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Against Intent
February 14, 2011 10:24 AM   Subscribe

The landmark Blackstone Hotel in downtown Chicago, which has hosted 12 U.S. presidents, opened in 2008 after a two-year, $116 million renovation. Inside the Beaux Arts structure, built in 1910, buffed marble staircases greet guests spending up to $699 a night for rooms with views of Lake Michigan. What’s surprising isn’t the opulent makeover: It’s how the project was financed. The work was subsidized by a federal development program intended to help poor communities.
posted by hippybear (35 comments total) 10 users marked this as a favorite

 
buffed marble staircases greet guests spending up to $699 a night for rooms with views of Lake Michigan.

I'm guessing the people who clean the rooms and carry the bags and cook the meals won't be folks who pay $699 a night for a room.

I'm also guessing that there are still poor people in Chicago. The obsession over whether this part of Chicago is poor enough seems forced. People will commute to work, just like they do all over the world.
posted by Jahaza at 10:37 AM on February 14, 2011


On the face of it, it sounds ridiculous. But...

There is a good argument to be made that a lot of the money spent on construction went to pay the people who built it. Carpenters, electricians, painters, HVAC guys, carpet layers, stone workers, cabinet makers. Not to mention the raw materials production and delivery.

Sure some people skimmed their cut off the top - management, financing, operating costs, insurance. However, I am not so sure that making "jobs centers" is a more efficient way of delivering funding to the poor, though. Blue collar guys are working poor.

The hotel will employ bell men, wait staff, busmen, housekeeping, maintenance, front desk staff, management staff, food services. The hotel will purchase local services - laundry, pest control, IT, non routine maintenance, and so on.
posted by Xoebe at 10:38 AM on February 14, 2011


Yeah, the development program trickles down, right?
posted by interrobang at 10:42 AM on February 14, 2011 [6 favorites]


I love the smell of trickle-down economics in the morning.

on preview: beaten to the punch by interrobang!
posted by immlass at 10:43 AM on February 14, 2011


There is a good argument to be made that a lot of the money spent on construction went to pay the people who built it. Carpenters, electricians, painters, HVAC guys, carpet layers, stone workers, cabinet makers. Not to mention the raw materials production and delivery.

Supply-Side Jesus wins again!
posted by briank at 10:43 AM on February 14, 2011 [5 favorites]


The government should give me a billion dollars so I can employ a bunch of people and help the economy. I mean, it makes sense. I could finally have that $200k/yr on-site full-time cat groomer I've been needing. And someone has to remove that slightly different colored core from my carrots before I eat them. What am I, an animal? Anyway: Taking that money from the government would be a sacrifice, but it's the least I could do to help make America great again.
posted by chasing at 10:47 AM on February 14, 2011 [10 favorites]


I think the intent of the law is to help development in communities with a large concentration of poor people. While this hotel is in a census tract that technically counts, it is abusing the intent of the law to use these fund to build a luxury hotel/condominium building in a part of Chicago which is mostly home to other luxury hotels and condo highrises.
posted by mai at 10:49 AM on February 14, 2011 [1 favorite]


I would love to find out that unionized construction labor was used to build it, if only to see what part of the expenditures conservatives will accuse of being "wasteful."
posted by XQUZYPHYR at 10:49 AM on February 14, 2011


Large companies use intelligent lawyers to make money from the government. Film at 11.
posted by Mister Fabulous at 10:53 AM on February 14, 2011 [1 favorite]


The 15-block tract that’s home to the renovated Blackstone -- census No. 3206 -- qualifies because it had an individual poverty rate of 26 percent in 2000.

