What’s so special about the number 50?

By Sally Duros, Real Estate Editor
Chicago Sun-Times

Why do we have so many aldermen? New York City has one City Council member for every 159,000 residents and Los Angeles has 1 for every 226,000. But here in Chicago, we have one City Council member for every 56,000 residents. That’s a lot of politics per square inch of neighborhood.

So why is that?

“It’s a legacy from when Chicago was an aspiring immigrant city,” said Paul Green, director of the Institute for Politics at Roosevelt University. “It’s from when people couldn’t speak English, and neighborhoods had their own ethnic everything — from grocery stores to restaurants to political leaders.”
Green says the immigrant population at the turn of the 20th century put an indelible stamp on our form of government and the way we get things done.

“In 1890, almost 80 percent of the people living in Chicago were foreign born,” Green said. Up until the 1920s, Chicago had 35 wards with two alderman per ward, each alderman serving a two-year term.
The way things were organized, Chicago politics ran around the clock, with an election continually on the horizon.

Neighborhoods were ethnic enclaves that wanted their own alderman, police, firemen and community leadership, Green said.

In this city of little villages, we were full of diversity, but also ethnic segregation, Green said. The advantage of having so many wards was that everyone was ensured some representation, some jobs and their own piece of the action of a growing, vibrant city.

Chicago’s alderman are famous for their antics — legal and otherwise, according to Green.

It could be a case of too many cooks spoiling the broth or, viewed from another perspective, many players making a more flavorful stew.

In some ways, having all these alderman might help us fulfill our municipal self-talk of being “The City that Works.”

Green said that it’s important to remember that by law, Chicago City Council has tremendous power.

Left to their own devices, all of these alderman could run the city into the ground, Green said.

So “what you wind up with, what you need is a politically strong mayor to keep the alderman in line.”
So if we had fewer alderman would we have less corruption?

“If you reduce the City Council by half, would that reduce the chance for corruption?” Green asks. It’s more likely we would “give alderman a chance to double their fun,” Green said.

Copyright (c) 2007 Chicago Sun-Times, Inc.

Let’s give aldermen a taste of what they dish out

By Sally Duros

My friend Sue is mad as hell and she won’t take it anymore!

But in truth there’s nothing she can do.

“When the house next door was sold,” Sue says, “it was on a 50-foot lot, and the developer subdivided it.” She says the backs and fronts of the two large houses that stand there now extend beyond the depth of her vintage home.

“It cuts off light,” she says. “I am looking at a brick wall where I used to look at my neighbor’s back yard.” And what’s worse, “You don’t find out about it until it’s been done.”

Sue, who lives on Chicago’s Northwest Side asked not to be identified, but stories like hers are being repeated in neighborhoods all over Chicago as the aldermanic elections approach. Sue didn’t know the house next door had been sold, and she didn’t seek help from her alderman, who is very “old” school. She didn’t think he would have assisted. Besides, “by then it was too late. There’s no point,” she says.

Sue isn’t alone.

The 250 candidates running for Chicago’s 50 aldermanic seats in the Feb. 27 election understand that, and they’ve armed themselves with statements on how they will best serve residents and their neighborhoods.

Included in that, we’re sure to hear much about Chicago’s zoning ordinance.

Chicago has been gradually shifting to allow denser development on residential lots since 1998, and you can see this in successive iterations of the zoning ordinance, says Stacey Rubin Silver, a planner and attorney who works with her husband, Warren, in their firm Silver Law Offices.

Sue’s culprit — if you should choose to view it that way and Rubin Silver doesn’t — is the maximum “floor area ratio,” or FAR, allowed for each type of residential structure in Chicago.

In Sue’s case, her house is on a lot in an area zoned RS-3. A new property owner can build whatever he desires on a lot if no zoning change is needed, Rubin Silver says, as long as he complies with classification rules related to yards, parking and open space.

Sue and some of her neighbors would like to downzone their ward to RS-2 from RS-3 so new redevelopment would retain more of the original character of the neighborhood. Downzoning proceeds just like a zoning change sought by a developer except it is instead initiated by the alderman on behalf of the residents.

But Sue and her neighbors don’t believe their current alderman would be responsive to their idea.”It seems like there isn’t a lot of transparency, and people don’t know that there will be a development next door until the bulldozers show up,” Sue says. “If you had a responsive alderman who had lots of block meetings, maybe it would make a difference.”

If your current alderman isn’t responsive, I say respond by voting someone else in.

Your alderman can act with a heavy thumb to a zoning issue –on behalf of either developer or resident. It’s how the alderman “sways” that makes residents either happy or sad.

“Zoning is very democratic with a small ‘d,’ in a good sense,” zoning attorney Warren Silver says. “The way the process is set up it gives a lot of sway to the alderman. I think that’s a good thing because by and large it empowers the community.”

The role of an “empowered” community in this complex transaction that I’ll call “Building the Neighborhood We Want,” is to elect an alderman who will be an honest steward of the responsibility awarded. That means working with us in partnership.

It’s a big picture approach.

