Crain's Chicago Business

THE TAKEAWAY: Meet the new Metropolitan Planning Council CEO. PAGE 6

GREG HINZ: Newman-Casten contest may preview where Dems are headed. PAGE 2

CHICAGOBUSINESS.COM | JANUARY 17, 2022 | $3.50

Why it’s hip to go public again SPACs and lofty valuations produce the biggest crop of local IPOs in a decade

BY JOHN PLETZ

GEOFFREY BLACK

Initial public offerings by local companies hit the highest level in a decade last year, amid a broader surge in IPOs nationally.

A dozen Chicago-area companies took advantage of the strongest U.S. IPO market in 25 years. That’s up from five in 2020 and nine in 2013, which was the previous high-water mark in the past decade.

An already-frothy environment was boosted by the frenzy for blank-check IPOs early in 2021.

Half the local IPOs were traditional offerings, while the other half involved Chicago private companies going public by merging with publicly traded special-purpose

CRAIN’S CHICAGO BUSINESS

REPARATIONS

Former Evanston Ald. Robin Rue Simmons on Dewey Street in Evanston’s 5th Ward.

COMPENSATING

FOR DAMAGES With its first-in-the-nation reparations program, the city of Evanston made history. But will the promised $10 million actually shore up Black wealth? PAGE 13

acquisition companies, or SPACs. Another 17 Chicago-area SPACs completed offerings, raising money from investors, according to Dealogic, a research firm in London. Nine of them have identified acquisition targets outside Chicago. There were five local SPAC offerings in 2020. Two more Chi-

JOE CAHILL: Why Chicago needs more IPOs. PAGE 3 cago companies, cannabis grower and seller Verano Holdings and psychedelic-treatment developer Wesana Health, went public in Canada.

Easy access to public markets helps more companies stay independent, bolstering Chicago’s corporate roster, adding jobs and providing financial windfalls for See IPOs on Page 20

New money upends venture capital As local VC firms proliferate, entrepreneurs gain the upper hand over investors vying for the best deals

BY KATHERINE DAVIS A rising generation of earlystage startup investors in Chicago have proven they’re here to stay by raising additional funds, which is boosting competition among local venture-capital firms in a red-hot startup market.

The number of active Chicago VC firms has grown to 89, up from 77 in 2020 and 15 in 2010, according to PitchBook. Several earlystage firms launched in the past decade, including Starting Line,

M25, Listen Ventures, Chingona Ventures and Sandalphon Capital, are now lining up investors for second and third funds, according to U.S. Securities & Exchange Commission filings and interviews with fund managers.

Starting Line closed a $30 million second fund in April. M25 closed a $31.8 million third fund in May. Listen Ventures closed on $92 million across two funds this month. Chingona is close to See VENTURE CAPITAL on Page 21

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BOOTH INSIGHTS

FULTON MARKET

Entrepreneurs need a new customer-service approach. PAGE 8

This would be the biggest project yet in the red-hot district. PAGE 18

1/14/22 4:07 PM

2 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

E

This race may point to where Dems are headed

complicated than that. And lots of other factors play in, from a pending ethics case to a key foreign policy dispute, the role of ex-Rep. Dan Lipinski and questions about whether the Southwest Side powerhouse political organizations still can deliver—and for whom.

Casten, a green-energy entrepreneur, first won office two elections ago by unseating veteran Republican Peter Roskam in the old 6th District that was centered in DuPage County. He won re-election by a narrower margin in 2020 and was considered a solid THE 6TH DISTRICT PRIMARY HAS bet for re-election. Until, that Springfield Democrats BECOME A POLITICAL CAGE MATCH. is, last year decided to create a new Hispanic-influenced district in the northern part of the Sean Casten of Downers Grove that metropolitan area. may be the most telling in Illinois Doing so meant that remaining this election cycle—and one of the districts had to be shuffled, commost interesting nationally. bined and reworked. In this case, On its face, the race pits the it meant merging parts of Casten’s party’s progressive wing against district with portions of the 3rd the moderates, with the former District, which Newman has repbehind Newman and the latter resented since unseating Lipinski with Casten. In reality, it’s more ach knocked off an entrenched incumbent to gain their job, a rarity in today’s electoral world. Now, thanks to Springfield mapmakers, they’re locked into something worse: a political cage match, a primary contest in which only one can survive to sit in the U.S. House another day.

That’s the situation in the new 6th Congressional District, a contest between Democratic incumbents Marie Newman of La Grange and

in the 2020 primary and which includes parts of the city’s Southwest Side and adjacent suburbs.

Newman, an ad agency exec and business consultant by trade, has emphasized bread-and-butter issues such as expanded health coverage. That’s won her the backing of SEIU and other progressive groups, and the support of fellow members of Congress known for advocating on such issues, including Rashida Tlaib and Ro Khanna. But campaign aides suggest she’ll tack to the middle in the primary, emphasizing her role on the House Small Business Committee and pitching herself as a hard worker who knows how to deliver for constituents.

Team Casten counters that he, too, has a progressive voting record in Washington and underlines that, despite the COVID pandemic, he has been able to hold more than 50 town hall sessions with constituents. Casten also has been particularly outspoken, even

by Democratic terms, in talking about the Jan. 6 riots and what’s

GREG HINZ ON POLITICS

needed to protect U.S. democracy as Donald Trump plans a potential bid to regain the presidency in 2024.

Casten, who has some personal wealth, is expected to be better funded—particularly if Jewish groups still upset about the fact that Newman was one of only eight House Democrats to vote against funding the Israeli Iron Dome missile defense system. (Newman aides reply that voters in the district didn’t want to spend $1 billion on the project, given other needs.)

Newman, in turn, may end up having more energy out in the precincts from party activists who tend to dominate primary elections.

That potential advantage could be diminished if groups such as the 19th Ward Regular Democratic

Organization get involved. Ditto Lipinski, who says he hasn’t decided yet whether to endorse but certainly could stir the waters some.

Politically, more of the district’s population was in her district than his, roughly 41% to 23% by population, with smaller sections of the old 1st, 5th, 8th and 11th districts included, too. But Newman faces a key hurdle later this month when the House Ethics Committee is due to say more about whether it has sustained a complaint filed against her by a conservative group alleging that she improperly promised an opponent a job if he’d drop out of the primary election against her.

That’s just the overview. If you want an idea where local Democrats want their party to head, keep an eye on this contest.

An advance look at the true ‘state of the state’

W

hen J.B. Pritzker was elected governor, he made it clear his main objective was to reverse the state’s population decline by supporting businesses, maintaining a 21st-century workforce, and by bringing jobs and investments to underserved communities.

Instead, Illinois has lost 137,155 residents during Pritzker’s tenure, according to the U.S. Census Bureau’s population estimates.

The share of Illinois’ budget spent on underserved communities is falling, income inequality is worse than ever before, and Illinois lags behind other states on almost every measure of economic performance.

Next month, Pritzker will address Illinoisans with his annual State of the State speech. Here’s a sneak peek of Illinois’ true standing.

Illinois’ people problem has gotten far worse. According to the latest census estimates, Illinois’ population declined in 2021 for the eighth consecutive year, and domestic outmigration is to blame

While no longer constrained by job proximity, Americans moved to Texas and Florida—states that they were already flocking to before the pandemic—and also Idaho, Utah and Montana. As a result, these states benefited from increased economic activity and job creation.

By October 2021, these five states boasted 2.2 jobs per jobseeker on average, compared with 1.7 in the rest of the country. Illinois barely managed 1.1 job per unemployed resident.

What did all these states have in common?

They were less densely populated, with fewer COVID restrictions, fewer regulations, lower taxes and more economic freedom overall.

According to the Economic Freedom of North America index, economic freedom and well-being are consistently higher in these states.

Research shows that Americans migrate toward states with relatively lower tax burdens, fewer employment regulations, less dependence on public-sector employment, lower union density and more government services.

By contrast, Illinois is ILLINOIS’ PEOPLE PROBLEM HAS third for most regulatory restrictions, has the GOTTEN FAR WORSE. 10th-highest state and local tax burden, and arguably has the most powerful publicfor all of that decline. From July sector unions of any state. And 2020 to July 2021, Illinois lost although government spending 122,000 residents to other states has increased fast in Illinois, it is on net, causing the state’s popubecause public employee pension lation to fall by 114,000 residents after accounting for net births and costs have skyrocketed, crowding out government services. In fiscal international migrant flows. year 2021, pension contributions The problem is that fewer consumed 26.5% of the state’s people move to Illinois than the general funds budget, up from less number of residents who leave each year, according to the Census than 4% two decades ago.

Pritzker has proposed tax Bureau. And this problem is only increases in every state budget getting worse over time. during his tenure and has given The risk of coronavirus infecin to government union leaders’ tions and the differences in how every demand. As government state officials responded to the unions’ demands increased, the COVID-19 pandemic accelerated cost of government increased remote work.

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for Illinoisans, even as services decreased.

When the COVID-19 pandemic hit, stricter-than-average restrictions in Illinois kept economic activity suppressed for longer and caused recovery to lag, relative to the rest of the country. One year into the pandemic, 35% of Illinois small businesses were shut.

Pritzker’s command-and-control approach has worsened Illinois’ relative economic position during the pandemic. And it’s difficult to blame anyone else since the state was under one-man rule via executive orders for more than half of the governor’s term.

ORPHE DIVOUNGUY ON THE ECONOMY

Turning the state around will require a complete policy reversal, one that puts Illinoisans first at the expense of the governor’s own policy preferences. That means working with the Legislature to put a pension reform constitutional amendment on the ballot so future state budgets can finally prioritize spending on education

and social services for those in need. Pension reform will make government work for Illinoisans of all talents and backgrounds, not just a small group of government employees.

Crain’s contributor Orphe Divounguy is chief economist at the Illinois Policy Institute.

B E ST I N C L A S S IN OVERALL CLIENT S AT S I FAC T I O N .

B E Y O U R B A N K E R ’ S T O P P R I O R I T Y. W I N T R U ST.CO M / P R I O R I T Y

Banking products provided by Wintrust Financial Corp. banks. Source: 2021 Coalition Greenwich Market Tracking Program

1/14/22 3:18 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 17, 2022 3

JOE CAHILL ON BUSINESS

Brunswick is betting the boat boom has room to run COVID-19 isn’t the only reason consumers are taking to the waters THE PANDEMIC-DRIVEN SURGE in demand that filled the order book at Brunswick also has the nation’s biggest maker of powerboats racing to expand capacity in an industry with a history of choppy sales and steep downturns.

At the same time it’s investing in factory space, Mettawa-based Brunswick is in another sprint to add cutting-edge technology to its boats—features such as sonar and radar, autopilot, fish finders, automatic docking and, most important of all, electric motors. In November, the 177-year-old company made the biggest acquisition in its history, laying out more than $1 billion for Navico, a Norwegian specialist in myriad marine technologies. A couple of months before, it purchased RELiON Battery, based in South Carolina, to help ready a launch of electric-powered boats that could come by the end of the year.

See BRUNSWICK on Page 22

BCCOMMS VIA WIKIMEDIA

I

BY H. LEE MURPHY

“BRUNSWICK NEEDS TO BUILD MORE BOATS FASTER AND RESTOCK SHOWROOMS. DEALERS ARE SCREAMING FOR PRODUCT TO SELL.” Craig Kennison, an analyst at Robert W. Baird in Milwaukee

Suburban homeowners scrubbing racism from property deeds

BY DENNIS RODKIN Nicole Sullivan is a north suburban mother of four who says that she and her husband, Dan, “try to teach our kids to always leave something better than you found it.”

It’s a lesson she put to use herself after accidentally discovering that the deed to the family’s home in unincorporated Mundelein included an antiquated provision that prohibits selling or renting it to anyone who’s Black, Chinese, Japanese or Jewish.

“It’s unenforceable because it’s not legal anymore,” Sullivan said, “but it’s a stain on our home.”

On Jan. 4, Sullivan and another mother of four from the same neighborhood, Catherine

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Shannon, were at the Lake County Courthouse in Waukegan to make use of a new Illinois law that makes deleting racist language from property deeds and covenants easy.

Joining the two women as a thick black line was drawn through the restrictive covenant on Sullivan’s home were state Sen. Adriane Johnson, 30th, and state Rep. Daniel Dedich, 59th.

They sponsored a bill, passed into law last July, that allows county recorders to black out racially restrictive covenants on property deeds, at a charge of no more than $10 to the homeowner. The law took effect Jan. 1.

Racially restrictive covenants were outlawed by the federal Fair Housing Act of 1968, but the

NICOLE SULLIVAN

Though now illegal and unenforceable, the 1929 restrictive covenant barring sale to people who are Black, Jewish, Chinese or Japanese was ‘a stain on our home’

Nicole Sullivan holds documents about her home that were written in 1929 with racially restrictive covenants. language that is still embedded in innumerable property deeds “is a relic of the historical harms done to communities of color,” Johnson told Crain’s. The bill she See DEEDS on Page 21

Why Chicago needs more IPOs

f you’re looking for a reason to feel good about Chicago’s future as a business center, check out the number of local companies going public.

As my colleague John Pletz reports, initial public offerings

by Chicago-area companies hit the highest level in a decade last year. There were 12 IPOs, up from five in 2020. They showcased the breadth of Chicago’s economy, spanning industries from insurance and manufacturing to health care and technology.

Last year wasn’t a blip. Pletz reports another batch of local IPO prospects is in the pipeline for 2022.

The IPO surge is a good sign for Chicago, because it means fast-growing local companies are opting for independence over buyouts. In recent years, some of Chicago’s most-promising startups have been acquired by larger out-of-town buyers. The long list includes payment-processing specialist Braintree, sold to Paypal in 2013; cloud computing company Cleversafe, acquired by IBM in 2015; and artificial intelligence pioneer Narrative Science, which agreed to a buyout by Salesforce late last year.

Buyouts put money in the pockets of company founders and early backers. But they diminish Chicago’s stature in growing industries. A city loses some prestige when acquisitions turn locally based firms into subsidiaries of larger companies based elsewhere. On a more practical level, decision-making power resides at headquarters, giving the home city an inside track for corporate investments and civic support. Even worse, the job cuts that often follow takeovers tend to hit the acquired company’s town harder.

Not that going public is any guarantee against a takeover.

