Warehousing, dissecting the arguments for making it DeKalb’s premier industry

I find this whole argument over warehousing quite interesting. From the one side you have those who believe DeKalb can do better than this for its industrial base. For reference, I lean towards this side. There are others who believe that warehousing is the only industry we should seek out.

There have been several arguments for making warehousing our primary industry. The predominant arguments I have heard are, “We need the low end jobs for unskilled workers”, “There are no more manufacturing jobs in the USA, only warehousing”, “Our schools need the funding”, “High tech and other commercial industries bring in workers from the outside who ultimately burden our city and schools”, last but not least, “Any job is a good job and we need the jobs”.

I think we would be wise to analyze these arguments. They all have elements of truth to them. They also ignore important elements of truth.

‘We need the low end jobs for unskilled workers”

It is true, we need jobs for unskilled workers. On the other hand, not all of the residents here are unskilled. The DeKalb population base is blessed with all sorts of skill sets and as a university town, we have a fresh supply workers being produced with skills encompassing many industries. We should consider ways to give the unskilled of the community good marketable skills. Being of a conservative slant, I think programs for this should not only come from the government but also from the business community and social groups as well. Because a person is unskilled, it doesn’t mean they can’t learn a skill. Most people only need to be given the opportunity. I was fortunate that my town, Reading Pa., had a Vo-Tech school where I spent half of each day in High school learning about electronics. There were many fields to choose from, auto mechanics, cosmetology, data processing etc. By the time I graduated from high school I had enough of a skill set to get my first real job as an production technician testing and fixing boards for televisions. It wasn’t much of a skill but I was able to build on it. I’m sure there are plenty of students in the DeKalb High School who, if given a similar opportunity, will be able to become anything they can dream of being.

“There are no more manufacturing jobs in the USA, only warehousing”

The number of manufacturing jobs is ever shrinking in the US as a whole. I’m not sure what the solution to this is, except that we, as a nation, need to fix this. We need to learn new skills and come up with new ideas that we can export to the rest of world for us to keep the standard of living we’ve come used to having. Building our nation up with jobs in an industry that is totally dependent on the US consumer will ultimately kill our towns as well as the nation as a whole. If we do not produce something the rest of the world wants and is willing to pay for, we won’t have any ‘currency’ to pay for all of those cheap imports we demand. This of course spurs an entirely different argument, one which this article is not about. Suffice it to say, we should not put all of our eggs in such a fragile basket.

“Our schools need the funding”

Our schools do need the funding. Warehousing does bring in tax revenues and they do not have many jobs per square foot which keeps the burden on the schools to a minimum. Sadly, from my understanding, the taxes they pay are on the low end of the tax scale. Other industries pay much higher taxes. Warehouses are full of things and have a small number of people moving those things about. Offices have a larger number of people per square foot, and they push very few things around, mostly money and ideas. This naturally means more residents and more kids in our schools. Of course they pay higher taxes to offset this. This flows right into the next argument given.

“High tech and other commercial industries bring in workers from the outside who ultimately burden our city and schools”

Other industries, such as high tech and financial, do bring in workers from outside of the community. So what? We can pretty much expect the population of DeKalb to grow even if we didn’t have one new job to offer. I believe it is estimated that the population of the city is expected to reach 50,000 by 2010 or maybe it was 2015. The time frame is not as important as the estimate of growth. With or without industry, warehousing or otherwise, our population will grow creating additional burdens on our city’s services and our schools. Wake up folks! Look around! New homes are being built left and right. The only reason we had a slow down was because the city council invoked a moratorium on new homes until they could solve how to pay for the additional services that they would need. This is without even attracting many new industries here lately. I don’t think the Walmart and other stores on 23 nor did the Target attract all of these homes. DeKalb is a good place to live! It is now closer to civilization than it ever has been in the past. The population base of Northern Illinois will continue it’s march westward. More people will move into DeKalb! Does it not make sense we should have a good mix of industries in our community so the existing residents as well as these new residents can work and spend their money close to home? Why should I go spend my lunch money in Naperville? Why should I have to spend $200.00 or more each month in gas driving over to DuPage county instead of spending that money here in DeKalb?

