Economic Development

This has been a topic of discussion on here before:

The city council on Monday will consider developer Howard Wakeland's request to rezone nearly an entire block of properties along North Lincoln Avenue.

The council meets at 7 p.m. Monday at the Urbana City Building, 400 S. Vine St.

The properties are west of Lincoln Avenue, between Hill and Church streets, just north of the Illinois American Water plant. The site is currently made up of single-family homes and Wakeland wants to change the zoning from residential to general business-university.

So, um...discuss!

From yesterday's News-Gazette:

Purchase of the Lo property means that, out of 19 properties, only one 7-acre piece would remain to be acquired. Schmidt said the local governments are likely going to have to use their "quick-take" eminent domain authority to obtain that property, which he said is owned by a defunct land trust. Under quick take, the city gets immediate control of the property while a purchase price is litigated.

The next phase of the Curtis Road project calls for building a four- and five-lane road for 1 1/2 miles from Wynstone Drive in Champaign to Wesley Avenue in Savoy. It will cost $12.1 million. Of that amount, $5.7 million will be federal funding, with the county paying $3.7 million and Champaign and Savoy paying $1.6 million each.

Discuss.

Ross Perot has a new (at least it's new to me) website with some educational information including a

slide show on federal revenues and spending and projections for the future.

This link tells it all

Regardless of how you feel about Chicago and/or Illinois politics, bringing the Olypmics to Chicago would be great for Champaign County and the University of Illinois.  So this is good news:

The IOC has picked four finalists in the bidding for the 2016 Summer Olympics.

Making the cut are Chicago; Tokyo; Madrid, Spain, and Rio de Janeiro, Brazil.

Three cities were eliminated from the race -- Doha, Qatar; Prague, Czech Republic, and Baku, Azerbaijan.

Urbana has been aggressive in downzoning and imposing unattractive and costly restrictions on developers.    The restrictions on demolition is a great example where a developer can be 100% in compliance with zoning guidelines, meeting all the costly requirements as required, and not be able to build their project.   City Staff openly admits to property owners that the neighborhood association conspires to decrease the value of properties.   The intention is that a property will become dilapidated to the point where the acquisition price will be affordable for their preferred lower density option.   Neighborhood groups openly admit the same and are leveraging the recent demolition restrictions and threatening property owners with the hassles that await them, hoping they'll donate their property to them or sell it to them at a very low price.   This whole trend has raised some concerns....

Concern #1:  Zoning rules no longer reliable
As an Urbana resident I stand firm that the residents should dictate the zoning rules that guide development.    At the same time, I want Urbana to attract good property owners.   I have yet to hear anyone argue that Urbana does not want good investors.    As a good developer, would you want to invest time and money when you can no longer rely on zoning guidelines?    It can cost tens of thousands of dollars simply to perform due diligence when you factor in architect fees, etc.   If you purchase a old house, your project can be stalled for months or more and rejected on the basis of "historical" even if the argument is irrational.   Whether or you agree with this statement, it is now a huge political challenge to build a building that zoning says conforms with the look and feel of the neighborhood.   

Concern #2:  Disrespect for good developers
I appreciate what the atkins group has done for Urbana.    I was told recently that Brandon Bowersox held up distracting cards while the AG was presenting it's signage proposal to point out how annoying electronic signs are.    He changed his cards every 10 seconds to prove his point.   Every good developer is talking about that and how disrespectful that was at a city council meeting.   While he earns points for being cute and creative, I just don't want good developers to be reluctant to invest in Urbana because they'll be harassed by city council members if they don't like a proposal.   What is said and what is real may be two different things.   There is a perception that Urbana has been taken over by fanatical political activists.   I would much prefer that Urbana work towards building a more positive brand that does not emphasize this sentiment.   We need good examples to look at and need to stop providing ammunition to the idea that urbana is fanatical and unreasonable.  

Concern #3:  Potential Lawsuits
There are rumblings that a huge lawsuit against the City of Urbana is imminent to recover damages as a result of downzoning.    I have also heard that the conspiracy to decrease property value is also unlawful and is likely to face a legal challenge.   Now I'm not a lawyer and this argument may have no merit.   As a citizen I'm EXTREMELY worried, maybe even paranoid.   I appreciate that when you take the value of the best use of a parcel of land pre downzoning and compare it to the best use of a parcel of land post downzoning, the damages can be hundreds of thousands of dollars per parcel.   This might cost the taxpayers $10s of millions if the investors fight and win.    If the legal bills are $400,000 for the nursing home, imagine what they would be in a case like this even if the city prevails.    The political activists thus far have been impressive in their ability to stick it to investors, but what happens if the investors strike back?

