All Forum Posts by: Sid Franklin

Good luck with that theory!  It's happening NOW.

http://www.wirepoints.com/its-happening-wp-origina...

"It’s not just happening, it’s worsening. The most recent news marks a death spiral in full swing. Population is shrinking, the tax base is eroding and the state’s revenue is declining, all while the underlying causes remain unaddressed and debt soars for the state and most of its municipalities.

One credit rating agency last week finally conceded that death spiral, at least tepidly. “A self-reinforcing cycle of population loss and economic stagnation could greatly complicate Illinois’ efforts to stabilize its finances,” Moody’s wrote. That’s important because rating agencies have shamelessly focused on the short term, cheering tax increases that cover debt service for the moment but ignoring the long term effect of driving off taxpayers. Well, the long term has arrived.

The press remains complicit by missing the full scope of the crisis. Major stories are ignored. For example, a recent RealtyTrac study found a stunning 500,000 Illinois homes — nearly 20% of houses in the state — with seriously underwater mortgages. That is, the mortgage balance exceeds home value by at least 25%. I was asked about that yesterday by Dan Proft while taping for his Illinois Rising radio show that airs on Sunday. He’s about the only one to recognize how horrible that fact is in itself. He asked me afterwards to provide the source the numbers I discussed. (It’s linked here, and kudos to Proft for being conscientious about facts.)

Most political reporters have long mocked doom and gloom about our problems. They ridiculed the “Illinois is Broke” campaign of The Civic Federation and the comment by Ty Fahner of The Civic Committee that Illinois’ pensions may be “unfixable.” They ignore superb research long produced by the Illinois Policy Institute. One long-time member of “the sky isn’t falling” crowd came around recently — almost. That’s Rich Miller, the most influential political reporter in the state. He wrote last week that Illinois is in danger of becoming a “failed state.” But what’s his solution? “Throw [Gov. Rauner] a bone or two” on his reform agenda. No. The list of reforms Rauner initially wanted is down from some 44 items to just three or four. Illinois should be implementing the whole initial list, and more."

Why would anyone go all the way to Detroit when they can just go to the south side or west side to see the same burned out neighborhoods and blight?  I know, it'll never happen...I heard that in 2005, 2006 and 2007.

The poor on welfare and reliant on other government assistance are not the people moving out of Chicago. The poor will quickly outnumber the rich in Chicago and they likely won't be voting for candidate's willing to hold the line on taxes, government assistance and pay and benefits for government employees. It is middle class taxpayers seeking lower taxes, better schools and less crime that are depopulating Chicago, Cook County and Illinois. Once a neighborhood loses its middle class taxpaying citizens, it might as well be Detroit when it comes to real estate values and tax revenues generated.  The north side then gets to make up the difference.

It won't be a problem, until it is.  Population declines due to property tax hikes, crime and bad schools are what created Detroit's death spiral.  If the West side and South side resemble Detroit (and their next to nothing real estate values) who do you think will pay for it?  The Chicagoans living on the north side, that's who. That's why Rahm needs to hire 1000 new cops without the resources to pay their salaries and pensions. Those that stick around rather than moving to avoid the tax hikes will have to pay ever increasing property taxes and deal with the ever increasing quality of life issues because of population loss in other parts of the city.  Why won't Chicago become like Detroit?  We certainly aren't doing anything different when it comes to governmental decision making.  

From MSN Money today.

http://www.msn.com/en-us/money/markets/chicago-new...

"The Windy City has become a poster child for financial mismanagement, having suffered a series of ratings downgrades in recent years. Aside from having thin reserves and large volumes of outstanding debt, Chicago is notorious for its underfunded pension plans."

self-reinforcing cycle of population loss and economic stagnation" in

http://capitolfax.com/2017/01/05/moodys-frets-over...

https://rebootillinois.com/2017/01/06/only-in-illi...

