The Chicago Community Development Commission yesterday unanimously approved $51 million in tax-increment financing for the redevelopment of the Old Main Post Office, Crain’s Chicago Business reports.
It’s one of the largest subsidies granted by the city in recent years, according to Crain’s. The TIF, requested by developer Walton Street Capital, L.L.C., will fund 17 percent of the estimated $310 million it will take to convert the building into 300 condos, a 236-room hotel and 450,000 square feet of office space. Under Walton’s plans, an additional 800,000 square feet of the massive 2.5-million-square-foot Art Deco building will be demolished.
Crain’s quotes a report from the Department of Planning and Development that says, “Without this assistance, the developer would not achieve reasonable rates of return, and therefore, would not undertake the project.”
Which TIF is this money coming out of? Or are they going to try and pull a fast one and sneak the money from a boarding TIF (which they have power to do)
It’s the Canal/Congress TIF District, according to the story.
“Without this assistance, the developer would not achieve reasonable rates of return, and therefore, would not undertake the project.”
there’s the real nut of the matter, I hear this same line parroted verbatim at every development proposal where TIFs are being sought – so perhaps one of the professionals can weigh in here, what exactly is considered a “reasonable” rate of return?
The cynic in me suspects many of us can only dream of such rates in our investments…
One doesn’t need a subsidy to push the rate of return up to the ‘reasonable’ level. Just pay less for the property up front. I find this just amazing, a billionaire getting that kind of handout. Thank you sir, can I have another?
I bet that as part of their reasonable return calculation, they included an ungodly amount for the developer fee as an expense.
TIFS are necessary, but like everything else involving government in this city, county and state they are abused. I don’t know enough about the specifics of this TIF use to comment directly.
However, it seems to me that if a TIF were denied then the purchase price of the property would have gone down accordingly. Assuming it was worth more than the proposed TIF.
If you want to see some of the TIF abusers just browse some of the TIF information at http://www.ncbg.org/
I find it interesting that the same developers who are receiving TIF funding are some of the same that have had quality problems. IT makes me wonder why these issues go unreported, and if there is some sharing of the TIF money behind the scenes.
Goto Pages 112 to see some of the past projects (note the developer LLC is shown, not the developer)
http://www.ncbg.org/documents/TIF%20ALMANAC%207%2003.doc
TIFs are not necessary. Some government intervention for capital improvements in really depressed areas might be, but that doesn’t make a TIF, an example of too much govt red tape in addition to a wealth-redistribution scheme, the proper instrument to address them
by the way, the silence is deafening regarding my query on what a “reasonable” rate of return is, particularly considering this is a website run by people in the industry.
so, fine. if developers and politicians want to keep wasting everybody’s time, energy and tax dollars playing this little game, communities will simply continue to fight back.
Carter,
If we knew the answer, we’d provide it. It’s going to fall into a wide range of numbers, the high end of which would probably make you want to vomit.
You’re dependent on your elected officials to ensure that a “reasonable” rate of return is, in fact, reasonable.
Investment returns in real estate need to be high – by some investors’ standards – to compensate for the level of risk involved.
One of those very significant risks is that – to use your words – “communities will simply continue to fight back” thereby stretching out timetables, causing revisions to plans, incurring any number of unpredictable expenses.
a quite reasonable response, thanks.
so how do folks in your biz feel about this new zoning “simplification” concept the City is dangling?
I have no problem with people making money in the building trade, I have no problem with people making lots of money in the building trade – I do hate dealing with overly aggressive developers who want the moon, I view it as a waste of everyone’s time, it causes all sorts of arguments in our neighborhoods, distracts from more important issues, it can monopolize our elected officials’ time, etc.
I need to read that history of zoning book that came out last year, anyone done that yet?