One of Chicago’s most successful IPOs of the past decade, food ordering and delivery specialist Grubhub, succumbed to a buyout last June after its share price sagged.

Still, going public can eliminate one factor that forces startups to sell. Companies often turn to deep-pocketed acquirers because they need capital to finance expansion. IPOs provide access to public capital markets, allowing companies to fund their own growth.

Self-funded independent companies have more control over their own destinies. Unlike subsidiaries, they’re not hostages to the priorities of a larger organization. They can chart and pursue long-term strategies while retaining the flexibility to adapt to changing market conditions

and capitalize on opportunities as they arise. In time, one or more of Chicago’s 2021 IPOs might grow to become a dominant player in a major industry.

Another reason for optimism is the performance of Chicago’s recent IPOs. The Wall Street Journal reports that two-thirds of the companies that participated in best year for U.S. IPOs since the 1990s now trade below their initial offering price. It’s the opposite for Chicago’s 2021 IPOs, two-thirds of which are trading above their offering price.

That testifies to the quality of Chicago companies going public. Many have proven business models with track records of growth and profits, as opposed to the clouds of hype that launch some IPOs. Leading the pack among local IPO stocks is Portillo’s, a 58-yearold fast-food chain that’s been growing rapidly in recent years.

Portillo’s stock is up more than 60% since its October public offering. Close behind with a 57% rise since a July IPO is Ryan Specialty Group, an insurance brokerage launched by Aon founder Pat Ryan.

Clearly, these companies were ready for public ownership. With strong underlying businesses, they appear to have staying power as independent public companies.

The boom in IPOs here and across the country also rebuts critics who argue that the cost of complying with U.S. securities regulations discourages firms from going public. Compliance costs were no deterrent as rising valuations drew companies to public markets in droves.

Less welcome is the increasing use of end-runs around disclosure requirements for public companies. Half the local companies that went public did so by merging with special purpose acquisition companies formed to acquire operating businesses. Companies that go public through “SPAC” mergers escape some of the scrutiny that traditional IPOs get.

Others, including Portillo’s and Ryan, took advantage of lower disclosure standards for “emerging growth companies” with less than $1.07 billion in annual revenue. Those rules allow companies to provide less information about finances and other matters, including executive compensation.

That may please company executives, but it’s bad for investors and U.S. capital markets. Fully informed investors make better investment decisions, allocating capital more efficiently. And fully transparent markets attract more investors.

1/14/22 3:58 PM

4 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

2022 housing market is coming out hot

BY DENNIS RODKIN When John Grafft scheduled a one-hour open house at a new 11unit condo building on Southport Avenue in Lakeview this month, he didn’t count on having to use the garage as a waiting room.

He needed it not because of the icy weather descending that day, but because about 100 people showed up to tour the condos.

For a typical Saturday open house, Grafft said, “I’d expect to see 10% of that.”

Nothing is typical in the housing market anymore, as low interest rates that look like they’ll go up and a slender inventory of homes on the market combine with people’s continuing desire to move to a home that suits their pandemic-era lifestyle of at least part-time working and schooling at home.

Stir those three elements together, several real estate agents said, and the first week of the new year was a hot one in the housing market.

“It’s crazy out there,” said Anne DuBray, a Coldwell Banker agent in Glenview. Three of the homes she represents had open houses the weekend of Jan. 8 and 9, and

by Monday morning, two of them were under contract. The third, she said, “is probably only a day behind them.”

DuBray and other agents said a

lot of the early-January traffic was people who witnessed the frenetic housing market in the first several months of 2021 and wanted to get in before things get nuts this year.

The trouble is, “everybody wants to get in ahead, so you (end up) just contributing to the frenzy,” said Anthony Rodriguez, a Coldwell Banker agent in the city.

When Rodriguez went with a client to see an Albany Park house that had been on the market for two days, he said, they learned the listing had “back-to-back-toback-to-back showings.”

AHEAD OF THE GAME

Eager house hunters may have started shopping before sellers were ready, said Jeff Lowe, a Compass agent. His team has “a lot of inventory we were targeting bringing on (the market) after Martin Luther King Day,” Lowe said, “and I would say there’s a lot more inventory you’re going to see in the next 30 days.”

If they were ahead of the game, buyers may have simply been trying to catch the wave of listings at its height, which in winter 2021 was the first week of the year. Weekly reports posted by Midwest Real Estate Data show that in the first week of January 2021, a little more than 5,350 new listings came on the market in the Chicago metropolitan area. That was the wintertime peak of new buying opportunities,

the largest crop of fresh listings introduced into the marketplace of any week stretching from seven weeks prior to seven weeks after.

Those first-week-in-January listings were the worms this year’s early birds were after.

The first week of 2022 also saw a leap in new listings, but it wasn’t quite as big. About 4,100 homes came on the market in the first week of January, or about three-quarters the number from the same time a year ago.

In a tight-inventory market like the current one, “you have to pounce when a good new listing comes on the market,” said Brian Pistorius, a Berkshire Hathaway HomeServices Chicago agent.

About 37 families came to the Saturday and Sunday open houses at his listing on Churchill Street in Logan Square.

“In this weather, we’d usually be lucky to get five or six,” he said.

DuBray said she the youngish couples who came to her open houses were serious about buying.

She could tell, she said, because several told her they’d left the kids with sitters or relatives.

“Usually, they bring the kids,” DuBray said. When they don’t, “it’s so they can get down to business, go see everything” that’s on the market without being distracted.

Earnest buyers often start their search at the dawn of the year, Lowe said, “but the difference this

JOHN GRAFFT

Despite icy weather, early-bird buyers have been crowding into open houses and putting homes under contract quickly: ‘It’s crazy out there’

At this 11-unit condominium building under construction on Southport Avenue in Lakeview, so many people showed up for an early-January open house that the listing agent had to make dozens of them wait in the garage as others toured the units. year is that inventory is so low, they have less to look at.”

In the city, the new year began with 30% fewer homes on the market than the same time last year, according to data posted by the Chicago Association of Realtors. That’s in part because a year ago, the number of downtown condos for sale was swollen because of the two-fisted hit the condo market took in 2020 from COVID-related downtown shutdowns and social unrest. (Comparable inventory data is not available for the suburbs.)

Nevertheless, buyers have needs.

“Inventory is tight, but you still have people who need to get that

new home” because their family is growing or shrinking, or for other life cycle reasons, Rodriguez said.

That’s sparking a sense of “urgency,” Jorge Abreu, managing broker of @properties’ Highland Park office, said in an email.

Already this year, 11 properties in Abreu’s territory have gone under contract, compared to 10 for the same period last year. That’s not a big uptick, he wrote, but there’s been a distinct pattern of buyers grabbing what comes on the market fast, “instead of the old model, which would see buyers waiting to see what came on” in subsequent weeks.

Her path to selling N.Y. mansions started in South Shore

BY DENNIS RODKIN Growing up in a modest South Shore bungalow that was owned first by her grandparents and then by her parents, Mia Calabrese learned to appreciate the stability of homeownership.

In school, “I had friends who were always moving from apartment to apartment, and I could see it created a certain amount of instability,” says Calabrese. “I knew I was always going home to the same house.”

Calabrese’s family—and in particular, her grandmother, Myrna, who immigrated from Belize—understood that owning a home was a path to developing generational wealth, Calabrese says.

The family held onto the bungalow for 46 years, from 1970 to 2016.

By the time they sold it, Calabrese was living in New York, where she eventually became a real estate agent and beginning Jan. 20 appears in the Discovery+ television show “Selling the Hamptons.” The show focuses on Calabrese and five other agents

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working in a well-known string of towns, where mansions regularly sell for more than $20 million and as high, last year, as $107 million.

As the only Black person among the six, Calabrese says she understands homeownership in a different, possibly more visceral, way than the others on the show. “My grandparents and my parents owning a house gave me the stability and safety to make my plan, have my goals,” she says.

Homeownership, Calabrese says, was a fundamental part of the package her parents and grandparents modeled for her.

“You grow up, and part of being an adult is finding your partner and buying your house,” she says.

PASSING DOWN WEALTH

The lesson of intergenerational wealth is the same in the Hamptons, she says, only with more zeroes in the numbers.

“People who bought these homes 20, 30, 40 years ago and sell now,” she says, “they pass that wealth down.” Her grandparents did the same, selling their bungalow to her parents in 1993 for $78,000, which was “below mar-

ket value,” Calabrese says. “That was something they could afford to do for their family.”

When grandmother Myrna and her husband, Gilbert Innis, arrived in Chicago from Belize, friends suggested they apply for public housing in Cabrini-Green, but “my grandmother said that wasn’t for her,” Calabrese says.

“They rented and she started saving her pennies until they could buy a house” in 1970, about two years after they arrived.

Gilbert worked for Metra and Myrna was a housekeeper. Calabrese believes it was working in affluent clients’ homes where her grandmother “learned what it means to own your home.”

The couple bought a red brick bungalow near 79th Street and Oglesby Avenue for $15,000.

Later, Myrna urged two other branches of the family to buy South Shore bungalows as well.

As Black homeowners, the Innises were rare. In 1970, two years after the Fair Housing Act was passed, 42% of U.S. Black households owned their homes, compared with 65% of white households.

“Black homeownership is about the same now,” Calabrese says. “Not much has changed.”

In Illinois, the change has been more significant: from 29% of Black households owning homes in 1970 to 39% in 2018.

Calabrese’s parents, Sam and Dawn, who were both in sales, bought the house from Dawn’s parents in 1993, when she was 2 years old.

Growing up there with her parents and her brother, Nick, Calabrese “saw South Shore changing,” she says. “When I was growing up, there was industry, restaurants, veterinary clinics, grocery stores, but there’s been so much disinvestment.” She was last in South Shore in the summer of 2020, volunteering at a mask-and-food giveaway at the Avalon Regal Theater on 79th Street, a mile west of her childhood home.

While none of her family is still in South Shore—her brother, “my best friend,” joined her in New York last year—Calabrese told Crain’s she plans to “do something to attract investment to South Shore,” but was

DISCOVERY+

Mia Calabrese, the only Black agent among six featured in a new reality show called ‘Selling the Hamptons,’ said the modest bungalow owned by her parents and grandparents taught her about homeownership and intergenerational wealth

Mia Calabrese not yet ready to give details.

In the meantime, Calabrese said, she hopes that her presence on “Selling the Hamptons” will give some South Shore kids a road map for their future.

“I want kids on the South Side of Chicago, and kids all over the country who maybe didn’t grow up with a second home in the Hamptons, I want them to look at me and say, ‘If that girl coming from 79th Street can do it, I can do it too.’ ”

1/14/22 3:17 PM

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THE TAKEAWAY

Darlene Oliver Hightower Hightower takes over this month as CEO of the Metropolitan Planning Council, the independent regional policy and planning organization. Hightower earned a law degree from Georgetown University, focusing on poverty, employment and civil rights law before becoming the vice president of community health equity at Rush University Medical Center. A Chicago native who grew up in the Brainerd neighborhood, Hightower, 51, is married, has a daughter in her 20s and lives in Bronzeville. By A.D. Quig

> How did you grow up?

I was raised by a single mom. I was always surrounded by a lot of cousins, aunts and uncles. We lived a pretty good life. My mom was an office manager for a relatively prominent Black orthodontist, probably 30 or 40 years. I remember going there after school, getting to spend time with her in an office setting, probably until seventh grade.

In your legal career, what’s a case that you still think about all the time?

There was a class action, and there were instances of racial harassment, nooses on the job, racial slurs, people getting inadequate treatment, not getting promotions and raises. Most of our clients were African American men. Getting to know their stories and getting an understanding of that work environment was really powerful, especially since by comparison, my career—I had not experienced the level of discrimination that they had.

>

<

What happened in seventh grade?

That’s when I got into the seventh and eighth program at Kenwood High School. That required me being bused from my neighborhood; it was like 9 miles. I was a latchkey kid.

I remember holding on to my house key for dear life, being so scared that I was going to lose it, but also feeling a real sense of responsibility, feeling like a real grown-up.

>

RESIDENTIAL REAL ESTATE BROKERS Crain’s 2022 Notable Real Estate Brokers will recognize top Chicago area real estate brokers for their success and accomplishments during the last 18 months.

Deadline is Feb. 11

Nominate at ChicagoBusiness.com/NotableREBrokers To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.

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Give me a restaurant recommendation and a book recommendation.

S.K.Y. in Pilsen on 18th Street— higher end, a great wine list and delicious food. And Pilsen Yards, which has an amazing outdoor patio space, great cocktails. As far as books, anything by Octavia Butler. I think my favorite book by her is “Fledgling.”

At heart, I’m a futurist. Always thinking about what the world could and should be down the line.

>

NOMINATE NOW!

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2022

What are your hobbies?

I am a foodie. I pay penance for that love of food by working out all the time.

I’m a Peloton person.

Then I read a lot— love sci-fi, fiction.

Any projects you’re especially excited for at MPC? This focus on affordable housing and economic development. If you’re talking about creating healthy communities, you’ve got to be talking about vitality in those neighborhoods. I’m excited about the scope of the work. I spent the last five years at Rush focused on the West Side of Chicago, but MPC is regional—so I can have a bigger impact and double down on looking at things through an equity lens.

1/14/22 3:15 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 17, 2022 7

Is the worst over now for downtown office landlords?

BY DANNY ECKER After a full year of eroding demand and surging vacancy, downtown office landlords ended 2021 with their best quarter since the COVID-19 pandemic began. But it’s still too soon to say whether things are beginning to turn around or if more fallout is coming.

The vacancy rate among offices in the central business district dipped to 19.7% at the end of the year, down slightly from a recordhigh 20.1% at the end of the third quarter, according to data from real estate services firm CBRE. That marked the first time the vacancy rate has fallen from one quarter to the next since the third quarter of 2019, CBRE data shows. But the rate remains at the second-highest level the brokerage has on record.

It’s one of the first signs since the start of the public health crisis that the downtown office market could be improving and provides a welcome boost for landlords that have watched demand soften to a historic degree over the past 21 months. Despite the recent surge of the omicron variant further delaying plans for many workers to return to offices on a regular basis, companies during the last three months of 2021 collectively moved into new offices at a fast-

er pace than they moved out— the first time that has happened since the third quarter of 2020.