“Any job is a good job and we need the jobs”

I’m a firm believer that no job is bad. If you work hard, and do a good job as a fork lift driver, or whatever job it is you have, you can be proud of your work. There is no shame in any work. My contention is is that it is bad for a town to have only one industry. Evidence for this can be seen all over the country. A town thrives until it’s industry leaves or goes bust, then most of the town is unemployed and the town then dies or it takes years for it to recover. DeKalb needs a good mix of industry. We already have a number of warehouses large and small. It is time to look to other industries.

I believe the real argument for warehousing is…

In my opinion, the real reason for making warehousing the industry of choice for DeKalb is plain laziness. Face it, thanks to our location, the people in charge of finding new industry for our city and county can just sit on their hands and wait for the next logistics center to come. These people would have to create a marketing plan and find creative ways to espouse the virtues of DeKalb and it’s surrounding areas if they want to get other industries into DeKalb. Why work when you don’t have to? Why spend the time searching and coming up with ideas for attracting other industries when the logistic industry just comes calling without little or no effort? Being a lazy person my self, I can relate to this. Being a person who does not settle for mediocrity, I just don’t understand how we let ourselves fall into the trap. The trap these people lay with their half truths and underestimations of DeKalb and its residents! If half of the energy was spent on marketing DeKalb to other industries as spent on justifying why warehouses are the only good solution for DeKalb, we would already have all sorts of industry in town.

To sum this up. DeKalb is a great town. The fact that we are growing and it is estimated that this growth will only increase is the evidence for this. We have a good population base and have a broad skill set. We should capitalize on this and work to find ways to attract various forms of industry, High Tech, financial etc, not just the ones that come easy for us. We all need to work at this! This is not the time for DeKalb, let alone any town in the US, to sit back and just let come what may. We should look back to what made our country great, creativity, innovation and hard work, and apply these to building the DeKalb our children will be proud to call home. The DeKalb where we, our children and our children’s children will have jobs. The DeKalb which will help keep America strong for the next century to come.

7 thoughts on “Warehousing, dissecting the arguments for making it DeKalb’s premier industry”

  1. I am really impressed with the depth of thoughtfulness this group displays. I certainly hope that more DeKalb residents become aware of your efforts at this site.

    Joe wrote: “The only reason we had a slow down was because the city council invoked a moratorium on new homes until they could solve how to pay for the additional services that they would need.”

    I most respectfully disagree.

    There really was no need to invoke a moratorium. The last major residential annexation attempted in DeKalb was the Savannah Green project in 2001. That developer attempted to bring in an 800 home subdivision. He offered to build an elementary school but that offer as well as the annexation request was turned down. There were several reasons that project was turned down. One was the amount (800) of workforce affordable housing units (prices would have started at $109,000). Another lesser known reason was that the developer had rejected a central Illinois union boss’ request to become a financial partner in similar projects in Normal and Urbana and revenge was exacted.

    No local or national residential developer has attempted to annex land into DeKalb since 2001 because any such request would fail to get the 2/3 super majority city council vote required. As a result the national developers (and some local) moved to Cortland. At the time of the Growth Summit it was determined that there were 1,987 residential lots that were approved but not yet built in DeKalb and 498 such lots in Cortland. No new lots have been added to DeKalb. I estimate (educated) that there are about 700 lots left in DeKalb and it has been projected that there are now somewhere around 5,000 approved but not yet built lots in Cortland. DeKalb, during this recent growth burst, has averaged somewhere around 350 residential units per year.

    Anecdotal note: the Novotny farm (some of the land for Godzilla) at that time was also under consideration (although I don’t know if a formal application was ever generated) for annexation as a residential subdivision by Kennedy Homes.

