Recommendation: Invest in disinvested areas

Some parts of our region have experienced a persistent, long-term lack of market investment, leading to declining property values, tax receipts, employment, and population. Markers of economic disconnection and disinvestment exist in every county of the region, frequently appearing around older subregional job centers like Joliet, Aurora, Elgin, and Waukegan. Long-term patterns — including racially discriminatory policies like the historical segregation of housing, as well as market shifts in residential and commercial demand — have contributed to economic struggles in some areas. The multi-faceted and persistent nature of such disinvestment often outstrips the ability of any one community to respond effectively. Regardless of their assets, disinvested areas generally struggle to meet the core requirements of market feasibility, with exceptionally weak demand, a lack of anchors or agglomeration potential, negative reputation, and/or a lack of developer confidence in public sector capacity or market feasibility.^{{{Karen Chapple and Rick Jacobus. “Retail Trade as a Route to Neighborhood Revitalization” Urban and Regional Policy and Its Effects, Volume 2 (2009): 19-69. http://www.rjacobus.com/resources/archives/Retail%20Trade%20Proof.pdf}}{{Georgeanne M. Artz, Younjun Kim, and Peter Orazem. “Does Agglomeration Matter Everywhere? New Firm Location Decisions in Rural and Urban Markets.” Journal of Regional Science, Volume 56, Number 1 (2016): 72-95. https://cba.unl.edu/outreach/bureau-of-business-research/academic-research/documents/kim/agglomeration.pdf.}}} Disinvestment can constrain municipal revenues as fewer and fewer residents and businesses remain to pay taxes.^{{{Mike Maciag. “Demographics can Spell Trouble for a City’s Finances.” Governing. September 15, 2016. http://www.governing.com/topics/finance/gov-census-demographics-cities-fiscal.html.}}} Residents who are unable or unwilling to move — many seniors and low-income households, for example — may make up a larger share of the community. These residents may also suffer poorer health than those who live in areas with more access to resources.

Disinvested areas broadly refers to both economically disconnected areas (EDAs) and struggling commercial and industrial areas. EDAs have a concentration of low income and minority or limited English proficiency residents, while disinvested commercial and industrial areas have experienced a loss of economic activity over a sustained period. Both types of areas have substantive overlap. Solutions to promote vital places and new market-driven investment complement those targeted to promote economic opportunity for residents. ON TO 2050 also identifies strategies to build the assets and capacity of the region’s under-resourced communities. These combined individual, built environment, and community-driven solutions are required to comprehensively promote inclusive growth.

Disinvestment also affects the ability of municipalities to serve their residents and businesses. A low base of property, sales, and other taxes can lead to higher property tax rates in communities struggling with economic development, furthering a lack of attention and investment from the private sector.^{{{Chicago Metropolitan Agency for Planning, ”Property Tax Burden in the Chicago Region,” November 28, 2017, Property tax burden in the Chicago region.}}} A mismatch between local property values and revenue requirements creates these high property tax rates in disinvested areas, and local policies like Cook County property tax classification can exacerbate the disparities. The resulting municipal revenue constraints can leave communities with fewer resources to invest in local infrastructure or public services, again furthering a cycle of disinvestment. The map below highlights the disproportionately high tax rates in many of the region’s struggling communities. Greater investment in these communities is integral to improving their fiscal health, and the prosperity of the region overall.

Map

Effective composite property tax rates in Northeastern Illinois, 2014

Residential property (left) and commercial and industrial property (right)

Key

• Economically disconnected and disinvested areas
•   Less than 2.5%
•   2.5%-4.99%
•   5%-7.49%
•   7.5%-9.99%
•   10% or greater

Source

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As highlighted elsewhere in ON TO 2050, lack of access to economic opportunity limits the ability of many talented and skilled residents to succeed. In particular, residents of disinvested areas, especially on the South and West sides of Chicago and in the south suburbs, often have to travel longer distances or take slower transportation options to reach high quality employment opportunities, education, training, and services. Recent analysis shows that residents of some EDAs and disinvested areas spend 58 hours more per year than the average resident commuting to work.^{{{Travel patterns in economically disconnected area clusters}}} This problem is particularly acute for disabled residents of these areas, who face substantive barriers to getting to work. A critical part of promoting inclusive growth is helping to build economic opportunity and vibrant nodes within disinvested areas that have a historical lack of private investment. Most disinvested areas were economically thriving in the past and still have strengths to build upon. Many have highly desirable infrastructure assets, particularly public transit, although they often have less access to parks and natural amenities as compared to other parts of the region. Rebuilding disinvested areas will be critical to long-term regional prosperity by ensuring that jobs and economic opportunities are available in communities where economically disconnected residents live. View the Chicago region’s economically disconnected areas (EDA’s)( Economically disconnected areas have a concentration of low income residents and either minority re...
Read more) and disinvested areas in an interactive local strategy map.

To achieve the vision of a region where all communities can thrive, CMAP( Chicago Metropolitan Agency for Planning ) and partners must pursue new solutions for disinvested areas. Given the conditions common in many disinvested areas, these solutions must differ substantially from typical, market-based planning and investment practices. While the Targeted Reinvestment Area (TRA)( Targeted Reinvestment Areas are locally-designated places that help implement plan priorities aroun...
Read more) program would provide some needed tools and resources for disinvested areas, it will not suffice on its own. The following section highlights the additional relationship building, research, and coordination needed to relink these areas to the region’s economy. Strong and meaningful engagement of residents — especially low-income residents of color, and in places where faith in institutions has been diminished — must be at the core of all such work.

Strategies