The Virtuous Cycle of Growth and Affordability

The strategy for a virtuous cycle of affordability and growth comes down to two parallel efforts: driving fundamental growth and reclaiming our reputation. We must build housing, expand our population, foster a pro-Chicago business environment, and retain and attract new talent. We also need to market Chicago with the relentless intensity of Michael Jordan and the Bulls in the 90s, selling Chicago on the global stage. We can't fix our perception without fixing our reality; they are inextricably linked and must be tackled together.

Let's explore each briefly as components of the Virtuous Growth Cycle. We will explore these foundations here and in more detail throughout the book.

Increased Affordability

Affordability is the desired outcome to create a city that works for as many as possible. Affordability allows people of all income levels to work hard, be rewarded for their efforts, and propels millions of people forward. Right now, the affordability crisis is summed up by the fact that nearly everything costs more. This is a post-pandemic effect, but is also driven by factors like political and global instability and demographic changes in Chicago and elsewhere. While many cost increases are beyond the city's control, many opportunities exist to create affordability. The big three are: 1) build housing, 2) freeze and lower taxes, and 3) create a city that people and businesses want to move to, not away from.

Build Housing

The housing crisis is one of the most critical issues facing our city today and we need to rapidly expand housing of all types: affordable, naturally occurring affordable, and market rate. Affordable housing is typically defined as subsidized housing (either when building, selling, renting, or some combination thereof). Naturally occurring affordable housing is typically housing that is affordable in its own right. There's no government intervention or subsidization, but due to the overlap between the cost and the ability for people to afford it, it's affordable to many. Market rate is similar to naturally occurring affordable housing, but it typically is associated with a more "premium" end of the market segment for housing. This typically is associated with higher rents and home values. ¹⁸ No one type is the silver bullet. We need it all, as fast as possible. We need at least 100,000 new units of housing to depressurize the market and lower the cost of both renting and owning. We can achieve this by reducing red tape, creating a "pre-approved" list of housing types and designs, stabilizing the property tax system, and mobilizing the 10,000+ vacant properties across the city, to name just a few ways to rapidly accelerate the rate at which we build housing. This will be outlined in detail in following chapters, but growth (population and economically) without housing supply growth is counterproductive and would make things worse, not better.

For the vast majority of people, housing is their largest monthly cost regardless of where you live in the city. The housing crisis is negatively affecting all of us. If you cancel your Netflix subscription, you save $10 per month - a small lever with little impact. If you find lower cost housing, you can save hundreds of dollars or more per month. Lowering housing costs is one of the biggest levers to make people's lives affordable. One of the biggest opportunities, although not the only one, is to rapidly build housing on the 10,000+ vacant lots that the city owns and over 40,000 in total. ¹⁹ Chicago is unique in that respect as in New York, you have to search for hours to find a park or even a small patch of grass. Their concrete jungle can only get taller. But Chicago is unique because our available landmass, vacant lots, and housing stock in disrepair are available and are one key to solving the housing crisis. In addition to lowering costs, building housing is a massive economic backbone of the success of the United States over the last 250 years, has created millions of jobs, and is a major driver of family and household wealth accumulation. It should not come as a surprise that the notion of the American Dream starts with the vision of home ownership.

Building housing is doubly important to focus on and get right in Chicago. The new housing we build will create viable pathways to broaden home ownership which have historically excluded minorities, but which we can ensure is more equitability attainable across races and socioeconomic statuses. Increasing housing for all and intentionally paving pathways for minorities will start the long, uphill road to rectify the redlining and housing discrimination in Chicago that stripmined families of their homes and their wealth for generations.

Population and Job Growth

For every person that comes to Chicago, our tax base increases. You pay less. For every person that leaves Chicago, our tax base decreases. You pay more. This is a key underlying rationale for population growth. When we have more people here, each of us pays less and life becomes more and more affordable.