So the program can fund places where there are a lot of wealthy people living near a lot of poor people. As suggested in the article, perhaps it should also require a low median income.
posted by exogenous at 11:00 AM on February 14, 2011


Large companies use intelligent lawyers to make money from the government. Film at 11

Totally. This is nothing. Haven't you heard about those awful half dozen or so postal workers who used their government credit cards to buy pornography, an apple computer and a couple of plane tickets? That's obviously a much more newsworthy story than this. Those parasites probably cost tax payers somewhere in the high thousands. In fact, how can we afford to even have a post office anymore with such abuses running rampant? Now, there's an outrage-worthy example of government waste. I mean, give me a break, rite?
posted by saulgoodman at 11:22 AM on February 14, 2011 [1 favorite]


Sorry if it wasn't clear; that was meant to be irony, on a couple of different levels, not actual thread-shitting.
posted by saulgoodman at 11:34 AM on February 14, 2011


So the program can fund places where there are a lot of wealthy people living near a lot of poor people.

The "poor people" in this situation are art students living in the dorms at Columbia College -- according to the Bloomberg article only 4% of actual families in that census tract are below the poverty line. It's a total fraud, but appropriating public money to build amenities for the rich is a Chicago tradition.

Interesting side note: the Blackstone Hotel was the location of the original smoke-filled room in which Warren G. Harding was chosen as the Republican candidate for 1920.
posted by theodolite at 11:35 AM on February 14, 2011 [5 favorites]


The problem here is that the article makes tax credits sound like a zero-sum game: this project got financed and therefore equally-worthy jobs center projects did not receive credits.

The truth is that a significant portion of the tax credits made available every year by the federal government go unused. The reason is because a developer still has to present a viable transaction and still has to engender the support of a a lender and an tax-credit syndicator. Tax credits are an incentive to direct private funds toward projects that benefit the public good--they do not magically make companies interested in bad transactions.

Is it theoretically possible that a jobs center was not built in order that this hotel could be? Yes, of course. But if you worked in this field and talked with the government employees charged with allocating tax credits, you would know that their biggest burden is preventing recapture: i.e., signing up projects for allocations that will be successfully completed and operated for the seven-year compliance period, as opposed to giving money to projects that have to give the money back in six months time because their financing structure fell apart due to concerns by their lender or equity provider about the viability of the project.

If projects like this one, however distasteful you find it, were not being undertaken, then the credits would go un-utilized and would eventually be cut out all together. The majority of funded projects are not as egregious as this example, but at the end of the day all federally-funded projects require Davis-Bacon wage compliance, so your choice here was much more likely to be federally-funded jobs restoring historic hotel and contributing to the local tax base or else federal recapture of available funds.

As a taxpayer I would personally prefer the funds be recaptured, but their utilization represents a net gain for that area in any event.
posted by jefficator at 11:37 AM on February 14, 2011 [2 favorites]


But it was all legal. Never mind that, once again, the movers and shakers amongst us give fuck-all about the spirit of the law.

(And, yes, the workers made some money in the temporary jobs it created. Not much of a tradeoff, IMO.
posted by Benny Andajetz at 11:39 AM on February 14, 2011


But it was all legal. Never mind that, once again, the movers and shakers amongst us give fuck-all about the spirit of the law.

Yeah it pretty much ruined life for me when I discovered it actually is true that you really cannot survive if you are attempting to maintain the spirit of the law and not just the letter. Its why I didn't go to law school and why my jaw still drops on a daily basis in the business world.
posted by jefficator at 11:47 AM on February 14, 2011 [1 favorite]


Blue collar guys are working poor.

There's a big difference between skilled labor and service sector jobs. Low-skill laborers of questionable immigration status make $15/hr or so in my area. Equipment operators, cabinetmakers other tradesmen start around $25/hr and go up from there, depending on experience, the employer and whether they're union or not. I wouldn't call that working poor, unlike say a hotel housekeeper, which probably starts barely above minimum wage.
posted by electroboy at 11:53 AM on February 14, 2011 [1 favorite]


"If projects like this one, however distasteful you find it, were not being undertaken, then the credits would go un-utilized and would eventually be cut out all together."

So it's all good, and they're, ummm, practicing for the next one, which will be a Totally Appropriate use of public money?
posted by sneebler at 11:54 AM on February 14, 2011


Hey, hey! The elites are doing their best to serve y'all. Now bend over and be served!
posted by vidur at 11:55 AM on February 14, 2011 [1 favorite]


program intended to help poor communities.

