Suburban Chicago government became a homebuilder, attracting private development – The Real Deal

Andre Harvey with Chicago (Bellwood.com, iStock)

Andre Harvey with Chicago (Bellwood.com, iStock)

Chicago’s western suburb of Bellwood has completed a long comeback to ease taxpayers’ debt burdens, thanks in large part to a decision by the local government to build its own housing.

A little more than 10 years ago, the central Cook County village of about 19,000 residents launched a program to spur growth by developing its own homes, Crain’s reported.

Its economy had stagnated during the Great Recession, and a series of gambles by the village administration failed to pay off, leaving taxpayers shouldering the costs of property tax incentives placed on swaths of land that never attracted developers, Bellwood’s economic development head Peter Tsiolis told The Real Deal.

“They were sold by a bunch of guys in fancy suits,” Tsiolis said.

While new home sales in Chicago’s suburbs last month hit their highest levels since the housing market crash of 2008, according to The Real Deal, it’s not common for village governments to take the lead in expanding their own community’s housing stock. Few new homes were added in Chicago and its suburbs compared to the rest of the nation during the previous decade.

Instead of creating tax incentives in hopes of attracting developers to spur new activity on vacant property that used to be the suburb’s downtown and came to be owned by Bellwood, Tsiolis proposed the village start constructing its own homes.

Bellwood started by building a row of five homes, and the units sold for upwards of $200,000 just a couple of years after the average home sale price in the suburb was $49,000 because of a series of transactions on foreclosed properties, Tsiolis said. The village has since developed 23 total homes, with two almost complete on a property that used to be a vacant former gas station, Tsiolis said.

“To go from $49,000 to $212,000 a year or two later back then was amazing,” he said.

Making money on the homes hasn’t always been the village’s goal, although its newer self-built homes are moving for above asking prices.

“We’ve sold them for as close to real market prices as possible. But we’re going to have the long-term benefit of getting these long underused properties back onto the village’s tax rolls. That’s substantially better for the village,” Tsiolis said.

The village-built houses are bigger than most of the older homes in town built in the years after World War II between 900 and 1,200 square feet, which were no longer accommodating the needs of Bellwood residents, who started moving into bigger spaces elsewhere. The two new homes going up at the former gas station on St. Charles Road are 2,150 square feet each, and one has sold for around $380,000, above the $369,000 asking price, Tsiolis said.

With the momentum of the village’s self-started growth, a new player wants in, and for the first time in a decade has found success with residential real estate development in the suburb.

Juan Fragoso brought his West Humboldt Park-based J. Fragoso Construction to Bellwood and recently completed a three-bedroom, 1,600-square-foot home, across the street from the row of five homes the village built years ago, Crain’s reported.

The village’s homes “are 100 percent what convinced me to do it,” Fragoso told Crain’s. He got multiple offers after he dropped the price on one home he built there from $375,000 to $349,000, and he wants to build at least two more in Bellwood, he told the outlet.

Commercial developers have also shown renewed interest in Bellwood since the village helped to grow itself and shore up its finances, Tsiolis said.

Duke Realty is putting up a 299,000-square-foot warehouse that was fully leased amid its construction in November, a type of development the village hasn’t seen at such scale in 70 years, and the village has also recently given a green light to a new $30 million, 80-unit senior housing project, he said.

[Crain’s] – Sam Lounsberry

https://www.chicagobusiness.com/residential-real-estate/bellwood-becomes-homebuilder