Crain's Chicago Business, May 29, 2023

AMBITIOUS AGENDA

Will he be able to build alliances and win the resources to ful ll his vision? PAGE 11

CEO pay disclosures are getting weird

Execs’ fortunes vary widely under the new ‘compensation actually paid’ method versus the traditional calculation. Some local CEOs wound up in the red last year — theoretically. I

MICHAEL PYKOSZ’S COMPENSATION as CEO of Oak Street Health dropped by $50 million to a “negative” $48.4 million last year. Anders Gustafsson did better at Zebra Technologies, but his pay was a negative $17.5 million. Dover CEO Richard Tobin nished $13.7 million in the hole.

How did that happen? What seems like a mathematical fallacy is the result of a Securities & Exchange Commission requirement long in the making. Public companies now must report “compensation actually paid,” a

number designed to get a better handle on the value of stock, option and other awards that often account for the bulk of top executives’ compensation.

But some compensation experts have their doubts about the

BY STEVEN R. STRAHLER

new metric’s worth, and one says proxy advisory rms are steering clear of the measure for now.

For the best-paid CEOs at Chicago’s public companies, its impact on CEO compensation is split down the middle.

Among the 25 highest-paid CEOs under the old rules, 10 showed a higher gure — sometimes much higher — under compensation actually paid. Another

10 had a lower gure. e di erence was negligible for two other CEOs, and three more weren’t assigned a CAP gure because their rms’ scal years ended before the new rule took e ect.

Five companies reported negative CAP. eir accountants arrived at it by moving the window for looking at the value of stock

ONE CITY, 50 WARDS

A nonprofit’s founder explains how City Hall can help end hunger in Chicago. PAGE 4

Michael Pykosz

JOE CAHILL

The state budget deal falls short in addressing critical issues. PAGE 3

Illinois Republicans start making their picks in the 2024 race

Just a few hours after Florida Gov. Ron DeSantis got o to a dead-air- lled start to his race for president, Donald Trump picked up an endorsement from Darren Bailey, who may have been blown out in his race for governor last year but now appears to be preparing to run for Congress in Southern Illinois and wants the former president on his side.

at, in a nutshell, is the state of the GOP race for president, both here in Illinois and nationally.

Democratic incumbent Joe Biden is vulnerable, and the pros in both parties know it. His age and appearance raise legitimate questions about his performance. But though it’s still kind of early with time for change, the race for the GOP nomination to oppose Biden seems to be boiling down to a contest between the hero of Jan. 6 and the guy trying to gag Mickey Mouse. e rest of the eld is so far back as to be almost invisible.

Big investor in Pat Ryan’s

firm cashing out

sources close to LaHood say that shouldn’t be taken as an endorsement, I guarantee you it was noticed at Mar-a-Lago. Clearly in DeSantis’ camp is former gubernatorial hopeful and conservative activist Jeanne Ives, who has ties to major party benefactor Dick Uihlein.

“I’m a DeSantis fan,” Ives said in a phone interview. “I like a strong governor with a proven record of accomplishments. . . .Florida has, what, a $21 billion budget surplus.” And Trump? “If he’s the nominee, I’ll be 100% behind him,” she replied. “But I’m not going to let anyone o the hook on COVID,” where Trump, at least early in the pandemic, backed a shutdown of much of the

BY STEVE DANIELS

e largest nancial backer of Patrick Ryan’s wholesale insurance brokerage rm is cashing out most of its winnings.

Toronto-based private-equity

rm Onex, which invested more than $300 million in Ryan Specialty Holdings in 2018 and is now its second-largest shareholder, is selling two-thirds of its stake in an o ering managed by Barclays for Ryan Specialty.

Before the sale, Onex owned 11% of Ryan Specialty’s Class A shares. Founder and CEO Ryan owns 13.4% of Class A shares. Ryan also controls more than three-quarters of the Class B shares, which gives him voting control on the board.

e sale, which closed May 24, was priced at $43.45 per share, just below the $44.21 closing price on

stakes. e stock, which closed at $40.83 on May 24, is o 7.6% since the news, announced late May 22.

Overall, though, Ryan Specialty’s stock price had climbed nearly 43% since its July 2021 initial public o ering.

With Onex sharply reducing its

Aon, which handles the broad insurance needs of corporations and smaller businesses, Ryan Specialty focuses on a narrower corner of the business. It works for larger brokerages like Aon, nding coverage for businesses or business lines whose insurance needs are

IT SEEMS TO BE A CONTEST BETWEEN THE HERO OF JAN. 6 AND THE GUY TRYING TO GAG MICKEY MOUSE.

“People who like DeSantis are still with him but getting nervous,” says one top Illinois Republican, who asked not to be named. “ e Trump hard core is still with him. A lot of people are looking for a place to land.”

“Right now, I’m going to wait and see what happens,” says former Bolingbrook Mayor Roger Claar, a member of the GOP’s central committee who was a big Trump backer in 2020. “Trump seems to be holding his own. But I’m looking at whether he can win” against Biden.

As the Bailey reference suggests — “I am proud to endorse President Trump . . . again!” Bailey says on his Facebook page — the former incumbent’s stronghold is downstate, south of Springeld. Party sources believe not only Bailey but also U.S. Reps. Mary Miller and Mike Bost will be on Trump’s side, with Bost trying to fend o an expected primary challenge from Bailey.

Just to the north, Rep. Darin LaHood recently invited DeSantis to be the star speaker at his recent Tazewell & Peoria County Republicans Lincoln Day Dinner. ough

Pat Ryan

JOE CAHILL ON BUSINESS

No cheers for the state budget deal

Once again, Illinois political leaders are congratulating themselves for performing a basic governmental function — agreeing on a state budget for the upcoming scal year.

Cooper’s Hawk closing its Chicago location

In order for the Gold Coast location to be ‘truly viable and successful in the city of Chicago, it needed to become something that was outside of how we think of our business model,’ said CEO Tim McEnery I

BY ALLY MAROTTI

Cooper’s Hawk Winery & Restaurants is closing its sole Chicago location in mid-July, citing underperformance.

Esquire by Cooper’s Hawk originally opened in the Gold Coast just months before the pandemic shut restaurants down. It stayed closed almost two years, reopening in March 2022. It will permanently close July 17.

“In order for Esquire to be truly viable and successful in the city of Chicago, it needed to become something that was outside of how we

THE RESTAURANT CHAIN LAUNCHED IN 2005 AND HAS ABOUT 8,000 EMPLOYEES.

Chicago wealth flight? One banking giant that ought to know says no.

And JPMorgan Chase is putting its money where its mouth is. It plans to triple the number of private bankers serving the city’s wealthiest families and individuals.

BY STEVE DANIELS

If the wealthy are leaving Chicago, or even contemplating it, it’s news to the country’s largest bank.

Over the next ve years, JPMorgan Chase is planning to triple the number of advisers in its Chicago private bank catering to wealthy families and individuals.

And that’s after a 25% increase in private bankers over the past two years. e JPMorgan private bank now has 100 advisers serving the market.

JPMorgan just named coheads of the Chicago private bank for the rst time. ey are Charlie Cooper, 45, and Maggie O’Brien, 42, both area natives. e private

bank operates out of two o ces, one in Chicago and the other in north suburban Winnetka.

“We’re really bullish on Chicago,” O’Brien said in an interview.

JPMorgan’s private bank in Chicago manages $120 billion in client assets, up nearly 40% since 2019. at’s the year O’Brien joined Chase after 17 years at rival BMO in commercial banking and private banking roles. Cooper is a 15-year veteran of Chase and a former U.S. Navy o cer.

“We don’t see anything to make us believe that trajectory is going to slow,” O’Brien said.

JPMorgan’s actions belie the narrative some are telling about the Chicago area — that people with money are leaving for

lower-tax states or because of perceptions that crime is out of control. at debate has taken on new life since the election of Brandon Johnson as Chicago mayor. Johnson has proposed hundreds of millions in controversial new taxes, while allies are urging $12 billion in nancial moves, including enacting city income and wealth taxes, meant to a ect the wealthy rather than the middle class.

