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.
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Showing posts with label property taxes. Show all posts
Showing posts with label property taxes. Show all posts
Tuesday, November 16, 2010
Sunday, May 2, 2010
Chicago is in the Top Twenty Cities for Foreclosures and REOs: No Shortage of Affordable Housing
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.
Monday, February 1, 2010
Will Making Everyone Poor Help the Poor?
More and more of us every day are losing the War on Poverty.
You might have heard of the $5000-range tax bills confronting the less-than-affluent owners of $40,000 shanties in neighborhoods like Englewood and Garfield Park, while Streeterville condos costing $1M or more pay no more than $5000 or $6000, or maybe $8000 at the most in property taxes. You have to wonder why there has been no outcry from the poor and near-poor homeowners who are being robbed of their last little bit of wealth, and who don't have the resources at their disposal to combat this assault.
The suburbs aren't any better. Last week, I was talking to one of our firm's clients, a nice Hoffman Estates man who occasionally makes a tiny stock trade in penny stocks he researches himself, as a hobby. He and his wife are solid in their jobs, have savings, and have had no problems making the payments on their $240K house. But they recently received their new tax bill for $8,500, which is more than double their previous bill, which itself had represented a massive increase over that of a year before. The house might now sell for $180K, which in itself is not a problem for my friend, for he bought it to keep and live in, not to "make money". But the new tax bill will mean an additional $400 a month in payments, which will force this man and his family of four out of their home, especially since his wife was recently laid off her job. My customer is protesting through the usual channels, even though he is so blindsided by this that he can barely cope. The reason for the draconian hike is that the Village is in a bad financial bind due to large mistakes in the allocation of revenues over the past few years, and many of their bets went badly. We can only ask how the village will cure its situation if my friend and about 1000 of his neighbors are forced to walk away from their houses for inability to pay these utterly unanticipated bills, and the city is forced to take possession of their houses, that are often worth less than the mortgages outstanding. There comes a point when people just cannot pay anymore, and the upward-trending line of expenses and taxes is now crossing the downsloping line of personal incomes and employment.
Against this backdrop, the taxpayers of Chicago are being forced to spend $447,000 per unit for "affordable" housing at Wilson Yards, to house 150 very select tenants. Given that there are hundreds of condos all over Uptown, Edgewater, and Rogers Park, many in "move-in" condition, languishing on the market for months on end at price points far lower than this, and many more hiding in the "shadow" inventory, whole developments nearly emptied and unsold, but not showing on the listings, you'd really think that our leaders could mate need with need, and purchase a couple of hundred of these orphaned units to offer as "affordable" housing. While many of these units have suffered from neglect and abuse and surely need substantial work in order to be habitable, an expenditure of $30k-$50K per unit to replace broken plumbing and missing fixtures is pretty small potatoes relative to the cost of the Wilson Yards project. Desperate sellers and foreclosing lenders would benefit, and the neighbors would be no worse off with a "low income" tenant than they are saddled with yet another "low income" housing development in the area, or with the liability for unpaid utilities and assements for neighboring units in their condo buildings that are in default or foreclosure, and are deteriorating into slums through sheer neglect as pipes break in unheated units, and departing foreclosure "victims" strip fixtures and inflict other damage on their units.
It's a good bet that the poor homeowners of Englewood and the middle-class dropouts of the suburbs won't be able to score an "affordable" apartment at Wilson Yards. They will just have to move in with relatives, or maybe find a box under a freeway somewhere. Somebody has to pay for projects like that, and these are the people who are doing the paying. Nobody has ever done a precise calculation on how many people have to sell their houses for inability to pay rapidly escalating taxes, for every "affordable" apartment built at the taxpayers expense.
Will taxing our poor and middle class homeowners into homelessness help house the poor? Why are we dispossessing our working poor of what few assets they possess, such as their little homes they struggled to buy, in order to build "affordable" housing, and destroying the struggling remains of our middle classes to subsidize evermore redundant Big Box retail in the name of "economic development"? The tax revenues lost to TIF districts, tax abatements, and other corporate "gimmes" must be offset by raising property taxes to confiscatory levels, and on the national level, the few trillion dollars committed to TARP, TARF, HAMP, and the rest of the alphabet soup of housing and financial bailout programs, as well as the immense subsidies committed to keeping housing prices levitated beyond affordability to a population whose incomes are falling, is taken from the taxpayers at large, and from other desperate needs. Someone out there remarked that the money committed to housing and financial bailouts as of the end of 2008 would pay for electrified rail service to every city and town with more that 5,000 inhabitants in the country. Aside from the sheer cost to the public treasury and the increasing danger of a treasury default, as the deficit swells and the tax revenues drop because of reduced incomes and business activity, there is the unbelievably twisted thinking of a president who believes that the best way to provide "affordable" housing is to spend our tax money to prop up housing prices at levels that are still above affordability.
In any case, you have to pretty naive and deluded to believe that our local and federal governments have any solutions to the economic problems we're dealing with, or any help for any of us out here. So let's stop asking these people to come up with "solutions". Our authorities are the problem, not the solution. Any "solutions" will be of our own devising, with our own money and effort; and the more of our resources our parasitical and theiving authorites skim from us, the less we'll have to help us deal with the problems our authorities have created and that they're inflicting on us.
