Archive for the ‘Chicagoland’ Category

How come a LaSalle County TV station is the most valuable in the country?

image credit: Brian Smith (CC BY-NC-SA 2.0)

Well now, more precisely, how come the spectrum held by  a TV station broadcasting from Ottawa fetched a higher price than any other station offered? WWTO is owned by Trinity Broadcasting and broadcasts on five digital subchannels according to the Wikipedia article.  According to the report today from the Federal Communications Commission, their spectrum sold for $304 million, highest in the U S. , while WYCC’s spectrum in Chicago fetched only $16 million.  I know there are all kinds of technical considerations that might explain the difference, but it’s a curious one. Some of us are suspicious when government-owned assets are sold for a comparatively low price.  Both stations are reportedly going off the air.

Nationwide, most of the spectrum has been “purchased” by wireless companies but apparently some will be returned to the “unlicensed” category for use by wifi and similar low-power devices.

So most of the spectrum will be used by private corporations to provide services from which they expect to obtain a profit.  Kind of like commercial land, which everyone agrees is subject to tax.  So why does the government not tax privately-held spectrum?

Let’s watch the Assessor on this one

Some people are Cubs fans, others find it more interesting to watch the Assessor.

Crains reports that a very prosperous Cub, Jon Lester, has purchased and demolished the building next door to his home,apparently so that he could have a side yard.  Purchase price was $1.35 million, so the land must be worth that much.  It cost Mr. Lester more, of course, since he had to pay to demolish the place, but let’s take the $1.35 million over to the Assessor’s office. There we see that the property was assessed at $100,463, indicating a market value of $1,004,630 for the land + building. Land alone is about a quarter of this, so the Assessor seems to be saying the land is worth $250,000.  But it isn’t. Obviously it was worth over a million dollars. (And, checking Zillow, I see that the price isn’t out of line for the area.  A 3125 sq ft lot at 1450 W. Grace is on offer for $1.05 million. )

Now, under Cook County’s current rules, the tax bill is based on the assessment of the total parcel and it makes no difference which part is land and which part is building.  But with the building gone, it’s important for the assessed value to represent what the land is really worth. Otherwise the rest of us taxpayers have to cover part of Mr. Lester’s share.

(In case the link above stops working, you can readily find the parcel on the Assessor’s web site. Search for 1446 W Berteau, or parcel number 14-17-305-025-0000)

From the Assessor’s web site

Is Trump not entirely bad?

Photo of Jan 21 2017 women’s march by Bob Matter.

Political commentator Bob Matter took this photo, and sent it with the comment “You know you picked the right guy when the tax lawyers are against him.”

But are they?  Sure, there’s a sign, but it’s hand-lettered, and carried by one guy. Maybe he’s a tax lawyer, and maybe he’s against Trump.  But tax lawyers ain’t stupid.  Nor impoverished. I bet they like whoever runs the government, and with Trump suggesting new rules on repatriation, a “border tax,” and a new “Dependent Care Savings Account,” which can be for benefit of the unborn and qualify for matching funds, there’ll be plenty of work for tax lawyers.

Maybe they hired an out-of-work actor to try to build some sympathy for their profession.

None of the above is meant to suggest that Hillary, or Jill, or even Gary would have reduced the demand for tax-related legal advice. As Henry George might have said: “It is not kings nor aristocracies, nor tax lawyers nor accountants, nor landowners nor capitalists, that anywhere really enslave the people. It is their own ignorance.” That’s why we have a Henry George School.

Sound concept, everything else wrong

Argyle station, one of the platforms to be widened. Graham Garfield photo from Wikimedia, Creative Commons Attribution Share-alike 2.0 generic license

Argyle station, one of the platforms to be widened. Graham Garfield photo from Wikimedia, Creative Commons Attribution Share-alike 2.0 generic license

[The following was written in September 2016, but for some reason was not published until January 2017.]

If good transit increases land values – which it does – then shouldn’t the increase in real estate values should be used to fund transit infrastructure?  Yes, if you do it right.

Case in point is CTA’s “Red Purple Modernization Project” and, in particular, the “Lawrence to Bryn Mawr Modernization.”  The structure is nearly 100 years old, been maintained somewhat, it seems reasonable that it might need rebuilding.   Maybe it’s even reasonable to widen the platforms (which must account for a lot of the >$1 billion cost), even tho we know from Granville and Loyola that elevator access can be achieved on existing narrow platforms.  It would be interesting to know of any evidence that narrow platforms actually are associated with more accidents or injuries than wider platforms.

We’re already stuck with a federal funding system thru which skilled local politicians have milked federal taxpayers for over $1 billion just for this 1.3 mi segment. But a local match is needed.  It’s not clear from the posted documents how much this match would be, but under new laws the State permits “Transit TIF’s” which can be used to raise much of it.

