Meanwhile in Chicago...

But I will answer your question:
Difference between tax revenue bond (should be appx 3 percent coupon) paying $4bn coupon in perpetuity) less same bond but with the maturity of expiration of 421A (call it 2percent coupon). And this is assuming no tax increase.

Returning to the main discussion, Chicago politicians are trying to use their history of slow home price appreciation "as a badge of honor, a promotional tagline, for the Chicago region." Only problem is that if property taxes and income taxes rise, as they surely will in Chicago and NYC, cheaper homes are not made more accordable.

https://www.chicagobusiness.com/residential-real-estate/home-prices-have-been-slow-rise-decade-heres-why-thats-not-all-bad

That the tax benefits afforded the developer negates all the economic activity and tax generated through condo sales, rentals, office space, food beverage and entertainment etc.

George; as I said I'm not a big fan of Chicago or Illinois for that matter. But I do travel there a couple of times a year for family matters. I've never heard so many people complaining about their local government, property taxes and politics in general. My father in law threatens to leave every Christmas! Lol.

"But I will answer your question:
Difference between tax revenue bond (should be appx 3 percent coupon) paying $4bn coupon in perpetuity) less same bond but with the maturity of expiration of 421A (call it 2percent coupon). And this is assuming no tax increase."

So in other words you have absolutely no idea what Hudson Yards is ACTUALLY paying right now.

30, I am sure you can do the calculation of those two bonds values online and take the difference. First one is simply $4b/0.03. $133bn. Less max value of 25 year abatement with zero discount of $100bn. So min $25bn value without assuming increase in taxes and ancillary revenues from transfer taxes and other sources Keith point out. I will leave it there.

30, I am sure you can do the calculation of those two bonds values online and take the difference. First one is simply $4b/0.03. $133bn. Less max value of 25 year full abatement with zero discount of $100bn. So min $25bn value without assuming increase in taxes and ancillary revenues from transfer taxes and other sources Keith point out. I will leave it here.

Again you are avoiding the real question:
How much are they actually paying right now?

We're getting off topic.

Back on topic, here's today's news from Chicago, or is it NYC?

"The extended stretch of declining home sales reached its 16th month in November, according to data released this morning. ... Local factors in buyers’ hesitance include high property taxes, the likelihood that they will go up more and uncertainty about the future fiscal health of the city and state."

https://www.chicagobusiness.com/residential-real-estate/city-home-sales-fall-more-10-percent

Thanks, George. That's the part that should be concerning for everyone. All of those factors for Chicago are also relevant for NYC.

If I recall correctly, 30Y mentioned that a 30% increase in real estate taxes is already baked in the NYC budget for the next few years. On top of that, NYC already has major fiscal issues that will only get worse over time with regards to unfunded pensions and retiree health care. de Blasio's only made the problem worse with his spending, and this is the situation when we have a good economy. This situation gets ugly fast if the economy tanks.

I feel bad for all the businesses in NYC who's security costs are going to skyrocket due to what's going on in Iran. Also, a combination of zero federal aid and tons of police overtime, new training, etc for anti-terrorism task forces could be a budget problem for this city.

https://www.nytimes.com/2020/01/06/nyregion/nyc-e-bike-thefts.html

@30yrs - As you know, you are one of my favorite (if not my absolute favorite now that NWT has disappeared) poster, but I tend towards the Malthusian even without your input; having your analysis reinforce my already-present pessimism does not bode well for my mood in the New Year. Accordingly, I am going to start chanting inside my head as I read your posts "nonsense!" consistent with my New Year's Resolution to ignore any analysis that leads me in the direction of what might otherwise be an inconvenient truth.

For every bike theft MCR, somebody is doing something extraordinary! I like to focus on the extraordinary, and there are far more extraordinary and exceptional things being done by people than negative things!

Chicago's north shore is suffering...

http://www.chicagonow.com/north-shore-real-estate-chatter/2020/01/how-did-winnetka-and-the-north-shore-housing-market-do-in-2019/

by 30yrs_RE_20_in_REO "I feel bad for all the businesses in NYC who's security costs are going to skyrocket due to what's going on in Iran."