Cooper and O’Brien don’t see much change from where they’re sitting.

“ ere’s business formation happening here,” Cooper said.

New businesses are critical to

“From the beginning, I vowed to work with the General Assembly to bring scal sanity to Illinois while restoring a compassionate state government that invests in the things that build a stronger economy and future. I’m pleased to say that’s exactly what this balanced budget does, for the fth time in a row,” Gov. J.B. Pritzker said as he and Spring eld Democrats announced a $50 billion scal blueprint for scal 2024.

I understand the impulse to celebrate routine legislative accomplishments in a state that went almost three years without a budget under former Gov. Bruce Rauner, a Republican who couldn’t reach agreement with Democrats who controlled the state legislature during his term. Pritzker has had an easier time nding common ground with fellow Democrats who now have overwhelming majorities in both chambers.

As you would expect, the budget deal re ects Democratic priorities. ere’s half a billion dollars for migrant health care, hundreds of millions in new funding for education, along with money for poverty reduction, health care and economic development.

To give credit where it’s due, Pritzker and the Democrats have also taken some steps to shore up state nances since he took o ce four years ago. e state has slashed its backlog of unpaid bills and added hundreds of millions in supplemental contributions to catastrophically underfunded pension plans. Illinois even scored some credit rating upgrades, although it’s tied with New Jersey for the lowest ratings among states.

CHALLENGES

But it’s time to stop applauding state leaders for meeting minimum job requirements. Instead, their spending plans and overall legislative record should be evaluated against the state’s biggest long-term challenges.

Illinois su ers from a range of woes, including sluggish economic growth, a shrinking population and a reputation for hostility to business. ese issues arise from various factors, not all of which can be solved by state government. But government action could ameliorate some root causes of Illinois’ worst problems.

Consider state employee pension funding, the biggest source of scal instability in Illinois. Pensions are underfunded by $140

billion, a staggering debt that’s consuming an ever-larger share of state revenues. Annual contributions required by state law have climbed to $10 billion, or 20% of the budget. at gure is expected to reach $18 billion over the next couple of decades.

Yet the funding shortfall continues to grow, because statutory payments are insu cient to cover future state pension obligations on an actuarial (i.e., real world) basis. According to the Illinois Commission on Government Forecasting & Accountability, the $10 billion statutory contribution for scal 2024 is $4 billion less than the actuarially required amount. Makes Pritzker’s $200 million supplemental pension contribution for scal 2024 look puny.

DANGER

Changing economic conditions could make the pension shortfall even worse. Illinois got a break in 2021, when a surging stock market boosted pension investments and reduced the funding gap. But markets tanked last year, reversing much of the gain. Worse could be in store if the economy tips into recession, or — God forbid — the federal debt ceiling is breached.

Yet Spring eld has neither boosted contributions to actuarially required levels, nor taken meaningful action to slow the growth of pension obligations.

e latter would require an amendment to the state constitution, a step Pritzker refuses to propose, despite his backing of a failed amendment that would have allowed a graduated income tax.

Property taxes are another long-term drag on Illinois’ economy. Illinois has the second-highest property tax burden of the 50 states, according to the Tax Foundation. A major reason why they’re so high is that Illinois school districts, municipalities, park districts and other local governments rely heavily on property taxes to fund basic public services.

But high property taxes squeeze homeowners’ pocketbooks, sour investors on Illinois real estate and depress property values. People leaving Illinois often cite property taxes as a major reason for moving.

Yet Illinois policymakers continue to ignore the economic effects of excessive property taxes. A legislative task force appointed in 2019 to study alternative funding sources for local government services accomplished nothing, and there’s been no serious attempt to address the problem since then.

Until state lawmakers tackle these critical issues, they deserve no applause for passing a budget.

See COOPER’S HAWK on Page 22

A view of the interior of the Esquire location in the Gold Coast.

COOPER’S HAWK

How City Hall can help end hunger in Chicago

Chicago’s new mayor leads a city where one in ve households are never sure where their next meal is coming from.

e solution to this kind of food insecurity is usually framed in terms of food pantries and soup kitchens. But take it from me — a Black Chicago native who has been homeless and hungry, both as a child in Englewood and as a Navy veteran: at’s not the real solution.

Instead, Chicago’s goal should be making sure that every resident can always count on getting the healthy food they need to thrive.

Ending food insecurity requires consistency, communication and commitment, along with equitable approaches and innovation. To see why, picture yourself getting o work, grabbing the bus and barely making it to the food pantry before closing, and nding slim pickings. Imagine walking home on dangerous streets after dark, wondering how you’ll get to the food pantry after your work schedule changes next week.

Consistency

Now imagine instead that you can count on regular free deliveries of high-quality, nutritious food. at’s the model we decided to implement at Dion’s Chicago Dream: Every week, we deliver boxes of fresh fruit and vegetables to households in need across Chicago.

People can’t lead good lives without good food. I see access to healthy food as a human right. But even if you don’t, you can understand that people are more likely to be productive, contributing citizens if they consistently eat nutritious food without worrying where their next meal is coming from.

Communication

Dion’s Chicago Dream contacts each of our recipients every 15 days seeking feedback. We learn and improve constantly. For example, 70% of recipients didn’t like pamphlets cluttering their produce boxes. So, in partnership with the American Diabetes Association, we now o er recipes through a QR code printed on our boxes.

Perhaps because of privacy concerns, food programs don’t tend to keep in touch with recipients. But to end food insecurity, Chicago must know exactly who’s going hungry and whether food-security e orts are working. Communication needs to ow

An ongoing collaboration between Crain’s Chicago Business and the University of Chicago’s Center for E ective Government. ChicagoBusiness.com/OneCity50Wards

to the city from the people being served, and vice versa.

Commitment

ere’s no quick x for food insecurity. It requires commitment to, say, a threeto ve-year plan with regular reporting requirements and milestones. If progress isn’t clear after a year or two, it’s time to rethink and try again.

Another kind of commitment could easily fund Chicago’s campaign for food security: a nancial commitment from food companies with headquarters or major operations in our city.

Equity

When I look at executives of major food-related nonpro ts, I don’t see many who look like me. And talk about symbolism: e lone Black person among founders of the Greater Chicago Food Depository — which distributes food to pantries across the city — lies in an unmarked grave.

People of color live with higher rates of food insecurity and must be a bigger part of the solution. Established organizations

Big studio campus on Northwest Side set to open in early 2024

that also would employ hundreds of people.

BY ALBY GALLUN

Movie studios and production companies that need space in Chicago to shoot their next show will soon have a new option: the Fields Studios on the Northwest Side.

Construction of the $250 million project at a former Marshall Field’s warehouse is underway, and its developer, New York-based Knickpoint Ventures, said last week that the studios should open in the first quarter of 2024.

The studios, which will include nine sound stages, will eventually employ 600 to 800 people and will improve Chicago’s standing as a destination for movie studios and production companies, said Zain

Kolta, founder and managing partner of Knickpoint.

“This is a piece of infrastructure that the city and state really needed,” he said. “We think it’s an incredible economic development tool.”

CATCHING UP

Demand for studio space has surged over the past decade or so as Net ix, Amazon Prime and other content producers ramp up production to satisfy the ravenous appetites of binge-watching consumers. ey can rent space at Cinespace and other studios in Chicago, but demand is outpacing supply, creating room for new studios. In South Shore, a group led by Derek Dudley, a producer of “ e Chi” television series, is building a lm studio

Though Chicago has been a popular destination for location shooting for a long time, it needs to catch up with cities like New York and Los Angeles on indoor studio production, Kolta said. With more studios, the city’s film production industry can employ more people who work on sets, a diverse workforce that includes camera operators, lighting technicians and makeup and wardrobe specialists.

“We’ve got to grow the pie,” he said.

Knickpoint set out to raise money for the $250 million project more than two years ago. After wrapping up its fundraising, the firm quietly began construction in January. It finally went public May 22 with a “topping-off” ceremony, an event timed with the installation of the roof structure on one

can partner with nonpro ts, growers and other organizations led by people of color, thus addressing underlying causes of food insecurity by supporting jobs and reliable revenue streams in disadvantaged communities.

