fuels, production of which is projected to drop 5% a year or more from 2012 forward. 

Is it wise to divert future tax revenues to subsidies for private purposes, no matter what their merits may be, when Chicago currently is struggling financially and is unprepared for the post-Peak Oil era? At this time, the city's systems and infrastructure are in need of substantial repair and upgrading, and any further diversion, present or future, of public money to private purposes could further impair our ability to maintain a safe, orderly civil environment.

TIF and RIF financing mean the diversion of future tax increases (the "increment") from general revenues to private purposes, in this case the rehabilitation and winterization of rental properties in the 49th Ward. The amount of money involved is often substantial; in the case of the proposed 49th Ward RIF, up to $54 M will be diverted from general revenues in an era of steeply increased costs of operating the city in an era of steep reduction in available energy and vastly increased operating costs.

Additionally, other wards will also demand RIFs for similar purposes, which means that the amount of future property tax revenues diverted could be multiplied by 50, since many of the the south side and west side wards are burdened with much more rental housing stock in much worse physical condition than that of the 49th Ward. This could mean that, ultimately, up to $2.5 Billion could be diverted from general revenues to the purpose of rehabilitating rental properties, over the next 25 years,in addition to other subsidies for other private purposes, to the detriment of the City's ability to fund daily operations and make necessary investment in the upgrading and expansion of critical infrastructure to keep the city minimally safe and sanitary in an era of crippling shortages and rapidly escalating cost s for nearly all services and goods.

Given that Chicago's water and sewer infrastructure is decrepit and outdated, and will need substantial repair and upgrading to continue to meet current needs, and that its public transportation system is also in poor condition and ill-equipped to handle a steep and rapid increase in ridership that could occur if the cost of auto ownership were to become too expensive for low and medium income residents due to rapid escalation in fuel costs. Considering all of the foregoing, Chicago and the surrounding Cook County suburbs are currently ill prepared for the vicissitudes of Peak Oil and the terminal decline in oil and other fossil fuel production.

While the costs of running our city in such a manner as to ensure basic safety and sanitation will rise steeply and rapidly, tax revenues could well be in free fall due to declining incomes of residents and in business activity, as declines in fuel supplies will raise the costs of all business activities in proportion. Many businesses will fail and nearly all will face major challenges, while employment opportunities will wither. Property taxes, sales taxes, and all other taxes and fees will most likely have to be increased steeply to meet daily operational expenses and perform "patch" repairs in critical transportation, water, and sewer infrastructure, and expansion and improvement of these systems will quickly become prohibitive. The capital necessary for expansion simply will not be there because of the debt overhang from the early 2000s that has absorbed all the capital that otherwise might be available to invest in replacing aged infrastructure and expanding our utilities and public transportation. Yet this investment will be necessary if the city is to maintain services at their current level for the current population of approximately 2.9 million and surrounding suburbs that rely upon our water treatment and sewer systems. Additionally, massive investment in the regional public transportation system will be necessary for the system to accommodate new riders as driving becomes prohibitively expensive for tens of thousands more local residents than currently use the system.

Chicago will therefore have to find a way to finance vastly more expensive daily operations and maintain and expand as needed the utility and transportation infrastructure needed to ensure that the city will remain safe and livable with steeply reduced energy imputs from that point forward. There is at this time no substitute for oil and other fossil fuels that will meet all energy needs,, and plans for alternative energy, such as expanded nuclear capacity, will take at least a decade and most likely two decades to be fully implemented. Expansion of our power generating capacity will also be problematic because of the shortage of capital.

In short, the city will have great difficulty in funding its daily operations and in finding the capital to invest in necessary infrastructure repairs and upgrades, with the revenues that will be available for the purpose. It will most likely be necessary to raise taxes substantially just to maintain services at their current levels and make emergency repairs on critical infrastructure. Investment in expansion and upgrades of that infrastructure to meet the needs of an expanding population of ex-suburbanites and immigrants from other cities and towns, in an economy that is shrinking in response to steeply higher fuel costs, will require massive capital outlays that will be possible only if tax revenues increase steeply.

Any further diversion of tax revenues from public purposes to private purposes, by means of a TIF, RIF, tax abatement, or any other direct or indirect public subsidy, will mean that less money is available to prepare the City of Chicago's systems and infrastructure, which are already somewhat underfunded and have critical deficiencies, and that the city could end up in a financial bind impossible to negotiate as costs increase 25% or more and it becomes impossible to operate on the revenues available. This could mean steep reduction of necessary services, such as sanitation, emergency response, and law enforcement; and cascading failures in critical systems such as water and sewage treatment, and transportation infrastructure, greatly endangering the health and lives of 2.9 million (and possibly many more) city residents; and rendering the city much less attractive as a place to do business.

Our most important task in preparing for the post-peak era is rendering our community more resilient and self-reliant in a context where government subsidies and services may be steeply reduced, or non-existent. In the future that is almost upon us, our governments will be increasingly unable to function as they have for the past century, and will be unable to provide funding and assistance for any but the basic functions of a local government, and surely will not have the means to provide subsidies to individuals for private purposes, no matter how worthy.

For these reasons, any further diversions of tax revenues, present or future, for private purposes, would mean putting our basic services at risk and would endanger the health and lives of Chicago's 2.9 Million residents, and possibly many more in Cook County that are dependent upon the same systems for essential services. As it is, large diversions of revenues from the public till to private purposes have crippled Chicago financially, and retarded the city's progress in upgrading its critical infrastructure and funding daily operations.Therefore, the proposed 49th Ward RIF,  should be tabled, and no future TIF or RIF financing should be considered. 

Additionally, extant TIFs and other subsidies to business entities should be reviewed and re-considered in light of their true benefits, if any, and the negative offsets to those benefits, with the aim of reducing as much as possible the drain on public finances, and building reserves for the expenditures we will need to make to keep our city and its environs livable and economically viable.

Wednesday, November 17, 2010

Uptown Update: 70% of Property Taxes in Wilson Yards TIF District Go to the TIF

Those who believe that TIF or RIF funds are "free" money need to take a look at what is happening to taxpayers in extant TIF districts in Chicago.
Uptown Update's November 15 post displays a tax bill for a property in the Wilson Yard TIF District. As you can see, fully 71% of the amount goes to the TIF district, and away from the schools, the police department, the fire protection district, the libraries, the parks, and all the other critical services and public amenities that make Chicago a good place to live, work, and do business. 

No wonder Chicago is having serious financial problems. We have over 160 extant TIF districts, with more being planned, notably the 49th Ward RIF that will cover the entire ward. Additionally, some TIFs are renewed when their 23-year term expires.

Was the Target store on Broadway worth diverting so much money from the municipal services that we need to have a safe and sanitary environment? Do the 200 or so jobs the store supplies offset the reductions in services and hikes in taxes and fees made necessary by the loss of tax revenues?

Remember, every dime allocated to a TIF comes out of city revenues. There's no such a thing as free money. 

Tuesday, November 16, 2010

An Entitlement Program for Rogers Park Landlords: How Will the 49th Ward RIF Benefit Property Owners and Help Solve Chicago's Financial Problems

Follow the link to the fact sheet for the proposed 49th Ward Rental Improvement Fund, the TIF that will cover the entire 49th Ward, and divert up to $54 Million in property taxes paid in the ward to landlords in the area to rehabilitate their properties, on the condition that they reserve a percentage of their units for low-income tenants.

Many people believe that this plan is an "improved" TIF, but the closer I look at this plan, the more difficult I find it to believe that it will benefit anyone other than owners of rental properties who are to receive the grants. 

The RIF (Rental Improvement Fund), a variation on a traditional TIF created to improve rental property, is being promoted by Marilyn Pagan-Banks of North Side P.O.W.E.R. and 49th Ward candidate for Alderman, Brian White. The RIF is projected to generate up to $54 Million over its 23-year lifespan, which is to assist (i.e. subsidize) more than 1,500 rental property owners in the ward in repairing and rehabilitating their properties on the condition that they keep their rentals affordable.

According to the promoters, we need the RIF to "improve the quality of life for all Rogers Park residents by preserving the unique diversity of Rogers Park as a community of choice", to "address the current situation- that much of the housing stock in Rogers Park is aged and could be improved with rehabilitation-while creating a future source of dedicated revenue for continued housing market stabilization and improvement"; and "Protect many of the smaller landlords who may be compelled to exist the rental market or raise rents to unaffordable levels, due to the costs to make repairs." 

