5 Rahm Real Estate Plans to Watch in Second Term

Now that Rahm has pushed ahead to victory in the city’s first-ever mayoral runoff election Tuesday night, he will soon be returning his attention to some of the fiscal, housing and development matters that stand to affect Chicago real estate the most. Here’s our take on five big issues that are sure to keep coming up.

1) A Potential Property Tax Increase

During Rahm's campaign, the mayor and his backers stressed that, with his corporate ties and moderate fiscal bent, he was the right man for the task of fixing the ballooning pension deficit. The mayor has proposed raising property taxes to tackle the problem, but has been understandably reluctant to do so. With the re-election under his belt, Rahm may be ready to take the plunge. He once suggested increasing the city's property tax collection by $250M phased in over a five-year period, but chose to cover the pensions during his first term through other tax hikes instead. Alderman Scott Waguespack, 32nd, who supported mayoral challenger Jesus “Chuy” Garcia, told the Chicago Tribune that Rahm could have "no other option" than to raise property taxes as soon as this year. But Rahm insists it's a last resort.

2) The Affordable Housing Ordinance

With a crisis looming over the city's struggle to provide affordable housing options to some 280,000 low-income residents waiting for spots to open through the Chicago Housing Authority, last month Rahm pushed his solution through the City Council. This landmark affordable-housing ordinance will require many new developments to set aside apartment units as affordable housing. The mayor hopes the plan will create 1,200 new affordable units over the next five years, but critics say it could backfire, and ultimately stifle local development when developers are already suffering from higher-than-usual construction costs. Will Chicago see a rush to new developments over the next year, and then an exodus after the ordinance and its accompanying penalty fees take effect?

3) The Redevelopment of Wrigleyville

Cubs' owner Tom Ricketts is looking to replicate the success of the Boston Red Sox off the field by revitalizing Wrigley Field and its surrounding neighborhood in much the same way that the renovations of Fenway Park have boosted the local economy. That means Wrigleyville’s Clark and Addison streets could see a baseball-driven boom in coming years. The owner's plans for the neighborhood include an open-air plaza with branded archway, connecting hotel, and the ability to close down streets for regular street fairs. Enter a new entertainment district at the corner of Clark and Addison, where an aging McDonald's that Rickett's purchased for $20M in 2011 sits. The city has already given him approval to put a hotel there, but Ricketts and others interested in the area's business and redevelopment opportunities will still need to seek the mayor's approval for future plans. Look to Guggenheim Baseball Management's acquisition of the LA Dodgers and 300 empty acres in the city's well-trafficked downtown to see a similar story play out.

4) The Future of the Lakefront Michael Reese Hospital Site

There are 49 acres of redevelopment-ready lakefront land, not three miles from the city's convention center and downtown, soon to be up for grabs. Former mayor Richard Daley led the city's decision to purchase the site, the former location of Michael Reese Hospital, for $91M as a cornerstone of the failed 2016 Olympic Bid. Five years later, the city is finally about to start the bidding for companies interested in developing the land into something—anything—more. With tentative proposals for a casino, a cluster of hotels, or the future Obama Presidential Library in play, the site is likely to take on a key role in the long-suffering effort to revitalize the Near South Side lakefront and its adjacent historic Bronzeville. Not to mention its proximity to the future $173M DePaul University basketball arena and entertainment district and the proposed site of the controversial Lucas Museum. Bonus points if Rahm is able to recoup at least some of the city’s investment.

5) The TIF Program

Chicago’s $1.3B TIF program has pumped hundreds of millions of dollars into subsidizing development in the South Loop, Bronzeville—both neighboring McCormick Place—and even tony River North’s LaSalle Central TIF District. Mayoral challenger Chuy was among the biggest critics of the mayor’s TIF spending decisions in recent months, and it remains to be seen how Rahm will react to some voters’ calls for TIF program reforms. TIF money can be spent on a host of neighborhood improvements beyond encouraging commercial real estate development, including improving local transportation and streets, schools, libraries and parks. But any way you slice it, it’s money that, when spent right, can make certain up-and-coming blocks and neighborhoods that have fallen on hard times more attractive to developers and renters. Crain's tallied up some of the city's biggest TIF expenditures last week and found that about a third of TIF spending has taken place downtown.