From Moody's: "Population loss can be a cause, as well as an effect, of economic deterioration. A self-reinforcing cycle of population loss and economic stagnation could greatly complicate Illinois’ efforts to stabilize its finances. Even assuming the state reaches a consensus on addressing its current operating deficit and benefits from steady economic growth, Illinois’ pension funding requirements as a share of budget likely will rise to 30% (from about 23% currently) in coming years."

The IPI is a bit of a right wing rag but this story should be a wake up call for ALL Illinois real estate investors and homeowners.

https://www.illinoispolicy.org/moving-out-illinois...

"Another troubling sign is the increasing flight of wealth and earning power associated with those moving out of Illinois. Migration data from the Internal Revenue Service, or IRS, show that as of tax year 2014, the average income of taxpayers leaving Illinois was $77,000 per year compared to an average income of $57,000 per year for those moving into Illinois. This $20,000 differential between the average earnings of those moving out compared to those moving in is the worst in Illinois history and the worst in the country."

Still no plan on how to pay for 1000 new cops in surge to address rising violence in Chicago.

http://chicago.suntimes.com/politics/the-watchdogs...

Even if Mayor Rahm Emanuel manages to add nearly 1,000 cops in the next couple years, his promised surge of new hires would barely make up for the decline in the Chicago Police Department’s ranks on his watch.

There were 6,244 rank-and-file police officers working the city’s 22 police districts as of Oct. 19, records obtained by the Chicago Sun-Times show. That’s down more than 800 from the 7,047 beat cops shortly after Emanuel took office in 2011.

http://www.chicagobusiness.com/article/20161121/BL...

"We believe we will lose the court case," concedes Steve Lux, the district's chief financial officer. So, as per a preliminary court ruling, both the district and workers are back on their lower, previous funding schedule, even though as of Dec. 31 the park district's pension fund was roughly $515 million short of the assets needed to pay promised benefits, and was only 43 percent funded.

http://chicago.suntimes.com/politics/cps-board-pas...

More bad news from CPS - CPS prospectus includes mention of “hypothetical bankruptcy”

http://mobile.reuters.com/article/idUSKBN13V2VM

Chicago's public school (CPS) system plans to sell a new type of bond issue in an attempt to separate the debt from the district's severe financial woes and protect it in a potential bankruptcy filing, according to a document released by the district on Tuesday.

The preliminary prospectus for the debt indicates the Chicago Board of Education will issue $500 million of bonds secured solely by a capital improvement property tax and not by the district's general obligation pledge.

That pledge currently covers about $6.8 billion of existing bonds that are rated junk by Moody's Investors Service, S&P, and Fitch Ratings.

CPS, the nation's third-largest public school system, is struggling with pension payments that will jump to about $720 million this fiscal year from $676 million in fiscal 2016, as well as drained reserves and debt dependency - factors that have pushed its GO credit ratings deep into the junk category and led investors to demand fat yields for its debt.

Illinois Governor Bruce Rauner last week vetoed a bill to give CPS a one-time $215 million state payment to help cover pension costs.

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Ratings for the new bonds, backed by a $45 million a year property tax levy approved by the Chicago City Council in 2015, were not available. Because that tax revenue can only be used to fund capital projects and not operations, CPS is hoping bondholders will consider the debt a safer bet than the district's GO bonds.

A CPS spokeswoman could not immediately be reached for comment.

CPS cannot currently file for municipal bankruptcy in Illinois, although there have been attempts to change state law to allow such a move. The prospectus includes legal opinions on a "hypothetical bankruptcy" by CPS that conclude payments on the new bonds would not be automatically stopped by a federal bankruptcy court and that bondholders would retain a lien on the tax revenue.

The prospectus was released a day before the schools' governing board, appointed by Chicago Mayor Rahm Emanuel, votes on an amended fiscal 2017 budget to account for a new contract with teachers. The bond issue is tied to a bigger capital plan CPS announced last week.

The bonds, to be priced through Barclays and J.P. Morgan, carry term maturities in 2036 and 2046.

(Reporting by Karen Pierog; Editing by Matthew Lewis)