A major way to grow is to recruit people to Chicago. By recruiting people to move to Chicago, we increase the population, the tax base, and the supply of talent for the labor market. A growing population is simply one of the best time-tested (literally for millennia) ways to grow the economy, personal wealth, and overall societal quality of life. Another key way to grow our population is to stop losing people who decide to leave, as too many do, because of lack of affordability, lack of safety, and lack of faith in the education system.

My vision for population growth is that we aim high. We need to grow Chicago to five million residents. It may sound impossible given where we are at now, but there is a path. Here's how I think about it:

• If we were as dense as NYC geographically, we could hold roughly 6.4 million residents. At 5 million, we will still be much less dense than NYC yet we will have decades of sustained growth individually, economically, and as a city to benefit from.

• We have a massive land area. Having been to all corners of the city, once you get out of the Loop and dense lakefront, you realize how much potential there is to build housing and to bring in jobs - whether small businesses, manufacturing, service sector, trades, etc. We have the space to grow and anyone who says otherwise likely hasn't left downtown or their neighborhood recently, if at all.

• We already know we can support 3.6 million. 1.4 million more is roughly a 50% increase (a growth rate which many cities realize over a few short decades). We can't be scared of growth. This is why we need to build housing so badly. Building housing directly leads to more jobs and opportunities to grow our population.

• From a growth rate perspective, we would need to grow at 2.37% per year to reach 5 million by 2050. Starting out, it's only about 65,000 people per year. We already lose more than 100,000 per year so reducing outflows paired with modest inflows of people can net us 65,000 and we can build from there. Even if we grow slower and reach 5 million by 2060 or 2075, we will be in a much better and healthier position as a city.

• The forces favoring us are enormous, which we'll explore in detail later: high-quality educational institutions in the city and the surrounding midwest, world-class health care options, a robust, diversified economy, a global leader in arts, culture, and entertainment, being situated geographically in the center of the US and on the world's largest freshwater system, and being buttressed from extreme weather and climate areas. This is a short list, but all these and more are tailwinds that will push Chicago's desirability forward and it is our job to not only sell this vision to the people across the nation, but the world, but to also prepare for and plan for such growth.

Growth of this type will be challenging. But with a shared vision of growth, we can overcome the current trends where fewer and fewer people are paying more for an increasingly expensive city. Growth represents affordability and opportunity. In addition, it's also exciting and brings momentum and energy to a city.

Pro-Chicago Business Environment

We must create a pro-Chicago business environment which increases the number of available jobs so that, as we grow, more people have more and more high-quality, meaningful job opportunities. Businesses and people need each other. While many falsely pit them against each other and demonize each other, the reality is people and businesses go hand in hand. Dividing business and people is a destructive political strategy. Politicians use it to create class warfare and advance themselves and their ideologies instead of focusing on creating and building a growing, thriving society for all to benefit from.

This is not a case for deregulation or unbridled capitalism. We must be honest about how policy failures of the past have led to the inexcusable, extreme concentration of wealth. We have to focus on creating a supportive environment for businesses while upholding their responsibilities as corporate citizens. People, businesses, and the city need each other and to pretend or promote otherwise is to engage in divisive, false rhetoric.

Chicago is notorious for being too difficult, costly, and challenging to start, grow, and run a business. The issues range from high tax rates, business-specific taxes levied in Chicago that are not levied elsewhere, permitting issues, ambiguous timelines for building commercial buildings, and so much more. In addition to underlying costs and inefficiencies that need to be improved, the mayor has a powerful voice in messaging and communicating a pro-growth posture. This leads current citizens to feel supported in starting and nurturing businesses here and helps to brand, market, and attract innovators, entrepreneurs, small business owners, and even larger corporations to Chicago. Creating a pro-growth brand and mindset is the foundation for growth overall which is central to creating a more prosperous and healthy city. As a former small business owner and entrepreneur myself, I know how hard it is to get set up, started, and growing. You want to provide your products and services to people yet the requirements and bureaucracy imposed by the city distracts from focusing on your business and your customers. The city itself should attempt to be additive to businesses so they can grow, create jobs, provide to their customers and innovate rather than stifle, suppress, and burden business.