The RIF will exist "solely to fund multifamily rental property repair and rehabilitation", and funding would be available to landlords in the form of grants, in return for which the landlord would agree to keep rents affordable, as defined in the guidelines, for ten years.

Taxpayers should have a lot of questions to ask about a plan that will take an "increment" of local property taxes amounting to as much as $54 Million over the next 23 years to subsidize some property owners to improve their properties while maintain rents at reduced levels. For starters,  the grants will be offset by additional property taxes to make up for taxes being diverted away from essential city services, which means that the rents in the area will trend higher and there will be no net gain for the renters on properties that benefit from these grants.

And does Rogers Park really need more cheap housing, in an era of falling house and condo prices, and downward pressure on rentals as failed condo conversions revert to rental?

Will this TIF overlap some of the areas covered by the Loyola-Devon TIF, which still has several years to run? What effect will being in two TIF districts have on the taxes for affected properties? Will it matter? 

But the most important questions are these: What gives a public agency the right to to divert public money to private property owners, whether for the benefit of renters or anyone else? And how is "continuing housing stabilization" the function of a government?

Will the RIF do more to aggravate blight than mitigate it? 

Worse, could it be that the RIF will make lower-income renters worse off, not better, and that they will end up paying more rent, not less? Will the RIF be just another factor in driving up property taxes, and rents, thus not only canceling the benefits to landlords and tenants, while increasing the load on all property owners?

Most of all, how will Chicago solve its financial problems and continue to provide essential civil services such as police and fire protection, public transportation, schools, as well as desirable amenities that make the city an attractive place to live and work, and still keep taxes at levels where Chicago can compete with other cities for businesses and residents, if we continue to divert hundreds of millions of dollars in the aggregate of all the city's 160-plus TIF districts, not to mention a multitude of other massive subsidies named differently, from city coffers to private purposes?

None of our candidates for the alderman in the 49th have addressed the city's mounting financial problems, which mirror those of the state of Illinois, now one of the most financially challenged states in the country. Much less do they seem concerned with how we will be able to fund essential services, and critical infrastructure repairs and improvements in the coming era of rising fuel prices and increasing shortages, and falling tax revenues due to the continued shrinkage of our tax base and the deteriorating incomes of the population.

Two public meetings concerning the RIF have been held so far, with only a day's notice given for each, resulting in low attendance for each. The first I attended, at which Tom Tresser spoke, had only a sprinkling of attendees. It would be beneficial and only appropriate to have another meeting for the public with more publicity and advance notice, and attended by our candidates for Alderman, Joe Moore and Brian White, especially since the latter is one of its promoters; as well as Marilyn Pagan-Banks, and the members of the ZULAC zoning committee. The public is entitled to a more solidly grounded justification for yet another massive diversion of public money for private purposes.

Sunday, November 14, 2010

The 2011 Chicago Games: New Northside Candidates Bring Interest to a Dull Race

The Chicago 2011 election looks to be a dull election, a study in foregone conclusions.

The lineup for next year's municipal elections, with a few interesting exceptions here and there, is comprised of Legacy politicians whose major accomplishments are tax increases, budget crises, and massive subsidies for crony businesses, along with reduced services and increased fees for nearly everything. Only in a few wards, such as the 46th and 48th, do Chicago voters have a choice of interesting, talented newcomers who might be capable of reversing the insanely destructive policies and initiatives promulgated by our outgoing Mayor and the 50 spineless, brainless rubber stamps who have never opposed Daley on any important issue and who've played the major part in making Chicago an expensive and altogether unattractive city in which to locate a major business without being offered a massive taxpayer-funded subsidy... and making life miserably expensive for taxpaying residents and businesses while reducing essential services.

Maybe we are all so occupied with the struggle to get or hold onto a job and make ends meet in this dismal time that we have little energy to spare for the 2011 Chicago games, but a curious inertia seems to have settled over the city, for this election seems to be generating very little interest among the population. That is really astonishing given the incredible mismanagement of the city's finances and assets by our current lineup of clowns, and considering that this is the first time in 20 years we've had a real opportunity to elect someone other than Daley as Mayor, whose grip on power was considered so unshakable that he never once during his 20-year reign had a truly serious challenger. Same thing in several of the wards, where entrenched incumbents are stepping down after decades of running virtually unopposed, such as the 46th Ward (Uptown) and 48th Ward (Edgewater), where Helen Schiller and Mary Ann Smith are both retiring, creating opportunities for political newcomers..

There are at least 7 candidates running in the 46th, all of whom are interesting, and a number of whom have extremely detailed and specific ideas to address the ward's major issues. I will decline to comment further on the 46th Ward race as I am employed by one of the candidates, and wish to avoid a conflict of interest.

In the 48th Ward, the bland legacy pol, Harry Osterman, a long-time representative to the State House, is opposed by  newcomer Phil Bernstein, who is best known for his trenchant blog, Edgewater Intelligencer,  and is a feisty and original independent with over three decades of experience as a business owner and public servant who has directed major public works projects, and who offers a detailed vision for Edgwater, including specific plans for reviving Edgewater's moribund Broadway and Granville retail strips and most of all, solving Chicago's increasingly serious financial problems. His opponant Osterman is a nice enough guy in his colorless way, I suppose, but there's more to being an effective leader than being a "nice guy" and Osterman has, after all, been a part of the state government that has made Illinois one or the most financially troubled states in the union. Bernstein, by contrast, not only has very detailed plans for the ward and the city that include viable ideas for reducing expenses and balancing Chicago's out-of-control budget, but has taken real risk in publicizing his positions, his vision, and his plans in great detail at his candidate's website, which most candidates avoid doing, preferring to mouth the usual vague palaver about "creating jobs" and "improving service" and "creating coalitions". It's easy to come through on promises that are nothing but vague, general statements that promise nothing in particular. You aren't expected to deliver what you never promised, but when you say that you absolutely will, say, donate 30% of your salary to local charities, reduce property taxes, and mitigate the city's budgetary problems, you had better deliver. Bernstein pledges to do all of this, and we can only hope that 48th Ward residents are sufficiently motivated by the recent spate of violent crime, the deteriorated condition of Edgewater's retail districts, and escalating taxes, to put their Iphones aside for a few minutes this February, and go out in the cold to vote to give this talented  and spirited outsider a chance.

Here in the 49th, Joe Moore, the 20-year incumbent, has no credible opposition at all. It was not until a couple of weeks ago that I encountered anyone circulating petitions for any candidate at all, though I heard loose talk about a number of others, including Blane Roberts, Joyce Shanahan, Louis Herrera-Baker, Ben Meyer, and  Brian White. I signed Brian White's petition, holding my nose, just so there would be somebody on the ballot besides the incumbent. I have not encountered anyone circulating petitions for anyone else since, even though I walk the streets a lot, and use public transportation.

Somehow, none of these people seem like they're likely to offer spirited opposition. Sorry, kids, but your Facebook page doesn't make it as a campaign site, and neither does a one or two page amateur website with a couple of pictures of you and your charming family, but only vague statements about "service" and no specifics about your experience or qualifications, and most of all no vision or specific, detailed plans as to how you will implement your plans.
Well, Shanahan, and recently, Herrera-Baker have dropped out of the race, and Shane Roberts and Ben Meyer are invisible, so Joe Moore's only real opponent at this point is Brian White of the Lakeside CDC. White sole agenda seems to be securing a TIF to cover the entire 49th Ward, designed to subsidize landlords to reserve apartments for low-income renters, and is patently a device for conveying property taxes to certain Rogers Park landlords. Does Rogers Park need more low-income rental  housing? Does diverting our tax revenues from essential services and desirable public amenities to favored apartment owners for the purpose of securing housing for low-income tenants, benefit most of the ward's middle-class population? Since White and Moore are both supporting this TIF, and seem to have similar agendas altogether, White's candidacy seems rather pointless.

If anyone is opposing O'Connor in the 40th (Edgwater-Rogers Park-West Rogers Park, or Bernie Stone in the 50th (West Rogers Park), I haven't heard about it. If you've heard anything interesting, fill me in. These two wards are experiencing problems with spreading blight and crime, and their somnolent incumbents need to be replaced with energetic people who have visions for their wards as vibrant urban neighborhoods with well-maintained rental housing, clean streets, and lively, well-kept retail districts.