Innovation

When the food pantry model rst took hold decades ago, the perception of hungry people obviously didn’t include smartphones. But in three years, Dion’s Chicago Dream has grown from zero to providing half a million pounds of fresh produce largely via social media accessed via smartphones. QR codes, data collection, tracking — all these technologies help us better serve our recipients.

Social media, arti cial intelligence, drones — Chicago needs to keep up. Fortunately, we have excellent colleges, universities and companies that understand where tech is going and can apply their expertise.

Within Chicago government, we need champions who truly believe in ending food insecurity. ey could advance this goal through a City Council subcommittee or an executive branch o ce — or both. Here are their marching orders: Figure out exactly who needs help, establish a regular cadence of service and communication, and track metrics to monitor progress or lack thereof. Tap local companies and schools for funding and tech expertise. Don’t stop until every Chicago resident has consistent access to the nutritious food they need to thrive.

of the studio’s two buildings.

The Fields Studios are part of a much larger redevelopment of the former Marshall Field’s campus, a sprawling 1.5 million-square-foot complex at 4000 W. Diversey Ave. Some of the warehouse space at the property, now called the Fields, already has been converted into apartments and office space leased to tenants including Crate & Barrel and Federal Savings Bank.

As the owner of the Fields

Studios, Knickpoint is essentially a landlord, renting studio space to production companies. It has the capacity to offer the companies spaces as large as 36,000 square feet without columns, the most available in Chicago, Kolta said.

He hasn’t reached any deals yet, but it’s still early.

“We’ve been in touch with basically every major studio in the U.S.,” Kolta said. “The reception has been great. People love the design. They love the location.”

Dion Dawson founded Dion’s Chicago Dream, which delivers weekly boxes of produce to hundreds of households.

A council committee or a mayoral agency — or both — can champion a food delivery system based on consistency, communication, commitment, equity and innovation

KNICKPOINT VENTURES

Construction on the $250 million project at a former Marshall Field’s warehouse is underway

The Fields Studios are part of a much larger redevelopment of the former Marshall Field’s campus, a sprawling 1.5 million-square-foot complex at 4000 W. Diversey Ave

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Group hopes to turn obsolete feature into tourism magnet

Preservationists are looking to raise money for the Chicago Harbor Lighthouse before the federal government steps in and auctions o the property

BY DENNIS RODKIN

Although it’s been standing in Lake Michigan since the 19th century, Chicago’s Harbor Lighthouse is little known except as a quaint feature in social media photos. Now a rescue group hopes to transform it into a tourism magnet.

“Let’s return this magni cent structure to its original state and (tell) people about its place in Chicago’s maritime history,” said Kurt Lentsch, president of Friends of the Chicago Harbor Lighthouse, a nonpro t organization founded in March 2022. e group’s spark was the news out in 2020 that the federal government wants to reclaim the obsolete lighthouse from the city of Chicago, which has owned it since 2009 but has made no visible progress on restoring or repurposing it.

“ e imminent threat,” Lentsch said, is that if the federal government retakes custody of the lighthouse, “and they can’t nd a suitable owner, they would deem it surplus property” and eventually auction o the site. “It could potentially be sold to a private owner,” Lentsch said, “and it would be lost to public use.”

A city o cial said that while the threat of the federal government auctioning o the site is unlikely, there’s no argument with the Friends group’s intentions. All the governmental entities that have

some ownership or say over the site, including the national parks service, the Coast Guard and the city’s asset management department, “are supportive and have no objection to potential reuse,” said Eiliesh Tu y, a planner at City Hall’s department of planning and development.

“If we can make it safe for people to visit” a slim little building perched on a breakwater out in Lake Michigan, “there’s a lot of possibility for the lighthouse,” Tu y said. Programming could be developed in concert with two other nearby sites, Navy Pier and the future DuSable Park, to be built on a long-empty piece of land west of DuSable Lake Shore Drive.

RAISING AWARENESS

e Friends group has made presentations on its mission to Chicago yacht clubs and other groups, and last week was to present to the Cli Dwellers Club, a group devoted to Chicago’s arts and culture. It’s in large part a public awareness campaign, although the group estimates it needs to raise $3 million to $5 million toward restoration, Lentsch said.

e overarching goal, said Edward Torrez, who’s on the Friends group’s 20-member working committee, is to “make it the people’s lighthouse. Letting it go into private hands would be terrible. Torrez, a longtime preservation architect and principal of the Chica-

go rm BauerLatoza Studio, estimates that hundreds of thousands of lakefront windows frame views of the lighthouse, but that “most people don’t know anything about it.”

Before railroads made Chicago the Midwestern colossus, maritime trade on the Great Lakes and canals started the city’s growth. Chicago’s rst lighthouse was built in 1831 but collapsed soon after. e present lighthouse was completed in 1893, at a spot roughly 1,000 feet north of where it is now.

When Navy Pier was built in 1916, the lighthouse was in a spot that didn’t quite protect the pier from boats crashing into it, so in 1917, the lighthouse tower, 66 feet tall, was moved to its present site, southeast of Navy Pier’s east end. Two small buildings with red roofs were added on either side of its base. One housed the foghorn and one housed the signal room, Torrez said. ree lighthouse keepers lived in small rooms inside the tower.

Much of the indoor space has been empty for decades, Lentsch and Torrez said. e light was automated in the 1970s, eliminating the need for live-in sta . In 2009, the federal government turned the unused building over to the city.

“No work has been done since the city took ownership,” Lentsch said.

Tu y, the city o cial, declined to comment on past years’ lack of

action on the building but said the city commissioned a comprehensive study of the facility in 2015, completed by Torrez’s rm along with SJK Engineering, Willoughby Engineering and two other rms. e study concluded that the building and its interior were in fair condition despite its “age, severe exposure and relatively minor level of maintenance due to abandonment.”

Lentsch said that after an additional eight years of neglect, “we can’t keep going down the road we’ve been on, doing nothing.”

PHASES

e Friends group has a threephase program. First is making it possible for visitors to get up close to the site, probably on boat tours launched from Navy Pier. Second is “disembarking,” he said, onto docks and into the building. ird is “celebrating the lighthouse,” with exhibits and re-creation of some of its historical interior, most of which is gone. e group does not have a timeline for these phases.

Tu y said visual access by boat is likely to gain swift approval, but potential obstacles could include the need to create safe docks on the tiny site and the possible presence of asbestos or lead paint. She said access “is precarious” and that the site would need extensive improvements to accommodate the public.

Torrez, whose rm has been involved with several historyoriented sites in Chicago, including the Pullman National Park visitors center, the Chicago Maritime Museum in Bridgeport and a restoration of the historic Water Tower and Pumping Station, said a well-designed visitor experience should “tell a lot about the maritime history of Chicago.”

A special thrill, Lentsch said, would come from providing visitors access to the top of the tower, beneath the still-operating harbor light.

“ ere’s a view of the skyline there that you can’t get anywhere else,” he said. “You’re up 66 feet o the water. No boat is going to give you that.”

Hotel Chicago, Marina City retail space hit the market

Leisure travelers have given downtown hotels a big lift over the past year. But nding a buyer will be di cult amid high interest rates and an unsteady banking industry.

BY DANNY ECKER

As Chicago’s prime weather months begin and bring an expected rush of tourists to the city, the owner of a prominent hotel and retail space near the Chicago River is hoping investors will be drawn in, too.

Newly listed for sale last week were the 354-room Hotel Chicago at 333 N. Dearborn St. and the retail and parking portions of the historic Marina City towers next door, according to a marketing yer.

ere is no asking price for either of the properties, which could be sold together or separately, according to marketing materials from brokerage Jones Lang LaSalle. e Marina City portion includes 146,000 square feet of dining, entertainment and experiential retail venues and two 450-stall parking garages that serve the landmark towers.

e o ering does not include the 896 condominiums in the towers or the House of Blues adjacent to the hotel.

e owner of the two properties, Bethesda, Md.-based Pebblebrook Hotel Trust, hopes to cash out amid a big comeback for leisure travel to the city, which helped push hotel room rates well past pre-pandemic levels last year, according to hospitality data and analytics rm STR. at recovery story has prompted several downtown hotel landlords to try to sell their properties, including the owners of the Virgin Hotel Chicago, the Blackstone Hotel on Michigan Avenue and the Hampton Inn Chicago Downtown.