HURDLES REMAIN

Yet the headwinds for many downtown office owners remain strong. Many large companies are still trying to figure out their workspace needs and big space contractions could be in order as leases expire. New sublease offerings last quarter from utility provider Peoples Gas and law firm Schiff Hardin showed that big companies aren’t done trying to shed space amid the rise of remote work. The sublease vacancy rate increased during the last three months of the year to its second-highest mark during the pandemic, according to CBRE. Meanwhile, there are still big new buildings coming to the market and threatening to add more vacancy or poach tenants from other properties. Roughly 3.6 million square feet of offices were under construction downtown as of the end of December, just 57% of which has been preleased, according to CBRE. Included in that statistic is the 1.5 million-square-foot BMO Tower next to Union Station, which opened this month with just more than half of the building still available.

That backdrop continues to

push landlords with big blocks of space to fill to offer extra free rent and lease term flexibility to entice companies to sign on.

While many companies are still contemplating how they’ll use offices moving forward, “the bold that have come out and taken advantage of the opportunities in the market feel that maybe the worst is behind us, and that’s what you’re seeing in these numbers,” said leasing agent Jon Cordell, an executive vice president at CBRE. “The good news is the uncertainty isn’t as high as it was. There’s more resolve in needing office space.”

Backing up that sentiment is more than 200,000 square feet of positive net absorption during the fourth quarter, a key demand metric which measures the change in the amount of leased and occupied space compared with the prior period. The Fulton Market District—which has won the lion’s share of deals during the pandemic—boosted that absorption figure with CCC Intelligent Solutions (formerly CCC Information Services) and Kroll (formerly Duff & Phelps) occupying their new offices at 167 N. Green St. Elsewhere downtown, cryptocurrency startup CoinFlip moved into more than 43,000 square feet at the Old Post Office, and online consumer-

COSTAR GROUP

Though it remains high, the vacancy rate ticked down for the first time since mid-2019. But the future remains murky for landlords as the pandemic drags on.

Two companies—CCC Intelligent Solutions and Kroll—moved into nearly 190,000 square feet at 167 N. Green St. during the fourth quarter. lending company Affirm occupied a similarly sized footprint at 350 N. Orleans St. But landlords will need those gains to pick up speed to make up for huge leasing losses over the past two years. Net absorption for all of 2021 fell by 2.1 million square feet—the worst year on record, CBRE data shows.

That wiped out almost all of the positive absorption combined from 2020 and 2019, the latter of which was a record high.

MAJOR DEALS

Some big new leases gave some landlords reason to feel better during the fourth quarter.

Heavy-duty tool maker Milwaukee Tool and farm equipment giant Deere inked deals for their first Chicago offices in October and November, respectively, underscoring the value companies place on planting their flag downtown for access to the city’s deep pool of tech-savvy talent.

Companies are also willing to pay more to upgrade their space, hoping to motivate their

employees to work from offices rather than home, Cordell said. That has worked well for the newest and recently renovated buildings: Roughly 75% of the office relocations that have occurred over the past nine months have been to higherquality buildings, according to CBRE. Two owners of those top-tier properties struck deals during the fourth quarter to take advantage of their leasing success.

The New York developer that turned the Old Post Office into a modern office building that is now 95% leased refinanced the property with an $830 million loan—one of the largest mortgages ever for a Chicago office building. And at the new Bank of America Tower at 110 N. Wacker Drive, which is more than 85% leased, Dallas-based Howard Hughes recently reached an agreement to sell its controlling stake in the property to a New York investment firm. That deal values the skyscraper at around $1 billion.

After selling for less than $30 million, Webster Place needs ideas and money to mount a comeback

BY ALBY GALLUN A New York investment firm has suffered a big loss on the sale of a struggling Lincoln Park shopping center that’s poised for a major makeover.

RPT Realty sold Webster Place, a 135,000-square-foot property at Webster and Clybourn avenues, for $29.3 million in late December, according to a news release from the real estate investment trust. The shopping center turned out to be a disastrous investment for RPT, which paid $52.7 million for it less than five years ago.

Yet the low price doesn’t come as a huge surprise in the COVID-19 era, which has been cruel to retail properties. Retailers have closed stores across the country amid a broad shift in shopping patterns, with more consumers embracing the convenience of online shopping and spending less at brickand-mortar stores. The trend was already underway but accelerated

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after the pandemic swept across the nation in 2020.

It doesn’t help that Webster Place includes a movie theater—Regal Cinemas—a sector hit hard by the pandemic, and a bookstore—Barnes & Noble—a business that already was in a steep decline before COVID. Another big tenant, Webster Place Athletic Club, closed in 2019. The shopping center was just 68.5% occupied last fall, according to an RPT quarterly report.

With retail facing an uncertain outlook, many investors are wary of the sector these days. But Novak Construction, which acquired Webster Place from RPT, isn’t one of them. Chicago-based Novak is primarily a contractor, but the firm has been loading up on retail properties lately, taking over former Sears stores in Portage Park and Galewood and pushing forward with plans to redevelop them. A Novak venture also paid $25 million for a prominent Loop

retail property about a year ago.

It’s unclear what the firm has in mind for Webster Place—Novak executives did not return phone calls—but the property needs an owner with vision and money.

With proximity to wealthy neighborhoods, including Lincoln Park, Bucktown and Old Town, it’s “a phenomenal piece of real estate,” said Mitch Goltz, co-founder and principal of GW Properties, a Chicago developer that considered bidding on the property.

“It’s a very well-located asset that needs to be in the hands of an owner that can reposition it,” he said. “The bones are there. You just have to figure out a way to reactivate the pieces.”

ADD RESIDENTIAL?

One potential solution: adding apartments to the property. In 2018, RPT floated plans to build two 20-story towers just south of the shopping center that would have included residential, office and retail space.

But the company never went through the process of obtaining zoning for the project. Current

COSTAR GROUP

Lincoln Park shopping center sells for big loss

Webster Place in Lincoln Park zoning allows for construction of 168,000 additional square feet at Webster Place, according to a marketing brochure from Jones Lang LaSalle, which brokered the sale for RPT. That, combined with a 1.1-acre site next door that wasn’t included in the sale, could accommodate a major residential project.

JLL and RPT representatives did not return phone calls.

Adding apartments to languishing shopping centers has become a popular turnaround strategy for

developers, injecting some new energy into dreary properties and diversifying their revenue streams beyond risky retail. Novak has gotten into the game, with plans to convert part of the former Portage Park Sears into 207 apartments.

Novak could also refill Webster Place’s existing retail space with new tenants less vulnerable to competition from e-commerce.

Potential uses include medical offices and distribution, according to a JLL marketing brochure aimed at prospective tenants.

1/14/22 3:37 PM

8 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

A pandemic is no time to make little plans views, prototyping, pricing, selling, and then iterate as needed, all in pursuit of customer satisfaction. This is useful, of course. The mechanisms for operating a business haven’t disappeared because of the pandemic, and I’d argue that disciplined entrepreneurship has never been more important.

But, it’s easy for entrepreneurs to get lost in day-to-day operations during a crisis and focus on aspects of operations they can control, a practice that allows small problems and missed opportunities to grow quickly and multiply.

is executive director of education and programs at Chicago Booth’s Polsky Center for Entrepreneurship & Innovation.

Advice for small businesses and entrepreneurs in partnership with the University of Chicago Booth School of Business.

CHALLENGES

Entrepreneurs today face challenges that require unconventional solutions: How can we deliver quality customer service when lack of staff, materials or operational certainty make predicting the future virtually impossible?

According to a December report from McKinsey, “In the past 3 months, over 60% of consumers faced out of stocks; only 13% of them waited for the item to come back in stock.” As a member of the 87% who did not wait, I can attest that my preferred brand made no effort to retain me as a customer.

Even though entrepreneurs know

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ne of the books I read over the recent holiday break was Adam Grant’s “Think Again: The Power of Knowing What You Don’t Know.” Grant, an esteemed organizational psychologist and faculty member at the University of Pennsylvania’s Wharton Business School, posits that we are best served to “question our assumptions like a scientist.” Our conclusions about business, he said, are merely hypotheses that require proof before being accepted as fact. It’s a powerful notion to seek to be proven wrong. In over 25 years as an entrepreneur, I largely predicated decisions on experience, instincts and my assessment of the “truth.” I rarely found comfort in being wrong—even when, in retrospect, it would have benefited my business.

Grant’s book got me thinking about how entrepreneurs should approach customer service in our current economic environment, beset with labor shortages, supply chain disruptions and general operational uncertainty. Traditional evidence-based research suggests entrepreneurs should identify their value proposition, qualify it through rigorous customer inter-

the lifetime value of a customer is fundamental to long-term success, I was ignored. So I’ve been asking myself: Is it time to rethink customer service?

Entrepreneurs cannot make products appear overnight or add staff when nobody is available for hire. But you can engage directly with your customers, even if it’s about bad news, and make it personal. An act of empathy and understanding can be ex-

tremely persuasive. If that’s not an option, show consumers you feel their pain so deeply that you offer bold financial incentives to retain them. Extend return and exchange policies to encourage customers to try an alternative that you can supply. Even suggesting an alternative from another provider could build consumer confidence and loyalty to your business down the road. Also, pay attention to your new customers who, themselves, may be part of

the 87% that abandoned their usual provider when stock was unavailable, and offer incentives to keep them coming back.

Today, customer satisfaction requires big, out-of-the-box thinking to maintain the ties that bind.

In a crisis, it’s easy to focus on dayto-day operations, but the entrepreneurs who will win big during this pandemic are ones who recognize the long-term value of each customer and make grand plans to retain them.

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10 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

ince Crain’s launched in 1978, we have had a front-row seat to the extraordinary transformation of Chicago’s Loop and the neighborhoods—some of them industrial, some pockmarked with vacant lots—that encircle it.

By the late 1970s, artists and creatives began to reclaim the abandoned warehouses north of the Chicago River and, rebranded as “River North,” the neighborhood became a magnet for galleries, design studios and ad agencies and a hub of dining and nightlife. At about the same time, developers rethinking acres of former Dearborn Station rail yards created Dearborn Park, which, along with the refurbishment of the old Printer’s Row, heralded the beginning of the South Loop development phenomenon that’s still underway today. By the 1990s, the Lakeshore East area skirting the northern edge of Millennium Park was being built, an entirely new neighborhood above the former Illinois Central Railroad yards. Along the way, the Loop itself underwent a historic metamorphosis. A business district that once welcomed office workers from 9 to 5, only to become a ghost town by night, had been recast into a true residential neighborhood in every sense of the word, with condos, apartments, restaurants, theaters and shopping.

The forces that reshaped the Loop have since marched westward, with high-rise office towers springing up along Wacker Drive to accommodate commuters eager for proximity to the West Loop’s Metra hubs. It was perhaps inevitable, then, that the development wave would jump the river and eventually the Kennedy Expressway, as the neighborhood where Oprah Winfrey’s Harpo Studios once stood out as a pioneer of sorts beckoned with its swaths of open space and rows of funky old butcher and grocery wholesaler warehouses.

ANTWON MCMULLEN / ALAMY

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Tapping the brakes at Fulton Market

Today, that neighborhood—Fulton Market—is unquestionably the hottest development spot in Chicago, and perhaps even in the Midwest. Real estate investors have poured billions of dollars into what was once a quiet enclave of restaurants and the suppliers who served them. High-rises are cropping up where low-slung brick warehouses once stood. McDonald’s calls Fulton Market home now. Google runs its Midwest operations there. That’s about as corporate as a neighborhood can get.

Andrew Mooney, commissioner of the Department of Planning & Development for Mayors Richard M. Daley and Rahm Emanuel from 2010 to 2015, argues forcefully in a Jan. 13 Crain’s guest op-ed that there now may be too much development underway in the Fulton Market District—or at least too much density.

What prompted Mooney to write was

Crain’s reporter Alby Gallun’s Jan. 12 exclusive: Chicago developer Fulton Street Cos. is set to unveil plans for a $600 million mixeduse project at 1200 W. Fulton St., a proposal that would be the biggest real estate development to date in the fast-growing neighborhood. That project would include 500 apartments, 200 hotel rooms in a roughly 50-story tower, a 500,000-square-foot office building and a 10-story building catering to life sciences companies. At 600 feet, that 50-story tower would be taller than any building completed or under construction in the district, though there are plenty of projects in play that are fairly close to it in scale. Related Midwest, for one, is building a 43-story tower at 900 W. Randolph St., and Fulton Street Cos. itself is also building a 34-story tower just across the street from the project it plans at 1200 W. Fulton.

Mooney points out that key to the revital-

ization of Fulton Market were steps previous administrations took to promote investment while, through landmarking, protecting the historical assets that formed the core of the area’s identity. He notes that most developers have planned and built responsibly, taking the historic character of the district into consideration. But, with requests for zoning changes and giant tower plans in the offing, the scales of development are beginning to tip in the wrong direction.

The underlying traffic, transportation and utility infrastructure of the district, Mooney notes, are pretty much unchanged from a hundred years ago. While congestion in Fulton Market hasn’t yet reached the nightmare proportions often seen, for instance, in the North and Clybourn corridor, it won’t take much more density to approach that level.

Let’s be clear that Crain’s continues to be a champion of smart development that upholds Chicago’s tradition of thinking big. With so many high-rise proposals on the drawing boards for Fulton Market, now is a good moment to consider what a future Chicago will look like. The local aldermen and the Lightfoot administration’s city planners must continue to take congestion, density and the character of the Fulton Market District into consideration as they review and approve new projects for the area. That might mean saying no to certain massive developments in favor of others of a more moderate, creative and sustainable scale. It means striking a balance: There’s obviously demand for Fulton Market real estate, or developers wouldn’t be so eager to build there. The city simply needs to be sure it’s taking both developers’ and the community’s needs into consideration. Even those of us who don’t live and work in the Fulton Market District have a stake in the city getting this right.

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Who steps up for kids when others walk out?

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lost on me. he week before last, I sat in It has been a challenging coua lunch meeting at a restauple of years for us all, but parrant, blocks from my son’s ticularly for Chicago’s youth. As school that was closed because many recent articles have notthe Chicago Teachers Union voted, American children are started to halt in-person teaching. My ing this year in crisis, and that seventh grader and 340,000 other certainly rings true in Chicago: children sat at home with classes canceled, again losing critical op 1 in 4 Chicago youth are living portunities for positive socializain poverty today. tion and learning. I, on the other Beth Swanson is 76% of Chicago Public Schools hand, simply showed my vaccina- CEO of A Better students depend on school for tion card to the hostess and then Chicago, a venmeals. met with my friend, who works at ture-philanthropy Nearly 18,000 students in Chithe Illinois Department of Human fund dedicated to cago experience homelessness.