    The moratorium on residential annexation was political. The motivation for doing so was meant to attempt to address some of the reasons why an annexation attempt would fail to get super majority vote on the city council and to allay citizens’ fears of ‘rampant’ growth in DeKalb. The theory is that by publicly placing a residential moratorium while passing a huge increase in impact fees certain council members would vote in favor of an annexation.

    Whether the effort will provide the impetus needed to obtain super majority approval has yet to be tested. It is also yet unknown whether a developer will assume the financial risks that the impact fee increases pose. There are some who are juggling the numbers to see if it is economically feasible but none so far have formally applied for annexation.

  2. Thanks for the new info Mac. Being somewhat new to the area I am missing a lot of the background on these issues.

    With that said, my premise is still valid, DeKalb, and this area, are growing with or without the industry and will continue to do so.

    On the subject of growth, the reasons for the slower growth may be because of politics, ineptness or a true concern for the city of DeKalb and what it will look like down the road. I truly don’t know. If there are three people to a house, 350 houses a year is 2.6% growth per year. Not stellar, but not stalled either. As the pressure swells on DeKalb, there will be new homes built. Cortland and those areas will fill out eventually. Hopefully with the new guidelines they will not look like cities of mud that seem to be the rage up here. Why is brick not used more?

  3. Joe… This community needs to be challenged to think outside of its box lest we get trapped into making decisions primarily based on “that’s the way we’ve always done things.” We need more input and involvement from our residents who are new to the area. Thank you for speaking up.

    Why is brick not used more? Cost. Consumer willingness to pay that cost. Customer ability to afford and/or qualifications to borrow that cost. Followed by customer preference. Some high end customers would rather purchase a log cabin-style home, for example, than an all brick.

    The 350 residential units are not houses. From 1990-2002, 58% of the building permits issued in DeKalb were for multifamily ( mostly student apartments), townhomes and duplexes, 37% single family detached homes and 5% commercial/industrial.

    I believe DeKalb is growing at slightly over 2% per year and that is certainly not stagnant growth. The concern is the amount of time that transpires from application for annexation until a building permit can be issued.

    Before the approval process begins things such as soil tests, enviromental studies, traffic studies, feasibility studies, drainage, wetland mitigation, subdivision design, convenants and restrictions, etc. must be completed. The costs of which is measured in the hundreds of thousands of dollars.

    Once the process starts the developer must pay the City to review those studies and make revisions as necessary. Within this process the developer meets with the various governmental units such as Sanitary, Park and School Districts for their consideration and/or approval. It is then forwarded to the Plan Commission and then to the City Council. Each of the governmental units meet once or twice a month and if they are doing proper due diligence, with full public hearings, rarely will a project be discussed and approved or denied in a single meeting at any unit of government. This process often takes more than a year to complete.

    Once the project is approved the developer (usually): 1) finalizes financing 2) closes on the property 3) lets out bids 4) chooses vendors 5) installs streets, curbs, grading and retention, sewer, water, storm water drainage, sidewalks, lights, etc., etc. This process can take more than a year and must be completed, at least in stages or phases, before the first building permit can be issued.

    DeKalb has around 700 approved units (I do not know the breakdown between single and multi family) left in permit ready inventory. If the market stays hot, based on trends, that is a two year inventory. It is then possible that DeKalb would have no permit ready lots or units.

    If you are comfortable with the residential growth then going to Cortland, Waterman, etc. having no inventory is not a problem. But if that housing bubble ever does pop, and I am of learned belief that the pendulum does swing both ways, DeKalb would be in a precarious position.

    In the late 70s or early 80s, local attorney, the late Dave Witheft, purchased the only new construction home built (by Milan Krpan) in DeKalb County that year. This is what directly led to our school district laying off teachers, mothballing and selling schools and being placed on the State watchlist for potential bancruptcy.

    If we are truly to look at the Big Picture with discerning eyes I think we have to weigh the cost of growth in its various stages: Rampant, moderate, slow and no. Within that spectrum is just right.