But getting a deal done has been exceedingly di cult with high interest rates and an unsteady banking industry. Business travel, a key demand driver for downtown Chicago, has also been slower to return and has held back the re-

covery of downtown’s hospitality sector. And surging costs of labor and goods have watered down pro ts for hotel owners. Average revenue per available room downtown last year, which accounts for both room rates and occupancy, was about 7% below 2019 levels, STR data shows.

HEADWINDS

Pebblebrook will look to overcome those headwinds at a hotel that generated $7.4 million in net earnings last year, according to the company’s most recent annual report. at was up from just $600,000 in 2021 but still well below the $12.2 million it generated in 2019, the report said.

Aside from the sales of newly built St. Regis Chicago on Wacker Drive and the CitizenM hotel on Michigan Avenue that were pre-negotiated while the properties were under construction, the last big downtown hotels to trade

were the Embassy Suites Chicago Downtown and Hilton Garden Inn Magni cent Mile in March 2022, according to research rm MSCI Real Assets.

e Hotel Chicago was originally called the House of Blues Hotel when it opened in 1998. LaSalle Hotel Properties bought it for $114 million in 2006 and renamed it the Hotel Sax, which lasted until it became the Hotel Chicago in 2014. Pebblebrook took control of the property when it acquired LaSalle in 2018.

Pebblebrook has been on a run of selling hotels across the country over the past year. e company sold o four properties in 2022 and has sold another three so far this year, as well as the retail portion of the Westin Michigan Avenue near the north end of the Magni cent Mile.

A spokesman for Pebblebrook did not respond to a request for comment.

e retail portion of Marina City is back on the market after JLL tried to sell it for Pebblebrook in 2019. e brokerage plays up a buyer’s ability to “continue the current leasing momentum and enhance in-place revenue through re-merchandising opportunities.” Tenants in the portion for sale include steakhouse Smith & Wollensky and pingpong club Spin.

Marina City is one of Chicago’s most recognizable high-rise projects and was designated a city landmark in 2016. Architect Bertrand Goldberg designed the towers as a “city within a city” and completed them as the tallest reinforced concrete structures in the world when they debuted in the 1960s.

e property originally included a skating rink, which was eventually replaced with Smith & Wollensky, and an o ce building that was later converted into the hotel in the 1990s.

Adam McGaughy and John Nugent in the JLL Chicago o ce are marketing the properties on behalf of Pebblebrook.

Chicago Harbor Lighthouse

BARRY BUTLER

Peoples Gas’ refund could lead to even bigger one

The $15.4 million refund regulators

BY STEVE DANIELS

e $15.4 million refund regulators just ordered Peoples Gas to pay customers may be only the beginning.

e Illinois Commerce Commission surprised many on May 18 by ruling that Chicago’s natural gas utility shouldn’t be allowed to recover that amount from ratepayers to absorb the costs in 2018 of unpaid bills it wrote o .

Peoples collected far more from ratepayers for bad debt in 2019, and regulators have yet to rule on how much of that the utility should keep. If the commission follows the same logic it used this month, the refund could be as high as $24 million.

State law allows utilities to impose a monthly surcharge on customer bills for reimbursement of costs due to uncollectible bills. E ectively the statute, enacted in 2009, removes most of the nancial risk utilities used to bear for customers who wouldn’t or couldn’t pay.

But it doesn’t eliminate all the risk. e commission after the fact must nd that a utility acted reasonably in trying to collect everything it was owed before signing o on the extra charges.

In Peoples Gas’ case, the ICC ruled unanimously that the company didn’t do that for the costs it incurred in 2018.

just

ordered Peoples Gas to pay customers may be only the beginning

e reason: Peoples suspended all disconnections in 2017 when it installed a new billing system.

e utility feared that inaccuracies could lead to wrongful disconnections as the new software was taking e ect and employees were getting adjusted to using it.

So, out of an abundance of caution, it stopped warning customers who weren’t paying their bills that they could lose their service.

Unsurprisingly, unpaid bills ballooned. In 2018, they increased to $39 million from $31 million the year before.

But the truly big hit was in 2019, when the bad-debt writeo s closed just shy of $60 million.

In determining the $15.4 million refund, the ICC applied a 40% reduction to the 2018 uncollectibles gure. If it does the same with the $60 million total, that will come to $24 million.

BAD DEBT

The $15.4 million refund marked the first time the ICC ruled that any utility failed to try hard enough to collect past-due bills since the 2009 law was enacted. Until this month, all utilities had passed along their costs of bad debt without challenge.

“While (Peoples) represents that they chose to suspend disconnections and certain other collection activities during the 2017 (system) upgrade to eliminate the possibility of incorrect-

ly or accidentally disconnecting customers during the upgrade, (they) did not present evidence in this proceeding suggesting that the only choice they had was to either suspend disconnections entirely or improperly disconnect customers,” the commission’s order read.

Peoples told Crain’s in 2020 that after-effects from 2017’s suspension of disconnections also were why bad debt spiked in 2019. It was in 2020 that customers were charged $4.32 a month — more than $52 in that year — just for unpaid bills Peoples had written off. That remains a record for any utility in Illinois.

“As we said (May 18), we are very disappointed with the commission’s (refund) decision,” Peoples spokesman David Schwartz said in an email. “The commission approved our plan to suspend disconnections. We are considering all of our options. Regarding the 2019 reconciliation, we think it’s best to avoid speculation.”

(The commission never approved that plan. Peoples gave ICC staff a heads up about it in 2017, and staff since has recommended approving Peoples’ actions. Schwartz referred a reporter to testimony in an October 2022 oral argument, which discussed ICC staff’s views.)

Coincidentally, unpaid bills

are again a problem now that heating bills have risen — a combination of Peoples’ relentlessly rising delivery rates and sky-high natural gas prices in the first half of 2022.

RECORD PROFITS

Peoples is hiking its monthly surcharge for uncollectibles to $3.28, beginning in June, according to an ICC filing. The charge currently is $1.16.

Said Schwartz: “The current $3.28 surcharge is more than a dollar less than it was in 2019, when it was $4.32.

The 2022 surcharge was very low due to reduced uncollectible dollars that were the result of the extended COVID moratorium.”

Critics say Peoples until now has used utility-friendly state laws to spend wildly on infrastructure, driving up rates and heating bills, and then bearing no risk of the growing inability of lower-income households to heat their homes.

“The incentives have been a little off for Peoples Gas for a while,” says Abe Scarr, director of Illinois PIRG, a consumer advocate. “Affordability itself has turned into a profit center.”

Scarr is referencing growing late-payment fees, which have contributed to a series of record profits for Peoples over the last several years. When unpaid bills are written off, those late fees are added to the pile of bad debt all ratepayers must cover.

Loop law firm Greenberg Traurig eyes move to Fulton Market

DANNY ECKER

One of the largest law firms in Chicago is nearing a deal to move from Wacker Drive to the Fulton Market District, a move that would further establish the gritty-turned-trendy neighborhood as a destination for white-collar professional services firms.

Miami-based Greenberg Traurig is in advanced negotiations to lease around 90,000 square feet in the building under construction at 360 N. Green St., according to multiple sources familiar with the discussions. If the deal is completed, the firm would move its office from the nearly 125,000-square-foot space it occupies today at 77 W. Wacker Drive, where its lease expires in May 2025.

People close to the matter said no deal has been finalized, and a Greenberg Traurig spokeswoman said in a statement that “it is premature and wrong to report since nothing is final until a lease is signed.” The negotiations come after a drawn-out search by the firm to move from its longtime Wacker Drive tower.

Greenberg would be the first

major Chicago law office to plant its flag in Fulton Market, which transformed over the past decade from a domain of meatpackers and food wholesalers into a corporate destination with the likes of Google, McDonald’s and Mondelez International. Professional services firms have more recently added to the mix, with leases signed by Ernst & Young, Kroll (formerly Duff & Phelps) and law firm Norton Rose Fulbright, as well as a massive deal that Boston Consulting Group inked last year to anchor the 360 N. Green building. Greenberg’s arrival could help other major law firms and traditional Loop tenants justify moving to Fulton Market.

