Friday, January 25, 2008

Transfer Tax May Blunt Uptown's Economic Boom

Courtesy of Medill Reports Chicago
By John Riley

Depending on your perspective, the former Wilson Yard at West Montrose Avenue and North Broadway is either a sign of a promising economic future or an eyesore exemplifying urban blight.

For years the yard, adjacent to the Wilson el stop in Uptown, was used as a repair and storage site by the CTA. It now stands empty and vacant.

With the push for development in Uptown, many wonder how businesses that might consider locating in the Wilson Yard will react to a proposed increase in the real estate transfer tax.

The tax is levied on all industrial and commercial property in Chicago. The fate of the proposed increase will determine which vision of the Wilson Yard becomes reality.

The increase in the tax, which would charge buyers of property $10.50 for every $1,000 of sale price, was approved by the Illinois legislature as a way to subsidize the Chicago Transit Authority’s underfunded pension system. Because the tax applies only to properties within the city, the city council must approve it.

The current transfer tax, paid by the buyer, is $7.50 per every $1,000 of sale price. Sellers pay the county and state transfer tax of $1.50 for every $1,000. That number would remain unchanged under the proposal.

For years, the Wilson Yard has been a target by developers hoping to gentrify an area that, until recently, had few prosperous businesses. In 2001, the city created a tax increment financing, or TIF, district to help spur economic development. The CTA sold the Wilson Yard property to the city, which has plans to locate a Target or similar “big box” store.

But approving the 40 percent increase in the transfer tax would inhibit economic growth, said Brian Bernardoni, director of government affairs for the Chicago Association of Realtors. Bernardoni said the tax discourages businesses from moving into areas because they must pay it on top of any down payment.

Bernardoni also rejects the rationale for the increase. Instead of going toward operating costs or improved infrastructure, the transfer tax simply puts money into CTA’s pension fund.

“Trying to save the CTA’s pension plan hardly equates to doomsday,” Bernardoni said, referring to the prospect waved by transit officials of drastic cuts in service if the General Assembly didn’t increase the agency’s funding.

The alderman representing the 46th Ward, in which the Wilson Yard is located, is Helen Shiller. Shiller’s office did not return phone calls seeking comment.

The area north of the Wilson Yard now contains an Aldi supermarket, retail shops, ethnic restaurants, and a Dunkin Donuts. Some Uptown residents, including Victor Foley, say the success of these businesses are harbingers of a coming economic boom for the Uptown area.

“Obviously, I wish it were something else,” Foley said. “But I think [Target] will be good for the area. Anything will help.”

Foley cited the increase in condominiums south of Montrose Avenue and a noticeable increase in foot traffic as signs of development.

But David Rodriguez, another Uptown resident, said he avoids the area around the Wilson Yard. Rodriguez said the area is unappealing to him, pointing to the bar, liquor store, tattoo parlor and two methadone clinics across the street.

“A Target would probably help this place a lot more, because there’s not a lot to do here,” he said. “There’s not really any specific reason to be in this area other than if you live here.”

Rodriguez said he thinks Shiller should vote against the increase in the transfer tax.

“That would discourage businesses from coming,” he said. “You’re paying hundreds of thousands, and then you’ve got this extra amount. Why would anybody want to take a chance here?”


  1. This is an excellent article. Be sure to click the link below the picture to see more pictures of the site and charts explaining how the taxes would work.

  2. Shiller will vote for it - for sure

  3. The best way to ruin your local economy is to jack up the taxes.

    Mass transit needs to be privatized since it's painfully obvious that city, county and state legislatures aren't capable of running a lemonade stand, let alone the CTA/RTA, et al.

    This asinine "tax your way out of self-inflicted problems" BS needs to stop.

    I look forward to Shiller's inarticulate prattle of spit-soaked double speak lack of an answer answer as to why she thinks this verdampt transfer tax will do anything other than to destroy growth.

    I'm sure there's enough graft-laden overhead which could be reduced in the budget to pave the freakin' rails with gold.

    Too bad our elected officials could care less about the people they state to care so much about.

  4. this is an extremely weak student article

    if they wanted to do an article on the new RE xfer tax, fine

    if they wanted to do an update on WY, fine

    but WY is a bad example of the impact on development of the new RE xfer fees

    1st of all, the seller is the CTA, a govt agency, and so exempt from fees

    and the xfer from the CTA to Holsten is ancient history

    also, the Aldi's did not buy the land it is on, they swapped, so there's nothing to take a % of

    seems like the student wanted shots of an undeveloped area but didn't do any real due diligence

  5. Thanks Hugh--as I read the article, I was thinking that Holsten had already acquired the land?

  6. Extremely weak is a generous phrase to use for this article.

    Seems the author wanted to write about Wilson Yard and latched onto the tax hike to do it.

    There are much LARGER issues with Wilson Yard. First and foremost is does Target come in and when?

    If Holsten keeps ownership of everything there then no property transfer means no big additional taxes.

    Even at 100 million in sales the tax only adds $300,000 to the costs. I don't like the tax, but trying to suggest it is going to impede the development of Wilson Yard is a stretch.

  7. Again Shiller will vote YES - It will be bad for Condo Owners. Sorry, the Evil Beings living in Uptown who what her to work for a living. Yes she is a owner, but I am sure not just like a normal owner.

  8. Aside from Target, retail businesses would likely rent from Holsten. It is highly unlikely that they would purchase the retail space outright. Therefore, this article is poorly researched and written. And why is Uptown singled out? There are retail developments on non-government owned land across the city?

    I suggest UU readers contact the author and editor to let them know their feelings.

  9. I agree about the methadone clinics, but in defense of the Tattoo Factory -- it's a cleaner, more brightly lit, and generally more attractive storefront than even the new Aldi. I don't see a problem the The Spot, either, though I'll admit I've run into some questionable characters at that liquor store. All in all though, the east side of the street isn't the big problem. I mainly prefer to stay away from the area because of Wilson Yard itself!

  10. Can't these Medill students find a new community sandbox to play in? There are other communities aside from Uptown they could write about. But then,they and their professors would have to leave the comfort of their nice, North Shore neighborhoods and venture out more than 2 miles into the real world of Chicago. And, they would have to venture out more than two mental steps past the confines of the far left liberal narrative that all their articles squeeze each year's new facts into.

    Perhaps they should tackle real poverty issues, such as those found in Austin and Englewood and leave poor Uptown alone for a change.