Concern #4:  Selling your investment property will be more difficult
Considering all the uncertainty and challenges an investor faces when dealing with the City of Urbana, smart buyers will be including more and more contingencies into any offer.    Imagine receiving an offer where there is a contingency insulating the buyer from the demolition restrictions, zoning boards, and city council.    These contingencies are now required for a conventional project that conforms with zoning guidelines, not just special projects.    A contingency period could last 6 months or more on a conventional investment!

Urbana is going to be announcing budget deficits.   There is the dark cloud of the likely lawsuit against the Urbana School District for failing to protect kids from sexual deviants.    I'm disappointed that Urbana has decided to actively drive away potential investors and harass those who have invested in Urbana.   I want good developers to invest in Urbana and I suspect that the greater majority of people agree with me.   

long post with with hopefully some answers...

I have been reading with interest the continual comments about the County Wide Schools Facility Tax. It has now been approved by every school district in the county by, I believe, a unanimous vote by each individual board. I certainly see that there are myriad questions about the tax and just as many perceptions good and bad about the potential for the tax.

Though I cannot speak for any other school district besides Unit 4, I will try to answer some of the comments that have been asked on this blog...

1. Why go for the Max 1%? 
   Frankly, I don't think the ILGA intended for the TAX to be used as a mechanism for Property Tax relief. I think they intended to try and help school districts by providing another mechanism to fund capital projects. I may be wrong in that belief, but that is what I think. That being said, when the districts in Champaign County got together at the Regional Office of Education to discuss this tax, the key thing that we in Unit 4 talked about was that we would not support this new tax without some kind of relief for property owners. We feel that it is imperative that any reductions that can be made are made. IF we were to ask for 1/4%, we would be able to abate the same 9-10 cents /100 EAV that we are allowed to with this tax (AGAIN IT IS ONLY FOR CONSTRUCTION DEBT AND FACILITIES ISSUES, NOT SALARIES). That abatement in Unit 4 is approximately $15M. That is all the debt we have out and al we can abate with this potential revenue source. People can say all they want that it is not enough and I would totally agree. However, it is all we can do.

   If our only goal was to abate property taxes, then we would simply go for 1/4%. actually it begs the question if we are not going to do anything new other than pay off one type of debt with a different revenue stream, why would any district do that. In order to have construction bond debt, a district had to ask the voters for approval for property tax increases to begin with. Why would a district go back to the voters to ask for approval to do the same thing with a different source of income. Doesn't make sense to go back ask for something you already have

   This revenue source can be used for additional stuff, hence the 1% request. In Unit 4, we can dramatically increase the efficiency of our bldgs and put in A/C. Everyone of us works in an air conditioned environment and I often wonder why teachers and students should be asked to do something different than what we all do... We can also satisfy the consent decree requirements for the additional seats north of university ( yes I know that not everyone agrees with this, BUT it is a legal settlement that past boards agreed to and it is not open for contestation in court). We can update the infrastructure to support the computers needed for today's learning environment. We could build a school south of University if needed. More to come later on this subject. 
   If another district wants to post about their plans, that would be great.

2. Why are you doing to reduce the cost of doing business?
   Since I have been on the board, we have delayed a textbook adoption by one year, saving the interest on $700,000. We have refinanced debt at a much lower rate saving several hundred thousand dollars in interest payments. The night I was elected the previous board cut $2M in annual expenditures, We have bought lower priced energy through co-op arrangements, we have not filled at least 15 positions that I am aware of off the top of my head that have been vacated and we decided not to fill them to save money. Just a name a few of the items...

   Each year staff throughout the district ask the board for programs to increase this or that. The vast majority have been met with good idea, but we can't afford it right now. Even this week we were presented with middle school athletic program additions, last month it was additional foreign language offerings.

   All of these ideas are terrific and the vast majority need to be added as soon as possible. However, they can only be looked at as part of a total budget package. An individual request for $100K in expenditures seems insignificant in a $95M operation, but we get 10 such requests/ideas a month. Those add up to a major deficit.

   2 months ago the board was asked to give a list of programs we would like to add because they are things that community members have asked us to do. That "dream sheet" combined with staff requests added up to close to $28 Million dollars for year!!!! Obviously there is no way we can or will approve that kind of increase.