SPACE-SHEDDING MOVEMENT

The 24-story Green Street building is being developed by Chicago-based Sterling Bay and is expected to be completed early next year.

Greenberg would also add to the long list of law firms moving to newer buildings and cutting back on workspace, in line with the trends set off by the rise of remote work during the COVID-19 pandemic. The

space-shedding movement has driven up downtown office vacancy to an all-time high, but Fulton Market’s mix of upscale offices, restaurants and hotels have helped the neighborhood largely defy the leasing challenges plaguing other parts of the central business district.

FULTON MARKET’S GAIN

For Sterling Bay, signing Greenberg would bring 360 N. Green to more than two-thirds leased before construction is completed. That would help validate the developer’s 2021 pivot to redesign its plan for the building by shrinking the size of the floors and making it taller. Professional services companies and law firms tend to avoid buildings with massive floor plates, opting instead for those with more window lines for offices.

But Fulton Market’s gain would come at the expense of an office building at 77 W. Wacker that has seen some of its most prominent tenants decamp in recent years. Greenberg Traurig would follow big law firms Jones Day and Morgan Lewis & Bockius out the door at the 1.4 million-square-foot tower, which

has been owned since 2008 by the State Teachers Retirement System of Ohio. Those other two law firms previously moved to the new office tower at 110 N. Wacker Drive.

Including Greenberg Traurig, the 51-story building at 77 W. Wacker is now 61% leased, according to real estate information company CoStar Group. That is well below the 78% average for downtown office buildings as of the end of March.

A Sterling Bay spokeswoman

declined to comment; a spokeswoman for the State Teachers Retirement System of Ohio did not respond to a request for comment.

Greenberg Traurig ranked 10th on Crain’s 2022 list of Chicago’s largest law firms, with 181 local attorneys. The firm announced in March that it generated more than $2.1 billion in revenue during its 2022 fiscal year, an 8.6% increase yearover-year and its ninth consecutive year of record revenue.

A rendering of 360 N. Green St. GENSLER

Some much-needed wins on one key front

Three years after George Floyd’s May 25, 2020, murder and the painful social reckoning that followed, corporate Chicago has some gains to feel relatively good about — as well as some goals still left frustratingly unful lled.

To start with the good news: e executive ranks of Chicago’s 50 largest public companies have become more diverse over the past 10 years, with local numbers ahead of national statistics. at’s according to the latest “Inside Inclusion” report, a study of trends in the racial composition of boardrooms and C-suites compiled annually by business advocacy group Chicago United.

In the past decade, minority representation in senior leadership positions at the 50 biggest companies in Chicago has increased by about 14%, Chicago United notes. Meanwhile, minority board representation at those companies rose nearly 11% in the same span of time.

As Crain’s Sophie Rodgers reports in a May 25 summary of the ndings, Black people made up nearly 8% of C-suite positions in 2022 at the companies measured, compared with 3% nationally. Asian Americans represented nearly 10% of those positions in Chicago, compared with 7% elsewhere in the U.S. Chicago’s most diverse public companies in 2022, meanwhile, were Commonwealth Edison, Archer Daniels Midland and CommonSpirit Health.

So Chicago is ahead of the curve at least according to the yardsticks Chicago United is employing in its multi-year study of

THE EXECUTIVE RANKS OF CHICAGO’S 50 LARGEST PUBLIC COMPANIES HAVE BECOME MORE DIVERSE OVER THE PAST 10 YEARS, WITH LOCAL NUMBERS AHEAD OF NATIONAL STATISTICS.

the organizations included in Crain’s annual list of Chicago’s largest publicly held companies. at said, growth in Hispanic representation tended to lag other groups in the leadership data. at nding tracks with research re ected in the Jan. 17 edition of Crain’s monthly Equity series. In statewide research conducted annually by the University of Illinois, Latinos were

the most underrepresented group among Illinois board members, but it wasn’t clear why, Eunmi Mun, associate professor at the University of Illinois at UrbanaChampaign’s School of Labor & Employment Relations, told Crain’s.

e school’s report found that 72 companies that led reports in 2021 had no Hispanic or Latino directors, and only 23 rms

had at least one Hispanic or Latino director. ough Hispanic or Latino directors made up about 6% of Illinois board members, Hispanic and Latino residents comprised roughly 16% of the state’s population in 2021. So CEOs who understand the value of boardroom diversity now have a target they can aim to hit in the year ahead: Look to round out Latino and Hispanic leadership within your organizations.

Another concern: Nationwide studies like Chicago United’s show that the largest companies are currently the ones leading on DEI — and they’re also reaping the higher returns and competitive edge that come with diverse leadership teams and inclusive workplaces. Which means small and mid-market companies — which happen to comprise the vast majority of Chicago-area organizations — are being left behind in social and economic terms.

And despite modest gains on the C-suite and boardroom fronts, a May 25 report in Crain’s shows corporate America’s pledges to diversify its supply chains by granting nearly $80 billion in contracts to minority-owned businesses haven’t delivered the long-term success activists and corporate leaders had hoped.

So while Chicago United’s latest checkup of leadership diversity within the area’s largest corporations provides some much-needed good news, there’s still work to be done. Fortunately, the data provides smart leaders with some clear clues about what steps to take next.

Let’s grow Chicago as the food capital of America

It’s an exciting time to be part of the food industry in Chicago. e depth and breadth of the sector is truly world class. Big food giants coexist with amazing startups, a huge investor community, a vibrant culinary scene, innovative retailers, programs to address food security, and some of the best urban farms in America.

I urge Mayor Brandon Johnson utilize this  food community, creating more support for the sector to grow, create well-paying jobs, promote economic recovery in under-resourced communities, feed people in need, and a rm Chicago’s role as the national leader in food production and access.

In the 19th and early 20th centuries, city grew into the keystone for the nation’s industrialized food system through processing. Former xtures such as the stockyards and its massive meatpacking plants are long gone, yet Chicago remains a center for big food companies such as Mondel z, Kraft/ Heinz, Mars Wrigley, Kellogg’s, Quaker,

Conagra, Kerry, Ingredion, Lifeway, and others that have corporate, regional or division headquarters in and around the city.

Over the past two decades and more, there has been a sharp rise in consumer demand for healthier foods produced sustainably and humanely. And Chicago’s food sector has entered a new phase, with a growing ecosystem of companies, emerging brands, innovative retailers, investors and venture capital, service providers and non-pro ts, all dedicated to building a better-for-people, better-for-the-planet food system.

As managing director of Naturally Chicago — the association for natural and organic food companies in the region — I get to work rsthand with nearly 300 of the companies growing the Good Food and natural products industry.

In recent years, this sector has witnessed some impressive exits as larger companies purchased Vital Proteins (Nestlé, for $1.5 billion), RXBar (Kellogg’s, $660 million), Factor (HelloFresh, $277 million), Frontera Foods

(Conagra, $109 million) and others. ese buyouts have produced great returns for their founders and investors.

In addition, Farmer’s Fridge, Chomps, Simple Mills and other food companies are continuing to grow, employ locals and prepare for their next phase as an exit or a publicly traded company. And new retail concepts such as Foxtrot, Dom’s Kitchen & Market and Crafty are also on the leading edge.

Last month World Business Chicago hosted its second Chicago Venture Summit: Future of Food. is sold-out event brought together more than 1,100 food leaders from the region and across the nation to build relationships and grow new opportunities to invest in Chicago’s thriving food industry.

e summit featured leaders from big food, emerging brands, investors, service providers and more, all committed to follow World Business Chicago CEO Michael Fassnacht’s directive to grow Chicago as the U.S. capital of food.

Naturally Chicago and the Food Foundry both hosted events on Day 1 of the Summit, linking investors with emerging brands. As the producer of a Pitch Slam and Financing

& Innovation Forum since 2009, I will say that this year’s was the best yet. A standing room only crowd witnessed 10 brands seeking capital from dozens of investors and vying for more than $200,000 in prizes.

