Chicago - A message from the station manager

The Weekend Desk Report

By Steve Rhodes

Still on the hunt for a new living space – I’ve had a couple close calls but no deal sealed. Reach out if you know of something and/or someone looking for a roommate.


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Rent Bent
“The inevitability of higher apartment rents isn’t the only threat on the horizon in 2020 for Chicago’s renters,” Don DeBat writes for Loop North News.
“In 2019, rents have increased a modest 1.4 percent year-over-year. Chicago’s median two-bedroom rent now is $1,285, compared with the national average of $1,192, reports a new survey by Apartment List, a national apartment research firm.
“However, tenants leasing in hot lakefront and downtown neighborhoods easily will pay $2,500 to $3,000 a month for a swank two-bedroom layout in a newer, amenity-filled high-rise.”
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“Many professional apartment management companies have stopped taking refundable security deposits, mostly to avoid the massive bookkeeping work to compute the tenant’s tiny annual interest earnings of 0.01 percent as required by the Chicago Landlord Tenant Ordinance. The annual interest payment typically costs a landlord only a few cents a year per unit, but it is an accounting nightmare for major management firms. Imagine sending out 20 cent checks to thousands of tenants every year. The cost of the postage stamp would exceed the interest payment.
“Significant application, move-in, and pet fees generally have replaced security deposits in the downtown rental apartment markets. Application fees range from about $80 to $100 per renter. Non-refundable move-in fees start at about $350 and go to $500. Some landlords also charge move-out fees.”
Security deposits were supposed to be used to motivate renters to keep an apartment in good shape, lest they end up having to pay for the repairs. They were not intended to generate revenue. But apparently that’s not how landlords see it – are they really such an accounting nightmare? C’mon – and now they just take your money as a move-in fee for the cost of . . . you moving in? It’s a rip-off, plain and simple.
Intended Consequences
“As a new task force formed by Mayor Lori Lightfoot explores ways to increase affordable housing in Chicago, developers have a warning: Beware of unintended consequences,” Crain’s reports.
Here we go!
“Residential developers worry the panel is a first step in the city’s push to strengthen a Chicago ordinance requiring them to include affordable apartments or condominiums in their projects. And they’ll be relying heavily in the coming months on a familiar argument: that tougher regulations would be counterproductive, discouraging rather than encouraging the creation of housing in the city.”
Tougher regulations certainly wouldn’t prevent the creation of more affordable housing in the city. If they discourage the development of more unaffordable housing, so be it – though I doubt developers would simply stop building. That’s how they make money.
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By the way, why characterize the rules as “tougher” instead of, say, “fairer?”
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Anyway . . .
“City housing officials say there’s not much data to support that conclusion [that “tougher” rules will discourage development]. But many developers say the current rules, last revised in 2015, already have had a negative impact.

“All they do is restrict development,” says Jim Letchinger, founder and CEO of Chicago-based JDL Development.

Data, please.
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“With the [Affordable Requirements Ordinance], [Lightfoot’s] challenge is finding the regulatory sweet spot: the optimal level of regulation that produces more affordable housing without depressing development.”
But I thought the city just said there is no data to support the notion that regulation that produces more affordable housing produces development.
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Also: Maybe it’s good to develop more affordable housing while “depressing” development overall! Maybe that’s the sweet spot!
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“Developers have never been the most sympathetic bunch, and they certainly aren’t these days. They’ve profited from one of the biggest apartment booms in decades, charging high rents and selling projects for much more than they cost to build. But rising prices for construction materials and labor have cut into profit margins, and raising money for new projects is getting harder amid concerns about rising property taxes, they say.”
So it’s not enough that developers have been raking in the dough for years at historic levels; now we have to insure that “rising prices for construction materials and labor” don’t cut into those hefty profit margins and they make just a little bit less?
Also, rising prices for construction materials means that companies who produce those materials either have to cover their own rising costs or are trying to increase their own margins. Why should we favor developers over them?
Further, rising labor costs means that laborers – real people with real families – are making more money, though probably not considerably more. Is that a bad thing? Maybe they haven’t been getting a fair wage all this time considering how much developers have been making in a historic building boom.
Let’s not just frame this as developers vs. people who need affordable homes – though that should be enough.
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“For developers, the economics are simple: If the government makes something less profitable to produce, businesses will make less of it. Typically, government regulations reduce profits by imposing higher costs on businesses. But the ARO depresses profits by decreasing the rental revenue a building can generate, sometimes by so much that a developer won’t move forward.”
Yeah, not so much. Do auto companies produce fewer cars because the government imposes standards such as, “This car will not blow up when you turn the key?” Do food companies produce less food because the government requires the food not be poisoned?
If the answer to those questions are Yes, so be it. I suspect that answer is No because of supply-and-demand and greed – folks in business still want to make money.
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Also, what of the cost imposed on government (and society in general) of a lack of affordable housing? Or perhaps developers are suggesting that affordable housing is the government’s business, and they are more than willing to pay taxes (along with everyone else) to see to it that it gets built and our people are adequately housed. I would go along with that! Just make sure the subsidized housing is, um, contained within market-built housing so as to not repeat the horrors of stacking poor people on top of each other
Oh, wait, that’s what we’re trying to do in the first place!
(And by the way, “affordable housing” isn’t just for the poor; it’s for all of us who aren’t rich.)
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“A couple of years ago, Chicago developer David ‘Buzz’ Ruttenberg was drawing up plans for a 40-plus-unit condo project on Orleans Street on the Near North Side. But Ald. Walter Burnett, 27th, who represents the neighborhood, wouldn’t approve the plans unless 20 percent of the units were classified as affordable, Ruttenberg says.

“We couldn’t afford it, so we took a pass,” says Ruttenberg, chairman emeritus of Belgravia Group.

I did a quick search this morning and couldn’t find more on this deal, but I’d like to have it vetted before it’s repeated. I did find plenty of deals Ruttenberg did in conjunction with Burnett. I suspect “couldn’t afford it” means “couldn’t make as much money as we wanted to,” but so be it. What would Ruttenberg have the city do? If the market was building enough affordable housing on its own, the city wouldn’t have to impose any regulations on developers to do so.
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By the way, if you haven’t figured it out already, Ruttenberg is a millionaire.
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State TV


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New on the Beachwood . . .
The Beachwood Radio Sports Hour #287: The Houston Asterisks
The rules were clear. Plus: Pathetic Playoff Picks; Louisiana State’s Universe; Bye Bye Bourbonnais; Is Jonathan Toews Back?; Bulls Midseason Report: It’s The Underachieving That Stands Out; Red Star Rachel; Klopas Is Back; and Illinois Starts To Hoop It Up.
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ChicagoReddit

Wanting to move to Chicago to work in a Michelin star restaurant any advice on making that feasible? from r/chicago


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Weekend ChicagoGram

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#weather #Chicago #snow #singledigit #view #photography #paisajeinvernal

A post shared by Gloria N. Lopez (@layoya) on


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Weekend ChicagoTube
The Handcuffs at Montrose Saloon last Sunday night.

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Weekend BeachBook
A sampling of the delight and disgust you can find at our Facebook page.
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Catholic Church Shields $2 Billion In Assets To Limit Abuse Payouts; Surely Going To Hell.

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In God We Trust, But Which One?

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At The Bottom Of The Sea, They Wait To Feast On Alligators.

The true nature of nature.
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Weekend TweetWood
A sampling of the delight and disgust you can find @BeachwoodReport.


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Republican operative booed at convention.


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The Weekend Report Rip & Tip Line: Conscious conscience.

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Posted on January 19, 2020