‘Twas only a few years ago, when the housing boom was in full roar, that homeowners didn’t have to fret too much over whether the money they invested in remodeling would be paid back at resale time.

Indeed, it was practically a no-brainer: Home sale prices were going up so high and so fast that remodeling the kitchen or the master bath would nearly pay for itself. Some remodeling companies had so much backlogged work that clients passed the time on waiting lists.

“These days, it’s a new ballgame,” said Sal Alfano, a former contractor who now is the editorial director for Remodeling magazine, a trade journal. “Now, the jobs are smaller, the scope of work has been cut back, and consumers are doing things in phases.”

And, he said, consumers are squinting harder at contractors’ estimates, not only to push down costs but also to decide whether the price of that redone kitchen or master bath is going to pay them back anything when it comes time to sell in a market that has become notoriously fickle and with home prices sliding.

Such born-again cost-consciousness makes complete sense in the current economy, Alfano said, but he’s concerned that the infatuation with the contractor who offers the lowest bid will come back to haunt consumers.

Each year, Alfano’s magazine partners with the National Association of Realtors to produce the Cost vs. Value Report, a massive numbers-crunch that tries to ballpark the return on investment for dozens of home-improvement projects, nationally and regionally, in addition to numerous metro areas, including Chicago.

It’s an ongoing slide, he said. Nationwide, the payback at sale on remodeling, in general, peaked in 2005 (the height of the housing boom) at 86.7 percent, according to the magazine survey of the remodeling industry and NAR members.

“That is,” he said, “it was costing you 13 cents on the dollar to build just about anything (if you were selling the house in a relatively short period).

“That’s pretty cheap,” he said. “Then it sank like a rock, ending up at 76 percent, or 10 points lower than the year before.”

In the 2009 survey, the average payback, nationally, was about 64 percent, according to magazine data.

That’s almost exactly the average for 33 remodeling projects analyzed in the Chicago area in the 2009 survey. Heading the costs-recouped list here were not the glamour kitchen/bath projects, but smaller-scale and more utilitarian jobs.

The best returns here, according to the report, were on midrange entry-door replacements (115 percent return at sale) and upscale fiber-cement siding replacements (85.8 percent).

The magazine extensively defines the parameters of each project, citing specific materials and overall price ranges, all gleaned from cost-estimating software used in the remodeling industry. In addition, this year 4,000 members of the Realtors’ group weighed in on how the improvements might pay back at resale in their local markets. The full report is at remodeling.hw.net.

A midrange major kitchen remodel in Chicago (average cost: $67,332) recouped about 67 percent at sale time. An upscale bathroom remodel here ($63,402) recouped about 50 percent, according to the study.

Despite the data, not all consumers are reining in and battening down, some remodelers say.

“For the people who have the ability and want to do a kitchen remodel, I’m not seeing them skimping,” said Bryan Nooner, chairman of Distinctive Remodelers in Orland Park.

“Pretty typically, we’re seeing kitchen remodels in the $40,000 to $70,000 range. They’re spending what they want to. They still want the granite (counters), they want upgraded wood-cabinet species such as maple or cherry, and we’re doing few standard wood stains — most everybody wants a hand-rubbed finish.”

One of his recent clients, Frank Toland, said resale value wasn’t a consideration when he recently remodeled the kitchen of his Mokena home. He said the job cost about $70,000, in addition to upgrades elsewhere in the house that were done at the same time.

“Resale really didn’t factor in at all,” Toland said. “We’re not planning on moving. We’re planning on staying there, and that’s why we decided to do it the way we wanted.

“We hope that the money we put in, eventually we’ll get it out. But we said, let’s do it the way we want it done rather than cut costs because of resale value.”

Matt Draus, who owns Descon Construction in Oak Park, also said he’s hearing from customers who are thinking long term.

“We see people who have a little bit of money and decide they’re not going to move for five years because of the real estate market,” Draus said. “But we’re not seeing the big blowout room additions.”

Instead, he said, he’s seeing smaller projects and more emphasis on maintaining and updating existing features.