You might have heard of the $5000-range tax bills confronting the less-than-affluent owners of $40,000 shanties in neighborhoods like Englewood and Garfield Park, while Streeterville condos costing $1M or more pay no more than $5000 or $6000, or maybe $8000 at the most in property taxes. You have to wonder why there has been no outcry from the poor and near-poor homeowners who are being robbed of their last little bit of wealth, and who don't have the resources at their disposal to combat this assault.
The suburbs aren't any better. Last week, I was talking to one of our firm's clients, a nice Hoffman Estates man who occasionally makes a tiny stock trade in penny stocks he researches himself, as a hobby. He and his wife are solid in their jobs, have savings, and have had no problems making the payments on their $240K house. But they recently received their new tax bill for $8,500, which is more than double their previous bill, which itself had represented a massive increase over that of a year before. The house might now sell for $180K, which in itself is not a problem for my friend, for he bought it to keep and live in, not to "make money". But the new tax bill will mean an additional $400 a month in payments, which will force this man and his family of four out of their home, especially since his wife was recently laid off her job. My customer is protesting through the usual channels, even though he is so blindsided by this that he can barely cope. The reason for the draconian hike is that the Village is in a bad financial bind due to large mistakes in the allocation of revenues over the past few years, and many of their bets went badly. We can only ask how the village will cure its situation if my friend and about 1000 of his neighbors are forced to walk away from their houses for inability to pay these utterly unanticipated bills, and the city is forced to take possession of their houses, that are often worth less than the mortgages outstanding. There comes a point when people just cannot pay anymore, and the upward-trending line of expenses and taxes is now crossing the downsloping line of personal incomes and employment.
Against this backdrop, the taxpayers of Chicago are being forced to spend $447,000 per unit for "affordable" housing at Wilson Yards, to house 150 very select tenants. Given that there are hundreds of condos all over Uptown, Edgewater, and Rogers Park, many in "move-in" condition, languishing on the market for months on end at price points far lower than this, and many more hiding in the "shadow" inventory, whole developments nearly emptied and unsold, but not showing on the listings, you'd really think that our leaders could mate need with need, and purchase a couple of hundred of these orphaned units to offer as "affordable" housing. While many of these units have suffered from neglect and abuse and surely need substantial work in order to be habitable, an expenditure of $30k-$50K per unit to replace broken plumbing and missing fixtures is pretty small potatoes relative to the cost of the Wilson Yards project. Desperate sellers and foreclosing lenders would benefit, and the neighbors would be no worse off with a "low income" tenant than they are saddled with yet another "low income" housing development in the area, or with the liability for unpaid utilities and assements for neighboring units in their condo buildings that are in default or foreclosure, and are deteriorating into slums through sheer neglect as pipes break in unheated units, and departing foreclosure "victims" strip fixtures and inflict other damage on their units.
It's a good bet that the poor homeowners of Englewood and the middle-class dropouts of the suburbs won't be able to score an "affordable" apartment at Wilson Yards. They will just have to move in with relatives, or maybe find a box under a freeway somewhere. Somebody has to pay for projects like that, and these are the people who are doing the paying. Nobody has ever done a precise calculation on how many people have to sell their houses for inability to pay rapidly escalating taxes, for every "affordable" apartment built at the taxpayers expense.
Will taxing our poor and middle class homeowners into homelessness help house the poor? Why are we dispossessing our working poor of what few assets they possess, such as their little homes they struggled to buy, in order to build "affordable" housing, and destroying the struggling remains of our middle classes to subsidize evermore redundant Big Box retail in the name of "economic development"? The tax revenues lost to TIF districts, tax abatements, and other corporate "gimmes" must be offset by raising property taxes to confiscatory levels, and on the national level, the few trillion dollars committed to TARP, TARF, HAMP, and the rest of the alphabet soup of housing and financial bailout programs, as well as the immense subsidies committed to keeping housing prices levitated beyond affordability to a population whose incomes are falling, is taken from the taxpayers at large, and from other desperate needs. Someone out there remarked that the money committed to housing and financial bailouts as of the end of 2008 would pay for electrified rail service to every city and town with more that 5,000 inhabitants in the country. Aside from the sheer cost to the public treasury and the increasing danger of a treasury default, as the deficit swells and the tax revenues drop because of reduced incomes and business activity, there is the unbelievably twisted thinking of a president who believes that the best way to provide "affordable" housing is to spend our tax money to prop up housing prices at levels that are still above affordability.
In any case, you have to pretty naive and deluded to believe that our local and federal governments have any solutions to the economic problems we're dealing with, or any help for any of us out here. So let's stop asking these people to come up with "solutions". Our authorities are the problem, not the solution. Any "solutions" will be of our own devising, with our own money and effort; and the more of our resources our parasitical and theiving authorites skim from us, the less we'll have to help us deal with the problems our authorities have created and that they're inflicting on us.
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