EFFINGHAM — Talk of the coronavirus could not be avoided as a city official and local businessmen forecasted the economic future of Effingham during the Effingham County Chamber of Commerce First Friday Luncheon.
Michael Karibian, corporate treasurer of Midland States Bancorp Inc.; Steve Miller, Effingham city administrator; and Jeff Speer, chamber board chairman and owner of RE/MAX Key Advantage, presented their impressions of what Effingham could look like going forward.
With the coronavirus on the minds of many people, Karibian projected what could happen economically if a cluster of the virus would hit the Effingham area.
“The question is: Is it really going to be something that will destroy more economic value or is it going to be more of a blip?” Karibian said.
Karibian presented statistics comparing the number of people affected by the coronavirus to those affected by the flu virus this past year.
“If we look at what we do know, the flu has killed many more people,” he said.
“So, it shows there is a lot of fear generated about something we don’t know,” he added.
“When you start to think about it in economic terms, that fear of the unknown has unraveled quite a bit of value and has slowed the economy,” Karibian said.
With people beginning to panic, Karibian said it caused a sell-off in the stock market, which motivated the Federal Reserve to cut interest rates. He said when the Fed cut the rates, people began to think more is going on with the virus than what is being released, causing another stock sell-off.
“It has left us in new uncharted territory,” Karibian said. “Which means bond yields are falling.”
Karibian believes the Federal Reserve will have to lower the rate again in about two weeks. He said the President might also authorize a bill to jump-start the U.S. economy to reverse the stock market.
Karibian said the virus will force businesses to evaluate their supply chains moving production back to North America and that the Midwest would capture the biggest share of relocated manufacturing. He hopes Effingham can take advantage of the manufacturing move.
He said people who stand to lose the most are folks on fixed incomes but borrowers will be the big winners from a coronavirus pandemic as loan deposits and rates fall.
Karibian predicts interest rates will start to increase in 2021 and advised those at the luncheon not to miss an opportunity to buy or refinance a home while the rates are low.
Karibian noted it took nine months to get rid of the swine flu from start to finish and believes it will take the same amount of time to get through the economic phases associated with the coronavirus.
While homebuyers may benefit from low interest rates caused by the coronavirus, Speer said right now in Effingham County it’s a seller’s market if the property is priced right.
“In 10 years, we have seen an increase in our property values,” Speers said.
He said in 2014 there were 315 residential sales in Effingham County, 303 in 2015, 307 in 2016, 293 in 2017, 294 in 2018 and 304 in 2019. The statistics do not count Facebook listings and homes sold by their owners.
“It is fairly consistent,” Speer said. “And you could say we are a little low on inventory right now.”
Speer said currently there are 134 active under-contract listings, with an average price of about $136,000, up from the average of $110,000 in 2010. The highest-priced home that sold in Effingham County last year was close to $700,000. He said higher-priced homes, over $350,000-$400,000 range, usually take six months to a year to sell.
Also up from a decade ago is the county’s population. He said Effingham was one of three counties in the state of Illinois that had a population increase over the past 10 years.
“At the end of the day, I can tell you that Effingham County is doing quite nicely,” Speers said. “And will continue to do quite nicely.”
Effingham City Administrator Steve Miller said the county is enjoying a low unemployment rate, but warned the coronavirus could negatively impact that.
He noted the unemployment rate in Effingham dropped to 2.9 percent in December but believes if the coronavirus spreads to the Effingham area that percentage could increase. Miller said the virus could impact sales tax income for the city as well.
“Not only will it impact business and individuals, it will impact the city,” he said.
Miller also noted property values in the city are going up. Based on the past tax levy, the city generated $3.7 million in revenue from real estate taxes.
He said right now the city gets a 1 percent sales tax on purchases from commercial businesses. In 2019, the city collected $7.3 million in sales tax as compared to $7.2 million in 2018 and $6.7 million in 2017.
“Those are the funds that we need to conduct business,” Miller said. “Having a good growing economy is good for us.”
Miller said the city has four main tools it uses for economic development — enterprise zones, TIF districts, business districts and a new tool called the opportunity zone.
Opportunity zones are created by the federal government with approval from the Illinois governor.
“What it’s going to do is allow people to invest money through an opportunity fund into these districts and be able to retain their capital gains for 10 years, as an example,” Miller said. “So, we think this is going to be an important tool down the road.”
“We can’t control the economy. We can’t control the coronavirus. But I think the city continues to invest in the city and infrastructure and local business by providing incentives to move forward,” Miller said.
Miller said the city is always working to bring both commercial and industrial businesses to Effingham. Currently, he said the city is working on two large industrial projects, but couldn’t elaborate.
“Hopefully, what we are doing in the future will help to continue to grow what we’ve done in the past,” Miller said.