On Wednesday, Mayor Richard M. Daley announced he will not seek re-election, thus ending his 21-year reign as mayor of Chicago. It has been a remarkable tenure for Daley, who is now known internationally for his often-brash method of city management and handling the media.
Daley's Departure: The Real Estate Ramifications
As his mayoral run comes to end and politicians line up to take his place, the new mayor will have many issues on his or her plate, from gun control to city violence to budget deficits.
However, among all the areas of impact a new mayor will influence, the city's real estate community and marketplace rank high. The new mayor will likely shape the direction of the Chicagoland real estate market. And this impact will be immediate.
First, we're likely to see a sharp contract in the way Tax Increment Financing (TIF) dollars are spent. The Chicago Reader's Ben Joravsky and Mike Dumke have done exhaustive work on the disconnect between the original purpose of TIF districts (fund development in blighted areas of Chicago) and their actual impact (helping Daley-associated construction and development firms get sweetheart contracts in the Loop and other wealthy neighborhoods).
The new mayor is likely to cut back on seemingly inappropriate TIF spending, perhaps even using this plan as an aspect of his/her platform for election. TIF dollars, it has been argued, can help schools or other depleted city resources, rather than pet projects for political donors. From a real estate standpoint, this could mean less TIF-funded real estate development in flourishing parts of the city, and possibly more construction projects in under-developed areas of the South and West sides. Or, it could mean that TIF dollars go away from construction, and are used toward the Chicago Public Schools shortfall. In either case, you're likely to see less high-rise, downtown or South Loop development, and more low-income, South side projects, if any at all, funded by TIF dollars.
Secondly, you're likely to see substantial change in Chicago Police Department and Chicago Public Schools leadership. Both Jody Weis and Ron Huberman are "Daley guys" and that means they could be in trouble. Weis and Huberman are facing respective uphill climbs, Weis against escalating West side violence and Huberman against budget crunches and CPS mismanagement. Changes in both of these city departments would impact real estate, given that families are hesitant to move into the city when crime is up and schools are struggling.
Lastly, a new mayoral regime could bring a sense of optimism, which tends to help the real estate market. Much of the national news that comes out of Chicago has been negative, from violence on the streets to former high-level politicos facing jail time. Some of the names mentioned as possible candidates include a surprising number of Daley opponents, including 32nd Ward Alderman Scott Waguespack, one of only five aldermen to vote against Daley in the controversial parking meter deal. A fresh influence at City Hall could mean a clean-up effort that changes the way people look at Chicago politics. And that, in turn, could bring more home and condo buyers into the city.