Venture: Do aldermen have too much power over small businesses?

As Chicagoans head to the polls tomorrow for the aldermanic runoff election, they'll be choosing almost a third of the city council. That could have big ramifications for small business owners.

April 4, 2011

By Ashley Gross and Tony Arnold

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(WBEZ/Ashley Gross)
Chicago Soccer owner Imre Hidvegi fought an alderman's plan to redevelop his store into a condo and retail building.

The biggest economic news in Chicago this week may be what happens in politics.

On Tuesday voters in Chicago will choose almost a third of the city council. And for small business owners, that has big ramifications. They know their success can hinge on who their alderman is.

In Lincoln Square, just north of Lawrence on Western Avenue, a block of small business owners learned firsthand a few years ago how powerful an alderman can be. Alderman Eugene Schulter of the 47th ward pushed forward a proposal for the city to acquire their properties and sell them to a private developer to turn into condos and retail stores.

Tim Van Le owns Decorium Furniture in the targeted block. Now, three and a half years later, he still heaves a sigh when he describes how it felt knowing he might have to relinquish his store.

“Absolutely we feel so hopeless,” Le said. “We really felt like we had no word.”

Just next door is Chicago Soccer, which sells cleats and other soccer gear. Imre Hidvegi is one of the owners. He led the campaign to fight Alderman Schulter's plan.

“It steamrolled so quickly we didn’t even have a chance to sit down and ask wait, why, how, what’s going on here? I equate it to a violent attack,” Hidvegi says with a laugh.

He can laugh now because they rallied enough protesters to get Alderman Schulter to drop the idea. Schulter didn't respond to calls seeking comment.

That attempted land grab was pretty brazen, but every day aldermen are asked to sign permit applications for things like awnings and sidewalk cafes. And they get notice from the city for every building permit and license application. That can have business owners feeling like they have to make nice with their alderman.

George Fink is president of the Lincoln Square Chamber of Commerce. He says he senses fear on the part of small business owners.

“That’s the general feeling in the public that oh well, we can’t do anything unless we go through the alderman to do it,” Fink said. “Is that a good feeling for free people? No, I don’t think so.”

Elizabeth Milnikel agrees. She's researched the regulatory environment in Chicago as part of her work as director of the IJ Clinic on Entrepreneurship at the University of Chicago. It’s a law clinic with a libertarian bent that works with lower-income entrepreneurs. She says Chicago's political system vests too much control in each individual alderman.

“It puts a lot of power in one person and that person can be the gatekeeper for a business that’s really trying to get started, trying to flourish in a community,” Milnikel said.

Milnikel says making things easier for small businesses is even more important right now as the city tries to pull out of the recession and create jobs. But she says some businesses can’t even get off the ground if they don’t have buy-in from the alderman. She cites the case of one of her clients who wants to open up a day care but was told by the alderman there were already enough day cares in the area.

“She has held this building and paid property taxes for over a year now, [but] she hasn’t even been allowed to start building it up as a day care,” Milnikel said. “Meanwhile this block has yet another empty building sitting there.”

Alderman Vi Daley, who’s leaving the 43rd ward, says she worked hard during her 12 years to fill empty buildings. Still, she says it’s the alderman’s job to make decisions.

“I mean an alderman certainly knows their community, knows the street and you could probably reach out to chambers and get their input if they’re active on the street, but I guess, who would then make that decision?” Daley said.

In Lincoln Square, where those small store owners pushed back, Alderman Schulter is leaving office after more than 35 years.

Small business owners say they’re excited about his replacement – a young Northwestern University staffer named Ameya Pawar, who ran as an underdog and won. Pawar says what’s needed for local businesses is more transparency.

“I think this is probably endemic in the city of Chicago where campaign contributions are linked to things actually getting done – to signs or awnings processes getting taken care of,” Pawar said. “And I think moving forward what we need to do is create a climate where businesses in the ward and all wards in the city of Chicago feel like they understand how to get a license, how to get a permit, and I don’t think we have such a climate at this point.”

Entrepreneurs say they like what they hear from Pawar, but after years of doing business in Chicago, they’ll believe it when they see it. And in 14 wards across the city tomorrow, small business owners will be watching election returns closely to see who will be their new gatekeeper.

Each week on Venture, we bring you something called our Windy Indicator – a fresh way to understand the climate of the economy.

It could be sunny. Or it could be stormy.

One person who’s banking, literally, on April showers is Jeff Hodgson, founder and president of Chicago Weather Brokerage - a brokerage for precipitation. He says the amount of rain we get can be a strong indicator for all sorts of sectors of the economy.

“A lot of people talk to me and they talk about speculating. ‘Wow, I can’t believe you can trade rain or snow. Now you’re betting on the weather,’” Hodgson said. “And the answer I always get back to people is, ‘You’re investing all this money into a marketplace where the main revenue driver is something you cannot control. You’re the one speculating here.’”

The Chicago Mercantile Exchange started selling rain contracts six months ago. The whole idea is that farmers, golf courses, outdoor music venues, and fertilizer companies could treat the rain contracts as a sort of insurance. Heavy rainfall could be an economic disaster for those businesses. But so far – it’s been a hard sell.

“Farmers understand how to trade crops – crop futures. You know, wheat, corn, soy beans, things of that nature,” Hodgson said.

But Hodgson says it’ll take some time to get customers used to the idea of putting money on the weather – something you probably don’t think about buying.

Next week – our Windy Indicator goes premium at the gas pump.