    Final comment: I fully agree with you that Logistics should not be our premiere industry. I believe Education is and should remain our premiere industry but oh the delicacies and challenges that presents. :-)

  4. Thanks to the Smart Growth Internet Research Commandos, we can confirm that, yes, there is residential zoning for, ultimately, a whopping 5,000 additional units in Cortland.

  5. Thanks Mac for the historical, and builders inside look at the core of DeKalb, and adding to our knowledge of our growth issues.
    My comments towards certain things I have recently been told: There have been several interested parties looking at the Vatne property in the past few years, one was Walmart, and they decided against it since it was too close to town and an existing residential area. The other told to me was Anthony Homes, I understand certain city people were quite horrified of the idea, calling them “baby maker” homes.
    I was also told that we were lucky we did not get Savannah Greens, as the developer did file bankrupsy shortly after the plan was squashed.
    There are some interesting and unknown facts about the school district. Schools were built and then disposed of, citizens will not tolerate that waste. Three failed referendums, with the first one asking for the sky as a limit. Illinois is either 47th or 48th in the nation for school funding, making property tax Illinois method of paying for the schools.
    Whose taxes have ever gone down since the Nestles, Walmart, 3M, Goodyear were to added to the tax base? Soon the Target will begin operations, but again, the taxes won’t be there for several years.
    Another note, DeKalb was a one high school town back in 1970, it has taken in Malta, as Cortland high school students went to DeKalb in the past. The high school had crowded hallways in the 70’s too. How did the Park District get to build that building, where it would have been a good spot for the high school to build on?
    One final- final question would be have all these financial needs/wants examined closer. I too, am all for education, but education is not only about more and more and more funding, maybe another building is needed, and they could turn the high school to a 3 year high school, and adjust diferant school capacities accordingly.
    Gene Stassel sp? had a great show on several days ago, about America getting dumber. It emphasized studies of the more funding for a school did not guarantee smarter students, but the contrary! Some of the schools with the least money had the most successful students.

  6. Ing… You are correct that Construx filed for bankruptcy. They filed about this time last year. The Savannah Green projects did not however. I believe the financial partners in Normal and Urbana took those projects over, pr purchased them, and fulfilled any entitlements.

    And yes, Illinois ranks down near the bottom in terms of the percent of total operating expense per child that is paid by the State. But it ranks around 9th in the nation in school funding when all sources are added up. It is easy to decry the State for not paying 50% of the costs but I really don’t believe we want the state to increase our sales and income state to match the property taxes. If the state had to raise those taxes every time the local school districts raised peroperty taxes we’d all go broke in a hurry. The taxing bodies need to learn a new phrase: replacement revenue.

    You said, “Whose taxes have ever gone down since the Nestles, Walmart, 3M, Goodyear were to added to the tax base? Soon the Target will begin operations, but again, the taxes won’t be there for several years.”

    Again, until they learn REPLACEMENT REVENUE, taxes will never go down and government salaries and pensions will continue to rise unchecked. You are dead on in your assessment and my question is: when are we going to quit accepting this mentality?

    Your point on the enrollments and crowded hallways at DHS is very valid. I believe the highest enrollment ever at DHS was in 1972. It may be that our enrollment has now reached those of ’72 but I understand that night and alternative high school students are counted in today’s enrollment figures. I also think a comparison study of class room square footage in ’72 as opposed to today might suggest that we have converted a substantial amount of classroom space into office space.

    You said, “I too, am all for education, but education is not only about more and more and more funding, maybe another building is needed, and they could turn the high school to a 3 year high school, and adjust diferant school capacities accordingly.”

    I hear ya! The school district needs to put a comprehensive plan together just like the City and the Park District. They should incorporate into that plan where they believe new schools should be added and what needs to be done with the existing facilities. They should also identify all funding sources, including the soon to expire TIF districts, increased EAV due to new construction and identify the federal , state and private grant sources that they will apply for. Otherwise all funding sources except for impact fees and successful (if any) referendae will go to operating expenses.

    John Stossel’s report was excellent. If you haven’t done so yet, I recommend checking out: http://thehiddencostsoftenure.com/

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