A proposal to use city funds to convert multitenant houses in DeKalb’s Ellwood Historic Neighborhood is an unwise attempt to rush a process that should occur naturally.
The plan, pitched to City Council members this week, calls for the city of DeKalb to use tax increment financing revenue to buy houses designed for multiple tenants, renovate them for use as single-family homes, and re-sell them on the open market.
The idea is to reduce the density in the neighborhood and improve the quality of its houses, thereby improving its appearance and livability. But if there really is a desire for this kind of change, it should happen naturally through private enterprise.
It’s called “gentrification,” and it happens often in cities when the market determines that a desirable location is being underutilized.
Part of the reason that hasn’t happened yet in the Ellwood neighborhood is because no one is expecting the city to make money from this house-flipping plan. City officials project the city would lose $45,000 on each house, provided they buy them for $150,000, spend $75,000 on renovations, and sell them for $180,000.
If the business of renovating and reselling houses were an exact science, it would be a lot easier to calculate the city’s risk in the deal. But the real estate market is not an exact science.
There are no guarantees what the city might lose on the deal, or how long the properties would be publicly owned (and likely empty, unless the city wants to play landlord in the meantime).
What’s more, as 5th Ward Alderman Ron Naylor appropriately asked at Monday’s City Council meeting, “How much more life is really left in some of those houses?”
The answer: Probably not much. Many of the houses in the neighborhood have been used as boarding houses since the early days of the university we now call Northern Illinois. They are large buildings that have seen hundreds upon hundreds of tenants come and go. They have seen their share of wear and tear from inhabitants and elements. (It also bears noting that those houses have been there for a long time, and the character of the neighborhood should have been well-known to anyone who chose to move there.)
Although many of these properties are suitable for college students or other people looking for a place to stay, they might struggle to compete against other local options for the single-family homebuyer.
If this program induced only a couple of property owners to sign on to sell, it would be a drop in the bucket that would do little to change the greater neighborhood. If many owners sign on to sell, the city would assume more risk – and a larger real-estate portfolio.
City Council members took no action on the proposal at their meeting this week, asking for more information before a vote.
Despite the potential to create a program that would please some voters in the area, aldermen should reject it.