Many aldermen have held power over several re-elections by handing out chits of favor and influence and by skillfully exercising aldermanic privilege.

This tactical rather than strategic approach is like junk food. It takes the edge off hunger but doesn’t nourish you. Chicagoans are ready for better. I wager come election day, voters like my friend Sue might give back to their aldermen a taste of what they’ve been dishing out.

sduros@suntimes.com

– – –

The Chicago municipal election is Tuesday, Feb. 27, but you can vote today at an early voting site.

For more information, go to www.suntimes.com/webconnect and find links to:

– Chicago Zoning Department, where you can see how your block is zoned.

– Chicago City Council

– Chicago Board of Elections

– The Right Place, our blog

Credit: The Chicago Sun-Times -COPYRIGHT- © 2007 Chicago Sun-Times. All rights reserved.

One law comes and another one goes

By Sally Duros

Chicago Sun-Times Real Estate Editor

Jan. 26. 07 — So long, HB 4050, and hello, SB 2349. The Illinois Predatory
Lending Database Pilot Program is gone, but mortgage fraud isn’t,
so now we have the Mortgage Fraud Rescue Act, which went into
effect Jan. 1.

HB 4050 was smote in the unresolved clash between consumer
advocates and lenders: advocates want to flush out the predators
and prevent suffering caused by inappropriate sub-prime loans,
while lenders want to preserve the robust cash streams from the
legitimate sub-prime market.

Seems there are more flavors of ways to steal people’s homes and
mortgage money than there are flavors of ice cream. SB 2349, which
was sponsored by Sen. Jacqueline Y. Collins (D-Chicago) and Rep.
Marlow Colvin (D-Chicago), targets unscrupulous mortgage rescuers,
businesses that say they will save homeowners from foreclosure but
instead strip equity from their homes and leave the homeowners with
nothing.

“The law’s not even a month old,” said Tom James, senior assistant
attorney general to Illinois Attorney General Lisa Madigan. “We
know that the industry is well aware of it. It is being watched by
other law enforcement agencies who are drafting their own versions.

“There’s a tremendous amount of this,” James said. “We and
attorneys general from other states have sued three entities, and
recovered $750 million aggregate.”

The cases against First Alliance Mortgage Co., Household
Beneficial, and the most recent, Ameriquest, involved upselling,
the unscrupulous practice of peddling high-cost inappropriate loans
to homeowners.

“In terms of mortgage rescue fraud,” James said, “we don’t have
figures because it is exploding as a result of the mushrooming of
foreclosures.”

Driving foreclosures is the inappropriate use of sub-prime loans. A
typical borrower hit with this scam might be house-rich but
cash-poor, with some equity in the home, and a lower net income
than the average borrower. Seniors are a favorite target for these
scammers.

The new law requires mortgage rescuers to either save the home as
promised or pay the homeowner a substantial portion of the home’s
value.

“The law was carefully tailored for cases where the rescuers says,
‘I’m going to keep you in the home and you can buy it back’ —
that’s the hook they use,” James said.

In this scam, when a homeowner falls behind on mortgage payments, a
rescuer will promise to buy the house from the homeowner in return
for the homeowner paying the rescuer rent. The homeowner and
rescuer agree that the homeowner has the option to buy back the
house.

The homeowner doesn’t know that the mortgage rescuers have obtained
title to the home by paying off the mortgage. The homeowner can’t
keep up with the rent, and they lose their homes and any equity
they had built in them. Targeted homeowners usually have more
equity in their home than they owe in mortgage.

This scheme never works to the homeowner’s advantage.

HB 4050 died quietly Jan. 19 when Gov. Blagojevich directed the
Illinois Department of Financial and Professional Regulation
(IDFPR) to “immediately suspend” the law. “There was a sense that
we were regulating borrowers rather than regulating lenders,” said
Blagojevich spokesman Gerardo Cardenas. “We want something that
works better.”

As to SB 2349, “Whether it will be effective remains to be seen,”
James said. “We have incorporated enough bite there so that we will
get them.”

sduros@suntimes.com

READ MORE ONLINE

For more information, go to www.suntimes.com/webconnect and find
links to:

– The Right Place, our blog

– Illinois Attorney General Lisa Madigan

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A piggy bank, an investment or both?

By Sally Duros

Real estate is a commodity with a market, in the past most identified with the great building cranes and diggers, the towers of commerce downtown. Real estate is also a place, the neighborhood where we live, which is felt more as being precious, unique and of emotional value.

In the past 10 years, these two ways of experiencing real estate have merged in dramatic and unexpected ways. In Chicago, residential towers and towers of commerce increasingly stand side by side, creating communities downtown where none existed before. Meanwhile, in our neighborhoods, our houses, condos and the land they stand on — forever it seemed staid rows of piggy banks for life-long savings — have increasingly become commodities to be bought and sold in a market of rapid exchange.

Last year, the pace of exchange slowed, but the value held steady.

Economists tell us the value will hold as long as consumer confidence holds, and that depends in part on the those national indicators like the interest rate set by the Federal Reserve and other economic indicators followed religiously by the media. On the local front, economic confidence in the Chicago area has improved significantly, and is two points above the index of national confidence, according to findings of a telephone survey by pollster Rasmussen Report, sponsored by the Chicagoland Chamber of Commerce.