According to the CTA documents, “Transit TIF funds are created by growth in property value, known as increment, that occurs because of the investment in transit.” That’s almost certainly a lie, as a TIF absorbs the entire increase in assessed value that occurs during its life.  Increase due to better schools goes to the transit TIF.  Ditto for increase due to more effective policing, sanitation improvements, libraries, flood control, fire protection, or anything else the government does and pays for. Ditto for increases due to private activity that makes the area more desirable (for instance, good private schools have been shown to raise land values). Ditto for inflation, which has already returned to real estate values and will doubtless continue, on the average tho not every year, for decades.

So where will governments get the money to pay for schools, sanitation, libraries, and everything else including pension costs resulting from past services? The land value increase is already taken, as is the increase in improvements and from inflation.  So it’ll have to come from other taxes.  We’re already seeing higher taxes for nearly every kind of productive activity, and we’ll just see more.  It’s been pretty well demonstrated that people will put up with this.  Not a lot all at once, but a bit more every year.

We’re stuck with this, it is going to happen, the current crew will be re-elected repeatedly or similar ones put in their place. But, just for fun, we might consider what should have been done instead.

Well, first, a proper evaluation should have been done of restoring the third track on the parallel Metra line a mile or so west. Restore a couple of the stations which existed there sixty years ago, integrate the fare structure, and  we might find that two tracks would have been sufficient. But that would have required more coordination than legislators seem to feel is necessary.

Second, CTA needs to fix operational problems that constrain its capacity.  At Clark Junction, for instance, it takes about 18 seconds to reset the switches and signals after the route clears. Similarly, at Howard trains approaching from north and south are often held out because nobody can get empty trains out of the station, or perhaps sometimes because nobody got around to changing the signals. How could this be fixed?  How many more trains handled?

Hey Bruce! Mike! Here’s a few bucks for the deficit… or something.

For a full-sized (23.4mb!) copy of this cool Illinois Coal Industry Map produced by Illlinois State Geological Survey, click the image

For a full-sized (23.4mb!) copy of this cool Illinois Coal Industry Map produced by Illinois State Geological Survey, click the image

En route to writing something else, I discovered that the Center for Tax and Budget Accountability published a report last fall suggesting that Illinois might want to impose a severance tax on coal. I was surprised to learn that we didn’t already have such a tax, but encouraged that somebody is looking into it.

The report looks into severance taxes in several coal-producing states, suggesting that Illinois might raise anywhere from $1.6 million to $128.8 million, which might be shared with local governments, used as general revenue, or put into a permanent fund, or some combination. The numbers are pretty modest in the context of a state budget short by $4.6 billion for just the current fiscal year, but that’s no excuse to ignore them.

I did note a couple curious things in the report.  On page five it asserts that, since most Illinois coal is consumed in other states, consumers in those states would pay most of the tax. I rather doubt that any consumers would pay it.  Rather, since the coal market is national, implementation of a significant severance tax here would just reduce the value of coal deposits, so the tax would be paid by the owners or lessees of coal rights.

Second, there’s no discussion of existing real estate tax as it applies to coal deposits. Per 35 ILCS 200/10-175 it appears that coal rights, if not yet developed, are taxed on a value not to exceed $75/acre, practically a negligible amount.  That’s an extremely cheap way for speculators to hold rights waiting for a price increase.  But, per 35 ILCS 200/10-180, coal which is actually being mined is assessed much higher, based on its actual economic value as defined in the statute. So there’s already a substantial incentive not to mine the coal.  A proper analysis would consider how a severance fee would affect this assessment, both in terms of revenue and incentives to mine or not mine.


Suppose Northern Illinois University, all its students, staff, and buildings disappeared

NIU campus scene. Credit: EarlRShumaker via flickr (cc)

NIU campus scene. Credit: EarlRShumaker via flickr (cc)

Well, then, that would reduce economic activity in the region.  On that basis, the University estimates the impact would be $900 million annually.  That’s figured by counting staff salaries, student expenditures, capital improvements, and the multiplier effect of each.

But of course this is a phony argument, intended to maintain the flows of tax dollars to the state’s “higher education” system. Let’s just suppose that all government funding of the University stopped. Quite possibly it could remain in operation, as lots of nongovernment schools do. But suppose otherwise.  Tomorrow morning we wake up and find that Northern Illinois University is going out of business.  And, just to keep the exercise meaningful, suppose none of the other Illinois government schools are able to pick up the slack; maybe they went out of business too, or maybe they just won’t expand.

So now there’s a big campus for sale. Would a nongovernment school want to buy it?  Or maybe one or more other organizations, such as a mental hospital, retirement community, corporate think-tank, drug rehabilitation center, penal facility, religious group, will want to buy the space?  The campus won’t remain empty.  It will be re-used or redeveloped, and that will involve an unknown (but positive) number of jobs and investments.

What about the students? It seems the economic return on college credentials is decreasing,  but surely it has some value for some people.  There are lots of colleges, public and private, looking for students.  Some students will decide to put full-time formal education aside for a time, look for jobs or start businesses.  And starting a business might be a good idea, with a labor force suddenly available.

And the faculty? Surely they’re employable, as consultants or teachers elsewhere, or doing something else.  If they really can’t do anything but teach at a government school, what necessary skills do they lack?