Friday, October 29, 2010

$58 Million TIF Planned for Entire 49th Ward- Meeting at Loyola Park Field House Saturday Oct 30

A TIF that will cover the entire 49th Ward is in the works, that will funnel $58 Million to connected cronies. This means increased property taxes and reduced services for 49th Ward residents.

Is Chicago broke enough from the quilt of TIF districts covering this city? How much more can we take

There will be a meeting at the Loyola Park Field House tomorrow, Saturday October 30, at 3 PM. 

Click on the title link above to go to the petition to ban TIFs in Cook County. 

Wednesday, September 15, 2010

Midas Plague

Those of us who are fanatical Science Fiction readers might remember one of Frederik Pohl's more famous stories from the early 50s, during which period Americans experienced for the first time truly incredible affluence- remember the saying "you can't starve in America"?  The Midas Plague projects a society so affluent and so awash in consumer goods of every description that you are forced by government edict to consume as much as possible, and your socio-economic status is measured by your relative freedom from forced consumption; as you ascend the ladder you are required to consume less, not more.

Pohl doesn't show the flip side of the story, which is a society  broke and resource-depleted and burdened with towering debt to make and pay for this crap, to the point where many people are walking away from houses and apartments stuffed with decent, usable belongings simply because they can no longer pay the cost of housing them all and carrying them around. This is where our wealth and a major chunk of irreplaceable natural resources have gone, and we won't be able to reconstitute it into food, money in the bank, or the fossil fuels that made this incredible superfluity possible.I think about this story a lot when I contemplate the devolution of the country into a massive coast-to-coast resale store, as people buried under mountains of unwanted possessions and the debt they accumulated acquiring them, try to unload all the outdated clothing fads, obsolete electronics, multiple sets of china and stemware and turkey fryers and chocolate fountains and smoothie makers and yoga mats and kiddie pools and bric-a-brac and spare tires and multiple sets of tools and hobby kits and old kitchen cabinets and lawn furniture and whatever else they have stuffed into houses and garages and storage lockers, to buy food and pay rent.

 It evokes revulsion, this seemingly uncontrollable urge to acquire and accumulate past any consideration of need or even visible benefit or pleasure that so many Americans seem to have, especially when it's financed by equity-stripping your house and running up credit card bills equal to four times your income. The phenomenon has become so prevalent in rich Western societies that it has triggered a reaction formation known as Minimalism, the paring of possessions to the most basic essentials and an aesthetic of utter simplicity.

In our condemnation of the "materialism" and "consumerism" we think we perceive in the compulsive shoppers and packrats of this country, we forget that the incredible abundance of Western countries in the past 100 years is anomalous in human history, and that for the 10,000 years preceding this period, it was all most humans could do to keep a few pieces of shabby clothing on their backs and acquire the rudimentary necessities of daily life. For most of the world, it still is. That's why status and achievement have usually been measured by how much and what kind of possessions a person acquires. Our urge to accumulate evolved in response to extreme and chronic scarcity that lasted until we learned how to harness the power of fossil fuels, and it is essential to our survival under normal conditions... and the conditions of extreme abundance under which we of the Western world have lived in the past century and half are not normal.

That's just the problem with so many of our basic "instincts". The behaviors we evolved in the long ages of hardscrabble existence that enabled us to thrive and build a base on which to build our civilizations have been rendered obsolete by civilization and are mostly more a threat to our existence than an aid. We once needed to reproduce endlessly because most children in pre-modern times didn't survive past the age of five, but in our present context, a large family is only so many more mouths to feed, and a major drain on the finances and energy of the parents. We once needed to hunt and fight endlessly just to maintain a hold on our territories and stave off predators both human and animal, but now our dominator urge could lead to wars that end up extinguishing the species. And until quite recently, most people needed to amass stores of food and other goods to survive through the long periods of shortages, the crop failures, and the scarcity of almost everything, in periods where nearly everything was made laboriously by hand and you had to settle for what was available to you in your own back yard because of the difficulty of travel and shipping.

We might still need the traits that seem so inimical to survival now, but which will could mean the difference between living and dying in a world of resource scarcity and vicious contests over the scraps of industrial civilization. The acquisitive urge is basically constructive, but we need to learn to channel it constructively, toward accumulation of things that are genuinely useful (like a large savings account, for example) and possibly will be essential as the affluence of the last century fades and the consumerist ethos with it. Unfortunately, we're still wed to that ethos, and haven't gotten past the idea that the best way to achieve prosperity is to buy and fill our houses with "luxuries" of no utility and little lasting pleasure that trick us into believing ourselves wealthy while the bills stack up,  our bank accounts are empty, and we are more dependent than ever on fragile systems for delivery of essentials that could fail quickly and catastrophically. Our economists still believe that the best way to repair our economy is to stimulate spending, and borrowing to spend, on the things that are not only making our houses uninhabitable but are depleting the resources we can never replace and will badly need just to live in basic comfort, at the expense of the savings and investment in the ndustries and systems we will need to provide basic technological amenities and comforts in a future of permanent resource scarcity.

So, when we're tempted to buy another toy or another overpriced trendy garment, or trade up to a bigger apartment to accommodate the swelling horde of consumer "stuff" we've maxed our cards to buy, we should take a look at our possessions and bank accounts, and ask ourselves the following questions: Would this money I'm spending on this item be better spent paying down a bill? Do I even really want this nonessential frill? Could I get this item for free or next-to-free off Craigsllist or Ebay? Do I have the stuff I really need, like a six-month supply of non perishable food and personal supplies for everyone in this house, and necessary emergency equipment like an electric generator and ample warm clothing and bedding on hand?  Would it be better to pay off my mortgage than leverage myself into a bigger house I wouldn't need if I didn't have so much useless junk sitting around? Do I have enough money in my savings account? Is my retirement adequately funded? Would I be better off just getting rid of about half the stuff I have and stop spending money storing it and hauling it from one dwelling to another?

Our core urges and drives aren't corrupt or obsolete, just misdirected because we have not yet learned to deal with the incredible affluence of the modern era in our privileged country, nor do we yet grasp how fleeting this abundance may be. We will have to learn once more how to live with less, and make our resources serve our real needs instead of being diverted into useless consumption and the manufacture of billions of items that will spend the next few thousand years in landfills, the resources that were squandered making them lost to us forever. We'll have to relearn to make truly beautiful, durable things that can be passed down through four generations instead of stuff that breaks or obsolesces in two years. In short, we'll have to revert to the frugality that most people had to practice in the past just to live, while learning to conserve rather than waste.

Tuesday, August 17, 2010

We Will Kill for Oil

Honesty is so distasteful.

We'd so much rather see WAR IS NOT THE ANSWER, even if this sweet homily seems sort of hollow when affixed to the back end of something that weighs 6,000 pounds and gets 12MPG. Do these people think that there is no connection whatsoever between the 20% of our oil we import from various hot spots in the Middle East and Africa, and our 65-year-involvement and multiple wars there?

Was there ever any other reason for our cozy relationship with major human rights violator Saudi Arabia?  Or for our presence in Iraq, which is expected to displace Saudi Arabia as the largest producer and exporter of oil over the next decade? Or Afghanistan, of great strategic importance in accessing and securing the estimated $12 Trillion in oil reserves projected to reside in the Caspian Sea.

And how many people here want to reckon with the consequences of a sudden, drastic reduction in available oil supplies? So far, there is no indication that our local leaders even consider the possibility, let alone how it would cascade through our systems to produce critical shortages and major system failures. Chicago has no emergency plans in place, and instead of making the improvements necessary to our critical transportation and utility infrastructure necessary to keep the city intact and functioning with decent levels of safety and sanitation in the event of a prolonged emergency, are searching for more paths by which to divert tax revenues from essential public needs to the back pockets of corporate cronies while starving our increasingly decrepit and inadequate public transportation. To date, I have not once heard the term "peak oil" pass the lips of Obama , who prefers to talk about "reducing our dependence on foreign oil", as though there were any other kind, especially since it has become glaringly evident that offshore drilling is not likely to offset the fading production of the super giants, and neither are the tar sands of Calgary,which require staggering quantities of fresh water and natural gas to work, which means that the oil from the sands is not only partially subsidized by Canadian taxpayers and would have a negative EROEI without that subsidy, but comes at the expense of natural gas supplies, which are subject to rapid and irreversible depletion just as oil is.