Totally wrong, all the businesses in NYC who's security costs are going to skyrocket are due to the new law effective on 1/1/2020, that criminals are to be released without bail: https://nypost.com/2020/01/11/serial-robber-released-with-no-bail-then-immediately-robs-another-bank/

Here's a Chicago example of how property taxes can kill a home's value. Super-prime location at corner of Goethe and Lake Shore Drive, one of the only remaining mansions on LSD. Traded in 2010 for $5.2m. Today's Zestimate is $5.1m. Property tax in 2010 was $35k, today $113k, even though the market value has not risen. And back in 1999, tax was under $9k.

https://www.zillow.com/homedetails/1260-N-Lake-Shore-Dr-Chicago-IL-60610/3845074_zpid/

The governor's plan for a massive income tax hike isn't helping the situation: https://therealdeal.com/chicago/2020/05/01/it-looks-grim-for-mansion-sellers-in-winnetka/

Forgive my ignorance, but isn't this at least somewhat similar to issues Greenwich Connecticut houses have been going through?

Pretty much. But in Chicago, the property taxes are far worse. There are $3m houses with $100k/yr in taxes.

From Sam Zell

What big social themes will affect the markets?

Deferral of marriage is one. When I graduated college, I got married 10 days later, and a year later, 95% of the people around me were married and had moved to Tic-Tac-Ville. Forty years ago, Motorola built a campus in Chicago’s northwest suburbs. They hired engineers out of school who bought single-family homes nearby. That campus now is empty. When Equity Residential went public in 1993, our portfolio was all garden apartments in the suburbs. Today, it is all high-rises in 24/7 cities. Today’s graduates don’t even think of getting married until their late 20s, early 30s. They want urban living in 24/7 cities. They want optionality. That doesn’t just impact real estate; it’s eight more years of disposable income and social networking. Social networks have opened more eyes to what’s out there, and the more people open their eyes, the less they are willing to commit.

2017 Barron’s

Another example is GE moving HQ to Boston and UBS mostly leaving Stamford. Biggest reason was that they had problem attracting young talent.

I've heard some smart people recently suggest that the urbanization trend has run its course. The differential between city and suburban home prices has reached an all-time high. People can't delay kids indefinitely, so they eventually need space that Sam's buildings don't provide. With the rise in WFH, a long commute isn't so bad since it's not daily. Suburbs are getting better culture than 25 years ago when even a Starbucks was rare. Cities are becoming less safe again - disease, homeless taking over subways, legalized drugs. The massive budget deficits of cities will force massive cuts in important services and/or tax increases in cities.

After coming very close on a couple of properties in Manhattan on which we bid, I'm ready to go to the suburbs or even farther like New Hampshire. Mrs George is softening up but isn't there yet.

If you can work from NH and make the same $s, it is a reasonable choice with some famous schools.

This is what needs to be sorted out, and few companies have yet set policies on the matter. Although I officially work in NY, I'm on the road more than half the time. Now that we know that #WFH works, why not have more people remote and coming in maybe a week a month? If more companies decide to do this, the question of Stamford or 45th St ceases to matter. It's tri-state area or not. Maybe with a studio crash pad in the city for that week a month.

And btw, this is why Blas needs to get his sh*t together in a way he never has before. Massive tax hikes or cuts in service seem inevitable. He's going to have to decide how much he wants to cater to affluent taxpayers who fund his city but who are quite jittery about its future over the next several years

Close to a big Airline hub then economically with low local taxes if you do not care about where you live.

I think a lot of companies are going to have to take a long hard look at how much they are spending on (unnecessary?) office space. Plus I think they might start looking at how much cheaper healthcare is that they are paying for.

PS increased crime + decreased ability to pay police is a bad combination.

Chicago's mayor may be as bad as ours, bit at least she nods to safety as a priority.

https://abc7chicago.com/property-manager-chicago-homeowners-feel-unsafe-ready-to-leave-after-looting/6367902/