But more so than in recent years, he said, money talks.

“Cost is definitely getting much more scrutiny now,” he said. “It’s all about cost, that’s a No. 1 priority.”

But Draus said that bottom-lining often seems to be coming at the expense of quality. Driven by the slumping economy, the remodeling-industry ranks are swollen with newcomers and some tradespeople who are eager to have any income at all, he said.

“I’m [offering estimates] against people who aren’t honest and upfront and are low-balling it in order to get the work,” he said. “There are a lot of good builders out there, but there are a lot of others who are making times harder for the rest of us.”

Alfano agreed, and urged homeowners to be cautious when considering bids that are significantly below competitors’.

“What we couldn’t account for [in estimating costs for the magazine study] was the number of jobs where the contractor cut his overhead or his profit just to keep busy, hoping that things would turn around,” Alfano said.

“Others are former new-construction builders who don’t yet know that they can’t really do a job for a large percentage less” than competing bidders, he said.

Draus said he’s seeing some companies agree to jobs that unquestionably are money-losers for them, just to keep some cash flowing, sometimes with disastrous results for all.

“[A homeowner] might get a bid of $1,000 from a guy who’s about to go bankrupt or a $3,000 bid from a guy who is competent and stable,” he said.

“I’ve been called in to finish jobs for people who took the $1,000 bid,” he said.

64%

The national average percentage of remodeling costs recouped upon selling a home. That means it costs 36 cents on the dollar to build just about anything for your home.

In the Chicago area, the best returns were not the glamour kitchen/bath projects, but smaller-scale and more utilitarian jobs.

115%

Return on sale for replacing an entry door with a midrange substitute

85.8%

Return on upscale fiber-cement siding replacement

67%

The average payback on a midrange major kitchen remodel

50%

What you’d recoup on the average upscale bathroom remodel

By Mary Umberger

Chicago Tribune

The popular image of wind power is of a windmill-like tower cranking away on the prairie.

The wind power at Kathleen O’Donnell’s North Side home, however, comes from a rooftop device that vaguely resembles a barber pole, without the red-and-white stripes.

O’Donnell has installed an 8-foot-tall wind turbine at her Ravenswood Gardens home, where since October it has harnessed the breezes to provide some of the electricity for the former two-flat that she and her husband spent about a year converting into a single-family home.

The premise is fairly simple: The device’s helical-blade scoops catch the wind, forcing it through the turbine and to the home’s generator, creating electricity. If the wind isn’t blowing, the home is powered by the energy grid, as usual.

An architect, O’Donnell realizes she’s something of a pioneer when it comes to wind turbines in residential use.

“It’s a little bit new,” she said. “Wind is not as ubiquitous as solar, in terms of what people are willing to do.”

But maybe not for long. She notes a broader willingness to embrace energy-conserving products these days. Such acceptance has come a surprisingly long way in a just a few years, she said, and solar panels, geothermal heating and even green roofs don’t get as many quizzical looks as they used to.

Usually, it’s all about that other green, she said — cost.

“The ‘want’ is out there, but the ‘will’ is lagging,” O’Donnell said. “Everybody wants it (when clients) call, but when they’re told this is this much money, and it will increase their overall costs, then reality begins setting in, and they start cutting it.”

Wind power is pretty much an unknown, as far as public acceptance, she said.

“Some people might look at wind and say it’s a vanity thing,” she said. “It’s untested. We just don’t know about its (economic efficiencies). The payback is probably going to be better than solar. Maybe in a year or six months we’ll be able to extrapolate that” at her house.

So she’s using her own home as a guinea pig, to an extent.

“I’m committed to it and want to make my own personal investment to suit my own pursuits and for my goals for green building,” she said.

The costs are not insignificant. Her wind turbine (manufactured by Helix Wind Corp. in San Diego) lists for $7,500. In addition, there were costs for labor, installation, wiring, permits and fabrication of a steel structure and base to support it, which drove the total to roughly $16,500, she said.