Iraq and Afghanistan were Bush's Wars, then became Obama's Wars, but they're really our wars, and they probably will not end until every last drop of oil has been extracted from every last well, or at least until the cost of extraction is a barrel in for a barrel out. That time may come sooner than we think as it is. Obama's promise to end these conflicts, so quickly reneged on, is being flung in his face by foes and former supporters alike and will no doubt be used as a major wedge in the 2012 election by the next pandering con artist who runs on promises to accomplish the impossible, but anyone who believes that we'll withdraw from these conflicts anytime soon is probably someone who believes in perpetually self-renewing abiotic oil, or that we can run our economy on wind turbines, used restaurant grease and corn liquor.

It is probably useless to consider that our resource wars are only hastening resource depletion, or that all combatants will eventually lose, for the oil will deplete remorselessly no matter who controls it. But in the meantime, we probably have no choice but to soldier on, since we are still in stone denial concerning our extreme dependence on petroleum and are in no way prepared to make the adjustments and arrangements that would enable us to withdraw from the Middle East and lose access to the bounty of Iraq, or the Caspian sea. Nor is the rest of the western world, which relies upon the U.S. to do the dirty work of securing the oil supplies for other western nations, and any political aspirant who suggests that we confront the inevitability of resource depletion and consider these wars already lost, and learn to live with much less energy, is committing career suicide.

So what it all means is that we will continue to kill and be killed for the oil in the Middle East, and Africa, too,  just as we have for decades now, because the alternative, a rapid withdrawal with the possible sudden loss of 20% of our usual supply, would mean incredible chaos and violence, and random death on a mass scale,within our borders, as the systems we rely on to deliver electricity and clean municpal water and vaccines and medication and cheap, abundant food, all start to wobble and fail for lack of the necessary energy imputs to run them. It's an alternative that I'm personally not willing to accept if there is any way around it, and I'm sure you aren't, either, but I'm not holding my breath waiting for our leadership and general public to embrace the only alternative to "the war that will not end in our lifetimes", as Cheney  put it, which is to downscale and rearrange our systems and our lives to enable us provide for ourselves at a decent level of modern comfort and amenity in the absence of copious quantities of oil.

Sunday, August 8, 2010

Over The Cliff

While American policy makers pass energy bills designed to pander to various lobbies and to allocate the largest subsidies to the "alternatives" to oil that are least likely to be suitable replacements and provide us with even basic amenities in the energy-short future, a number of geologists and energy analysts are eying the rapidly dropping rates of new gas discoveries, and the steeply falling drill rig count with growing alarm.

Natural gas is now considered to be the most likely substitute for oil, in spite of the fact that it, too, is a fossil fuel that is almost always found in proximity to oil, and is also subject to depletion. Gas prices are at deep lows and consumption has dropped in recent years, and policy makers and the public alike are pacified by the assurance that we have enough natural gas in North America to last 100 years at current rates of consumption. 

Energy writer Kurt Cobb at Resource Insights, among a number of other prominent prognosticators, believes that natural gas supplies are headed "over the cliff", that the drop could be rapid and precipitous, and its onset could take place in less than three years. In a recent article at SCitizen, he outlines the convergence of circumstances now in place that could cause seemingly plentiful North American natural gas supplies to plummet precipitously in the near future. These include not only the unexpectedly rapid rate of depletion in recently drilled wells, but the shutting in of existing drills due to extremely low current gas prices.

As I've pointed out in previous posts, a 100-year supply will become a twenty-year supply very quickly were consumption to increase by just 5% a year. That's something we need to be very concerned about, because at this juncture, our leaders, driven by the fossil fuel lobby and in deep denial concerning our ability to continue business as usual as that has been done sine WW2,  are hell-bent on converting our fleet of 200 million cars and trucks to natural gas. The conversion of our gigantic fleet of petro-burners to natural gas would cause consumption to ramp up very steeply over the next decade, and drive this extremely valuable fuel into steep depletion, with dire implications for our ability to meet other critical needs, such as for food and heat.

Not only is natural gas used to heat most of the homes in the U.S. and is the most efficient and economical way to do that so far, our population of 305 million (and growing) people are extremely dependent upon mechanized agriculture for food, and natural gas is absolutely essential for manufacturing the nitrogen based fertilizers that made the "green revolution" possible.. Obviously, rapidly declining gas production could mean widespread food shortages, or even famines, in this country that has never experienced such a thing, and would also make many other essentials, such as ample home heat, unaffordable for a sizable fraction of our population. That the result would be unbelievable suffering accompanied by a steep increase in disease and hunger and rapidly falling lifespans, ought to be obvious, but our leaders don't seem overly concerned with the implications for our non-rich population, which is about 95% of us.

Rapid depletion of existing wells could easily cause crippling shortages and steep increases in prices in the next few years even if we don't increase our consumption. Therefore, it would be sheer insanity to double the demand for this fuel by adding the load of our entire transportation system, if indeed we could even begin to convert our fleet of gasoline burners, or put into place the delivery system needed to make the fuel widely available.

The promotion of natural gas as the silver bullet that will save our energy-intensive way of life is just the next stage of denial. Our business and government leaders now recognize that peak oil is a fact, and we are understandably frantically casting about for a "solution" that will permit business as usual to continue, forgetting that all resources have a depletion curve. This is why our political leadership and business elite not only will not be of any help in dealing with the vicissitudes of life in a rapidly contracting economy and increasing scarcity of necessites, but will actually be major obstacles to successfully managing the massage shift in our economy and its physical underpinnings now underway.

Tuesday, July 27, 2010

Eliminating Housing Subsidies Will Improve the Economy

Excellent article at Irvine Housing Blog

Eliminating housing subsidies may cause house prices to drop, says Irvine Renter, but it will free up capital for more productive uses.

How many  "more productive uses" can you think of for the $3.4 Trillion that we've committed to mortgage assistance, tax credits for new buyers, backstopping the GSEs like FMAC and FNMA against their hundreds of billions of dollars in losses on bad mortgages, and other assistance and subsidies for the sinking housing market? How much do FHA loans with their average 20% delinquency and default rates cost the taxpayers? How much do we lose to the mortgage interest deduction?

And how many poor people are living any better with Section 8 subsidies than they would be without this welfare program for slumlords?

$3. 4 Trillion would repair every dangerously deficient dam and bridge in this country. It could rebuild St. Louis' collapsing sewers, and rebuild Chicago's lakefront and rail system.

It could rebuild the aging water treatment infrastructure in all the older cities.

We could build a completely electrified rapid-rail (not High Speed) to every city and town in this country with a population of more than 5,000.

It could be put against our towering public debt load, most of all.

We might once again have productive industries making the things we badly need, to the benefit of every socio-economic group in this society, while housing costs would drop steeply. Poor people could find more "first-rung-on-the-ladder" jobs, and our middle classes could have more opportunities for advancement and more job niches utilizing a greater variety of skill sets and talents, while the rich would have more profitable investment opportunities where their capital would be utilized building new industries providing the technologies and systems we will need to maintain our technological amenity while transitioning to a low-energy regime.

Monday, July 26, 2010

Skewed Priorities


That's the overriding message from the northwest corner of Iowa, where the Lake Dehli Dam breached and drained the recreational lake behind it this weekend. There was no loss of life and no one was seriously injured, thankfully, but the resulting deluge pretty well gutted the value of the area to the vacationers who own the 900 or so homes that fronted the lake...  which was all most of the folks there could think about.

Nobody, not one person, said, Thank God there were no fatalities or injuries, which is the first thought you have when something like this happens.  There didn't seem to be a lot of sympathy or concern for the people downriver whose businesses and permanent homes were wrecked by the torrent, and a local official said in passing that his town would of course apply for funds for cleanup, which is going to be a big job. But that seemed to be a peripheral concern to most of the people interviewed.

What most people talked about first and the most was how they hoped the Feds would step in with the money to rebuild the dam, because otherwise their vacation homes-  mostly second homes worth from $50,000 to $500,000- will be almost worthless without the lake it created.

