Nobody likes to be made a fool of. Public embarrassment always comes at a price. I've had my share of it over the years. I try to avoid it at every opportunity, not always successfully.
Last week we discussed the financials of the Whiteco project as they applied to the developer and I demonstrated how the developer will not have any of his own money in the project at completion. This week we will look at the numbers as they apply to our tax revenue and also take a look at another Whiteco project in another town.
The main reason that is being put forward to build this project is "increasing the tax base." The numbers provided by the developer show almost $1 million in tax revenue coming in each year. However, tax revenue is a tricky thing, particularly here in Cook County, where it is impossible for the average person to figure out their tax bill.
Last year many people in Oak Park were hit with incredible tax increases. They were told that it was because of the dramatic increase in their home values, but in my opinion that couldn't be further from the truth.
While property tax bills for single family people have been rising, the property taxes for multi family buildings have been falling. This fact means nothing to your average Cook County suburb with little or no multi family, but to our community with over 13,000 multi family units it is devastating to the tax base and somebody needs to make that loss of money up. That somebody is the single family and condo people.
Take a look at the declining numbers for a luxury apartment building in town:
? 2002 $2.489 million
? 2003: $2.262 million
? 2004: $1.961 million
Actual cash paid
? 2002: $371,660
? 2003: $266,388
? 2004: Unknown
So while you were forking out more and more, apartment buildings greater than seven units were forking out less and less. It is my opinion that the revenue stream to the taxing bodies from multi-family buildings will get worse before it gets better. With vacancy rates in buildings between 7 percent and 15 percent more building owners might be tempted to file tax appeals based on vacancies.
Whiteco has tried to make a case by projecting a large increase in revenue to the taxing bodies from the project. They have done this by not using any Oak Park luxury apartments as a comparable. This does not make any sense to me. However, in all fairness, I do believe they have accurately portrayed the commercial portion of the real estate tax revenue. They are just way off on the apartment valuations.
Projected taxes paid per Whiteco apartment: $1.012 million
Current Oak Park luxury apartment taxes:$3,856
There is no way that the apartment portion of the income is going to come true at over 3.5 times the current rate and that is the bulk of the tax revenue Whiteco is projecting.
Whiteco projected income to taxing bodies: $954,156
Income to taxing bodies at today's rates: $375,057.00
In other words if the building were here today based on today's tax rates and accepting Whiteco's town home and commercial space projections it would bring in only $375,057. If only 31 kids go to the schools from this building it wipes out the income stream to the taxing bodies and we can't pay ourselves back the $20 million we are borrowing for Whiteco.
Today Whiteco is putting the finishing touches on a large luxury apartment building in Houston, Texas. What is completely remarkable about this building is that it is precisely, exactly, the same as Whiteco's first proposal here. Whiteco's Dominion Post Oak 230-unit luxury apartment building rises majestically above a six story 359 space parking garage directly across the street from a shopping district. In another bizarre similarity it sits smack dab in one of Houston's "redevelopment zones."
Call me a Philadelphia Lawyer, if you are wont, but I invested my own dime and contacted Houston's Economic Development office. A very nice women answered the phone, I asked a simple question: "What were the subsidies given to Whiteco for building the Dominion Post Oak Luxury Apartment Tower from either the city of Houston or the Redevelopment Zone Authority?" She said she would research the question and send me an answer. Early the next day she e-mailed back; it was zero. They gave them no money, no land, zero, zilch, nadda, zip. Another woman in a different city government office confirmed it for me: "Mista Hayma, we don't do that kinda thang 'round heya!"
So now we are looking like complete chumps, not your average garden variety chump, we are looking like dope-slapped super chumps. Whiteco goes to Houston, buys the land, builds their own 230-unit apartment building, builds their own 359 space parking garage, without a nickel of subsidy and then has the temerity to ask us to give them our land and build all of this and more for them, for free?
I try to avoid public embarrassment. I refuse to wear the chump crown. Would anybody else like to put it on and parade around town?