We heard from ve of Chicago’s leading venture capitalists who are investing in early-stage food companies. Leaders from Mondel z, S2G Ventures, Cleveland Avenue, Bluestein Ventures, and Supply Change Capital spoke about the challenges and opportunities in food. Most of these investors have put their money behind women-owned and minority-owned businesses and express a desire to grow their impact-investing portfolios.

Naturally Chicago also introduced our new Locally Made program. With lead funding from the Steans Family Foundation, we are launching a retail access and mentoring partnership with KeHE, the Naperville-based, employee-owned B Corp that is the primary natural, organic, specialty, and fresh product distributor to many Chicago area supermarkets plus thousands of other retail locations across the country.

is groundbreaking initiative is designed to connect Illinois’ vibrant retailer commu-

JOHN R. BOEHM

Jim Slama is managing director of Naturally Chicago and founder of the Good Food Catalyst.

nity with the region’s top-performing and emerging Natural Products brands. e program gives retailers a plug-and-play program to procure and promote local brands and meet the desires of their customers to buy and support local. Brands that participate in the program may be featured in point-of-sale promotions highlighting Locally Made. Numerous retailers and brands have already joined the program and we expect it to be a major growth engine for local companies—especially women and minority owned businesses—to thrive.

Other non-pro t programs such as the Hatchery Chicago food business incubator and the Good Food Accelerator, both based in East Gar eld Park, and e Plant, in the South Side Back of the Yards neighborhood, are working with early-stage entrepreneurs to help them hone their skills and grow their businesses.

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Chicago is also home to many of the top programs that promote food access and education that encourages residents to eat better food to liver healthier lives. Large philanthropists like Builders Initiative, Searle Funds at the Chicago Community Trust, Blue Cross and Blue Shield of Illinois, e Lumpkin Family Foundation, and Tom and Margot Pritzker are investing tens of millions of dollars annually to support non-pro t innovators focusing on food access and promoting better health.

Feeding America, one of the nation’s biggest food assistance organizations, is based here.

e Greater Chicago Food Depository links food pantries, shelters, soup kitchens and other programs with donated or purchased food with a focus on fresh, healthy options; Nourishing Hope, which also provides food assistance, o ers therapeutic services for those in need who face mental health challenges.

e Good Food Catalyst and its Good Food is Good Medicine program partner with University of Chicago Medicine and other educators to teach healthy cooking at home.

Chicago has a growing sector of urban farms, community and school gardens, composting projects, and non-pro t organizations similarly dedicated to a better food system and spreading the word to neighborhoods throughout the city. Many of these advocates, such as Urban Growers Collective, Growing Home, Star Farm, Gardeneers, and Pilot Light are working in under-resourced communities on the South and West sides.

And nally, let’s not forget that Chicago is one of the world’s culinary capitals and includes many pioneers in the farm-to-table movement such as Rick Bayless, Paul Kahan, Stephanie Izard, Beverly Kim, Sarah Gruenberg, Danny Grant, Jason Hammel, Matthias

Merges, Chris Pandel, Jonathan Sawyer, Sarah Stegner, Debbie Gold, Joe Flamm, Greg Wade, John and Karen Shields, Andrew Zimmerman, Joe Frillman and more. It is not an accident that the James Beard Foundation Awards (the Oscars of the restaurant industry) will again be held at the Lyric Opera House on June 5. And our culinary community stands out for its generosity in raising money for those in need through a partnership with the Evolved Network.

Chicago is truly the hub of the food industry in America. We urge Mayor Johnson — who has pledged to address the root causes of crime and other social ills — to recognize the important role that food can play in creating well-paying jobs, promoting health and economic development, and restoring opportunity to these communities with healthier and more sustainable food choices and businesses.

PEOPLE ON THE MOVE

BANKING

Valley Bank, Chicago

Matt Weidle joins Valley Bank as First Senior Vice President and Midwest Regional President. He will focus on growing Valley’s Commercial Banking presence in the Chicago market and the entire Midwest region, which will include building out verticals such as AssetBased Lending, Association Banking, Leasing, SBA and other solutions. Weidle joins Valley with more than two decades of banking experience, most recently at Bank of the West. He earned his business degree from Loyola University Chicago.

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has promoted Luis Delarosa to Senior Vice President, Corporate Controller.

Delarosa started at Clune in 2015, bringing 18 years of experience in accounting operations, corporate accounting, accounting systems, and nancial reporting. Delarosa was pivotal in implementing the rm’s “One Clune” initiative. His knowledge and expertise have allowed him to improve accounting operations across all Clune of ces. Delarosa has a B.S. in Accountancy from Northern Illinois University.

CONSTRUCTION

Clune Construction, Chicago

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has promoted Andy Holub to Senior Vice President, Pre-Construction Services. Holub oversees all Chicago projects during the pre-construction phase. He also manages Chicago’s Self-Perform division and Service Department, assisting clients with their immediate needs. A graduate of Clune’s Vistage Leadership Program, Holub has a B.S. in Architectural Studies from the University of Illinois, Champaign-Urbana.

HEALTH CARE

CIMPAR S.C., Oak Park CIMPAR welcomes Kellogg alum Dan Roman as its new CFO, bolstering its diversi cation amid swift growth. With 20+ years of leadership, Dan has held roles at National Sports Services, St. Augustine College, and Deloitte’s strategy group. Founded by Dr. Dheeraj Mahajan, CIMPAR is committed to dismantling healthcare silos, providing health solutions to individuals, employers, and health entities. Guided by Dan, CIMPAR is introducing an industry- rst, vertically integrated population health solution.

BUSINESS SERVICES

Watterson, Schaumburg

Watterson, a leading national facility services company and a portfolio company of Highview Capital, recently announced the appointment of Julie McCollum to the position of Chief Financial Of cer. In addition to her three decades of analytical experience, McCollum brings to the company her Merger and Acquisition expertise with strategic nance in high-growth environments. She is also a CHIEF member and community volunteer. For more information on Watterson, visit www.wattersonsolutions.com.

Clune Construction is pleased to announce Rico Cazares’s promotion to Vice President, Senior Superintendent. Cazares began his career in construction as a Union Carpenter over 20 years ago. He joined Clune as a Superintendent in 2016 and quickly became a key member of the Mission Critical group. Throughout his tenure, Cazares has demonstrated his ability to run a highly organized job site. He has become well-known in Chicago for his trade partner relationships and his dedication to his projects.

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has promoted Mike Culhane to Vice President, Senior Project Manager. Culhane has worked with Clune for over 12 years, serving much of his tenure on Clune’s Mission Critical team. He has a reputation for being dependable and positive, which translates directly to his team’s continued success. Culhane is a member of 7x24 Exchange, DICE Midwest, and the Healthcare Engineers Society of Northern Illinois. He holds a B.A. from the University of Minnesota-Duluth.

Chicago Dental Society, Chicago

Heather Nash joins the Chicago Dental Society as Executive Director. Bringing 20+ years of association management experience to the role, Heather will lead the society’s 14-member staff and oversee planning and execution of the annual Midwinter Meeting. Her track record of driving exceptional member and revenue growth, building effective teams and elevating organizational performance will continue advancing the mission and values of the Chicago Dental Society and its nearly 4,000 members.

CONSTRUCTION

Krusinski Construction Company, Oak Brook

Krusinski Construction Company is pleased to announce that Tiago Pina has joined the rm as a Project Executive. He will focus on leading and expanding Food & Beverage and Life Sciences initiatives. Tiago has 17 years of industry experience and has completed industrial, pharmaceutical, healthcare, manufacturing, and multifamily projects throughout the U.S., Brazil, and Canada. Tiago earned a bachelor’s degree in civil engineering in Brazil and an Executive MBA from IE Business School in Madrid.

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has named Spencer Framke, Vice President, Senior Superintendent, Team Lead. With more than 37 years of construction industry experience, Framke joined Clune in 2012 as a Superintendent on the Healthcare team. He has been instrumental in building Clune’s Healthcare division and establishing its market presence. Framke served ve years active duty in the U.S. Marine Corps and is now an active member of the Marine Corps League, American Legion and Disabled American Veterans.