Like the rest of the taxpayers in this country have nothing better to do with $200 million or so than to rebuild a  small dam solely to restore a recreational lake,  to rectify the economic losses of a handful of second-home owners.

Our pols and economists are sending the public a lot of mixed messages mixed with hope fastened to very doubtful metrics, but the message we most need to be trumpeted from the rooftops is already printed on our increasingly decrepit and dangerous infrastructure, our $13 Trillion in public and private debt, our gutted manufacturing sector, and our failing war efforts in the part of the world on which we depend for most of our liquid fuels; is that the party is over.  We can't even afford to repair the things whose catastrophic failure would cause thousands of deaths; at this time there are over 3500 large dams and 8000 bridges classified as dangerously deficient, and whose catastrophic failure would easily kill thousands of people, that we are dragging our feet on because we already spent the $16 Billion required for minimal remediation on things like highways to nowhere and mega-sports arenas, supporting the government-financed mortgage market, paying subsidies to farm owners to not grow food, and paying people to buy new cars and build ever more houses that nobody can afford to buy, among many other wasteful expenditures too numerous to list here. 

We have extended ourselves financially into the next century, well beyond our childrens' probable lifetimes, since the post WW2 era in order to finance things that not only are too big and too complex to maintain as we start down the other side of the fuel supply curve, but continue to squander massive amounts of our remaining wealth, or rather, our remaining borrowing power, on things that cannot be considered public purpose and are flatly extravagances that we never really could afford and that are now crowding out urgent public needs that we don't have much time to meet before energy costs place them beyond our reach forever.

The figure in the foregoing paragraph does not include private debt, which maybe doesn't mean anything anyway since so much of the public debt was incurred in backstopping the financial institutions against the losses they incurred from this private debt. Municipal shortfalls and state deficits are also not included, nor are future pension and entitlement program obligations.

Suffice it to say that recreational lakes in Iowa and 850-unit luxury condo towers in Chicago's laughably glutted north lake front condo market, among thousands of other costly private indulgences that come at public expense, are costly frills that benefit few, and that neither the country at large nor this city can accommodate any longer without making steep sacrifices in the things we need to live decently and safely. But the American middle classes, steeped in delusion and fantasy, and possessed of a swollen sense of entitlement, are the people least apt to get the message broadcast by the ever-increasing numbers of boil-water days, extended power outages, critical infrastructure failures, and the general decrepit and brittle condition of the country's systems, which is that we're at the end of our ability to pretend that we're still a wealthy country with unlimited resources and the competence to manage either our physical resources or finances so that we'll be able to keep the lights on and the trains running when energy supplies become critical.

Saturday, July 17, 2010

Loyola-Morgan Retail District: Gains and Losses

We can't fail to be impressed by the recent transformation of the formerly forlorn stretch of Sheridan between Devon and Albion. The strip of disused buildings and vacant lots has blossomed  into a lively and attractive retail district with the addition of the Morgan at Loyola Station rental apartment building, a good-looking and appropriately scaled mid-rise building with small ground-floor retail shops; and a pocket that used to be ugly and a little forbidding is now cozy and inviting. This pocket of Rogers Park is now the most successful and attractive retail district in the neighborhood, and it is helped a lot by the proximity of two major grocery stores and other retail in Edgewater a few blocks south.

Yet, as you travel south on Sheridan into Broadway and consider the moribund two-block stretch of Broadway just south of Sheridan, and spotty Devon Ave, you're reminded of how much easier it is to destroy a neighborhood than it is to build it, and how important is appropriate development, for Broadway Blvd is an essay in the destruction wrought by ugly, auto-oriented, anti-urban development; a wilderness of strip mall slums and drive-through food outlets and self-storage facilities. Actually, the street contains a number of interesting small businesses, including a couple of antique stores and a wonderful day spa as well as several interesting small restaurants, but they're a little lost among the seas of parking, fast food outlets and other auto-oriented garbage. Just a couple of blocks south, Broadway between Granville and Sheridan is still a cold, lackluster corridor of drive-through food outlets and parking lots, and Devon is pocked with disused parking lots fronting the street and vacant storefronts. But attractive, interesting, lively urban neighborhoods don't develop in a day, and it will take quite a few more years and an improved economic climate for this area to develop fully, and to reverse 75 years of  atrocious urban planning and deterioration.

And that's just as well. Maybe we need to move a little more slowly, and build more carefully, with every building built with care and love. We Americans tend to go way too fast at way too big a scale, with no consideration for unintended consequences and no regard for feedback along the way that is signaling that things aren't working out according to plan. And now that nobody has the money to go forward with big plans except for Loyola University, the people involved in developing this area need to take a breather and consider the progress made so far.

Some of things we hope they think about before they do too much more demolition include the block of Sheridan just north of the Loyola el station. This block still contains a couple of really interesting buildings and a number of businesses that have been in the neighborhood for many decades, like Carmen's Restaurant and Affordable Optical. However, in the past fifteen years, this block has lost a lot of its charm and cohesion, having been decimated by fires that destroyed a couple of charming old buildings, and Loyola University's demolition of a decrepit but lovely two story building and corner building. The University has rights of eminent domain in this area, which is part of the Sheridan/Devon TIF district, and the buildings that remain are in increasingly decrepit conditions, and according to one commercial tenant, are renting their commercial spaces out on a month-to-month basis, while Beck's Bookstore vacated its old building and moved to a space in the Morgan apartment building.

This would all seem to indicate that the university has plans for this block that very likely don't include the restoration of the remaining buildings on this block, including the incredible little beauty pictured below, which contains Affordable Optical and Carmen's. Chicago is fairly stuffed with buildings covered with wonderful embellishment, but I've never seen anything quite like the decorative terracotta ornamentation on this quirky little charmer, and the destruction of this building would be a tragic loss to the neighborhood. Buildings like this are what lend a neighborhood charm and character, and another bland new building, no matter how luxurious and loaded with amenities, would not replace a structure like this.

From here forward, the developers here need to take small, careful steps. There's no crying need for more retail space at just this point in time, given the number of empty spaces available in the area already and the extremely unfavorable business climate. Therefore, the developers might want to consider "infill" buildings for this block, small one-to-three story buildings with commercial space on the ground and perhaps second floor, and apartments above, and more important, some attention to architecture and decorative detail. The recent renovation of a row of one-story storefronts in the 1100 block of Granville in Edgewater is encouraging. These ugly, run-down spaces were recently re-fronted with attractively styled facades capped off by the attractive deco corner store, shown below.


These stylish renovations, and recently constructed mixed-use buildings allover town, while not architectural masterpieces, are major improvements on the hideous, utilitarian,suburban-style commercial development that blighted so much of the city during the 30-year period of urban destruction following WW2. Let's hope we can do even better with whatever gets built in the 6500 block of Sheridan, where the builders will be starting from scratch. Not every building, or even most buildings, has to be a  masterpiece, or terribly "original", just reasonably attractive and well-designed, and perhaps possess some charming decorative details. We might still have a long way to travel before we build with the same spirit and love of beauty that inspired the magnificent buildings of the early twentieth century, but we've at least turned the corner and left the dreadful post-war period behind us.

Whatever gets done, let's hope it gets done slowly. And most of all, lets work to preserve the beauty and charm our neighborhoods still possess after 65 years of maliciously anti-urban modernist destruction.

Monday, June 28, 2010

They Just Don't Get It

Our ruling elites and their mainstream media shills never really have cared what was good for the population, or even what we want or believe, but they used to listen to us well enough to at least feed back the lies we most wanted to hear. However, in their response to the financial debacle, they've shown that not only do they not give a damn what we think, but that they have no idea what it is we really do want or believe or expect. 

Never have they read us so wrong as in the government response to the financial debacle and the cures proposed. Now, after committing over a trillion dollars to goosing the house market in an attempt to rewrite the laws of supply and demand by floating more bad loans that will result in more defaults, and pouring hundreds of billions into FHA and the GSEs such as FNMA and FMAC, a few people up there perceive the threat to what remains of our credit system, and realize that the bleeding has to be stopped. Lawmakers have proposed not only tightening the lending rules and underwriting standards for loans purchased by the GSEs, but punishing people who strategically default by locking them out of the government-backed loan market for 7 years, during what time they would not be able to qualify for a loan backed by a government agency. That means they would not be able to get financed for a house, period, because 95% of all home loans written these days are either purchased by Fannie, Freddie, or Ginnie, or are written by the FHA, which has combined delinquency and default rates for its 2007 and 2008 vintage mortgages of over 20%.