   On another note, Schools are highly regulated about how we spend and collect taxes. The hold the line/reduce costs items are typically found in the Education fund/Transportation areas. Taxes are levied into individual funds and increases are limited by PTELL. Those hold the line/reduce costs are not generally found in the O and M and Health Life Safety areas. These are generally low Levy's and are not near enough to pay for recurring costs as facilities get older and older. Look at some of the facilities in Unit 4 and the county and you can see just how much cost reduction there is when it comes to stretching the maintenance dollar. Those folks are masters of stretching a dollar for building issues.

3. This is simple a "Bait and Switch"For some this is a tax increase. (those who don't own property in Champaign County)

   For others this will be a tax decrease (those who own property in a district that plans to abate some portion of the property tax bill related to construction debt and who don't spend as much on the retail goods) I suspect a good portion of the 'middle" class will fall in this area at least in Unit 4)

   For others it will be a wash. It will reduce property taxes and you will spend enough on taxable items to negate the property tax savings.

   If anyone is saying that some will not pay additional money in their total tax package (property, income, sales, etc) they are wrong. Some will pay more and some will pay less, most will probably pay about the same... those are the facts.

   However, for the same amount for the property owner, the schools throughout the county could be greatly improved.

   If facilities don't matter, than why do so many people ask me why we can't have facilities like Normal Unit 5? I am asked that often.

I am sure that I will have more later. Especially a detailed plan about how we in Unit 4 will spend this revenue if approved. Including a mechanism for accountability.

If you have any questions, you can feel free to contact me at tomlindw@comcast.net or 217-202-6841

Dave Tomlinson, President
Champaign Unit 4 Schools Board of Education

The editors at NRO wrote a bit about McCain's recent speech, and his cap-and-trade policy proposal.  They were not impressed.  Their piece concludes:

The scariest sentence in the speech was: “If the efforts to negotiate an international solution that includes China and India do not succeed, we still have an obligation to act.” This is posturing in the place of thought. It puts us in the worst possible negotiating position, and confirms that Sen. McCain is not engaging practically with the costs and benefits of his own policy. It indicates a foolish willingness to sacrifice trillions of dollars on the altar of fashionable, though uniformed, opinion and political expediency.

Once you leave reason behind, there is no logical stopping point, and his Democratic opponent will always be willing to one-up him. Sen. Clinton’s reaction to his speech (literally before it was even delivered) was: “Senator McCain’s proposal simply does not go far enough…”

Saw something in the legal advertisements in the News-Gazette last week that caught my eye.  If it runs again this week I will try to give citation to it.

If I read what I saw correctly, the owners of the Melrose Apartment complex on Bradley and Lincoln are being sued for non-payment of their mortgage.  I would be curious to find out how long the current management company has had this complex, what their vacancy rate is, and how leasing is running for the 2008-09 school year.

I've often been told that the New York Times is almost persona non grata around here, but I saw this Saturday, and I thought others here might also be interested in it...

They had an article (can someone find and post a link to it?) that discussed real estate development and vacancy rates.  They did a table  split by decades, and the thing I found most interesting was that of all housing (single-family, apartments, condos, etc.) built since the year 2000, almost 20% of that housing is now sitting vacant.  The other decades are generally running between 2-4% vacancy rates.

I'm afraid this real estate recession we're in isn't going to end well or soon, especially for places like California, Nevada, or Florida.

This is of interest to me, as I just sold and purchased homes in Champaign-Urbana:

– 3,093 homes were sold in the year that ended March 31, compared with 3,355 during the previous 12 months.

That was a drop of 7.8 percent.

– It took an average of 76 days for a home to sell during the year that ended March 31. That compares with a 68-day average for the previous 12 months.

– The average sales price was $152,770 during the year that ended March 31. That was up 2.5 percent from the $149,074 average sales price of the previous 12 months.

Discuss.

UPDATE:  Here are some statewide numbers.

So I went to the Capstone Quarters Condominium Auction Saturday, and it weren't purty...

I had actually gone by earlier in the week to tour the models (you were not allowed in the condos), and the packet they were handing out at that time included a sheet listing the furniture groupings in each unit.  There was notation next to 2 units indicating furniture left by owners who did not complete their sales contracts.  A sheet they passed out on auction day listed the number of leases per unit and 2008-09 renewals.  Each bedroom signs its own lease, and they had 183 leases available.  Only 80 were signed (many units had only one or two of their bedrooms leased) for this year, and only 69 are signed for next year.  I realize it's early, and they can still pick up lessees over the next few months, but still... :-(

At the auction Saturday, they had 60 units up for sale.  10 were sold at absolute, so they sold 7 2 bedroom, 2 3 bedroom, and 1 4 bedroom unit that way.  A total of 25 units sold, out of the 60 offered.  (Approximately 40% sold)

The 1st absolute sale was a 2 bedroom unit for $95,000 to an Asian family.  I did not get a chance to talk to them, so I don't know if they plan on living in the unit or if they plan on renting it out.  The remainder (22 total) of the 2 bedroom units sold for prices ranging from $80,000-$86,000.  The original asking price for these units?  $130,000-$154,500.