The device is capable of fully powering her home, but because it’s so new (installed in October), she hasn’t been able to monitor its energy output precisely. In the spring, she said, she intends to incorporate solar panels to help power the house, in addition to green-roof technology to help heat and cool the house.

O’Donnell may eventually move Tripartite Inc., her architecture practice, into her home, which will complicate her energy use, she said. On the other hand, it could make such conservation measures more valuable.

“I’m skeptical that the turbine is going to (cover) our total energy use, but at least it will be a large portion,” she said. “If we have an office in here and we have a lot of computers going, it will use a lot more energy.”

Nonetheless, she said, the days are gone when a homeowner can do a major renovation and not think long and hard about energy-conservation features.

“We’ve turned a corner,” she said. “You can’t do a rehab and not put in the insulation and the (efficient) windows.

“With all these houses on the market, and (a homebuyer) has to make a choice between house A and house B, and house A has a green aspect and house B missed the mark, I don’t know how you’re going to sell house B.”

Hear Mary Umberger at 12:49 and 11:15 p.m. Tuesday and Thursday and at 10:30 a.m. Saturday and Sunday on WGN-AM 720. Write to her at Money & Real Estate, Chicago Tribune, 435 N. Michigan Ave., 4th Floor, Chicago, IL 60611 or send e-mail to housingnews@comcast.net.

Mary Umberger Chicago Tribune

(Crain’s) — A company formed to develop a 102,000-square-foot shopping center in Glenview has filed for Chapter 11 bankruptcy protection, thwarting a mezzanine lender’s plan to auction off the company’s stake in the project.

Central Park Development LLC had pledged its membership interest in the development at 600 Milwaukee Ave. in the north suburb as collateral for a $5.2-million loan from a subsidiary of lender CF Capital Partners Inc. The financing helped the developer launch construction last year, just months before the economy plunged.

Chicago-based CF Capital scheduled an auction for last Monday to sell the ownership stake in the partially built project, according to a public notice. But Central Park blocked the auction by filing for protection from creditors Monday in U.S. Bankruptcy Court in Chicago.

Mezzanine lenders typically hold such auctions only when a loan is in default, but the notice did not say why CF Capital was selling the stake. CF Capital Principal John Cadden declined to comment.

Northbrook-based Central Park member Hyun “Steve” Kang could not be reached for comment, and Mr. Kang’s attorney did not return a phone call.

Central Park picked a tough time to launch the project, as retailers nationwide have closed stores and scaled back expansion plans. Locally, the retail vacancy rate in the third quarter rose to 11.7%, the highest level since 1994, according to CB Richard Ellis Inc.

But news of the proposed retail project’s troubles still surprised Glenview Director of Development Mary Bak, who said the village thought the development was progressing, even though Mr. Kang hadn’t signed any tenants.

Central Park acquired the nine-acre development site in March 2008 for nearly $8 million. Fifth Third Bank was the main lender for the proposed retail project, providing Central Park a $20.7-million construction loan and a $2.8-million line of credit.

The construction loan was to mature Sept. 6 but was extended two months, to Nov. 6, according to property records. The line of credit comes due in March. A bank spokesman declined to comment.

Central Park owes Fifth Third, its largest creditor, $10.3 million, according to the bankruptcy petition, while the CF Capital subsidiary, Catfish Glenview LLC, is owed $6.2 million.

By Andrew Schroedter

Rendering of proposed building

Roosevelt finances proposed Loop building

Roosevelt University has obtained financing for a 32-story building at 421-25 S. Wabash Ave. that would house classrooms, offices and housing for 600 students. The university has hired architecture firm VOA Associates Inc. for the $110-million project, which is being financed with about $184 million in bonds issued through the Illinois Finance Authority. Bond proceeds also are being used to refinance existing debt. Construction is to begin in February, and the building is slated to open in January 2012. The ambitious project has come at a cost, with two credit ratings agencies downgrading the university in part because of excessive debt. Fitch Ratings reduced its rating of the university’s debt one level to BBB+, from A-, while Moody’s Investor Service also cut its rating one level to Baa2, from Baa1.

Crain’s