Yet there remains the fear that Fannie's punitive new policy might not make it with the public. Writes David Streitfeld in the New York Times, "Fannie Mae’s decision to begin punishing people who walk away from their unpaid mortgages could prove difficult to sell to the public and might be impossible to execute, housing and lending experts said Thursday."

Uh, just what sector of the "public" would be unhappy with policies that punish people who walk away from mortgages that they can pay for? Most of us out here feel that the only foreclosure victims who rate sympathy are those who are unemployed or whose businesses have gone down the tubes in this dismal economy, yet these are the very people who are ineligible for assistance and get the least help, and we're furious at the lawmakers who are continuing to subsidize more home building and more bad borrowing under the auspices of the FHA and government-backed GSEs while cutting off the lifelines of millions of unemployed who will be left stranded with no income whatsoever at the end of this week.

A "strategic defaulter' is a borrower who has the ability to pay but is defaulting only because his house is worth less than what he paid for it. These people tend to be much more affluent than the average foreclosure casualty and they are defaulting as part of a larger financial plan. They usually have absolutely no remorse, and plan to buy within a few years when they feel that prices have reached levels justified by rents on comparable housing. And so far, there has been nothing to prevent them from buying within a couple of years of foreclosure if they have something for a down payment, even though mortgages are considerably more difficult to get than they were a few years ago.

If there's any group of defaulting homeowners the public has no sympathy for, it's these well-heeled borrowers who can pay their mortgages but are walking away because they just don't want to pay. After all, not only do renters, who derive no benefit at all from efforts to support housing prices and help buried homeowners, make up 40% of the general public, but most homeowners are not delinquent on their mortgages and tend not to sympathize with people who deliberately default. The only part of the "public" that will be unhappy are scamming borrowers, and the housing and lending hustlers, who were the only people who benefited from the Great Rampage of the 00s, and who have shoveled billions into lobbying for the HOPE NOW and other mortgage assistance programs, as well as ever more subsidies for housing "affordability" programs.

Strategic default is now becoming a fad among affluent homeowners whose expensive homes have dropped catastrophically in value, and threatens to topple what remains of our credit system.Tighter lending policies and steep penalties for defaulting borrowers who have the capacity to pay their loans are way overdue. The Republicans additionally have introduced a measure to the FHA financing bill that would forbid strategic defaulters from getting a loan from FHA. This is a completely justifiable measure and is only one of many reforms necessary to prevent another massive credit bubble from forming as this one deflates.

However, there's one question that has to be on everyone's lips, which is, how will we punish major corporations who default on mortgages worth tens of millions, for the same reason- that the properties involved have dropped steeply in value since purchase? These entities have set a example for the rest of the population, and there's nothing that angers people so much as the vicious double standard that exempts major corporations, especially financial concerns, from major wrongdoing while punishing hapless individuals lacking wealth and influence. Will J P Morgan's strategic default on a portfolio of commercial properties in San Francisco impair their ability to obtain credit down the road? Will corporate defaulters incur penalties proportionate to those imposed on individual homeowners?

We'll believe that our rulers are truly committed to reform when the financial concerns who benefited the most are subjected to the same penalties for irresponsibility and malfeasance as the rest of us.

Sunday, June 27, 2010

Rogers Park Men CAN Cook!

Yes, Rogers Park guys can cook! Above, Michael Harrington and Eva McCann present the Grand Prize to winner Michael Cain at the fundraiser for the Willye B. White Park's summer day camp program.

The gods gave us a perfect, sunny, cloudless day for the event, the food was great, and many neighbors were in attendance.

We're eagerly anticipating the next event! Thanks to Michael Harrington, Toni Duncan, Sister Cecilia Fandel, Eva McCann, and all the other organizers and volunteers who made it happen.

Thursday, June 10, 2010


Pictured above is a condominium at 6212 N North Winthrop I wrote about back in 2008, and it looks like the property has only gone downhill since. This building is a newly-constructed condo with 8 units originally offered at $550,000-$600,000 each, and which has gone through many ownerships. See current snapshot of ownership, above.

This is the worst-looking property for many blocks on N. Winthrop in Edgewater, a street that has undergone a 180-degree transformation over the past 15 years. Many years ago, Winthrop and Kenmore together formed the notorious Winthrop Corridor of drugs, crime, and blight, but since that time, these two streets have become beautiful, placid, tree-lined streets with well-groomed, beautiful houses and buildings in a wide variety of architectural styles.

In this block are many charming old corridor buildings and a number of "four-plus-one" buildings, all offering cheap rentals, yet these places are beautifully landscaped and well-maintained. 6212, on the other hand,, is gleaming new construction with  large, new high-rent apartments, yet it looks seedier every time I walk past it. The weeds are nearly a foot high in the pocket front lawn and on the parkway, where there is also a hole about a foot across and a foot deep, covered only by a barricade lying on its side. There is trash everywhere- on the little lawn, the walk, the parkway, and stuffed, along with piles of last fall's fallen leaves, between the pickets of the wrought-iron perimeter fence.

I was strolling down Winthrop late this afternoon, and was freshly shocked at the appearance of the place. In the course of snapping pictures to document the wretched appearance of the property, I was intercepted by a white male who appeared to be about in his forties, who double-parked his SUV in front of the place, jumped out, and demanded to know what I was doing.

"Are you the owner of this place?" I asked, indicating the building with my hand.

"Yes! I'm the owner!" he exclaimed, puffing his chest out and staring me intently in his "aggressive display" stance.

"Do you realize you have the trashiest-looking property on the street? This property looks horrible, " I said, "what with trash allover it and weeds a foot high. Look at all these cheap little corridor buildings that look so lovely and have such beautiful flowers and plantings, and your place looks like a slum. You're blighting the street."

I suppose he realized that he could not stop me from taking photos. "A good day to you, madam! Have a good day!" he barked.

The guy was utterly shameless. 

This guy clearly isn't troubled by the neighbors' opinions.  We seem to have a larger number of such owners since the Great Housing Rampage and the ensuing glut of newly constructed and converted condos. Either the owners are not paying for the place and are de facto squatters, and aren't going to lift a finger to maintain the place while they wait for their NODs to arrive in the mail (or for the Sheriff to arrive with the movers), or they are slumlords who picked these places up in foreclosure and just want to sit on them till they can flip them. They don't care how their places look or who they rent them to. Twenty years of dramatic neighborhood improvement in Edgewater and Rogers Park is in danger of being reversed by these predatory new owners.

Shame is usually a good method of enforcing local standards of property maintenance on slob owners, but you can't shame the arrogantly shameless. Some owners just have to be coerced, and it's no violation of their property rights to compel conformity with community expectations. Every owner in the area is negatively affected by the neglect and visible deterioration of property in the area. This property is in the 49th Ward, whose alderman is Joe Moore, and a few dozen calls and letters to Moore from irate neighbors disturbed by the litter and weeds might be helpful.

Saturday, May 22, 2010

Chicago's Shadow Governments

Most of us are hardly aware of our local Chamber of Commerce or Community Council, or any of the other business development and community advocacy organizations, and when they do intrude on our awareness, we wonder just what do they do, exactly, to justify a business allocating a few hundred scarce dollars to membership dues,and valuable time to attending meetings and events.

Well, for starters, they take taxpayer's money in order to lobby for more taxpayers' money to fund massive projects that may or may not be advantageous for their communities and are often opposed by the bulk of the citizens. These organizations are considered "delegate" organizations by the City of Chicago, and are eligible for funding by the City, as are other non-profit organizations that exist for "community" purposes. At this time, there are well over 100 such organizations, and many neighborhoods have two or three, for oftentimes, another organization will be founded by those opposing the plans and policies of the original group, and they exert an unseemly degree of control over local affairs, including major public works and community developments. Rogers Park's infamous DevCorp North, now known as the Rogers Park Business Alliance, is notorious for its involvement in and partial ownership of the disastrous Gateway Mall, which was funded by the Howard/Pauline TIF, and the Edgewater Intelligencer has detailed the role of the Edgewater Community Council in advocating for the outer drive extension and landfill, in spite of overwhelming and vehement opposition to this project by the bulk of Edgewater, Rogers Park, and Evanston voters. Additionally, the organization is promoting the construction of a large wind farm at Edgewater Beach, a massively expensive and unsightly "greenwash" boondoggle to be financed by the taxpayers, as part of their Edgewater Environmental Sustainability Plan.