It did. All those poor, huddled masses of LLCs set up to do the project so that the project could get done started off poor, with nothing and were able to pull themselves up by their bootstraps and follow the American Dream!

Lets all hear it for the United Citizens!

(Now many are broke and have committed suicide via filing for dissolution, they lived fast and died young)
posted by rough ashlar at 11:56 AM on February 14, 2011


The poor don't deserve anything nice, they will just destroy it. That's why they are poor.
posted by Ad hominem at 12:01 PM on February 14, 2011


appropriating public money to build amenities for the rich is a Chicago tradition.

*smile*

And I await the epic to-the-blue post where that TV show from Fox about the traditions of Chicago is "discussed". I especially look forward to the Blue post groupthink applies an Obama filter to it.
posted by rough ashlar at 12:02 PM on February 14, 2011


*smile*

And I await the epic to-the-blue post where that TV show from Fox about the traditions of Chicago is "discussed". I especially look forward to the Blue post groupthink applies an Obama filter to it.


What are you talking about?
posted by theodolite at 12:13 PM on February 14, 2011 [1 favorite]


I'll take any motherfucker's money if he be givin' it away.
posted by docgonzo at 12:14 PM on February 14, 2011 [4 favorites]


Why, that's outrageous! I shall surely endeavor to find some other luxury hotel to make sport with my multiple escorts in when I win the lottery.
posted by Halloween Jack at 12:15 PM on February 14, 2011


The truth is that a significant portion of the tax credits made available every year by the federal government go unused.

But any credits that are used reduce the total amount of Federal tax revenue in a given year, and as we are constantly reminded, we don't have enough of that stuff to go around spending it all willy-nilly on crazy social programs like social security or health care. Yet effectively spending tax revenue on the development of luxury hotels for the benefit of private owners--somehow that's an economically legitimate use of tax revenue?
posted by saulgoodman at 12:17 PM on February 14, 2011 [4 favorites]


What are you talking about?

Erm, because state senators play such a deciding role in allocating Federal grants?
posted by saulgoodman at 12:20 PM on February 14, 2011


According to the article the Treasury determines how these particular grant funds / tax breaks are allocated.
posted by hippybear at 12:25 PM on February 14, 2011 [1 favorite]


“Things like luxury hotels are entirely contrary to what we set out to do,” says Kellogg, who’s now a bank consultant

...

The program, endorsed by Republican Senator Rick Santorum and House Speaker Dennis Hastert...

Two men who spent their careers as tireless advocates for the poor. Hate to tell you Kellogg but you are either a chump or complicit if you for one second believe this wasn't the EXACT intent of this program.
posted by any major dude at 12:37 PM on February 14, 2011


On the upside, a beautiful, historic building was preserved instead of being torn down and having a new, inferior one built in its place.
posted by Jess the Mess at 1:39 PM on February 14, 2011 [1 favorite]


"Building high-end commercial projects goes against the intent of the New Markets program", says Cliff Kellogg, a former senior policy adviser at the Treasury Department who helped design New Markets. “Things like luxury hotels are entirely contrary to what we set out to do,” says Kellogg, who’s now a bank consultant.

Gee, I wonder why things like this happen?
posted by PareidoliaticBoy at 5:14 PM on February 14, 2011 [1 favorite]


There is a good argument

No. Not a good one, actually.
posted by jeanmari at 7:03 PM on February 14, 2011


er, it's my kinda towne?
posted by clavdivs at 11:36 PM on February 14, 2011


I love the argument that it is great to give vast amounts of wealth to the already rich, because some crumbs might fall the way of the working poor, after they work for it. How about you give the money to the poor? That money then goes to everyone that produces actually useful stuff to keep people alive, instead of new and expensive private planes and boats...

Do you understand, Xoebe, that your very argument is the chain that binds us?

Forgive me for giving up. I just can't be bothered to explain this anymore.
posted by CautionToTheWind at 4:48 AM on February 15, 2011 [1 favorite]


That's our problem. We keep trying to explain these problems away. That's not going to work. It never has and it never will.
posted by saulgoodman at 6:47 AM on February 15, 2011 [1 favorite]


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