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has named James Holt as Vice President of Virtual Construction. Through his specialization in 3D technology, Holt has established a unique set of skills enabling him to deliver exceptional services to Clune’s clients. Holt has a B.A. from National Louis University, holds his UAS Pilots License, and is Trimble, Revit, and NavisWorks certi ed. He is also an active ACE Mentor Program Chicago member and volunteers for Rebuilding Together.

NON-PROFIT

Shriver Center on Poverty Law, Chicago

The Shriver Center on Poverty Law, a national organization ghting for racial and economic justice, is proud to announce Erin Dowland Kabwe as its new Vice President of Development. Erin will connect people and resources to the organization’s mission and impact; oversee foundation, event and individual giving activities; secure major gifts and planned gifts; lead donor cultivation and stewardship; and develop stronger funding partnerships with law rms, corporations and other institutions.

CONSTRUCTION

Clune Construction, Chicago

CONSTRUCTION

TECHNOLOGY

Shure, Niles

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Clune Construction has promoted Jack Murphy to Vice President, Senior Project Manager. Murphy started with Clune as an intern in 2015. After graduation, he joined the team full-time and began working with Clune’s Mission Critical group. Rising through Clune’s ranks at a young age, Murphy quickly proved he had the skills to lead a team on several major data center construction projects nationwide. He has a B.S. in Technical Systems Management from the University of Illinois, Urbana-Champaign.

Clune Construction, Chicago

Clune Construction has promoted Ben West to Vice President, Senior Superintendent, Team Lead. With over 30 years of experience, West has demonstrated his expertise in the Healthcare and Mission Critical sectors. His portfolio consists of various complex projects, including hospitals, medical of ce buildings, trauma units, and some of Clune’s most high-pro le data centers. West is a member of ACE Mentor Program Chicago.

Shure has announced that José A. Rivas has been named to the position of Vice President of Global Sales. Since joining Shure in 2004, Rivas has held several positions of increasing responsibility and geographic coverage, including Sales and Marketing Director of the International Americas Business Unit, Sales Director of the Americas Business Unit, Managing Director of the Latin America Sales Organization and most recently as Vice President of Sales for Emerging Markets.

CHICAGO’S NEXT CHAPTER

PRIORITY NO. 1: Tackling crime presents Johnson’s biggest challenge. PAGE 15

BUSINESS PARTNERS: Chicago’s essential sector ready to collaborate. PAGE 17

HARRIS POLL: Cautious optimism greets the new administration. PAGE 18

JOHNSON’S AMBITIOUS AGENDA

Mayor Brandon Johnson was elected on the premise that the city’s challenges require long-term solutions. Will he be able to build alliances and win the resources to ful ll his vision?

Brandon Johnson is two weeks into his job as mayor of Chicago, a city facing big, intractable problems that will take longer than a few weeks to x. But Johnson the candidate won over voters by acknowledging that hard problems require long-term solutions. Nevertheless, he’s under pressure to take

BY JUDITH CROWN

immediate measures to tamp down gun violence, make CTA riders feel safe and prepare for “ scal cli s” at the transit agency and the Chicago Board of Education.

He’s inherited a surge of migrants who need shelter, food and health care, along with an emergency declaration to deal with the crisis. Longer term, he’ll have to nd a way to stanch the exodus of

SPONSORS

companies and workers from the Loop. All this while seeking new revenues to enact the services he says will result in a safer city through such measures as a youth employment program, expanded mental health and disability services, and more parks and libraries.

CHICAGO’S NEXT CHAPTER

BRANDON JOHNSON’S BRAIN TRUST

In the past few weeks, Johnson has announced key leadership appointments for his administration.

RICH GUIDICE

Chief of sta

Background: Previously executive director of the O ce of Emergency Management & Communications, he’s overseen events including Lollapalooza and Taste of Chicago and coordinated the response to unrest after the murder of George Floyd. Guidice has decades of experience in city government dating back to the Richard M. Daley administration.

CHRISTINA PACIONE-ZAYAS

Deputy chief of sta

Background: Christina Pacione-Zayas has been a state senator since 2020, representing a Northwest Side district that includes Logan Square and Avondale. She’s been active in progressive politics along the Milwaukee Avenue corridor and helped mobilize grassroots support for Johnson’s mayoral bid.

AGENDA

JILL JAWORSKI

Chief nancial o cer

Background: Incoming CFO Jill Jaworski is a municipal nancial adviser and public nance professional with 25 years of experience. She’s a managing director at PFM Financial Advisers and has deep knowledge of Chicago area governments, with experience in transportation and a specialization in public transit.

JOHN ROBERSON

Chief operating o cer

Background: Most recently, John Roberson held a series of top jobs under Cook County Board President Toni Preckwinkle. His experience in city government extends back to the Richard M. Daley administration where he held several roles, including a stint as aviation commissioner.

Continued from Page 11

“He’ll have to walk and chew gum at the same time,” says Alexandra Block, senior supervising attorney at ACLU of Illinois, who specializes in criminal justice.

At the top of Johnson’s to-do list: hire a dynamic police superintendent who can boost morale and gain support to enact a fouryear-old consent decree ordered after Laquan McDonald’s killing by a Chicago police o cer. Criminal-justice experts say the department must overhaul its “us versus them” culture and return a police presence to local neighborhoods.

JESSICA ANGUS

Transition director

Background: Labor union veteran Jessica Angus has helped lead the 90,000-member SEIU Healthcare Illinois as vice president and chief of sta . She’s a founding member of the United Working Families political organization and also served as political director for the Association of Community Organizations for Reform Now (ACORN).

JASON LEE

Senior adviser

Background: Jason Lee was senior adviser on Johnson’s mayoral campaign and earlier managed Johnson’s 2018 campaign for Cook County commissioner. Lee has worked for progressive labor and community organizations including AFSCME International and United Working Families. Earlier, he worked in corporate nance and investment banking.

erty by expanding services and resources such as librarians in local schools, expanding mental health services, employing youth and improving parks and community space. at will require new revenues, given he vowed during the campaign not to raise the city’s property tax. His proposals for a di erent assortment of new taxes already have drawn pushback from business groups.

Will Johnson be able to sell his vision to business constituents who mostly backed his opponent, Paul Vallas? Businesses are eager to work with the new mayor but require a long runway, says

world, but for those from every corner of the city.”

THE PROMISE OF THE CONSENT DECREE

A new police superintendent will have a tall order providing a better environment for rank-andle o cers but also instituting the overhaul mandated by the consent decree.

AMISHA PATEL

Senior adviser

Background: Since 2007, Amisha Patel has been executive director of Grassroots Collaborative and Grassroots Illinois Action. Before that, she spent six years organizing hospital and Head Start workers with the 30,000-member SEIU Local 73. She was a Crain’s 40 under 40.

FRED WALLER

Interim police superintendent

Background: Fred Waller returns to the department where he served for 34 years. He left in 2020 after rising to third in command and serving as chief of patrol and chief of operations. The search for a permanent superintendent is being led by the civilian run panel, the Community Commission for Public Safety and Accountability.

While outgoing Mayor Lori Lightfoot leaves a budget in better shape than expected, Johnson faces a looming gap of more than $600 million at Chicago Public Schools as federal COVID-19 aid runs out. And he’ll oversee negotiations with the Chicago Teachers Union, whose contract expires next year.

Experts hope his CTU bona des will avoid a stando . “Not only was he a teacher, but he has kids in the public schools,” says Michael Belsky, a public nance expert who headed the Fitch Ratings Public Finance Group and was mayor of Highland Park.

“ at’s di erent from previous mayors.”

e Chicago Transit Authority also faces a budget shortfall as it loses federal COVID aid in 2025. Ridership increased by 24% last year, but it is still just over half of pre-pandemic levels. And although COVID has subsided, hybrid schedules and reports of violent incidents have kept many commuters from riding.

In his campaign, Johnson argued that government can do much to curb violence and pov-

“DON’T ROLL EVERYTHING ON THE BACKS OF BUSINESS PEOPLE IN THE FIRST 90 DAYS.”