They also possess power over member and non-member businesses and development alike in their respective communities, and often do not hesitate to exert themselves to obstruct and harass businesses whose owners are not in their club, and have a tendency to reserve control of their organizations to a handful of powerful members.

Worse, these organizations have a voice in decisions affecting the entire city, such as the Outer Drive extension and park landfill, that was not granted them by the citizens of this city, and is often inimical to their interests and bank accounts. I don't remember electing any of the members of the ECC nor did I deputize them to speak for me on the matter of the Outer Drive extension.I did not vote to support them and other community organizations with my taxes, nor did I vote to support their positions on other issues, such as labor laws, zoning, the proper business mix for an area, and who shall be allowed to do business in the area and who should not.

Yet the City of Chicago has granted these organizations not only a significant chunk of our tax revenues when these groups are considered together, but a considerable degree of power over their respective communities, and a significant voice in major local affairs. It is not encouraging that the U.S. Supreme Court has voted to accord corporations the status of  "person", thus granting corporate organizations additional power without the accountability of a live, human person.

Should a 503(c)(3) tax-exempt non-profit organization be permitted to lobby for legislation favorable to their members, or for anything at all? Should an organization with defined, limited membership, existing for the benefit of that membership, be permitted to rule the entire community and foist unwanted public works projects on it, and decide which businesses will live or die? 

This is not meant to disparage the many fine community organizations and Chambers of Commerce that play a major role in improving their communities and building solid, desirable businesses in them. These organizations are often very beneficial.They often beautify the community by voluntary efforts, with plantings, banners, and other small enhancements, and they often are of real assistance to businesses starting up in their area. Some even provide valuable assistance to individual members in the form of business and legal advice, and access to financing. However, no matter how positive a role in the community a particular organization may play, it exists to serve its own members or a small constituency, and it should be supported strictly by voluntary contributions.

Most of all, these organizations should not be able to wield power not granted them by the citizenry, nor claim to represent us in matters that affect the entire community. They should not be permitted to hound a harmless little business out of existence, and they should not be able to use taxpayers' funds to lobby for legislation and projects that involve the expenditure of hundreds of millions of dollars in tax revenues and the disruption of tens of thousands of lives. The members of the ECC and other community organizations are surely entitled to their personal views and are entitled to voice them, but not with our money, nor should they be given authority in these matters not granted them by the voters.

Thursday, May 13, 2010

State of Illinois Funds Coal Mining: $1.6M Grant to International Coal Group, Inc.

in fiscal year 2009, the Illinois Department of Commerce and Economic Opportunity gave International Coal Group, Inc. (ICG, Inc.) of Williamsville, IL $1,664,250 for grant number 09-483006. According to the DCEO’s Grant Tracker website, grant number 09-483006 was part of the Coal Competitiveness Program, which “encourages communities and businesses to improve the coal extraction, transportation and utilization systems within Illinois.” This specific grant was for the construction of a new production portal.

Meanwhile, the resolution to repeal the moratorium on further nuclear development has gone to the state assembly. 

Why are we subsidizing coal production while obstructing nuclear, the most efficient and powerful means of energy production on earth?

Could it be that coal is a safer and cleaner form of energy? No, because coal has killed more people both directly, as a result of mine disasters, and indirectly, by pollution-induced illness, than any other form of energy, while the 104 nuclear power plants in the U.S. have not killed a single civilian in the entire history of the industry in this country. 

Could it be, instead, because the coal lobby is one of the most powerful in IL, and because we still have a substantial number of people employed in high-wage, though deadly, jobs as coal miners? 

It's time to ask why we are promoting and subsidizing the dirtiest and most lethal form of power generation while obstructing a set of technologies that could extend the fuel cycle for a thousand years by means of more elegant and efficient nuclear technologies, such as the Liquid Fluoride Thorium Reactor. And it is really time to question the wisdom of so-called "renewable" technologies that are diffuse and grid-destabilizing without the backup of fossil fuels like coal. How  clean and renewable can the "renewables" really be if they're only reliable with the "backup" of coal and gas, two forms of energy proven dirty, destructive, dangerous, and subject to depletion in the next couple of decades.

Wednesday, May 5, 2010

Against Nature: Can Our Freedoms Survive Peak Oil?

Many observers in the Peak Oil community are baffled and disgusted by the angry denial of our dire fuel situation and its implications for our future, not only among the general public, but among our well-educated upper-middle class, including many prominent political leaders and intellectuals. The truculence of the general public is usually attributed to stupidity, ignorance, and "selfishness", and the unwillingness to make sacrifices to serve the "common good"; and the consensus among the aware is that we will have to become a more authoritarian and regimented society, perhaps even impose military law, in order to maintain civil order and assure the equitable distribution of remaining resources. "This country needs a good father," one commentator wrote, and commented approvingly on the regimentation and authoritarianism prevalent in the early 30s, remarking that we might have to impose these conditions again to make it through the hardship and upheaval of the massive shift that is upon us. Rationing is already under discussion, and various additional controls and government-imposed rules regulating use and distribution of resources, are also being discussed, some more seriously that others- and every single one, from the CAFE standards that the auto industry has resisted tooth and claw since their inception 30 years ago, to the government-mandated phase-out of incandescent light bulbs in favor of CFL bulbs and LEDs, is bitterly resented by the bulk of the citizenry, who feel the weight of over-reaching authority in every part of their lives.

That the authoritarianism of the environmentalist and peak oil believers, and their open contempt not only  for common 'merikuns' and their wasteful ways,but for the concept of rights and freedom, might be exactly what triggers denial on the part of so many people who ought to know better, doesn't seem to occur to the environmentalist pundits and policy makers.

It also doesn't enter the heads of the authoritarians that the trends of the past 60 years that have made this country the most wasteful consumer of resources in the world, notably the build out of suburbia, and the corresponding total dependence on autos and trucks by our population, owe not so much to "market forces" or to the democratization of auto and suburban home ownership, as to government policies created by people who thought they knew better than we do what is good for us.

And what our leaders thought was good for us in those days was government-subsidized home ownership, taxation policies that incentivized the formation of large families, and lavish incentives for auto ownership, notably  "free" highways to enable car ownership and facilitate the mass movement of the middle-income population out of the old cities to houses purchased with VA and FHA 3% down loans in new auto suburbs. Meanwhile, civic leaders across the country frantically cast about for ways to revitalize their rapidly emptying cities, and eagerly embraced the vision of urban planners and architects who wanted to demolish the unsightly slums around urban cores and warehouse the poor in high rise housing projects.

In short, it was our authoritarian welfare state that gave us the world's most wasteful and unsustainable built landscape next to Dubai, and is now shoveling the last of our wealth into sustaining and expanding it. This massive misinvestment is questioned by only a handful of our citizens, for our population was inducted by the corporatist nanny state into the passivity, consumerist ethos, and sense of entitlement that have made this country into a quagmire of towering debt and built an economy distorted by multiple layers of government subsidies and programs that reinforce the practices we need to discontinue, and disguise their true costs.

Therefore, we beg the question of just what a super-authoritarian, hyper-regimented Big Daddy regime can do for us that will produce any other outcome than further misallocation of resources in massively expensive boondoggles like the misbegotten high speed rail plan, multibillion dollar gifts to failing, obsolete industries like production home building in the far suburbs and our failing, obsolete domestic auto industry, and most of all, further intrusion into our private lives and restrictions on our personal and economic activities? Will erasing what few freedoms we have left to us and moving entire populations around like chessboard pieces according to the wisdom of a bunch of bureaucrats assure us of an orderly and peaceful transition to a lower energy regime and mollify the tens of millions of people whose expectations and hopes will be crushed but who will be expected to acquiesce to arbitrary authority in the most personal matters, with little or no explanation except for the usual crap about the "common good"?

