David Mekarski, village administrator for the suburb of Matteson, recalls it took more than three years to land a Starbucks, noting retailers have been hesitant locating in a community that has seen its African-American share of the population increase to 60%.

"It's something we can't sweep under the carpet," Mekarski says. "We need to recognize that profits and dollars are not white, they're not black, but green."

Mekarski says an irony is that the shift in demographics has resulted in a wealthier community, with a 41% jump in household income during a four-year period as well as a doubling of median home values to $250,000. Nonetheless, retailers who have located in Matteson often do not spend as much on capital investment, as well as for operations and maintenance, as they might elsewhere, Mekarski claims. And merchandising has often been aimed at a "hip-hop" audience rather than an affluent suburban market, he adds.

Retail broker Ed Zifkin, CCIM, notes the same retailer skittishness has long been an issue up the expressways on Chicago's South Side. However, Mekarski says his village is "attacking the issue head-on," compiling a marketing strategy.

While his office has aimed to provide a fair, accurate and uniform assessment system, Cook County Assessor James Houlihan asks south suburban brokers "to require your elected officials to talk rationally about tax policy."

While a host of property tax incentives are now in place to retain and lure businesses to the county, Houlihan notes the tax burden in the south suburbs is more than three times as great as it is in north suburban Northfield. Five south suburban townships had 75% of the county's tax delinquencies, totaling $100 million.

"That should tell someone that something is awry," Houlihan says. "That's not right. That's not fair."

Houlihan has advocated leveling county assessments, which now are 16% for single-family and multifamily properties up to six units, but ranging up to 38% for office and retail property. But that's not the only change needed, he claims.

"We cannot have it as just 'homeowner versus business'," Houlihan says. "We have to look at how we finance local government."

That could mean broader sales taxes and an increase in the state income tax, he adds.

Consultant Phil McKenna says capital costs and operating costs also are factors in companies' location decisions. "It's not just the taxes," says McKenna, noting building requirements often are constraints.

He also took issue with Mekarski, adding that exploding suburbs such as Frankfort, Mokena and New Lenox need almost no incentives to lure retailers. "The incentive is there—rooftops," McKenna says. "I don't think it's a black-and-white issue…Two of the hottest markets are Evanston/Skokie—it's not ethnicity there—and Oak Park/River Forest, where it's the same kind of thing."

McKenna adds the western suburbs of Melrose Park and Franklin Park, where the Hispanic market is dominant.

Instant Insights /

Racism, Tax System Among Suburbs' Hurdles

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