Services, to discuss the myriad fighting poverty.

44% of young children in Chichallenges facing children and cago experienced an increase in families in this unprecedented time, and the symptoms of mental or behavioral health supports needed to help families continue disorders during the pandemic. to navigate this ever-changing global health Given those stark statistics, Chicago has pandemic, such as the need for in-person long prioritized its young people and conchild care and schooling. The irony was not tinually tries to offer additional access and

opportunity for all children: pre-K for all 4-year-olds; full-day kindergarten; community schools that provide holistic supports through nonprofit partners; dual enrollment and dual credit programs easing students’ pathways to postsecondary opportunities; City Colleges’ STAR scholarship, which offers students a tuition-free associate degree; My CHI My Future, which connects young people with out-of-schooltime opportunities throughout the city; and many more.

Chicago is also home to a wealth of impactful, inspiring and innovative nonprofit organizations, programs and leaders who are committed to ensuring young people have the support they need to thrive. They are a network of unsung heroes in Chicago that continually supports and provides critical services to our city’s children. They are typically not in the headlines, instead working behind the dramatic political scenes, doing the real work. However, it’s times like

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 150 N. Michigan Ave., Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

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these, when schools are shut down and students and parents are left in the lurch, that we witness their collective power.

During the CTU’s 2012 strike, Chicago’s nonprofit community rallied to support Chicago’s children, going above and beyond their traditional services. Museums opened their doors to children and families, waiving all costs; after-school providers stretched programming to be full-day; churches offered youth programs; the Chicago Park District extended summer programming into the fall; and school principals offered safe havens with food and enrichment programming. We saw that same nonprofit community support children again during the CTU’s strike in 2019.

Then in 2020, when the COVID-19 pandemic hit, while schools were shut down and scrambling to swiftly move to online learning, Chicago’s nonprofit community was again innovating and expanding

Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

1/14/22 3:51 PM

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YOUR VIEW Continued services. At A Better Chicago, the venture-philanthropy fund where I serve as CEO, we supported our portfolio organizations as they transformed from purely education nonprofits to organizations that provided essential needs and supports to young people across Chicago. Other nonprofits started serving the whole family, rather than limiting their services to the student that was registered for their program. Still others hosted learning hubs, allowing young people to safely come together to socialize and learn while schools remained closed, as research and data demonstrate that in-person schooling is critical not only for academic learning, but for the social emotional development of young people.

And this month, they stepped up again.

Nonprofit leaders, child care providers and youth workers all went above and beyond, again filling a void for Chicago’s children when they could no longer access their classrooms. And as we have learned throughout the pandemic, although all children are adversely impacted by this virus and all its societal impacts, the impact has been most devastating to low-income children from Black and Latino communities.

Last year I wrote an opinion piece challenging us all to reimagine how we teach and accelerate learning and reinvent how we best support young people. In an effort to do just that, A Better Chicago launched the Chicago Design Challenge, a multi-

million-dollar initiative that invested in Chicago’s most promising youth-focused innovations and provided the initial financial and strategic support they need to assure adoption at a larger, systemwide scale. As they have proved time and time again, these leaders won’t walk out on our children; they will do everything in their power to support our city’s young people and invite them in.

My son was able to access enrichment activities and safely play basketball in a park district building with his friends this month. And I am glad he finally gets to go back to school, too. As classrooms open again, let’s learn from our city’s nonprofit leaders and invite children in, rather than continue to walk out.

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CRAIN’S CHICAGO BUSINESS • JANUARY 17, 2022 11

CRAIN’S CHICAGO BUSINESS

Chief executive officer KC Crain Group publisher/executive editor Jim Kirk Editor Ann Dwyer Creative director Thomas J. Linden Assistant managing editor/columnist Joe Cahill Assistant managing editor/digital Ann R. Weiler Assistant managing editor/news features Cassandra West Deputy digital editor Todd J. Behme Deputy digital editor/audience and social media Robert Garcia Digital design editor Jason McGregor Associate creative director Karen Freese Zane Copy chief Scott Williams

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12 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ACCOUNTING

BANKING / FINANCE

EVENT MARKETING / PRODUCTION

CONSULTING

LAW

Legacy Professionals LLP, Westchester

Artisan Advisors, Barrington

Kindle Communications, Chicago

HealthScape Advisors, Chicago

Freeborn & Peters LLP, Chicago

Legacy Professionals LLP is pleased to announce that Michael Tiberi, CPA, CFE and David Zabrecky, CPA, have been named Partner at Legacy Professionals LLP, Tiberi effective January 1, 2022. Tiberi provides audit and tax services to employee benefit plans and labor organizations and is a 2009 graduate of Indiana University Kelley School of Business.

Zabrecky is the Firm’s Director of Compliance Zabrecky Services and is a 2008 graduate of Purdue University, Calumet. Legacy is a regional CPA firm providing audit, accounting, tax, payroll compliance audits, client service accounting, and other services to employee benefit plans, labor organizations, nonprofits, and other businesses. www.legacycpas.com

Artisan Advisors, a financial consulting firm specializing in strategic, support and risk management for community banks, welcomes William Ozanik Ozanik as a Director.

A community banking veteran, Bill will counsel clients on commercial and real estate lending, credit administration and underwriting, construction loan management, troubled asset resolution and Rohde management, compliance, risk assessment and mitigation, and loan operations.

Artisan also welcomes Cynthia Rohde as Managing Director of Strategic Marketing. With a careerlong focus in consumer, financial, and corporate communications, she will lead Artisan’s new Marketing Services practice and will counsel clients on a full scope of marketing issues specific to financial institutions.

Kindle welcomes Liz Fritch as Associate Producer. Liz is an experienced, Emmy Award-Winning producer that has spent the last ten years in the television industry – fully appreciating its many production elements and consistently delivering outstanding work every time. Liz now brings these versatile and highly applicable skills to Kindle’s growing roster of clients and Kindlers.

HealthScape Advisors is excited to welcome Nate Akers as a Managing Director. As a former health plan executive and strategic advisor, Nate brings a wealth of knowledge and experience supporting health plans design, operationalize and govern valuebased care initiatives. His portfolio of expertise also spans supporting digital transformation efforts to help plans enter new markets, grow sustainably and enable their strategic priorities.

Freeborn & Peters LLP announces that Joel Bruckman and Elitsa Dimitrova have been promoted to Partner, effective January 1. Joel Bruckman is a Partner in Bruckman the Litigation Practice Group and member of the Freeborn Insurance/ Reinsurance and the Emerging Industries Teams. His practice includes complex commercial litigation with a focus on trade secrets and restrictive covenant Dimitrova matters. He also dedicates a significant portion of his practice to advising clients on data privacy and cybersecurity issues.

Elitsa Dimitrova is a Partner in the Corporate Practice Group. Her practice is focused on private equity and venture capital, mergers and acquisitions, private placements and securities, and employee benefits and executive compensation.

ACCOUNTING Legacy Professionals LLP, Westchester Legacy Professionals LLP is pleased to announce that Jody Ingraham, CPA, and Edison Uschold, CPA, were promoted to Principal at Legacy Professionals Ingraham LLP (effective January 1, 2022). Ingraham specializes in federal and state taxation of closelyheld corporations and partnerships. She also works with employee benefit plans. She is a 2003 graduate of Winona State University.

Uschold Uschold specializes in auditing employee benefit plans and labor organizations and is a 2006 graduate of Marquette University.

Legacy is a regional CPA firm providing audit, accounting, tax, payroll compliance audits, client service accounting, and other services to employee benefit plans, labor organizations, nonprofits, and other businesses. www.legacycpas.com

ACCOUNTING

CANNABIS SECTOR

EVENT MARKETING / PRODUCTION Kindle Communications, Chicago Kindle Communications is pleased to announce the addition of Kerry Moore as Communication Strategist. Kerry comes to Kindle with more than 15 years of experience in award-winning journalism, extensive speech writing and communications, and strategic leadership roles at leading biopharma and aerospace companies. At Kindle, Kerry will bring her excellent communication skills to a seasoned, robust strategy team.

Verano, Chicago Verano Holdings Corp (CSE: VRNO) (OTCQX: VRNOF), a leading multi-state cannabis company, has appointed Brett Summerer as Chief Financial Officer.

Summerer brings more than 21 years of diverse financial experience after serving in leadership roles at Modern Engineering, General Motors in the U.S. and Asian markets, Corning Incorporated, and most recently, as Vice President, Head of Supply Chain Finance and CFO of The Kraft Heinz Company’s U.S. Operations.

“We’re confident Brett’s extensive leadership experience across multiple industries and markets, particularly in the CPG space, will be a valuable asset to our organization as we further grow and scale the Verano platform,” said George Archos, Verano Founder and CEO.

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CONSULTING Conlon Public Strategies, Chicago Chicago-based consulting and public affairs firm Conlon Public Strategies welcomes Dr. David Soglin as Senior Advisor.

Most recently the chief medical officer at La Rabida Children’s Hospital, Dr. Soglin offers expertise in health care, education, organizational management and strategy, and program design and evaluation. Throughout his career as a pediatrician, Dr. Soglin has worked to improve outcomes for under-served children, especially those impacted by Adverse Childhood Experiences.

Assurance, a Marsh McLennan Agency LLC Company, Schaumburg Dan Passananti has been promoted to regional Chief Operating Officer at Assurance, MMA Midwest headquarters.

Passananti has executive oversight of the client service platform, human resources, technology, and business process operation and plays a key role in creating alignment between business strategy and operational execution across the region. Since 2014, Passananti has served in multiple roles, most recently as SVP of Operations, where he drove innovation in our tools and processes.

EVENT MARKETING / PRODUCTION Kindle Communications, Chicago Kindle Communications is excited to welcome Julie Schneider as Executive Creative Director.

Julie has more than 10 years of experience in marketing, design, and brand experiences – most recently working for the past nine years at an experiential agency where she architected industry-leading events and activations for major tech and automotive brands. Julie will bring her wide breadth of creative experiences and ideas to Kindle’s powerhouse creative team.

ORBA, Chicago ORBA, one of Chicago’s largest public accounting firms, welcomes Megan Hannigan, CPA and Angelica Pierzchala.

Megan Hannigan will serve as ORBA’s Audit Hannigan and Assurance Trainer.

As a former auditor, she has conducted financial statement audit examinations and analyzed internal controls and financial reporting processes.

Angelica Pierzchala joins the Cloud CFO Pierzchala Services Group. She has experience preparing financial statements, reconciling monthly bank sheets, and managing accounts payable and receivable.

INSURANCE BROKERAGE

LAW Dentons US, Chicago Timothy Storino has joined Dentons in Chicago as a partner in the Litigation practice.

Most recently, he served in the US Attorney’s Office for the Northern District of Illinois for approximately nine years, where he investigated and prosecuted an array of criminal offenses at the trial and appellate levels. Tim holds more than 15 years of litigation experience that includes white-collar defense and investigations, complex civil litigation matters and commercial litigation.

EVENT MARKETING / PRODUCTION Kindle Communications, Chicago Kindle welcomes Kim Weisenberger as Campaign Producer.

Kim brings more than six years of experience in management consulting from her time in Washington, D.C., where she focused on project management, developing and implementing change management strategies, as well as driving new business development.

Kim will translate her project management and strategic consulting skills into Kindle’s creative, resultsoriented communication solutions.

LAW Freeborn & Peters LLP, Chicago Freeborn & Peters LLP is pleased to announce that Associate Alexander Gutierrez has joined the Firm’s Chicago Office. Alex is a member of the Real Estate Practice Group and his experience encompasses commercial real estate, with an emphasis on acquisitions, dispositions, financing, leasing and development. Prior to joining Freeborn, Alex was most recently an Associate at an Am Law 200 firm, where he focused on acquisitions, dispositions and development of mixed-use properties.

LAW Nixon Peabody LLP, Chicago Nixon Peabody LLP is pleased to announce Kamau Coar, former Chief Legal Officer and Chief Inclusion Officer at Heidrick & Struggles International, Inc., has joined our firm. As counsel, Kamau will advise public and private corporations and their leadership suites on enterprise risk management, governance issues, and litigation across practices and industry sectors.

Kamau attended Duke University School of Law and earned a BA from the Johns Hopkins University.

NON-PROFIT American Writers Museum, Chicago The American Writers Museum (AWM), the first and only national museum that celebrates American writers and their works, has announced the appointment of Jane Irwin as Chairman of the AWM Board of Trustees. Irwin retired as Senior Vice President Administration at PotashCorp, a mining and chemical manufacturing company. She also serves on the Board of Directors of S&C Electric Company, the Chicago Botanic Garden, and University of Michigan Law School’s Development and Alumni Relations Committee.

To order frames or plaques of profiles contact Lauren Melesio at lmelesio@crain.com or 212-210-0707

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ALTERNATIVES: Can meaningful employment also be considered as reparations? PAGE 14 POLICY AND POLITICS: Important to understand that getting to reparations is a process. PAGE 15

CRAIN’S CHICAGO R E PA RBUSINESS AT I O N S

MAKING THE CASE: Oak Park steps into the ongoing conversation on reparative justice. PAGE 17

COMPENSATING FOR DAMAGES With its first-in-the-nation reparations program, the city of Evanston made history. But will the promised $10 million actually shore up Black wealth?

Former Evanston Ald. Robin Rue Simmons on Dewey Street in Evanston’s 5th Ward.

BY DEBORAH L. SHELTON

GEOFFREY BLACK

I

rene and Winfield Garnett could afford to build a home in north suburban Evanston, but discriminatory policies limited their choice of location to a single area.

Lucious and Minerva Sutton were faced with a heartbreaking decision: See their home raised from its foundation and moved to a segregated part of town against their wishes or watch it be torn down.

The experiences of both families in the 1920s—and many others over decades— formed the backdrop of a pioneering effort last year when Evanston became the nation’s first municipality to fund a program to grant reparations to African Americans.

For generations, having a place to call home for many Black residents meant living in the city’s segregated 5th Ward.

They had no choice.

