Rahm Bails On Financial Crisis; Homeowners Brace For Tax Tsunami
Who is the smartest politician in Chicago?
Of course, it is Rahm Emanuel who decided not to seek a third term as mayor of the Windy City on September 4th. If only the captain of the ill-fated Titanic would have been this astute before its maiden voyage.
Chicagoans should have guessed that political shift was underway when Rahm’s powerful City Council floor leader, Ald. Pat O’Connor (40th), 64, announced on August 30th that he was retiring from politics.
It is obvious that two of Chicago’s most powerful politicians looked into the crystal ball and saw the future of the city’s catastrophic finances and the monumental $28-billion public pension debt much more clearly than the hapless home and condominium owners.
“Every property owner in Chicago fears that next year we are going to be hit with a tsunami—the largest real estate tax increases ever billed on planet earth,” said a Logan Square 3-flat owner who recently was slapped with a whopping 73% reassessment hike from Cook County Assessor Joe Berrios.
Is the city’s overwhelming financial crisis so bad that the political kings are exiting the sinking palace like rats and swimming up the Chicago River before the perfect storm hits?
For those investors who hope to survive financially, selling their multi-unit apartment buildings for top dollar and making an exodus from the Windy City while prices still are at record highs may be the smartest answer, experts say.
In fairness, Mayor Emanuel inherited the police, firefighter and school-teacher pension mess from former Mayor Richard M. Daley, who had kicked the debt down the road.
However, Rahm has forced taxpayers to dig deeply into their pockets for more than $2 billion in tax hikes, including $1.1 billion in property tax increases, hefty water, sewer and telephone fees and new levies for garbage collection. This has resulted in hefty rent hikes for thousands of apartment dwellers.
While Rahm still has eight more months in office to try to solve the crisis, his only hope is a pie-in-the-sky proposal to sell $10 billion in pension-obligation bonds.
“I’m exploring these pension-stabilization funds to secure the pensions and lessen the pain of future taxes,” Emanuel said.
While analysts likely will spend the next eight months postulating on who will be Rahm Emanuel’s successor, there is no doubt about the mayor’s accomplishments.
Here are a few of Emanuel’s brightest successes in the world of real estate development, affordable housing and tech jobs:
• The Riverwalk. Rahm’s treasured downtown Riverwalk likely will stand as one of his lasting achievements. It transformed the polluted Chicago River into a tourist magnet.
• Downtown development. Rahm will leave office while the city’s real estate market is booming and developers are breaking ground on a plethora of billion-dollar skyscrapers and residential towers, both luxury rental and high-end condominiums.
Plans call for $12-billion in mixed-use development coming to a former industrial site on the Chicago River and a stretch of the river near the South Loop.
One of the proposed sites is the Lincoln Yards project on the North Branch of the river. Thanks to Emanuel’s efforts, this old industrial neighborhood of steel furnaces and junk yards now is scheduled for office and residential uses.
Long vacant, the 2.8-million-square-foot Old Main Post Office in the West Loop now is under rehab and Walgreen’s announced it will move much of its office operations there.
Another booming new West Loop neighborhood is the Fulton Market district, which has gone from meat-packers to plush restaurants, hotels and apartments. Not far away is the 606, a jogging and bike trail that runs from Bucktown to Logan Square, boosting real estate values along its route.
• South Side development. Chinatown received a new library, a boathouse in Ping Tom Memorial Park and other public works upgrades on Rahm’s watch. He also coaxed large grocery chains, including Whole Foods, into opening stores in the South Side’s food deserts.
• Affordable housing. Rahm pushed through the Affordable Requirements Ordinance that set stricter guidelines on levels of affordable housing in some new developments. Another program would expand the city’s rules regarding transit-oriented development to parcels along CTA bus lines. It would eliminate the developer expense of building a parking space for each dwelling unit.
This year, Rahm proposed the Building Neighborhood and Affordable Homes pilot program which would provide $40,000 to $60,000 in down payment funds to qualified applicants who buy a home built through the $1-per-lot program. Purchasers would be required to live in the home for 10 years.
• Transportation. Rahm earned points in the African-American community for redevelopment of the 95th Street Red Line Station and planning the southern extension of the Chicago Transit Authority’s Red Line.
• Tech jobs. Employment in Chicago’s tech sector grew by 35,290 jobs between 2010 and 2015, a growth rate of nearly 35%, according to a report by the Building Owners and Managers Association of Chicago.
That’s an impressive record for any mayor of a major U.S. city. Rahm Emanuel is only 58 years old, a savvy Washington, D.C. political veteran and former Congressman and White House chief of staff to President Barack Obama.
In two years, Rahm will only be 60 years old. Obama said: “Rahm Emanuel has been a tireless and brilliant public servant. Chicago is better and stronger for his leadership, and I was a better President for his wise counsel at a particularly perilous time for our country.”
With President Donald Trump in the White House, times seem even more perilous today. Don’t be surprised if Rahm Emanuel is nominated by the Democratic Party to run for President in 2020.
For more housing news, visit www.dondebat.biz. Don DeBat is co-author of “Escaping Condo Jail,” the ultimate survival guide for condominium living. Visit www.escapingcondojail.com.