But here in idiosyncratic Chicago, I follow a different kind of indicator. It’s “da price” index. That’s da price Joe paid for his condo, his house, his two-flat. And I’ve found that da price is nearly always paired with the “who can afford dat?” index.

We ask: Who is buying those $400,000 condos in Uptown and those $900,000 condos downtown? What do they do for a living? With the follow-up question: How do I get that job? There sure seems to be a lot of this expensive new stuff out there. Are there really enough buyers for all this construction?

“Most of the cities are seeing a resurgence,” real estate investor Doug Crocker said in an interview last fall. “The biggest problem that could happen over a 50-year period of time could be the whole social-economic fabric of Chicago could shift, so that it’s all elitist, it’s all high-end, wealthy people downtown. That’s not good. We need to figure out a balance of low-income and moderate-income housing.”

Although Chicago is not the most expensive place to live in the U.S., it ranks high in terms of housing costs. Research released last week by the Center for Housing Policy found that Chicago, at $901 for the average cost of renting a 2-bedroom apartment, ranked 46th of 210 cities; the $254,000 average price of a house or condo ranked 62nd of 210.

Arguably, those prices are a comparative deal for buying a piece of a city as vibrant and livable as Chicago. But they are exorbitantly high for people starting out and for many professionals. It takes an annual income of $84,957 to qualify to purchase the median priced home of $248,000, according to the Center for Housing Policy’s Paycheck to Paycheck study. In Chicago, many working people, such as teachers, police and medical workers — practical nurses, for example — not to mention those in retail sales, will never earn that much per year.

Over time, our homes had become a new type of hybrid investment vehicle, and for those of us who have owned for a while, they still are. But now that the market has cooled for the long-term, we’ll have to put on our thinking caps to ensure that the diverse wage earners of Chicago have a place to live.

Credit: The Chicago Sun-Times -COPYRIGHT- © 2007 Chicago Sun-Times.

A piggy bank, an investment or both?

By Sally Duros

Real estate is a commodity with a market, in the past most identified with the great building cranes and diggers, the towers
of commerce downtown. Real estate is also a place, the neighborhood where we live, which is felt more as being precious, unique and of emotional value.

In the past 10 years, these two ways of experiencing real estate have merged in dramatic and unexpected ways. In Chicago, residential towers and towers of commerce increasingly stand side by side, creating communities downtown where none existed before. Meanwhile, in our neighborhoods, our houses, condos and the land they stand on — forever it seemed staid rows of piggy banks for life-long savings — have increasingly become commodities to be bought and sold in a market of rapid exchange.

Last year, the pace of exchange slowed, but the value held steady.

Economists tell us the value will hold as long as consumer confidence holds, and that depends in part on the those national indicators like the interest rate set by the Federal Reserve and other economic indicators followed religiously by the media. On the local front, economic confidence in the Chicago area has improved significantly, and is two points above the index of national confidence, according to findings of a telephone survey by pollster Rasmussen Report, sponsored by the Chicagoland Chamber of Commerce.

But here in idiosyncratic Chicago, I follow a different kind of indicator. It’s “da price” index. That’s da price Joe paid for his condo, his house, his two-flat. And I’ve found that da price is nearly always paired with the “who can afford dat?” index.

We ask: Who is buying those $400,000 condos in Uptown and those $900,000 condos downtown? What do they do for a living? With the follow-up question: How do I get that job? There sure seems to be a lot of this expensive new stuff out there. Are there really enough buyers for all this construction?

“Most of the cities are seeing a resurgence,” real estate investor Doug Crocker said in an interview last fall. “The biggest problem that could happen over a 50-year period of time could be the whole social-economic fabric of Chicago could shift, so that it’s all elitist, it’s all high-end, wealthy people downtown. That’s not good. We need to figure out a balance of low-income and moderate-income housing.”

Although Chicago is not the most expensive place to live in the U.S., it ranks high in terms of housing costs. Research released last week by the Center for Housing Policy found that Chicago, at $901 for the average cost of renting a 2-bedroom apartment, ranked 46th of 210 cities; the $254,000 average price of a house or condo ranked 62nd of 210.

Arguably, those prices are a comparative deal for buying a piece of a city as vibrant and livable as Chicago. But they are exorbitantly high for people starting out and for many professionals. It takes an annual income of $84,957 to qualify to purchase the median priced home of $248,000, according to the Center for Housing Policy’s Paycheck to Paycheck study. In Chicago, many working people, such as teachers, police and medical workers — practical nurses, for example — not to mention those in retail sales, will never earn that much per year.

Over time, our homes had become a new type of hybrid investment vehicle, and for those of us who have owned for a while, they still are. But now that the market has cooled for the long-term, we’ll have to put on our thinking caps to ensure that the diverse wage earners of Chicago have a place to live.

Credit: The Chicago Sun-Times -COPYRIGHT- © 2007 Chicago Sun-Times. All rights reserved.