Historical documents reveal the myriad ways that public and private actions confined Black residents to disinvested neighborhoods, denying them opportunities to buy the homes of their choice and leverage high property values to build generational wealth.

Home values in the tight-knit Black community were substantially lower and living conditions were considerably poorer than in neighborhoods where white families could live.

The forced relocation of the Sutton home to the 5th Ward in 1929 triggered an avalanche of personal and financial losses for the family, says Carlis Sutton, 79, grandson of Lucious and Minerva Sutton.

Those losses reverberate to this day.

“My family was victimized,” Sutton says.

Growing up in the 5th Ward, former Ald. Robin Rue Simmons witnessed how racism limited the life choices of Black residents.

“In February 2019, I came to the revelation that equity is not enough to address the egregious harms to the Black community and that reparations at the local level were in order based on the conditions in Black Evanston,” says Simmons, who introduced a resolution that year See DAMAGES on Page 16

SPONSORS

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Bringing reparations and public safety together in Chicago

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Kamm Howard is national co-chair of the National Coalition of Blacks for Reparations in America and executive director of the Conrad Worrill Community Reparations Commission.

n July of 2020, the Chicago chapter of the National Coalition of Blacks for Reparations in America (N’COBRA), along with the Dr. Willie Wilson Foundation, successfully led an initiative that culminated in a 47-2 vote in the City Council to establish the Chicago Subcommittee on Reparations.

At that time, former Evanston Ald. Robin Rue Simmons was dealing with a small, but loud, contingent of naysayers who were shouting local reparations were not reparations. I addressed that issue and others in the pamphlet, “Laying the Foundations for Local Reparations: A Guide to Providing National Symmetry for Local Reparations Efforts.”

In describing a central purpose of local reparations, I suggested that local reparations would serve as a triage response to the many dire issues facing Black communities across the country. Although limited in scope and scale, each community must determine that area or areas where laser-like targeted resources for past harms are most needed. For Evanston, to begin to address a 25% decrease in Black population, housing

was identified as that first area.

In Chicago, there’s no question that the violence we are experiencing is the problem in most need of targeted resources to redress past harms.

In 2011, I wrote a pamphlet titled “Do We Really Want to End Violence In Our Community?” In it, I provided a plan that I said if unenacted, we’d be looking up 10 years later and the violence will still be here—more intense and more deadly.

Eight hundred murders in 2021, 4,500 shootings and 12-year-old carjackers. My prediction was real.

And it’s happening across the country.

The multigenerational war on Black men—from Richard Nixon’s War on Drugs to Ronald Reagan’s illegalcocaine-for-weapons Nicaraguan war to Bill Clinton’s mass-incarceration crime bill are some of the governmental harms that have left two-thirds of Black children in Chicago fatherless.

Thousands of academic reports have shown that father absence is the key correlate to youth violence.

And the key correlate to continued father absence is labor force participation. Yeah, jobs.

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ALTERNATIVES

Since the 1960s, Black male participation in the labor force in America has steadily decreased. For Black men ages 16-25 in Chicago, fewer than 3 out of 10 have a legitimate job. Participation is only 1 out of 10 for ages 16-21.

In late 2021, the Conrad Worrill Community Reparations Commission and N’COBRA gave the Chicago Subcommittee on Reparations and the Black Aldermanic Caucus a $45 million violence reduction plan.

The goal: to equip young Black men with the skills necessary to enter the labor force. Many must be brought to a state of readiness. To incentivize them to do so, and remove them from the streets, a guaranteed basic income is necessary. This income will relieve them from the necessity to make those hard criminal choices for survival—i.e., food, shelter and

clothing. To be eligible, they must be enrolled in a service program that provides job training, trauma counseling, anger management, mentoring, life skills, parenting skills, vocational training or a GED program.

The data is irrefutable: Black men working do not engage in violence.

They do, however, parent their children, and they will marry their children’s mothers. Yes, we have the data.

And isn’t this what we desire—safe communities and healthy families?

The only thing stopping us from having this now is a few million dollars, an end to governmental denial and neglect, and political pressure—from all of us. The private and philanthropic communities can come right in, bypass the politics and immediately make the difference.

MUNICIPAL ACTIONS

When Evanston ‘accepted the need to address its historical wrongs’

E The Rev. Dr. Michael Nabors is senior pastor of Second Baptist Church of Evanston and president of the Evanston/ North Shore NAACP.

vanston made history in November 2019 when the City Council passed Resolution 126, establishing a reparations fund for Black people with a history linked to the city. Ten million dollars will be appropriated over 10 years by taxing cannabis sales within the city limits. The reparations fund also accepts contributions from businesses, organizations and individuals.

Representing the town’s historically Black 5th Ward, former Ald. Robin Rue Simmons brought the reparations plan to the council. Yet the resolution was a long time in the making.

Former 5th Ward Ald. Lionel Jean-Baptiste, now a Cook County Circuit Court judge, first introduced a resolution for reparations 20 years before Simmons. Calls for reparations have resounded since pre-Revolutionary War days. Many white colonial enslavers promised freedom to their enslaved workers if they fought against the British, a form of reparations. Union Army Gen. William Sherman promised all Black men 40 acres and a mule at the end of the Civil War. These promises were forfeited, and structures of discrimination in virtually every public sector arose.

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Housing, education, employment, the military, religion, transportation, recreation and public accommodations all teemed with racial inequality.

Even Evanston, known for an elite institution of higher education and for the religious training of United Methodists, was not exempt.

The Emerson Street YMCA was built in 1916 to separate Black and white youth from intermingling during recreational activities. By 1930, Foster School, built in 1905 with 99% white students, would become the school for Black children from kindergarten through eighth grade. Northwestern University would accept Black students without providing them housing.

As with all of the United States, Black Evanston residents founded churches so they could worship and develop their own theology, independent of white oversight. Ebenezer AME Church and Second Baptist Church were founded just weeks apart in 1882.

Evanston did not argue about the merits of reparations. There is a progressivism in the town that seems ready to acknowledge decades of discrimination. Admittedly, the progressivism has often moved at a snail’s

pace, making it appear anything other where equity is demonstrably visible.

The work of reparations is quietly than innovative. taking place under the auspices of Yet, work was being done that led the City Council and a Reparations to the historic moment in 2019. The Committee appointed by outgoing town rallied together after the racist Mayor Steve Hagerty and current shooting of nine Black churchgoers at Mayor Daniel Biss. Simmons retired Mother Emanuel in South Carolina in from politics and founded FirstRepair, 2015. Evanston residents supported a nonprofit organization focused on Black Lives Matter when high school reparations. students led a rally that drew 5,000 In December, Evanston hosted a participants after the killing of George Floyd in May 2020. I believe Evanston’s national symposium on reparations, with more than 20 cities from around reparations program is based, in part, the nation sending representatives. upon an ethos among residents that While HR 40, or the Commission to brings them together to acknowledge wrongs and injustices.

Coming together also means COMING TOGETHER ALSO MEANS beginning the work of repair.

Not everyone in Evanston BEGINNING THE WORK OF REPAIR. is supportive of its reparations program. The majority of us who Study & Develop Reparation Proposals for African Americans act, has do support it are fine with such disseen significant movement, it has agreement. After all, 100% support of been in the House of Representatives any program committed to repairing damage that is both current and goes for over 30 years. In Evanston, we support HR 40. Our town has acceptback to 1619, will not happen. Our ed the need to address its historical hope is that with each ensuing year, wrongs against Black people, not more Black people whose lives have been severely disrupted by racism will merely through acknowledging past receive critical support that will begin wrongs, but also rolling up our shirtsleeves to repair the damage. moving us all toward a healthy unity

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Chlo is an profe polit and fellow Insti Polic at No Univ

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POLICYMAKING

Balancing optimal policy and real-world politics

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Chloe Thurston is an assistant professor of political science and a faculty fellow of the Institute for Policy Research at Northwestern University.

s the issue of local reparations has been taken up by a small but growing number of localities— most recently in Oak Park—it is worth considering what lessons may be drawn from the case of Evanston.

So far, Evanston’s efforts have yielded a $400,000 fund to be used for grants of up to $25,000 for Black homeowners, who resided in Evanston between 1919 and 1969, that can be used for mortgages or home improvements. This has been lauded as a step toward recognizing and redressing the city’s role in racial economic disparities. It’s also been criticized for being overly narrow in its eligibility criteria.

The year 1969 is notable because of Congress’ passage of the Fair Housing Act, which outlawed housing discrimination on the basis of race the previous year. As my own work has documented, the federal government for decades sanctioned racial exclusion in homeownership, overtly in the 1930s and 1940s by including racial criteria in its federal mortgage insurance underwriting guidelines and with its endorsement of racially restrictive covenants on properties to preserve the racial homogeneity of neighborhoods into perpetuity. Even

after federal agencies ceased to use explicit racial underwriting criteria in the early 1940s and the Supreme Court ruled racial restrictive covenants unenforceable in 1948, federal officials continued to look the other way when it came to real estate discrimination.

The result was that few Black citizens enjoyed the opportunities for lowcost suburban homeownership that their white counterparts did, with implications for the intergenerational transmission of wealth. In 2016, the median wealth of Black households was almost one-tenth that of white households.

This is one impetus for starting a reparations program with housing, and homeownership in particular. And yet, the choice of the year 1969 might falsely lead one to believe that housing discrimination in the U.S. elsewhere is a product of the past.

Since 1968, Black households have continued to face disproportionate barriers to accessing housing in places like Evanston. Indeed, residents have described that as recently as the 1980s, it was tacitly understood that Blacks could only buy in some parts of town. Nor did the Fair Housing Act prevent municipali-

ties from using land use policies, such as to establish. Crucially, this may also zoning, in ways that continue to promote insulate the program from some legal challenges. segregation. Finally, as Andre Perry Some may lament the idea that and co-authors have found, houses in optimal policy has taken a back seat to predominantly Black neighborhoods political considerations. But policy“are undervalued by $48,000 per home on average, amounting to $156 billion in makers regularly decide who will and will not be eligible for programs, and cumulative losses.” considerations like expedience will So why choose such a narrowly targeted cutoff year, given the documented ultimately play a role. This is not to suggest complacency with what has persistence of discrimination and racial disparities in access to, and even returns emerged so far.

For those who would like to see from, homeownership, for example, an approach more attuned to recent in appraisal differences? Here, politics challenges, the answer isn’t to accept matters more. The question of who this as inevitable, but to advocate for should be eligible for reparations has also been prominent— and controversial—in EVANSTON OFFICIALS SEEM TO HAVE debates over potential federal programs.

DRAWN THE LINE WHERE THE LINKS Resolving this question BETWEEN GOVERNMENT POLICY AND is less urgent at the federal level considerRACIAL HARM WERE EASIER TO ESTABLISH. ing the low probability of congressional action reparations while recognizing—and in the near future. But it is crucial in localities where there is momentum now when possible, trying to surmount— the legal, fiscal and political acceptfor responses. In setting up its program, ability challenges such programs can Evanston officials seem to have drawn the line where the links between govern- face. Fortunately, Evanston is only at ment policy and racial harm were easier the beginning of this journey.

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DAMAGES Continued from Page 13 calling for reparations when she represented the ward in the Evanston City Council.

Not surprisingly, the process hasn’t been easy.

Officials have had to grapple with thorny questions: How do you repair decades of discrimination? What are people owed for what was denied or taken from them? Can you level the playing field when one race has had more than a century head start?

Municipalities nationwide are struggling to answer those questions as they consider ways to redress slavery, past discrimination and ongoing racism.

‘THE STATUS QUO IS NOT ACCEPTABLE’

In the wake of Black Lives Matter protests, momentum began building for reparations—from Burlington, Vt., to Iowa City, Iowa, to Los Angeles. California formed a statewide task force in 2020 to study the issue and develop proposals.

That year, the Chicago City Council created a reparations subcommittee, making it the second city in the nation to form a governmental body to address the issue.

Last month, 60 local reparations leaders from across the country gathered in Evanston to brainstorm how to push the movement forward. Among the cities represented were Detroit, San Francisco, Kansas City, Boston, Philadelphia, Omaha, Tulsa and Amherst, Mass.

HR 40, which has been introduced in the U.S. House of Representatives every year since 1989, has drawn renewed interest. The proposed federal legislation calls for a national commission to study reparations and propose remedies.

Although the bill failed to garner enough support for a floor vote last year, the number of co-sponsors grew, falling just five votes short.

Asheville, N.C., Mayor Esther Manheimer said many of her town’s 93,000 residents probably oppose reparations, despite the City Council’s unanimous vote in 2020 to support the joint city-county effort.

Most people don’t know what reparations are, she told attendees of a virtual meeting on reparations in November co-hosted by the Oak Park Public Library. She added that the word itself “seems like a lightning rod.”

Even so, she said: “I do think a majority of the people in Asheville are open-minded about doing something and they recognize that the status quo is not acceptable.”

A national poll in April conducted by the University of Massachusetts Amherst and WCVB-TV in Boston found that 62% of Americans object to reparations (72% of white respondents).

Those in favor cited slavery “as uniquely responsible for the contemporary socioeconomic inequalities between African Americans and whites,” poll director Tatishe Nteta, associate professor of political science at the University of Massachusetts Amherst, said in a news release.

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“While a majority of Americans express trepidation at paying the descendants of slaves,” he said, “the future may be bright for the movement as a strong majority of Americans aged 18-29 express support for reparations.”

Acto Cook Cou Baptist

‘DENIED EQUAL ACCESS’

In Evanston, officials plan to distribute $10 million in reparations over the next decade.

The first phase focuses on preserving, stabilizing, and increasing homeownership to build intergenerational wealth and equity for Black residents, who represent 17% of the city’s population of 78,000.

The city’s Cannabis Retailers Occupation Tax is funding the initial $400,000 budget.

To qualify, applicants must be African American and lived in Evanston between 1919 and 1969 or a direct descendant, or someone who experienced housing discrimination due to city policies or practices after 1969. Those living in Evanston between 1919 and 1969 were prioritized for the first round.

Of the 620 who applied, 16 were selected by lottery on Jan. 13 for grants of $25,000 each, which can be used to obtain or pay down a mortgage or make home improvements.

The funds will go straight to lenders or contractors on recipients’ behalf.

Simmons, who has since left the council to start a nonprofit to advance local reparations nationwide, acknowledges the money will only make a small dent.

