Chicago Finances/Ratings Downgrade (Lincoln, Detroit: real estate, 2015, apartment)

[chet everett]

Originally Posted by Opin_Yunated

Detroit and Chicago are nothing alike. Chicago is a global power city.

I'm just saying.. these things aren't something the average guy needs to worry about. Besides, no one WANTS to see Chicago go down.

...that in contrast "SOMEONE" wanted to see a city like Detroit "go down"?

Seems like you are missing the point.

Does not matter what ANYONE wants, what matters is the financial reality the City of Chicago AND the State of Illinois are facing. The bonds that the city needs to use to finance operational debt are getting MORE AND MORE costly because the RISK OF DEFAULT as judged by the bond issuers is GROWING MORE AND MORE LIKELY. That means every time that the mayor has to sit down and decide to borrow it gets more and more costly and the SPIRAL of ever increasing debt becomes worse and worse. Similarly the State of Illinois has a situation that is not sustainable -- without CUTS in spending / future obligations AND some additional revenues there won't be enough money to cover current bills nor future unfunded liabilities.

This not about who is "cheering for underdog Chicago" in the battle of mean nasty bond issuers who twirl their waxed mustaches waiting to foreclose, it is about economic non-sustainability of increasing debt in the face of insufficient growth in revenue. Don't forget that the high rises that are built routinely hire Mike Madigan to have their property taxes reduced to laughably low levels, the firms 'relocating' are similarly the recipients of 'grants and incentives' to make their taxes vanish. That transfers the bulks of the tax burden onto schmucks that work for this firms and sadly there are not of us to pay the bills of the folks that need state services but have no income to tax...

[Ace Rothstein]

Originally Posted by Opin_Yunated

Besides, no one WANTS to see Chicago go down.

Based on reading things on the internet since Obama was elected, many in this country would love to see it become the next Detroit.

[jonnynonos]

Originally Posted by Opin_Yunated

Detroit and Chicago are nothing alike. Chicago is a global power city.

I'm just saying.. these things aren't something the average guy needs to worry about. Besides, no one WANTS to see Chicago go down.

You gotta be kidding me. No one had the power to bring Detroit down but Detroit; it's city council and mayors ran the borrowing into overdrive until no one would lend them money to cover their bills. End of story.

They finally had to bring in an EM to sort out 30 years worth of insane bookkeeping. No one even knew the debt total until the EM Kevin Orr sorted it out.

As for it not affecting the man on the street, I wouldn't be so sure. Like I said, currently cities are declaring bankruptcy and reorganizing and are able to sell new bonds, but as more and more cities take the tactic Mr. Market will begin to rear his head and the city's are going to find themselves either unable to sell bonds at all or paying a premium in interest, making the cycle of insolvency even quicker and more obvious.

At some point, it might occur to people that eventually you just have to pay for what you spend.

[NYer23]

Short term solution is restructuring of pension obligation by asking city employees to contribute more to retirement (401K) and reducing benefits.

Long term solution is going to involve a honest discussion on what people are willing to pay for public services (can't expect to have good public education if you are unwilling to offer decent benefits). In addition to adding transparency and accountability to the process to ensure the people who deserve the money are receiving it (reduce the wasteful spending).

Chicago will not end up like Detroit as Detroit issues were compounded with the dependency and decline of the auto industry.

[andrew61]

Originally Posted by ForYourLungsOnly

It's a strange situation. All this doom and gloom yet downtown population is growing, 18 high rises are being built, and you hear news all the time of suburban companies relocating to the city and other out of state companies expanding or moving here. On another website I supposedly can't name, the Chicago Economics thread has a new story daily about some company moving here or expanding. Interesting.

And then take a look at the "prosperous" North Side (e.g., Lincoln Park/Lakeview). Storefronts emptying out like crazy. I was standing at the corner where Clark, Broadway and Diversey come together this afternoon waiting for the light to change, and looked around me and had to catch my breath, realizing I was witnessing a once-thriving area quickly turning to crap. I counted no fewer than four empty storefronts in the immediate vicinity. Nothing has yet gone into the old Walgreens space, Hanig's is gone, Vitamin Shoppe is gone, and now Panera is gone. Something's going on, and it's not good..

[MassVt]

Originally Posted by andrew61

And then take a look at the "prosperous" North Side (e.g., Lincoln Park/Lakeview). Storefronts emptying out like crazy. I was standing at the corner where Clark, Broadway and Diversey come together this afternoon waiting for the light to change, and looked around me and had to catch my breath, realizing I was witnessing a once-thriving area quickly turning to crap. I counted no fewer than four empty storefronts in the immediate vicinity. Nothing has yet gone into the old Walgreens space, Hanig's is gone, Vitamin Shoppe is gone, and now Panera is gone. Something's going on, and it's not good..

I'm guesing catastrophic rent increases..

[andrew61]

Originally Posted by jonnynonos

At some point, it might occur to people that eventually you just have to pay for what you spend.

Ah, that pesky thing called Math. It sneeringly refuses to cease being one of the Universe's absolutes, and it always wins.

[andrew61]

Originally Posted by MassVt

I'm guesing catastrophic rent increases..

Nah. All the stores I mentioned are big chains that can absorb higher rents far better than the little guy can.

Chains typically close locations when they underperform. I'm betting that is the case here.

[jonnynonos]

Originally Posted by andrew61

And then take a look at the "prosperous" North Side (e.g., Lincoln Park/Lakeview). Storefronts emptying out like crazy. I was standing at the corner where Clark, Broadway and Diversey come together this afternoon waiting for the light to change, and looked around me and had to catch my breath, realizing I was witnessing a once-thriving area quickly turning to crap. I counted no fewer than four empty storefronts in the immediate vicinity. Nothing has yet gone into the old Walgreens space, Hanig's is gone, Vitamin Shoppe is gone, and now Panera is gone. Something's going on, and it's not good..

Oh boy. Don't start that again. I uncaged a torrent of vitriol by creating a thread titled: Lakeview in Decline?" A while back.

If you feel that way, it makes about two of us!

[chet everett]

Originally Posted by MassVt

I'm guesing catastrophic rent increases..

... And the driver for those increases are almost certainly the property taxes shouldered by firms that do not have the clout to hire Mike Madigan!

The sick situation is if you just an ordinary guy that Madigan knows won't play the "donate to my campaign and then I will let you hire my firm" you are stuck with taxes so high you gotta jack rent so even "chain" stores can't cut it...