Meanwhile, we also need to consider the benefit to taxpayers of no longer funding the University.  How much would they save?  Or, more  likely, taxpayers would “save” nothing, but more funds would be available to cover other existing obligations, which does seem to result in some public benefit.

One more thing.  This topic was raised by a link in an email I received, labeled “What’s a state university worth to the region in which it’s located?”  That’s kind of meaningless; do we mean “to the people living in the region,” or “to the taxpayers of the region,” or “to the owners of land in the region,” or something else? And necessarily, the analysis needs to imagine what would happen in the absence of the university.  Do there exist any examples of a significant state university shutting down?  I know of none.  Perhaps a test is needed. Maybe I shouldn’t be surprised that Cold Spring Shops hasn’t commented on this.


I don’t understand GovCare Part 2

image credit: Paul Narvaez via flickr (cc)

image credit: Paul Narvaez via flickr (cc)

Over at New City, Tony Fitzpatrick tells us how he survived a heart attack.  The good news, of course, is that he did, and it seems to have been due to an aware spouse, responsive ambulance, and nearby hospital with skilled and dedicated staff.  Except for the first, those are advantages of living in a more-or-less functional and prosperous city, with pretty decent emergency services, all of which is reflected in the cost of land.

But somehow, because before “ObamaCare” Tony’s pre-existing condition prevented him from getting insurance for medical expenses, he credits O’Care with his survival.  As if, five years ago, there were no ambulances, no hospitals, or no medical staff. In 2010 an ambulance still would have come, he still would have been taken to the closest available hospital, and the staff still would have done their best for him.  The only difference is that, afterwards, he would have gotten a big bill, even bigger than the bill he probably did (or will) get.  He might have paid the bill, or worked out some payment plan, or had to sign up for some kind of public assistance.  And very possibly the hospital would have written off part of the bill.  (Either way, before or after O’Care, the hospital would have a considerable staff who spent their time negotiating payments, filling out forms, etc.)

It wasn’t Obamacare, Tony.  It was living in a city with helpful people and pretty good medical services. Either way, we’re all paying for it.

And, yeah, somebody ought to make this comment on Tony’s article, but I can’t seem to get thru New City’s spam protection.  Maybe someone else can.

CTA Continues Investment in Employee Comfort

click for full article (from CTA's employee newsletter)

click above for full article (from cta’s employee newsletter) as a 1 mb pdf

Yes, transit facilities should be comfortable. Investments to improve comfort can be a smart use of limited transit funds, attracting ridership and …  oh, employee comfort.  Well, sure, it’s good that we’re past the days when ‘L’ conductors had perch precariously between cars.  And providing employees with comfortable facilities can be a cost-effective alternative to treating them with respect or paying them well — last I heard, some full-time journeyman CTA employees are paid less than $65,000 per year.  But somebody forgot about the passengers.

Observant passengers already know that CTA has hundreds of public washrooms — owned by the public, tho not accessible to them.   But in the short run [between elections] and for the most part, we are captive riders, and fares don’t provide the majority of CTA revenue anyway.

How you can get the story right about TIF’s

TIP-logoCivic Lab has a Crowdfunding project to create a series of videos explaining Tax Increment Financing in Chicago.  I’m confident they’ll do a good job of describing what’s wrong and why TIF’s, in anything like their current form, are detrimental to sound economic development.  I’m a bit concerned about their proposed fifth video: Alternatives to TIFs.  Do they understand that the way to prosperity starts by looking at what the proper function of government is, and the proper way to fund government?.

Once we recognize that government should be funded by collection of economic rent, which in a well-run city is largely land rent, we can see that elimination of taxes on productive activity will make all kinds of enterprises viable, quite likely causing a labor shortage which is they key to prosperity for working people.  I don’t know that this message will get thru in the video, but the project offers a way to do it.

According to the web site, for $1,000 you’ll get a chance to express your own idea in their video.  You could simply say that proper role of government in economic development is to collect the rent, protect the environment, build the infrastructure, operate the natural monopolies, and stay out of the way.  Just a thought for prosperous Georgists.

Storytelling can be patented


credit: mpclemens via flickr(cc)

We already knew that computers, equipped with proper algorithms, could write stories pretty much indistinguishable from the work of professional journalists working under deadline pressure. And had I been paying attention, I’d know that the company behind this, a “spinout” from Northwestern University, is also moving into other “turn data into a story” tasks, which from the examples here seem to mainly focus on financial reporting, tho it also appears that buyers of used cars can be exposed to “automated and individualized vehicle stories” (pdf) about their cars, which presumably helps sales. And it’s no secret that In Q Tel, an affiliate of your Central Intelligence Agency, is one of several investors behind the company.

So, it’s technology, it’s government, it’s marketing– why am I surprised that it’s protected by a bunch of patents on different variations on “automatic generation of a story?” Here I am, using a computer with many automatic functions to generate a sort of story about this company, and I really haven’t time to read and try to understand all their patents. I guess I better stop before I get in more trouble.

h/t Crain’s.