“We are not addressing all crimes against the humanity of Black people with this one local initiative,” says the fourth-generation Evanstonian. “What we are addressing, however, are specific anti-Black policies that are responsible for our financial segregation today—our wealth gap, and our achievement and academic gaps.”

The lone dissenting council vote was Cecily Fleming, an African American alderwoman who supports reparations, but not what she describes as “a housing plan dressed up as reparations.”

“My concern is that we went way too fast and based this on a tax we can’t control,” Fleming says.

“I would like us to do something that is not patronizing, that is fully funded, and meets the needs of and supports the people who have been part of the harmed population.”

She advocated for cash payments and against directing money to lenders, who she says represent businesses that caused long-term harm through discriminatory practices such as redlining.

Samuel Jones, 91, who was born and raised in Evanston, says providing some kind of restitution is “a good idea.”

His daughter, Crystal Lloyd, who applied for herself and also on his behalf, has mixed feelings.

Growing up, she heard her father talk about the racism he regularly endured. When he sought work at an insurance company in Evanston in the 1950s, not long after completing military service, he was told “they were not hiring coloreds.”

“I’m hopeful he will get it,” Lloyd says of his application. “It’s about

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Karen Wilson-Ama’Echefu, a representative of the Bethesda African Cemetery Coalition, facing camera, embraces a guest after singing the closing song at the National Town Hall meeting. time.”

But she would have preferred the money go directly to recipients to use as needed.

If selected, the family will upgrade the main bathroom in their 1954 ranch-style house. (At press time, they didn’t know if they were among the first 16 recipients.)

‘THEY WANTED OPTIONS’

Compiled at the request of City Council staff, a report by the Shorefront Legacy Center, a nonprofit historical organization in Evanston, and the Evanston History Center documented racial discrimination from 1900 to the 1960s that impacted the daily lives and well-being of thousands of Black residents.

The report concluded that policies, practices and patterns of racism “had a material effect on occupations, education, wealth, and property; and for each generation that encountered discrimination and segregation in Evanston, there was another that followed, and another.”

The impact was “cumulative and

Chanda Perkins helps her niece, Amomee, ride a bike on Dodge Avenue in Evanston’s 5th Ward. permanent,” the report says, and “the means by which legacies were limited and denied.”

As opportunities for African Americans were undermined, white residents were given more than a century head start to build wealth.

Study co-author and Shorefront founder Dino Robinson says many people are surprised to learn about the city’s racial history, given its reputation for being diverse and progressive.

“But when you drive through, you do see a distinct difference in neighborhoods,” he says. “You do see the segregation that has been here

for generations. Some people have turned a blind eye to it. Others have lived that history, but are so tired of fighting against it that, in some ways, they have given up or accepted that as the norm. This report just reminds people that we’re no different than any other community in the United States.”

Redlining was banned by the Fair Housing Act in 1968, but recent investigations and analyses have uncovered an ongoing practice of redlining and discrimination in home appraisals across the country.

Evanston resident Justin Marcoviche-Garnett, the great-grandson of

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Reparations ‘will help us heal old wounds’

Actor-activist Danny Glover is greeted by Cook County Circuit Court Judge Lionel JeanBaptiste at a National Town Hall meeting at First Church of God CLC in Evanston.

Oak Park resident calls for a plan to build Black wealth Christian Harris, a former Oak Park Library board member who ran for a seat on the village board in 2019, co-founded grassroots group Walk the Walk along with Danielle Morales and Chris Thomas to address barriers to equity in the western suburb.

In 2020, the group began working on a reparations initiative and presented recommendations to the Oak Park Village Board in February 2021.

Harris This transcript has been edited for length and clarity.

Crystal Lloyd and her father, Samuel Jones, have applied for reparations funds.

Irene and Winfield Garnett, said redlining during the decades his family purchased homes in Evanston shaped how they felt about homeownership.

“My family wanted to be able to choose the neighborhood they lived in,” he says. “They wanted options for where they could spend their money.”

When his great-grandparents were making plans for a new home in 1926, they were required to construct it in the 5th Ward, says Marcoviche-Garnett. The two-story house still stands on Dewey Avenue.

The couple paid with cash because lenders at the time routinely denied mortgages to Black applicants.

Marcoviche-Garnett says his family didn’t apply for a restorative housing grant but might seek reparations in the future. He joined the board of directors of the Reparations Stakeholders Authority of Evanston, which is raising funds for reparations and will distribute grants separately from the city.

BEGINNING OF RACIAL WEALTH GAP

Sutton, whose grandparents’ house was forcibly relocated, says redlining, rezoning and other discriminatory actions greatly disadvantaged families like his.

His grandparents were given no recourse when a 1921 zoning ordinance converted the area where their house stood from residential to commercial, resulting in the relocation to the 5th Ward of homes owned by Black residents.

The Suttons’ house was moved near train tracks and a sanitary canal, where lots were smaller and many streets were unpaved.

Some of their new neighbors lacked running water.

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The house sold in 2017 for about $152,000.

Searching real estate website Zillow, Sutton saw that homes in their old neighborhood now sell for $450,000 to $1 million.

Sutton now sits on Evanston’s reparations committee.

“If nothing else, the city needs to know how families were disadvantaged by their policies,” says Sutton, a retired teacher and community activist who applied but wasn’t selected in the first round of 16 grants. “Reparations would be one way to prove that they have changed their policies.”

An early attempt at reparations in the U.S. took place in 1865, when U.S. Army Gen. William Tecumseh Sherman ordered the redistribution of confiscated Confederate land to formerly enslaved Black people—the so-called “40 acres and a mule” promise, which went unfulfilled.

More than 120 years later, Congress passed the Civil Liberties Act in 1988, which issued formal apologies and $1.6 billion in reparations—$20,000 each—to about 82,000 Japanese Americans forced into internment camps in the U.S. during World War II. According to the Conference on Jewish Material Claims Against Germany, which negotiates claims on behalf of Holocaust survivors, since 1952, the German government has paid more than $90 billion in reparations to over 800,000 Jewish survivors. Hundreds of millions of dollars more have been distributed to aid Holocaust survivors worldwide during the COVID-19 pandemic.

Reparations, according to proponents, can involve a formal apology, memorials, truth and reconciliation hearings, school curriculum changes, education vouchers, housing grants, cash payments, or other forms or combinations.

Chicago businessman Kamm Howard says local reparations will

vary, because “communities will prioritize whatever its challenges are and where it wants to direct its resources.” Howard is national co-chair of National Coalition of Blacks for Reparations in America.

William Darity Jr. says only the federal government can adequately fund reparations, which should include direct payments to victims.

Darity is director of the Samuel DuBois Cook Center on Social Equity at Duke University.

During a virtual meeting co-hosted by the Oak Park Public Library in December, Darity said HR 40 should be revised to make elimination of the racial wealth gap its primary goal. The wealth gap, he says, best captures the cumulative intergenerational effects of racism on the descendants of those who were enslaved.

Today’s $840,000 household wealth gap between Blacks and whites would require at least $14 trillion to close, says Darity, co-author of the book, “From Here to Equality: Reparations for Black Americans in the Twenty-First Century.”

Co-author A. Kirsten Mullen said 45 million white Americans living today still reap the benefits of the Homestead Act of 1862, which provided more than 1.5 million white homesteaders, including recent European immigrants, with 160 acres each.

That was four times what was pledged at the end of the Civil War to those who had been enslaved.

The Homestead Act marked “the beginning of the nation’s racial wealth gap,” Darity says.

History’s ripple effects are at the heart of the issue, some experts say.

“For supporters of reparations,” says Nteta, the University of Massachusetts political scientist, “the next stage in the fight may be the education of the public regarding the continuing legacy and impact of slavery on the African American community.”

CRAIN’S: How do you define reparations?

HARRIS: Reparations are a means of addressing the wealth and opportunity gaps due to historic racism and discrimination.

Reparations were promised to newly freed people after slavery but were never given. Reparations have been granted to other ethnic groups in America for atrocities committed against them, such as Japanese Americans interned during World War II, but never to Black people, whose labor built this country.

Descendants of enslaved Americans have some of the worst life outcomes and economic outcomes in the United States. It is important that we begin to heal as a nation from the wounds of slavery, civil war, segregation, Jim Crow and mass incarceration. The only way to do this is to address the history head on, hold truth-telling sessions and repair the harm done.

True reparative justice repairs the harm to all involved parties.

What do you hope to accomplish?

Oak Park undermined the ability of Black residents to build community and wealth going back at least to the early 1900s. As a result, I would like to see a reparations plan that gives Black people the opportunity to build community and wealth in Oak Park. That might be direct grants, low-interest business and real estate loans, tax reimbursements, community spaces, and revisions to the school curriculum, among other possibilities.

Black Oak Parkers would be able to build generational wealth, know the history of their Oak Park ancestors, have equitable graduation rates and life outcomes, and more.

This will help us heal old wounds.

Tell me about the reparations initiative your group is proposing and where it stands.

The first phase is educating the community about the history of Black people in Oak Park. As a Black person who grew up in Oak Park, I was never taught that Black people lived here before (renowned

African American chemist) Percy Julian moved here in the 1950s.

But there were Black people here as early as 1880. This history has been largely erased, so part of our work involves spreading awareness. We published a research paper on the early history of Black residents in Oak Park and shared it with the community.

We formed a partnership with the Oak Park Public Library to hold events about the history of early Black residents and the experiences of current Black residents, and given presentations to local groups and elementary schools on the importance of reparative justice.

What response have you gotten from Oak Park officials?

In February 2020, Walk the Walk presented to the Oak Park Village Board on the early history of Black residents and how the village board limited the growth of Black wealth and the Black community, and why the village should try to repair the harm caused by racism and discrimination.

Most of the board agreed there was a need for federal reparations.

The board sent a letter supporting federal reparations to U.S. Sens.

Dick Durbin and Tammy Duckworth and U.S. Rep. Danny Davis.

But five of the seven board members did not believe local reparations initiatives were possible or the correct course of action.

Lastly, we’re creating a task force to study reparations in depth and provide recommendations to village residents, for-profit and nonprofit organizations, religious institutions and six taxing bodies about how to contribute to reparative justice for Black residents.

What is the role of governments?

The U.S. economy made its initial fortune from slavery and this fortune propelled America to become one of the world’s wealthiest countries. The money generated from free slave labor helped build roads, pay for western expansion, fund wars, create Wall Street, construct government buildings and more. The debt for slavery is so large only the federal government could realistically pay what’s owed.

Some states had legal slavery.

That being said, every state has participated in and benefited from systemic racism that caused harm to descendants of enslaved Americans. This is something that the Illinois General Assembly should look into in the next year or two.

Deborah L. Shelton

1/14/22 3:10 PM

18 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

This would be Fulton Market’s biggest project

BY ALBY GALLUN A Chicago developer is getting ready to unveil plans for a $600 million mixed-use project in the Fulton Market District, the biggest real estate development to date in the fast-growing neighborhood.

Fulton Street Cos. wants to build office and lab space, apartments, a hotel and a big fitness center on a site at 1200 W. Fulton St., said Alex Najem, the firm’s founder and CEO. The 1.5-million-square-foot project underscores Najem’s unbridled exuberance for Fulton Market, a neighborhood that shook off the pandemic last year and is booming once again, with developers starting new apartment towers and businesses gobbling up office space. Fulton Street itself is getting ready to break ground on a 34-story apartment tower across the street and is close to lining up an anchor tenant for a 530,000-square-foot office building it plans about five blocks east, Najem said. See more renderings below.

“I love Fulton Market. The lenders love it. Tenants love it,” he said.

It will take a lot of love, money, fortitude and patience to pull off such a big, complicated project.

Najem has cleared one big hurdle: buying the development site. A Fulton Street venture recently paid $42 million for the 2-acre property at the northwest corner of Fulton Street and Racine Avenue, he said. Next up: Fulton Street plans to present its proposal for the site

next month to the Chicago Department of Planning & Development’s Committee on Design, he said.

CHALLENGES

Two more big obstacles await.

The developer needs to obtain a zoning change for the project from the city and then secure construction financing to build it. Lenders are enthusiastic about Fulton Market, and demand for apartments and office space there is especially strong, but developments with multiple uses are especially hard to finance.

It may seem like a lot to bite off for Najem, 36, a former executive at Chicago multifamily developer Cedar Street who co-founded Fulton Street in 2017. He’s never built anything as big as what he plans at 1200 W. Fulton St. But he’s is teaming up on the project with some well-established, deep-pocketed partners: Chris Merrill, the co-founder and CEO of Chicago-based real estate investment firm Harrison Street Real Estate Capital; and Shanna Khan, the daughter of Shahid Kahn, the owner of the Jacksonville Jaguars and Flex-N-Gate, a big auto supplier based in Urbana.

Waterton, a big, Chicago-based apartment landlord, also is investing in the development, Najem said. The firm, whose properties include the Presidential Towers housing complex in the West Loop, will handle management and leasing of the apartments at the Fulton

Market project.

The development will include 500 apartments and 200 hotel rooms in a roughly 50-story tower; a 25-story, 500,000-square-foot office building; and a 10-story, 200,000-square-foot building catering to life sciences companies, Najem said. The fitness center would encompass 200,000 square feet. Najem declined to disclose the tenant’s name, saying only that “it’s a national group that’s expanding.”

It’s unclear whether Fulton Market residents or city officials will go for a 50-story tower, which would be taller than any building completed or under construction in the neighborhood. At about 600 feet, it would be more than 100 feet higher than an apartment high-rise that Related Midwest is constructing at 900 W. Randolph St. Related Midwest had originally planned a 51-story, 570-foot tower on the site, but shrunk it to 43 stories after neighborhood groups criticized it as too tall.

Najem thinks neighbors will support Fulton Street’s plan because the project will include a lot of green space open to the public.

“We feel comfortable that the community as well as the city is amenable to height as long as there is significant green space on the ground level,” he said.

Chicago-based Hartshorne Plunkard Architecture is designing the project, with Morris Adjmi Architects of New York playing a

FULTON STREET COS.

A massive, $600 million development calls for office and lab space, apartments, a hotel and a big fitness center in the red-hot neighborhood

A rendering of development plans for 1200 W. Fulton St. consulting role, Najem said.

Fulton Street acquired the development site from affiliates of two businesses that occupy it now: paratransit service provider CDT and wholesaler Four Star Foods.

