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Friday, August 21, 2009

Daley, CAAP, and the Olympics

Yesterday at 1PM Central Time, there was a very mundane meeting of Chicago's Planning Commission. Among the matters on the agenda was the Central Area Action Plan. This is a NON BINDING that would add a plethora of taller buildings in the area around South Loop of Chicago. The South Loop is an area of the city that hugs Lake Michigan and stretches from Congress Street South to about Roosevelt (or about 2000 South). To no one's surprise, CAAP, which was pushed by the city itself, passed overwhelmingly.

CAAP sounds good on the surface, and it may wind up being a boon for the city. In the cynical world of Chicago politics, however, nothing is ever as it appears. First, let's set the stage. Everyone on Chicago's Planning Commission is appointed by the Mayor, Richard Daley. Second, nothing directed by the city these days isn't done with the goal of bringing the Olympics to the city in mind. With that, Daley's grandiose plans often leave the residents of the city on the short end.

CAAP is a complicated and sophisticated plan to attract more developers to the South Loop. CAAP would increase the density of the buildings in the area and it would use empty space in the area to accomplish that goal. By density, I mean the size, mostly up, of the buildings. In other words, if CAAP is seen through to the conclusion of its vision, the South Loop would have a plethora of taller buildings. It's important to note that CAAP won't change any zoning in the area. That said, while technically non binding, it would give developers a major trump card in getting zoning changed if and when they "asked" for zoning changes to implement projects for buildings taller than the current zoning. After all, CAAP is the city's idea and it calls for more "density" in the area. It's hard to imagine zoning commissions, also appointed by Daley, denying developers when they try and implement CAAP by building all these taller buildings.

So, what's the problem with all this? After all, Chicago is known for its sky scrapers. For one, there is already a parking problem in the area. In fact, there's a parking problem in the whole city. Now, there's going to be 60 and 70 story condos in the area. Some of these condos will be built where there's currently parking lots. The issue of parking isn't addressed in CAAP.

More than that, building all these taller buildings will bring with it abut $15 billion in infrastructure expenses. Taller buildings require more infrastructure. It requires more building inspectors, more sewers, more garbage clean up, etc. Schools will see more students. None of this is addressed and there's no plan to pay for any of this. With all capital projects, it requires more investment from the local government. That investment isn't accounted for, and it's expensive. It's estimated that CAAP will cost the city about $15 billion if the city will provide adequate infrastructure support for the new projects.

The problem is that the city is broke. The city just took off August 17th because it's so broke. Then, three days later, the Planning Commission approves a plan that will cost roughly $15 billion to support over the next five to seven years.

So, what will happen if this implemented inefficiently? Real estate developers will likely make out like bandits. They'll have license to build massive new condos in a growing area of the city. At the same time, parking, already a problem, will become even worse. Infrastructure will crumble even worse. To support these new developments, it's almost certain that new TIF's (Tax Incremental Funds) will be created. TIFs are really a way for the mayor to take money meant to go to schools, hospitals, and other infrastructure. TIFs are known as Daley's slush fund. It's really nothing more than a way for Daley to direct municipal funds away from "mundane" things like supporting schools and hospitals and toward supporting projects that help his allies like many of the developers that would benefit if CAAP is realized.

Then, there's the Olympics which is always buried underneath all political deals around Chicago these days. With CAAP approved, that's a major expansion project that Daley can now bring to the IOC to show just how vibrant the city will look come 2016. On paper, the city will look vibrant. There's no doubt that CAAP will add to the look of the city. Of course, it's unlikely that anyone at the IOC knows or frankly cares that the city doesn't have the infrastructure to support this "vibrancy". So, while Daley just gained a very important bullet in his arsenal in selling Chicago to the Olympics, it comes at the expense of the citizens of the South Loop. Those are the folks that will have to live in an area where the infrastructure doesn't support the real estate development. It's a small price to pay in order for the mayor to realize his dream of bringing the Olympics here.

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