The absolute on the 3 bedroom was $116,000.  Bidding on the remaining units got up to $100,000, but they refused to sell at that price.  These were originally $160,000-$180,000.

The absolute on the 4 bedroom was $135,000.  Bidding on the remaining units got up to $120,000, but sale was also refused on these units.  These were originally $180,000-$204,750.

There were several real estate agents in attendance. Some of them own units they bought at the original prices.  For people who were seeing equity evaporate at the rate of $50,000-$70,000 a pop, they seemed to be taking it rather well...or maybe they went home and drank themselves blind.  Wouldn't blame them if they did...

From yesterday's News-Gazette:

Five property owners who have yet to sell their land to the city for the Boneyard Creek Second Street detention project could be faced in coming months with eminent domain lawsuits to take their property.

The city council will be asked Tuesday night to allow the city manager to file eminent domain lawsuits against the five property owners, if the property owners do not sell to the city within 60 days of receiving a final offer.

Discuss.

As a follow-up to this post about the City of Urbana spending more than half-million dollars beautifying Philo Road while not mentioning addressing the crime issues in the area, this information was included in Council Member Lynn Barnes' email newsletter sent out over the weekend:

Calls for Service and Reported Crimes for the area bounded by Florida, Kinch, Colorado and Cottage Grove.

	2005	2006	2007	2008 (YTD)
Calls for Service	1349	1636	1303	324
Reported Crime	554	513	416	89

Discuss.

The NG had three stories yesterday that touched on the Urban League of Champaign County and their quest for a new building.

First, "Urban League wants to downsize headquarters."

Second, "Deal made to sell current Urban League building."

The Urban League, which ran into financial problems last year after it lost two major state grants worth 60 percent of its budget, has been cutting staff and closing programs ever since.

I guess that's one way of putting it.

Third, "Some officials have reservations about Urban League plan," as the Urban League is asking the City to donate a new building to them.

Council member Ken Pirok also said he "definitely will not be supporting" the Urban League's proposal.

"There's no reason to give something away that truly has some value to the city," Pirok said.

The lodge building was appraised at $340,000 in 2004. Pirok said he would support the city keeping the building and possibly reserving it for future city use if none of the six proposals are attractive enough.

City Manager Steve Carter also said the fact that the Urban League's proposal provides no compensation "is a problem."

Discuss.

You may have seen the ads; they've been in the Classifieds section of the News-Gazette for the last few Sundays. 

Today's paper features a story about the Capstone Quarters Condominium Auction scheduled for 4-19.  It says that there are 208 units in the complex, and 60 are being sold at the auction. 

A few questions that I'm dying to get the answer to, and probably won't for a long time:

1.  Are the units that are for sale units that were never pre-sold to anyone, or are these units that had signed contracts but did not close when finished?

2.  How many (if any) of the units in the auction are being sold by current owners who've decided they don't want a condo 1.2 miles from the U of I?

3.  How healthy is the owner's association, and what kind of restrictions are placed on owners?  Who will be managing the association after the auction finishes?

Given the current state of the condo market (a few weeks ago there was a story in the Wall Street Journal saying we currently have a 10 months supply of condos for sale across the U.S., with several thousand more scheduled to come online over the next 6 months), I would think a 70% sales rate is pretty good for this development.

From today's News-Gazette:

John Dimit is expected to be hired as interim executive director of the Champaign County Economic Development Corp,

Dimit, 59, who retired in November as executive director of the Champaign County Regional Planning Commission, stepped down from the economic development group's board of directors last fall. He continues to serve on the Urbana school board.

Discuss.

From today's News-Gazette:

Urbana developer Howard Wakeland met a stone wall Wednesday night when he sought the approval of the city's historic preservation commission to demolish a century-old house at 809 W. Main St.

The commission voted 6-0 to reject Wakeland's request for a certificate of appropriateness to demolish the two-story house, which Wakeland said is a run-down rooming house.

Commission approval of a demolition is required because the house is part of a 14-building local historic district, covering the 800 block of West Main Street, that the city council approved last Nov. 5.

