10/30/2007

Fair Warning: Chicago IL Reader, 9/14/07

The city has reserved the right to wipe out this block for a developer to be named later

By Ben Joravsky

In 1994, Imre Hidvegi and Edgar Alvarez opened Chicago Soccer, a soccer supply store, in a vacant storefront on the 4800 block of North Western. “It was just the two of us, and we did maybe $50,000 in business” to start, says Hidvegi.

Over the last 13 years, business has taken off. Chicago Soccer now clears more than $3.5 million a year in sales and has become a driving force on the local soccer scene, providing uniforms to schools, youth leagues, and adult clubs throughout the area.

On July 31, however, the city sent Hidvegi and Alvarez a letter warning them that it may use its power of eminent domain to take their property. “You don’t know what this is doing to us,” Hidvegi says. “My business is at stake — we have 30 employees. Why are they doing this?”

He’s not the only merchant on the block asking that question. The city’s reserving the right to buy all the property on the east side of Western between Lawrence and Ainslie so that a developer yet to be selected can build a development to be determined sometime down the road.

The block in question is part of the Western/North tax increment financing district. As faithful readers know, a TIF puts a 23-year cap on the amount of property taxes in a given area that goes into the public coffers, diverting any new revenues into a fund controlled by the mayor. By law it’s a tool reserved for use in blighted communities that otherwise would not attract development.

Instead the bulk of TIF money goes to affluent, gentrifying neighborhoods like the Loop and the near south side. TIFs are supposed to build the tax base, but they wind up diverting over $400 million a year from entities like the schools, the parks, and the county. Instead of making the city more livable, they’ve driven up property taxes to the point that it’s becoming difficult for working-class and middle-class residents to afford their homes. And of course there’s the issue of transparency — TIFs are virtually off the books, not itemized on any tax bill or budget.

On top of all that, the use of TIFs makes a mockery of the rights of property owners, as the merchants on Western Avenue are learning. Traditionally the city reserves its power of eminent domain for large-scale projects — parks, schools, hospitals, highways — that benefit the public. With TIFs in the picture, the city effectively uses eminent domain to transfer property from one private owner to another — typically to a well-connected developer.

In the case of Western Avenue, we’re talking about a stretch of 20 storefronts, bounded on the south by a Walgreens on Lawrence and on the north by Dental Corner, a dentist’s office on Ainslie. Outside the Walgreens is a small public square with a statue of Abraham Lincoln, inscribed with the quote, “Free society is not, and shall not be, a failure.”

“There’s nothing wrong with this block. It’s a great place to do business,” says David Smarinsky, who owns and operates Dental Corner. “We’ve been here since 1984. We have a list of about 2,500 patients. People move out of the neighborhood but they remain our patients. We don’t think it’s blighted at all.”

The block has a mix of businesses, including a tire store, a bridal shop, a real estate office, a Subway, a comic book store, and a restaurant, Thai Nippon, which has a sign in the window saying, “Closed for remodeling, we’ll be open soon.” True, three of the storefronts are vacant; one’s splattered with pigeon droppings. But all in all this stretch of Western looks like an ordinary north-side commercial strip—there are dozens like it in Edgewater and Rogers Park.

The acquisition letters set off a panic among the merchants affected. But their local alderman, Eugene Schulter of the 47th Ward, insists that the acquisition authorization letter’s part of a process he’s initiated over the last couple of decades to protect small businesses. Schulter says he’s routinely bombarded with calls from developers eager to buy up property and tear it down so they can build big-box monstrosities “like you see on Clybourn near North Avenue.” He claims the threat of eminent domain wards off that kind of development: if property owners can’t sell their property, big-box developers can’t buy it up.

Over the last year or so, Schulter commissioned a planner to put together a model of development for the block that includes two six-story buildings with retail on the first floor and 85 units of condos on the upper floors. When merchants saw a drawing of the model last month they pointed out that there was already a glut of condominiums in the area. Schulter assured them that it was only a model and that nothing was set in stone. “This is about protecting the merchants and property owners, not hurting them,” says Schulter. “I would never do anything to hurt them.” In the coming months, he says, he’ll work with residents and merchants to finalize a plan.

Should the merchants feel reassured about their survival? The city’s track record is mixed on TIF-funded projects. As Schulter points out, 46th Ward alderman Helen Shiller has protected some existing businesses affected by the Wilson Yards TIF development. At the same time, the city has plowed over businesses with TIF deals in Roseland, Bridgeport, Jefferson Park, Edgewater, Rogers Park — the list goes on and on. “I will make sure that merchants and property owners are protected,” says Schulter. “If they want to stay, I will make sure that any request to develop that property has a place for them to stay.”

But there are still problems for property owners under the threat of eminent domain. For one thing, it’s harder to get bank loans for improvements or expansion. “What bank is going to lend me money if they know the city might take my property?” asks Hidvegi. And even if merchants were invited to return to whatever gets built on the block, they’d most likely be coming back as tenants rather than tenant-owners. “We may wind up paying rent for less space,” says Hidvegi — not to mention no equity.

As the merchants see it, there’s a certain perversity to Schulter’s logic. At the very least they think there must be a less obstructive way to protect a block from decimation than by reserving the right to decimate it.

The larger lesson is clear: the merchants of Western Avenue had better be vigilant. Otherwise a demolition order could be coming their way.


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