All Forum Posts by: Sid Franklin

Little Village (near Lagunitas at 2607 W. 17th St), Bridegeport (Halsted and 35th near Nana) McKinnley Park, Bronzeville, Brighton Park and Gage Park are all communities that may be more attractive to Gen Y (until they have children) gentrifiers because of low cost of rents and the ability to purchase property and pay off student loan debt at the same time.  If restaurants and bars stop to pop up in these neighborhoods that are popular with 20 something northsiders my bet is that these communities will benefit from a population shift of Gen Yers south and west who are intent on keeping housing costs low to stay in the City.

Without good schools (or declining schools), property values in Logan Square, Humboldt Park, Albany Park,Old Irving, Avondale, Portage Park, Bucktown, Wicker Park and Lincoln Square may see a decline in property values.  When the soccer moms (and dads) start to bad mouth CPS class size and talk about moving to the suburbs at cocktail parties, the sentiment among parents in CPS in gentrified neighborhoods will likely change.  If crime increases because of cuts, that will be a killer (no pun intended) to property values.  I agree with your opinion that these are good gentrified areas and up and coming areas, however, the "word is out" already on these neighborhoods and when the tax hike hits - combined with school cuts - it might be better to wait for a price decline before investing in these areas.  I think some new areas are likely to pop up that have not been touched but have similar qualities to Old Irving, Avondale, Portage Park (proximity to public transportation is key) but haven't had values spike because of early development.  Investors need to look "out of the box" in Chicago if they are to see rising values and make money in what's likely to be a down market for years to come in Chicago's gentrified and newly gentrified areas - unless the City can solve the CPS issue.

Even though Ald. Pewar voted "yes" on the tax hike, not a penny of the taxes will be going into classrooms, parks, or additional policing.  90% of it will go towards paying police and fire pension debt (skipped by previous generations) - and nothing else.  If the Legislature and Governor don't alter the "ramp" on the City's current police and fire pension payments, the tax hike is not enough to satisfy state law and prevent state tax dollars from being diverted from the City and into the pension funds.  IIf that happens another tax hike will be necessary to fund operations.  A small portion of the tax hike will fund school construction but there's no guarantee that Bell - that just had a large addition put on - will see a penny of that money.  CPS pension debt is even larger than the police and fire debt and there's no plan - other than the State giving the City the money - on how to pay it.  If the City skips a payemnt to keep teachers in classrooms next year, lawsuits will be filed by retired teachers worried about a CPS insolvency.  I hope that Ald. Pewar can figure out a way to get dollars into classrooms, lower class sizes, improve Chicago's neighborhood high schools (or at least Lakeview HS) keep our parks clean and our streets safe without raising property taxes even higher.

Brian - I think a concern those of us owning in gentrified areas should have is that if this tax hike destroys property values in non-gentrified areas, then City revenue collections will fall in those non-gentrified areas (think pockets of Chicago like Detroit).  If that happens, gentrified areas of Chicago and the business districts will be asked to pay additional taxes to make up the loss of revenue.  This phenomena will then further impact the price of rent in gentrified areas or lead to Millennials and Gen Y (without children) moving into cheaper parts of the City where they can buy.

Thanks for sharing your thoughts on gentrification!  Great post!  What are your thoughts on how the quality of the Chicago Public Schools will impact Millennials who have kids - or are planning to have kids - decisions on Chicago neighborhoods or the suburbs.  Currently, class size in good schools in gentrified neighborhoods is at or over 30 kids in a class from 1st grade on through high school.  Many parents are worried that additional cuts to teachers are on the horizon unless CPS gets bailed out by the State this month.  How do Millennials plan to educated kids while living in Chicago?  Are many planning on paying for private school instead of sending their children to CPS?  As Chicago's taxes start to get closer to suburban taxes, won't some opt for the suburbs if they believe the schools are vastly superior?

Here's a good story about the next gut punch for Chicagoans and possibly, property values:

http://chicago.suntimes.com/chicago-politics/7/71/...

Does anyone think that Chicago's record tax hikes and the possibility of a tax exemption for property's under $250K will lead to a new round of gentrification largely driven by Millenialls wanting to live in the City but not wanting the costs of staying in neighborhoods that are already gentrified?

What neighborhoods will win with gentrification increasing values?

What neighborhoods will lose value as Millenialls move to greener and cheaper pastures?

Will Millenialls leave the City for the Suburbs?

Will investors chuck the state for areas with more growth potential and more certainty on property taxes and less governmental debt?

http://www.chicagotribune.com/news/sns-wp-blm-news...

Insightful Crain's editorial that  recognizes the need for additional taxes to fix Chicago's debt problems and ensure the schools are strong enough to keep parents with school age Children in the City.  Keep in mind, this is JUST the City - it does not take into account the State and County and other (numerous) taxing bodies that also levy taxes on Chicago's taxpayers.

http://www.chicagobusiness.com/article/20151031/IS...

Good Crain's article on the politics behind the tax hike.

Emanuel burns his base with his 2016 budget

http://www.chicagobusiness.com/article/20151021/BL...

Good Crain's article on how commercial properties will be impacted by the proposed property tax hike.  It also discusses how assessed values for downtown locations are skyrocketing creating a double whammy for many commercial property owners.

http://www.chicagobusiness.com/article/20151017/ISSUE01/310179999/reassessment-on-top-of-emanuel-tax-hike-stresses-chicago-property

"Emanuel intends to begin phasing in his $588 million tax increase next year, just as new valuations by the Cook County assessor are used to calculate tax bills. Based on current assessment levels, the tax hike, the largest in city history, could jack up total tax bills by as much as 18 percent over four years, his administration has said.

But citywide, the assessed valuations of commercial and industrial properties also are climbing, reflecting the steady run-up in real estate prices since the recession. From Lakeview to North Michigan Avenue, the median assessed value has shot up by more than one-third since the 2012 assessment, according to a Crain's analysis of assessor records. In the area that includes most of the Loop, the increase tops 50 percent and could go even higher as the complicated process of valuing trophy assets proceeds."

More insight on the size of Chicago's debt.

http://chicago.suntimes.com/chicago-politics/7/71/...

In proposing a four-year, $543 million increase for police and fire pensions, Emanuel is making a rosy and risky assumption that, if he