Will the same government whose leaders have consistently lied to us for 50 years regarding the costs of the high-entropy economy its policies created and who, while knowing full well what the likely outcome would be, recklessly drove the creation of the worst financial debacle the world has ever seen, be able to lead us to any other end than the complete collapse of every system we depend upon for water, food, transportation, and every other necessity of life? And will these leaders be able to offer any other solution to the predicament of a country of 305 million people left with no resources, no means to make a living, and no way to procure food and housing and heat, but a military dictatorship with the complete cancellation of all our rights, vastly amplified state violence, and the death by mass slaughter or starvation of a substantial chunk of our population?

The coming difficult times of shortages, falling living standards, and failing systems will require all the fortitude, flexibility,skills and virtues individual citizens possess, in order to rebuild our communities into places that can sustain and shelter us and our civilized values. And the cornerstone civilized value is individual freedom, which is inseparable from personal responsibility.

Without the liberties, unprecedented in history, that we have secured at such a cost, we're headed straight back to the filth, brutality, and class tyrannies of the past, complete with the entire population enslaved in a neo-feudal society with draconian restrictions enforced by a brutal military.

And responsibility is the virtue that we have to painfully relearn, and in a large hurry, from the bottom of our society with its vast population of welfare entitlement junkies, prolific breeders, and criminal elements emboldened by our irrational justice system, through our middle classes with their passivity, complacence, sense of entitlement, and refusal to reckon costs and make necessary trade-offs, up to our financial elites that have been granted a license to steal trillions of dollars from the taxpayers, and have permitted to use their power to dictate legislation and policies that favor them, to turn this country into a low-wage cesspool, asset-strip the population by fraud and malfeasance, and sell our country to a nation ruled by a thug government ideologically opposed to the freedoms we have enjoyed and abused here.

After all, there is nothing "natural" about guaranteed personal liberty for every citizen regardless of class, color, ethnicity, or sex. The concepts of liberty and unalienable rights are the products of a highly evolved and literate civilization, which is also unnatural, a civilization with a high level of knowledge and technology, and with a broad and reasonably well-educated commonalty dedicated to preserving as much of it as possible, beginning with the philosophy that justified it and made it possible, that of freedom and rights and personal dignity. Without the will to preserve that, and the knowledge of its importance, we'll lose those values and everything that they made possible, including, most likely, our lives.

Sunday, May 2, 2010

Be Afraid

The world won't end in 2012, but life as we know it just might. For those who didn't get the point embedded in the other chart I published a few posts back, here, from the Energy Information (U.S. Dept of Energy) is a more graphic depiction of the depletion of oil supplies, which are projected to "drop off the cliff" in 2012 after plateauing for a couple of years at current levels.

If oil in now at about  $85 a barrel, where will it go when we experience a 5% to 7% drawdown in production? Chevron and other oil producers aren't spending approximately $120 a barrel on risky deep-sea drills because they think they will lose money on it, people.

And how many years will it take to deplete remaining reserves at this rate of depletion? 

Given the hardship and economic turmoil described in this chart, we needn't expect such considerations as the human death toll and environmental consequences of offshore drills and the production of oil from "unconventional" sources (tar sands, deep sea drills) will weigh against the far greater toll should our complex systems that keep our grocery shelves stocked, treat our municipal water supplies, and supply the vast quantities of electrical power we need to live in comfort and have access to comfortable, sanitary living conditions, advanced medical car,and rapid emergency response, never mind the cornucopia of consumer goodies we all feel entitled to.

We are not prepared, nowhere near. We do not have decent public transportation, either for local or long distance travel. We will never be able to build all the nuclear power plants we need once the costs skyrockets due to escalating fuel costs. We do not have the rapid and high speed rail we will need to replace our planes. We do not have the wherewithal either jointly or severally to replace our soon-to-be-unlivable sprawl-burbs with well-insulated housing in dense, walkable towns and cities. We do not have the sustainable agriculture developed that we will need when it becomes prohibitive to use the chemical fertilizers manufactured with oil and gas. Most of us have no savings, let alone a 6 month supply of food. And thanks to the debt debacle of the past decade, we have no capital with which to build the systems we will need to retain our comforts, nor the industries that can supply us with the goods we will need in a different world than the one we live in now.

Maybe the religionists have a point- praying is what you do when you have nothing else left, and it seems appropriate now.

However, we could try to do just a few little things that might help. Since nobody, including all the leftist "greens", seems unduly disturbed by the recent deaths caused by the production of fossil fuels, could we try not to get all hysterical at the mere thought of building another nuclear plant near Chicago, or foam at the mouth because a train loaded with spent nuclear fuel might pass through town sometime. If we can tolerate a mine disaster that kills 29 minors, or a drill rig explosion that claims 11 men and spews oil allover the Gulf, could we front the theoretical hazards involved in a form of electricity generation that has not killed a single civilian in the U.S. or Western Europe in its forty-year history?

Chicago is in the Top Twenty Cities for Foreclosures and REOs: No Shortage of Affordable Housing

Illinois is one of the top ten "scam" states for mortgage fraud and Chicago is among the top twenty cities as ranked by percentage of home sales that are "distressed" sales. Distress sales comprise more than 30% of all home sales in the Chicago area at this time. Click on chart below to blow it up.

So it looks like the rollback in house prices is not over. Rogers Park and other far north neighborhoods are extremely hard hit by foreclosures, in direct proportion to the rash of condo conversions. According to the 2008 report compiled by Lakeside Community Development in 2008, over 3, 600 Rogers Park rentals were converted to condominiums.

Many of these units, which are frankly less than luxurious, are being offered at prices below $50,000, even though financing is not available on many of them and many others are uninhabitable, or are in buildings that are vacant and in boards. Many will be purchased by investors for cash below the prices offered, and fitted for rental. Others will be sold to buyers looking for a bargain-priced dwelling they can afford to invest money and love in without living on Raman Noodles for the next five years. On the city's poverty-stricken south side, the carnage is still more widespread, with many hundreds of beautiful 6 and 8 flats standing empty and in boards, and available to cash buyers for as little as $5000 a unit?

So why are we spending as much a $400,000 a unit for publicly funded "affordable" housing? I have personally counted over 40 units on the multilist in zip codes 60640, 60660, 60659, 60626, and 60645 that are available for less than $40,000 and could easily be made habitable and comfortable for another $20,000. Moreover, I discovered that behind every unit listed lurks a "shadow inventory" or "market overhang" of about 20 units that don't appear on the multilist but sit empty and in default. I personally can't put my finger on the precise number of vacant units, but my rough calculations tell me that we have at least 300 units that are "shadow inventory" between these five areas.

And why are we subsidizing more bad mortgages through FHA mortgage guarantees? Clearly, home ownership is not for everyone, especially in a period of falling incomes and unstable employment, and the government's efforts to re-inflate the housing bubble have so far not prevented prices from falling but have produced another bumper crop of bad mortgages: FHA is now the major subprime lender and recent-vintage FHA mortgages have a combined delinquency and "serious delinquent" or loans-in-default rate of nearly 20%, a really good indication that we're headed for another monster bailout in a couple of years. Bill Zeilinski of Mortgaged Future writes;

 Once again, thousands of borrowers are getting loans they do not stand a chance of repaying. Only now, unlike in the subprime meltdown, Congress would have to bail out the lenders if the FHA cannot make good on guarantees from its existing reserves.

Given the continued high rate of default, high unemployment rates and dropping incomes, and huge inventory of unsold housing, does it make sense to force the taxpayers to back yet another wave of soon-to-default mortgages made to unqualified buyers at prices they can't afford?

And given the massive glut of unsold inventory, much of which is available for less that $40,000 a unit and could be made habitable and comfortable for less than $25,000 a unit, does it make sense to drive honest low-to-middle income homeowners, who bought their places honestly, out of their homes by confiscatory property taxes in order to divert tax money to construct more luxury condos in a glutted market and subsidized "affordable" rentals that cost $400,000 or more a unit to build? 

This is really not about the "rich" folks vs. the "poor" folks, or even the taxpayers vs everyone who wants a gift at their expense. What this is really about is the massive misallocation of resources and money that will be very scarce in the near future, as fossil fuel resources continue down the other side of the slope. The money diverted to wasteful projects designed to sustain the unsustainable, in this case an inflated housing market and tax-funded boondoggles  designed to enrich politician's cronies, is money taken away from the systems and industries we will desperately need to maintain our cities at a reasonable level of amenity and comfort, let alone safety and sanitation, and to have an economy that enable the creation of new industries and jobs. It isn't just our money or our houses at stake here,it's our lives.