Dominic Soltero of @properties Commercial brokered the sales.

Though Fulton Street still needs the city’s blessing and financing before it can break ground, the firm is getting ready to start construction of a 34-story, 433-unit apartment building just across the street, at 1201 W. Fulton St. The City Council approved the proposal last year, and Fulton Street is in the final stages of securing a loan package to finance 90% of the building’s $190 million construction cost, Najem said.

That’s an especially high amount of debt for an apartment development, adding to the risk. Najem said Fulton Street is using a financing structure that hasn’t been

used for construction project yet in Chicago, saying it’s still too early to provide more specifics or disclose the name of the lender.

“We’re getting close,” he said.

“We’ll probably have it signed up by the end of the month.”

He aims to break ground in May. Merrill, Kahn and Waterton are also Fulton Street’s partners on the apartment building, which has been designed by Morris Adjmi.

Fulton Street has its hands full with other projects in the neighborhood. The developer is drawing up plans for a 450-unit apartment building at 1325 W. Randolph St. and Najem expects to break ground in May on a 530,000-square-foot office building at 917 W. Fulton St. The firm is close to signing a 125,000-square-foot lease with an anchor tenant for the project, according to Najem, saying he hopes to announce the deal in two months.

Ee $5

BY DANNY ECKER The $50 million redevelopment of a cluster of old Humboldt Park warehouses backed by billionaire Morningstar founder Joe Mansueto has landed its first tenant, a deal that could bolster a project in a wholly unproven location for companies.

EeroQ, a five-year-old Michiganbased venture that is designing a commercial quantum computer, has signed on to relocate its headquarters to the Terminal at 1334 N. Kostner Ave., the company and developer IBT Group said in a statement.

The five-year lease for 9,600 square feet makes EeroQ the pioneering user of the 250,000-squarefoot cluster of former locomotive headlamp factory buildings. A joint venture of Mansueto and Chicago developer IBT began converting the dilapidated property into creative office space in late 2020.

The deal marks a crucial victory for the development team as well as a gain for Mayor Lori Lightfoot’s high-profile effort to boost economic development and jobs in blighted South and West Side neighborhoods. EeroQ could help put the Terminal on

P018_CCB_20220117.indd 18

the radar for more types of users and add to a budding node of economic activity between the Terminal and the property next to it, where Amazon is building a new distribution center.

EeroQ is moving to Humboldt Park from East Lansing, Mich., where it has been doing research sponsored by Michigan State University, said CEO and co-founder Nick Farina. The company has a patented approach to developing a quantum computer chip by manipulating single electrons floating on liquid helium.

A quantum computer stores information in qubits as opposed to binary 0s and 1s, allowing the computer to process with power and speed that most computers today can’t. Google, Amazon and IBM are among the companies that have been developing quantum computing technology.

QUANTUM COMPUTING HUB

Farina, a 34-year-old Barrington native who founded two other startups before launching EeroQ in 2016, said he saw Chicago as a hub for the type of talent the company needs to perfect its technology in a new quantum computing lab.

“There is a very tight market

for quantum computing talent, and your success or failure as a company really depends on your access to talent,” said Farina. “Chicago has, we believe, the best ecosystem in the country for quantum computing talent.”

Instead of planting its flag near one of the local major universities or Argonne National Laboratory or Fermilab in the western suburbs, EeroQ prioritized being close to the city in hopes it will help the company attract and retain that talent.

Farina said he landed on the Terminal for a unique reason: The building doesn’t vibrate. That was essential for testing a technology that relies on liquid helium and can be thrown off by slight vibrations imperceptible without an advanced motion sensor.

“It’s an extremely solid building that is isolated from external noise,” Farina said of the structure, which opened in 1916 as the home of train headlamp maker Pyle National. “For most buildings, being next to a major highway or a train line is considered a positive. In our case, it was a negative.”

EeroQ currently has eight employees and expects to hire another 15 over the next year, most of whom

IBT GROUP

Mansueto-backed Humboldt Park project lands tech firm

EeroQ’s raw space inside the Terminal. will be based in Chicago. The company is funded by a combination of angel and high-net-worth family investors, Farina said.

The company “is such a key tenant because it really validates the whole project,” said IBT Principal Gary Pachucki, whose joint venture with Mansueto bought the property in July 2020 for nearly $8.3 million, Cook County property records show. Pachucki said he is focusing on science-centric users like EeroQ to lease up the rest of the property.

“The dream for the project from my perspective was to do a science or life science campus outside of Fulton Market. This is the genesis of validation for that,” he said.

Lightfoot praised the deal as

a win for Chicago on multiple fronts. “EeroQ will not only be well-positioned to capitalize on the many opportunities that quantum technology will drive, but also help to revitalize communities in need,” she said in a statement.

Farina, whose company aims to move into the building by June, said he also liked the idea of being a first mover in a part of the city that could use an economic jolt.

“If you’re building a quantum computer, you have to be comfortable with being a pioneer,” he said.

“It kind of comes with the territory.”

Zach Pruitt and Doug Hayes of Cawley Chicago represented the Terminal developers in the lease.

Emily Smith of Bespoke Commercial Real Estate represented EeroQ.

1/14/22 3:32 PM

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20 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

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ChicagoBusiness.com

OUR READERS ARE 125% MORE LIKELY TO INFLUENCE OFFICE SPACE DECISIONS

Find your next corporate tenant or leaser.

Local IPOs hit highest level in a decade IPOs from Page 1 founders and investors, giving them incentives to launch and back a new generation of startups.

“More companies went public instead of getting sold,” says Bob Hayward, a lawyer who works on stock offerings at Kirkland & Ellis in Chicago.

Lawyers and investment bankers also enjoyed record levels of business, increasing profits and causing them to expand their staffs. Hayward says his capital markets team, which has doubled to about 30 lawyers, led 16 IPOs in 14 months.

“It’s the most IPOs I’ve done any time in my career,” he says.

“It used to be for every five IPOs I worked on, one would get done.

That’s flipped.”

Among Kirkland’s deals was insurer Ryan Specialty Group, which raised more than $1.5 billion on July 22 in Chicago’s largest IPO last year. Led by Aon founder Pat Ryan, the company went public during the secondbusiest week in capital markets history, Hayward says.

Chicago investment bank William Blair’s capital markets unit had a record year, working on 95 IPOs and increasing its equity capital markets team to 35 people from 14.

Dealmakers expect the IPO market will remain strong. “We continue to see a steady stream of pitch activity for potential 2022 IPOs,” says Steve Maletzky, who leads William Blair’s equity capital markets group.

TAKING THE PLUNGE

Connect with Claudia Hippel at claudia.hippel@crain.com for more information.

P020_CCB_20220117.indd 20

fo them a ne “M inst

Maintaining last year’s pace could be a challenge, as capital markets brace for interest rate increases. Stocks are off to a shaky start this year, with the S&P 500 off 1.6% since Jan. 1. Recent IPO shares have been hit hard, with two-thirds of last year’s offerings now trading below their debut prices, according to the Wall Street Journal. By contrast, nearly two-thirds of Chicago’s newly public companies trade above their offer prices. The top performer is Portillo’s, which is 62% above its IPO price.

Nationwide, 1,009 companies went public last year, raising $316 billion, according to Dealogic.

More than half the deals were SPACs. There were 396 traditional IPOs, raising $153.6 billion: That’s more money than was pulled in during the previous peak of $107.9 billion in 1999 but fewer than half the record 845 deals completed in 1996, when SPACs weren’t a factor.

After years of selling out to private-equity and corporate buyers, or staying private by raising massive amounts of venture capital, companies now are being lured to the IPO market by rising valuations. Companies going public got a median increase of 64% from their previous valu-

JOHN R. BOEHM

CLASSIFIEDS

æ`ÛiÀÌ Ã } -iVÌ

WELCOME TO THE CLUB Chicago companies that went public last year Company

IPO price

Jan. 11

Portillo’s

$20.00

$32.43

Ryan Specialty Group

$23.50

$37.00

Thoughtworks

$21.00

$25.63

$9.26

$10.50

13%

Chicago Atlantic Real Estate Finance $16.00

$17.83

11%

Enfusion

$17.00

$18.68

Alight*

$9.75

$10.00

Vivid Seats*

$12.29

$11.11

Weber

$14.00

$10.81

$9.62

$6.49

$9.97

$5.76

$10.28

$3.01

CCC Intelligent Solutions*

Redbox* OppFi* ATI Physical Therapy* * SPAC

Change

62% 57% 22%

10% 3% -10% -23% -33% -42% -71% Sources: Dealogic, Yahoo

ations, the highest in five years, says Seattle-based research firm PitchBook.

“I think that’s got to be a pretty big part of what was enticing companies who were maybe on the fence to go ahead and go forward with an IPO last year,” says Cameron Stanfill, a PitchBook analyst.

SPACs made it easier for private-equity-backed local companies, such as employeebenefits manager Alight, formerly known as Hewitt Associates, online ticket seller Vivid Seats and insurance-software firm CCC Intelligent Solutions, to go public.

“It was an accelerated path to the public markets and the opportunity to find a strategic partner,” says Stan Chia, CEO of Vivid Seats, which merged with a SPAC led by Eldridge Industries, a media, sports and entertainment company.

Despite the stock market’s recent dip, observers say the IPO boom has room to run.

“For the first half of 2022, I see no reason why it won’t be as robust as the first half of 2021,” Hayward says. “The pipeline building now for IPOs that will price this year is strong.”

POSSIBLE HEADWINDS

Private-equity funds took a record amount of companies public last year, a trend Maletzky expects will help drive the IPO market this year. Venturebacked companies, many of which have been raising large late-stage rounds from institutional investors such as mutual fund companies and hedge funds, also will fuel the market.

“We’re seeing ultra-high-growth companies looking to tap the public markets even sooner than in prior years,” Maletzky says.

He predicts tech, health care and consumer-related companies will be the most active, but biotechs will face a tougher path.

Chicago has several potential IPO candidates in 2022, including Tempus Labs, a genomic-testing and data company led by Groupon co-founder Eric Lefkofsky; advertising-tech company Basis Global Technologies, formerly Centro; restaurant chain Cooper’s Hawk; and logistics-software maker Project44. Insurer Kin and industrial 3D-printing company Fast Radius are working to complete SPAC mergers.

Still, the IPO market faces some nascent headwinds. The Federal Reserve’s planned interest rate hikes, economic uncertainty and the disappointing performance of several new stocks like electric-vehicle darling Rivian could dampen IPO demand as 2022 progresses.

Meanwhile, growing scrutiny by the Securities & Exchange Commission could make SPACs a less attractive option, and many of the SPACs that raised money last year still haven’t found operating companies to acquire.

“There’s still plenty of positive momentum,” says Stanfill. “I think the market could sustain maybe not the exact same level as what we saw in 2021 but definitely above where we’ve been over the past five years or so in terms of IPO listings.”

1/14/22 4:14 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 17, 2022 21

Red-hot startup market boosts competition among local venture-capital firms closing on a second $40 million fund. And Sandalphon has raised $11 million for a new fund targeted at $25 million.

Their growth makes more capital available to local startups that have long complained about a shortage of early-stage money in Chicago. But more investors also means steeper competition among VC firms, which will have to fight harder to back the most-promising startups.

“It’s become more competitive to get money into the best companies,” says M25 founding partner Victor Gutwein, who started investing in 2015 with a $1 million fund when he was just 23. “The reason I was able to get started as this noname person with a very small fund was because founders were basically so desperate for risk capital that they couldn’t fill out their rounds.”

Jordan Wexler, founder of fintech startup EarlyBird, is one entrepreneur who’s benefited from the emergence of more venture investors in town. Chingona invested in his company as part of an early funding round in 2020. Since then, EarlyBird has raised capital from high-profile investors like Reddit co-founder Alexis Ohanian and the Winklevoss twins. “(Chicago) is a good town to raise in . . . and you can feel it,” Wexler says. “The network is available.”

New funds keep popping up in Chicago. Vijen Patel, co-founder of Pressbox, a laundry startup that sold to Procter & Gamble in 2018, is raising a $20 million fund with

JOHN R. BOEHM

VENTURE CAPITAL from Page 1

Victor Gutwein, founding partner at M25

Additionally, Jason Weingarten, co-founder of recruiting startup Yello, and Jon DeLuca, the son of Subway founder Fred DeLuca, launched a new fund with $3.2 million of their own cash. Dubbed Subconscious Ventures, the firm also “IT’S BECOME MORE COMPETITIVE TO invested in EarlyGET MONEY INTO THE BEST COMPANIES.” Bird, as well as Chicago-based logistics Victor Gutwein, M25 founding partner startup MVMNT. “We’re seeing a other local startup founders, in- lot of deal flow,” Weingarten says. cluding ShipBob’s Dhruv Saxena “I didn’t see this stuff two or three and Divey Gulati, Grubhub and years ago.”

Some investors are leaving oldFixer co-founder Mike Evans and Farmer’s Fridge CEO Luke er Chicago VC firms to launch Saunders. The fund is called the their own. Ezra Galston left Chi81 Collection, a nod to what Patel cago Ventures to launch Starting says is the 81% of the U.S. GDP that Line, and Samara Hernandez left MATH Ventures Partners to doesn’t typically attract VC.

launch Chingona Ventures.

“It’s great to see people who have spun off and do things on their own,” Hernandez says. “It’s bringing new blood and new perspectives and new ways of looking at deals.”

EXPANSION

More funding is pouring into venture capital across the country.

According to PitchBook, U.S. VC investment rose 98% to $330 billion in 2021. VC funding in Chicago surged to $7 billion in 2021 from about $3 billion in 2020. While it’s a record, Chicago still falls far behind the Bay Area, New York and Boston.

“We turned a lot of money away for our second fund,” Galston says.

“We’ve already got people offering us money—no diligence—for a third fund. There are a lot of

people who want access to private early-stage companies.”

While there’s more demand for VC investing, the market’s expansion also makes it more competitive to get in on the best deals. To compete, firms are taking on more risk. They’re cutting larger checks, requiring less equity in businesses and providing more flexible terms to founders in general. Other new firms, most notably LongJump, have set themselves apart by backing companies launched by members of minority groups, women or people without college degrees.

“You can’t just be normal money in Chicago anymore and try to get into the best rounds because those rounds are full,” Gutwein says.