Wakeland, who strongly opposed formation of the historic district last year, was philosophical about the commission's decision afterward.

"To me, historical is something unique that we're not going to see again, that's going to disappear," he said. "That is not how they (the commission) look at things."

Discuss.

The City of Urbana's got some consultant feedback for their sustainable development ideas for their property on Cunningham:

A proposal to develop a model sustainable community north of downtown, where homes would use only 10 percent of standard energy consumption, might not be financially realistic, a city consultant says.

Farr Associates of Chicago, in a report to be discussed by the city council Monday night, suggests that a 75 percent reduction might be possible, but that a 90 percent energy reduction would be difficult to achieve while still keeping the homes affordable.

From the News-Gazette:

"The Department of Energy has turned its back on us," U.S. Rep. Tim Johnson, R-Urbana, told The News-Gazette. "This is like changing the rules after the final score has been posted on the scoreboard. To me, Secretary Bodman's response this morning was a slap in the face.

"This is the worst form of bureaucratic arrogance and insensitivity that I have seen in my 40 years in politics."

Sen. Dick Durbin,D-Ill., echoed Johnson's anger and frustration, saying the Illinois delegation will take the fight directly to the president.

"In 25 years on Capitol Hill, I have never witnessed such a cruel deception," Durbin said in a written release. "For five years, the Department of Energy has urged our state and others to pursue, at great expense and sacrifice, this critically important energy project.

"When the city of Mattoon was chosen over possible locations in Texas, the secretary of energy set out to kill FutureGen," Durbin said.

More:

And while Illinois politicians are decrying the news that FutureGen may be no more, FutureGen Alliance spokesman Lawrence Pacheco said the alliance has gotten no official statement from the Department of Energy.

"All the alliance has heard is vague statements about how the DOE wants to restructure the project," Pacheco said.

As far as the alliance is concerned, Pacheco said, it still has a cooperative agreement with the department, "and it's still in effect today," he said.

Tribune:

The Bush administration appeared on the verge of killing off the $1.8 billion FutureGen project only a day after the president highlighted plans for a big hike in energy research spending in his State of the Union address.

...

Members of Illinois' congressional delegation, including Republican allies of President Bush, reacted with fury to the development.

"The [Energy Department] has turned its back on us," charged U.S. Rep. Timothy Johnson, a Republican whose district includes Mattoon. "We played by their rules. . . . Secretary Bodman's response this morning was a slap in the face."

A spokeswoman for Bodman said soaring cost projections and technological advances have led the department to rethink the project even as it remains committed to its goals.

"Clean coal remains a cornerstone of the administration's [energy] vision," spokeswoman Julie Ruggiero said. She said Bodman would announce a revamped plan for FutureGen "within days" but declined to say whether the project in Mattoon would survive.

Mattoon:

There was bipartisan outrage by state elected officials on DOE’s plans to dismantle FutureGen. Illinois Gov. Rod Blagojevich called it “an example of politics at its worst.”

“On November 30, 2007, the Department of Energy sent a letter reaffirming that the project was moving forward as planned. Only after it became clear that an Illinois site would be chosen over a Texas site, the Department suggested the project be delayed and now today, that it be dismantled,” the governor said.

State Rep. Chapin Rose, R-Mahomet, called the FutureGen project the most bipartisan effort in state government last year.

“FutureGen was the one bright spot. It was how things were meant to be in government for achieving a common goal. I will cooperate anyway I can with members of Congress to see that FutureGen does come to Mattoon,” Rose said.

Interesting reaction from Texas:

FutureGen Texas Regional Coordinator Hoxie Smith of Midland on Friday confirmed the prospect that the DOE either will award "a piece" of the project to the Basin or a private company will build a plant using FutureGen technology on 600 acres north of Penwell, 20 miles west of Odessa.

Awaiting his flight to Dallas Friday afternoon in Washington, Melton said Odessa city and Chamber of Commerce officials will meet with a company there next month to review its plans for a near zero emissions coal-fired electrical plant producing carbon dioxide for oilwell injection.

"The subject of FutureGen came up in discussions with all four leaders and I don't think anybody knows 100 percent what is going to happen," said Melton after attending the U.S. Conference of Mayors. "They all think it will be scaled back because the DOE would have to put a lot more money into it than they want to.

"There are rumors of breaking it into pieces and I think we will get something going. But I'm not sure it will be FutureGen. We have a meeting in February with a company looking at us for a project similar to FutureGen."