“It’s not uncommon for a Chicago-based company to receive mul-

tiple term sheets.”

Some older Chicago firms see opportunity in the new generation.

Pritzker Group Venture Capital, which has been investing in startups for 25 years, tends to invest at the later stages of companies. But to expand its reach, the firm has invested in early-stage firms in town, such as Chicago Ventures, Hyde Park Venture Partners and MATH Venture Partners, says Pritzker Group Partner Sonia Sahney Nagar. And Pritzker Group plans to invest in more, she says.

“More investors is good for the ecosystem. It will create more founders that are starting things we’re going to want to back,” Nagar says. “We kind of need this new class of investors that are emerging.”

These suburban moms wanted the racism deleted from their property deeds DEEDS from Page 3 sponsored “empowers homeowners to eliminate the racism in their documents.”

Shannon, who’s lived in her home for 21 years, said she first noticed the racist restrictions on her deed about a decade ago when she was on the board of her homeowners association.

The language is in 1929 documents that govern Shannon’s property, Sullivan’s and dozens of others in two neighborhoods near Diamond Lake, about 40 miles northwest of downtown Chicago.

Clause 10 in the covenants said the property “shall never be sold, transferred or leased to any person or persons of the African or Negro, Japanese, Chinese, Jewish or Hebrew races, or their descen-

P021-CCB_20220117.indd 21

dants, or allowed to be occupied by any such persons, servants excepted.”

“I was shocked when I saw that,” Shannon says.

Holly Kim, another resident of the neighborhoods, said the language “was a punch in the gut.”

Kim, who is the Lake County Treasurer, is Korean, so she’s not expressly mentioned in the documents, but her two children are half-Chinese.

“I know these things can’t be upheld anymore,” Kim said, “but it’s such a reminder of a horrible past.”

People often told her, Shannon says, “it’s history, it’s set in stone.

We can’t do anything about it,” but that her reply was, “We don’t keep the ‘whites only’ signs over drinking fountains because they’re his-

tory. We need to get rid of this racist language.”

In 2020, when she heard a Black pastor challenge white homeowners to look for ways they can help combat racism, Shannon decided to target the offensive language in her property covenants. She and Sullivan wrote to Gov. J.B. Pritzker, Johnson and Dedich, and the two legislators quickly took up the cause.

PROCEDURE

Before the new law took effect, Johnson said, a homeowner who wanted to get restrictive covenants deleted from their property deeds typically had to hire an attorney and spend several hundred dollars. Shannon said the final product wasn’t quite satisfactory anyway: Often, the language was

blocked out with a light line that left it still visible.

As of Jan. 1, all county recorders will black out the language entirely, for a fee of no more than $10. The result is, Sullivan said, “just as permanent” as what the original writers of the racist covenants intended.

Making the change in a property deed “brings us morally up to date,” said Eric Rinehart, the Lake County state’s attorney. “It removes any vestige of these abhorrent racist practices.” In Lake County, the recorder, Mary Ellen Vanderventer, will pass homeowners’ requests to Rinehart so he can verify that the requester has legitimate ownership of the property, he said.

Johnson, who said she lives in Buffalo Grove but her home’s deed has no racist restrictions in it, said

she’s pleased that the new law has origins in the north suburbs. “It shows we care about these things and are doing something about it,” she said. In November, WBEZ unearthed racist language found in deeds in Chicago, Skokie, Morton Grove, Highland Park and elsewhere.

Illinois joins several other parts of the country that have set up smooth mechanisms for deleting racist language. Among the others are Connecticut, Minneapolis and Seattle.

The first step for any homeowner, several of these sources said, is to determine whether there is racist language in the property deed by reading through it. Not all homes have restrictive covenants, and not all restrictions are worded the same way.

1/14/22 3:56 PM

22 JANUARY 17, 2022 • CRAIN’S CHICAGO BUSINESS

Brunswick races to meet demand amid COVID-driven boom in boat sales Right now, retailers feel stranded after consumers seeking outIs this collateral investment go- door recreation options during ing to bring returns? Even CEO the pandemic cleared out showDavid Foulkes has some doubts. rooms. Citing data from the U.S. In an August interview with Ya- Bureau of Economic Analysis, hoo Finance regarding autopilot, Frank Hugelmeyer, president of he admitted that “driving a boat the National Marine Manufacturis part of the experience.” As for ers Association in Washington, electric motors, Brunswick likely D.C., estimates there was a 30% inhas been spurred by the recent an- crease in boating and fishing not nouncement that General Motors long after COVID-19 broke out. is taking a 25% stake in a Seattle ri- Moreover, he observes a “foundaval, Pure Watercraft, which makes tional shift” in how Americans live and play, with “people moving out all-electric outboard motors.

The challenge: It takes a lot more of cities to oceanfront and lakeelectricity to push a 15,000-pound front communities and acquiring cabin cruiser through heavy seas the toys they need for recreation than to propel a 3,000-pound car on the water.”

Craig Kennison, an analyst at down a strip of smooth asphalt.

Robert W. Baird in Milwaukee, puts it bluntly: “BOAT BUILDERS SO FAR HAVE BEEN “Beginning in 2020, shoppers showed up at boat CONSERVATIVE IN ADDING BACK dealers and wiped out inventory. Brunswick needs MANUFACTURING CAPACITY.” to build more boats faster David Gee, editor, Boating Industry magazine and restock showrooms.

Dealers are screaming for There are no charging stations product to sell.”

Looking to fully capitalize on (yet) on open water, either, leaving range anxiety a major concern. a historic boom, Brunswick has “You don’t want to get stranded,” announced five new expansion projects in the past year. It’s addFoulkes said.

Still, the necessity of expansion ing 150,000 square feet to a plant seems obvious as orders back up. in Reynosa, Mexico, creating more “We’ve already sold some (new than 600 new jobs there when it boat) slots going into 2023,” Bruns- opens in 2023.

Beyond that, it will add capacity wick CFO Ryan Gwillim says.

BRUNSWICK from Page 3

at a Boston Whaler plant in Florida and at facilities in Portugal and Minnesota. At the massive 3 million-square-foot Mercury Marine engine base in Fond du Lac, Wis., where 4,100 people work, Brunswick is transforming underused distribution space to manufacturing. Even now, however, that plant is struggling to find enough workers.

TOO FAST?

MOTORING AHEAD Traditional powerboat sales climbed to their highest levels since bottoming out in the wake of the Great Recession of 2008.

350,000 300,000 250,000 200,000 150,000

Adding the cost of expansion—roughly $100 million—to the investment in technology, is Brunswick moving too fast? Most observers don’t think so. Even after the Navico deal, net debt stands at $375 million, easily manageable for a company that Wedbush Securities projects will enjoy a 59% increase in 2021 bottom-line profit to $641 million when final results are tallied. That’s equal to $8.18 a share, up from $5.07 in 2020. A further rise to $9.24 a share is forecast for 2022. Capital spending will come out of free cash flow, CFO Gwillim says.

The caution that has deterred expansion until now stems from painful memories of the 2008 recession, when annual U.S. powerboat sales nose-dived to a low point of 132,000, from more than 300,000 in 2005, according to the NMMA. Sales recovered to 230,000 in 2020, and observers

100,000 50,000 0

’04 ’05 ’06 ’07 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20

Source: National Marine Manufacturers Association

predict a rise to 300,000 or more in the next couple of years.

“Boat builders so far have been conservative in adding back manufacturing capacity,” says David Gee, editor of Boating Industry magazine. “Now Brunswick is taking the lead, and as the largest recreational boatbuilder, David Foulkes feels he has more runway than the others to make this move.”

For Gwillim, it’s a matter of simple math. There are more than 10 million registered boats in the U.S., each lasting an average of 30 to 35 years. That means the industry needs to get back to annual output of 300,000 boats just

to replace aged product ready to come offline. “This is not a bubble in demand,” Gwillim says. “We’re being reasonable in that most of our expansion is coming as additions to existing plants. We aren’t building all-new facilities from the ground up.”

James Hardiman at Wedbush forecasts that Brunswick revenue this year is likely to jump 13% to $6.59 billion, though the number would be higher if Brunswick had more boats to sell. He rates the company’s stock, trading recently above $100 (up from less than $80 a year ago), as a buy, with a further rise to $125 by the end of the year.

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Chicago restaurants are coping with a steak glut The latest wave of COVID-19 is causing diners to cancel reservations, and meat is piling up in local restaurant fridges

BY ALLY MAROTTI Omicron has reduced dine-in demand at Chicago restaurants, and as a result, high-end cuts of meat are piling up.

Northwest Meat, which supplies Chicago establishments such as Gene & Georgetti and Gibsons Restaurant Group with beef, poultry and pork, has about 1,500 pounds of excess high-end meat cuts sitting in its freezer. That’s about $22,000 worth of meat, on top of what the supplier would normally keep stocked, said co-owner Andrew Neva.

ALYCE HENSON

DEMAND PLUMMETS

The meat glut stems from a lack of dine-in business at Northwest Meat’s restaurant clients, as consumers hunker down and wait for this latest COVID wave to pass. Neva stocked up on product in mid-December, preparing to supply his customers with meat for all the holiday parties they were hosting. Then, as the omicron variant gained speed, the cancellations started rolling in and restaurants didn’t need as much meat.

“Our business has plummeted,” Neva said. “Any product I have left over, I’m just holding onto it and I’ll sell it throughout the next month or two. It’s really sad. We were doing really well and we had a lot of momentum.”

Neva’s employees have seen hours cut as well, down to about 30 hours last week from 40 be-

Northwest Meat co-owner Andrew Neva fore this latest wave.

The upside? Few restaurant operators are worried about supply issues worsening, even as omicron outbreaks cause meat plants around the country to reduce slaughtering capacity.

But that doesn’t mean they’re happy about the glut.

Restaurant operators are hem-

orrhaging money on the cancellations at a time when inflation has already sent the price of meat and seafood soaring. The holidays are often the busiest time of year for restaurants, and many lost much of that business. January isn’t looking better.

West Loop Argentinian restaurant El Che Steakhouse &

Bar saw its unused beef pile up when it closed for the last two weeks of the year after staffers tested positive.

LOSSES PILE UP

Most of El Che’s cuts of meat are dry aged and could just keep aging, said chef and owner John Manion. But not all of it. The

restaurant had ramped up for holiday business and ended up losing a couple thousand dollars’ worth of beef.

Manion sold the remaining cuts through his retail operation—he converted the host stand into a small retail store in 2020—but margins are much lower on raw beef sold directly to consumers. Manion estimates that being closed those last two weeks of December cost El Che about $140,000.

“We were headed into the last two weeks looking to be very profitable in the fourth quarter, and we were not,” he said.

El Che reopened, but business remains slow.

Some restaurants, anticipating that more consumers would stay home during the omicron wave, decided to temporarily shut down after the holidays.

Rye Deli + Drink, a restaurant two blocks south of El Che, closed for the winter, according to a post on its website. Gene & Georgetti is closed through Jan. 13, said third-generation owner Michelle Durpetti. The River North steakhouse usually shuts down the first five days of the year for maintenance and extended it this year. When it reopens, it will serve only dinner through the end of the month.

Closing temporarily is a balancing act, though, Durpetti said. It saves on operating expenses, but stay closed too long and employees might find work elsewhere.

R.S. Johnson Fine Art closing Michigan Avenue gallery

BY STEVEN R. STRAHLER R.S. Johnson Fine Art, a lingering bastion among Chicago’s old-school art dealers and an exhibitor of works by Picasso and other masters, is closing its Michigan Avenue gallery after 67 years.

Owner Stanley Johnson plans to continue the business online.

Still, the gallery’s demise at the end of the month marks a sad milestone on the local art scene and reflects a changed retail outlook for the avenue.

“Gone days when independently owned businesses dominated the landscape of our ‘Magnificent Mile’ here in Chicago, which now features, almost exclusively, multinational globally-branded retail shops.

And it seems the general public no longer finds joy in making serendipitous discoveries along Michigan Avenue—whether an independent bookstore, a local

designer’s shop, or, in our case, an acclaimed international art gallery,” Johnson and his wife, Ursula, wrote in a “friend and colleagues” email.

Stanley Johnson declined to comment further.

A specialist in Post-Impressionism, Cubism and Expressionism and output of artists from Durer and Rembrandt to Degas and Picasso, the gallery at 645 N. Michigan says it has sold works to the Art Institute of Chicago, New York’s Metropolitan Museum of Art and many other museums. It mounted six Picasso exhibitions from 1968 to 1998.

EVOLVING TRENDS

The gallery’s foot traffic also is a victim of New York, over recent decades, exerting an ever-greater pull on art commerce, signaled by the late Richard Feigen gradually moving operations there after opening a gallery here in 1957.

“That, in my judgment, was the

HOW TO CONTACT CRAIN’S CHICAGO BUSINESS EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200 CUSTOMER SERVICE. . . . . . . . . . . . . . . . . . 877-812-1590 ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5492

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beginning of Chicago losing its great dealers,” says Scott Hodes, a lawyer and art collector. “Chicago was a different place in the early ‘80s.” Where sophisticated tourists once made galleries like Johnson’s a must-see stop, Hodes says, “That ballgame is over.”

In their email, the Johnsons said that their business now is “almost exclusively virtual”—a “much broader and more sophisticated global audience . . . not just from North America but also from Asia and Europe.” They said they would continue to meet with customers by appointment.

The gallery was started in 1955

by Stanley Johnson’s father, S.E. Johnson, at 224 S. Michigan. It debuted at its current location on an inauspicious Friday—Nov. 22, 1963—and moved from the second floor to the ninth floor about eight years ago.

After the senior Johnson died in 1967, his son and daughter-inlaw relocated from Paris, where

FROM INSTAGRAM

A symbol of the Magnificent Mile’s changing retail mix and visitor tastes, the independent business plans to continue operations online

A recent exhibit at R.S. Johnson Fine Art. they were studying, and shifted the gallery’s focus.

“It was a commercial gallery,” Stanley Johnson told Chicago Gallery News in 2015, adding that his father “sold some junky stuff, but gradually we got some better things. Bad things could

pay the rent for awhile.”

Hodes estimates that Stanley Johnson has bought or sold more than 800 Picassos and consulted often. “Museums in different places in the world would bring him in. When any problem came up, he was there.”

Vol. 45, No. 3 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the last week in December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.

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