—Sam Toia, president of the Illinois Restaurant Association

Sam Toia, president of the Illinois Restaurant Association.

“Don’t roll everything on the backs of business people in the rst 90 days,” he says. “Businesses like to work with a one-year, three-year or ve-year plan.” He and other business leaders say the city can raise revenue by promoting events like Lollapalooza and the James Beard Awards to attract more visitors.

In his inaugural speech, Johnson reached out to di erent constituencies, making the case that it’s in everyone’s interest to elevate the city. “We’ll create a Chicago where the big development projects get done, the poor have a pathway out of poverty,” he says. “Where our cultural institutions, whether it’s our sporting events, hotels and world-class restaurants, are supported, promoted and accessible not just to those from every corner of the

Following the pandemonium when hundreds of teens took over Michigan Avenue and Millennium Park in April, the new superintendent will need to make sure people across Chicago feel safe, says Anthony Driver, president of Community Commission for Public Safety & Accountability, which is leading the search for a new superintendent. Violence typically peaks during the hot summer months.

e commission is charged with submitting three names to the mayor by July 14. Johnson can accept one of the candidates or reject all three, which would trigger a new search.

During the mayoral campaign, Johnson advocated an increase in the number of detectives, which he says would clear cases and reduce violent crime. While Vallas called for the lling of vacant positions, Johnson said the answer is “better policing, not bigger payrolls.” He has recommended putting more o cers on the street by assigning civilians to desk jobs and reducing the number of administrative positions.

Public safety can’t be separated from the reform mandated by the consent decree, says the ACLU’s Block. e department is in full compliance with only 5% of the document’s paragraphs, she says.

e promise of the decree is that people in Black and Brown neighborhoods, many of whom

Anthony Driver is president of the Community Commission for Public Safety & Accountability.

JOHN R. BOEHM

mistrust the police, will be treated respectfully when they call 911, Block says. “ ey want to know that if they call, something will be done about it,” she adds. “And if someone is accused of a crime, he or she will be treated professionally, without escalation, unnecessary violence or brutality.”

ere are reforms that the department could launch right away, Block says, such as sta ng up the department that is supposed to be working toward consent decree compliance. And the department could reform its search warrant process to avoid incidents such as the botched raid of a Near West Side home in 2019 that resulted in a $2.9 million settlement.

Civilian violence prevention efforts such as Communities Partnering 4 Peace and Chicago CRED are promising but modest in size, says Andrew Papachristos, a professor at Northwestern University specializing in criminal justice who is researching the e ectiveness of the programs.

“ ere are 280 outreach workers vs. 13,000 police o cers,” Papachristos says. Not only do they try to intervene in tense situations but they’ve helped neighborhood residents with small favors like delivering homework to students without internet. e clients who partic-

BUDGET FORECAST

includes police, sheri s, prosecutors, criminal courts, jails and probation.

ipate in the programs live longer and stay out of jail longer, he says.

Data shows the initiatives averted 282 shootings over ve years.

Much of the programs’ success is contingent on their working with individual police commanders, Papachristos says. “ ere are commanders that actively engage with the outreach organizations and

others that don’t,” he adds.

Papachristos and others advocate for police to be more visible on neighborhood streets and in schools and to establish relationships with local businesses owners. He points to a period in the 1990s when community policing was popular. “I’m not saying it’s a cure-all, but people’s perceptions of the police were better,” he says.

TOUGH CALLS ON RAISING REVENUE

Johnson made it a cornerstone of his campaign: Policing alone won’t improve public safety.

“ e vast majority of Chicagoans recognize that involves more than simply an increased police presence, but also investments in better access to mental health services, expanded economic opportunities, and a comprehensive

reduction in poverty,” he wrote in responding to a Crain’s survey.

“Each of these, in turn, requires greater investments in education, in job training and in the quality of life in neighborhoods throughout our city.”

His approach is backed by a study that found Chicago spends disproportionately more on the criminal legal system as compared to community services such as mental behavioral health, a ordable housing, environmental sustainability, parks and recreation, and arts and culture.

e study by Chicago-based Communities United and other nonpro ts analyzed the 2022 budgets of the 20 largest cities to determine the ratio of spending on the criminal legal system to community services. Criminal justice

Chicago placed No. 2 in the ranking, spending seven times more on the criminal legal system — $1,745 per household vs. $245 for community services. By comparison, Los Angeles spends four times more on the criminal justice system. San Jose, Calif., and Seattle spend more on services than on criminal justice. Cook County ranked sixth among 14 counties associated with a large city, spending 5.6 times more on criminal justice — $650 per household vs. $116 for community services. Which services and how much to fund are the particulars that Johnson will have to tackle in his budgets. e Lightfoot administration budget assumes a return to a previous policy, suspended this year, of raising the property tax levy by the same percentage as the increase in the consumer price index. But Johnson has said he opposes property tax hikes and wants to hold the current rate. If Johnson chooses not to raise the property tax, that would produce a budget shortfall, says Sarah Wetmore, acting president of the Civic Federation.

Working to advance racial equity and economic mobility for the ne xt generation inthe Great Lakes region.

Lori Lightfoot | BLOOMBERG

The Lightfoot administration anticipated a budget surplus this year and modest de cits in the next three years. The budget assumes a return to a previous policy, suspended this year, of raising the property tax levy by the same percentage as the increase in the consumer price index.

CHICAGO’S NEXT CHAPTER

THE BIG 6 CHALLENGES CONFRONTING MAYOR JOHNSON

MANAGE MIGRANT SURGE

An in ux of migrants being transported from border states is shaping up as the mayor’s rst test. The city last fall accepted thousands of migrants from Texas and Florida but a second surge is underway following the expiration of a federal policy limiting the number of asylum seekers. Mayor Brandon Johnson visited with lawmakers and o cials in Washington, D.C. earlier this month seeking federal dollars for housing and other needs. In the closing days of her administration, Mayor Lori Lightfoot issued an executive order declaring a state of emergency, which opens a way for the city to request a mobilizing of the Illinois National Guard.

IMPROVE PUBLIC SAFETY

The ongoing rash of weekend shootings and an expected increase during the summer months put Johnson under pressure to break the cycle of violence. His rst job is to appoint a police superintendent who can improve morale of rank-and- le o cers and institute changes mandated by a four-year-old consent decree. The decree requires the department to reform training, policies and practices in use of force, community policing, accountability, o cer wellness and other areas. Reform advocates say the department must improve the rate at which it solves crimes and respond to calls in poor as well as a uent neighborhoods. The department must build trust and make sure people across Chicago feel safe, advocates say.

RAISE REVENUES FOR SOCIAL INITIATIVES

Johnson aims to improve public safety by opening economic opportunity through programs such as childhood education, mental health and addiction services, job training and a ordable housing. And that requires funding beyond the budget Johnson inherited from Mayor Lightfoot. During the campaign, Johnson oated a number of new taxes and fees including a tax on real estate sales of more than $1 million and a head tax on employees at large companies. Most of his proposals have drawn icy reactions from business leaders, who also say they want to cooperate. Many would rather see the city invest in tourism and attract and grow businesses to expand the economic pie.

BRING RIDERS BACK TO CTA

Ridership is just over half of pre-pandemic levels as o cer workers adjust to hybrid schedules. Other commuters are staying away following reports of violent incidents and anti-social behavior. With federal COVID aid running out in 2025, the system, along with other mass transit agencies, faces a budget shortfall. A steering committee under the Chicago Metropolitan Agency for Planning is studying ways to fund and govern area transit. Meanwhile, Johnson must work with CTA to determine how to improve security so that commuters feel safe

IMPROVE CITY SCHOOLS

Johnson faces a budget gap at Chicago Public Schools where federal pandemic relief will expire in the 2025-26 school year. He’ll have to raise funds to fulfill his goal of expanding resources such as librarians and music teachers to all neighborhood schools. A f ormer CPS teacher with children in the public schools, Johnson’s allegiance to the Chicago Teachers Union will be tested next year when the union contract expires. Experts suggest that a relationship less adversarial as compared to previous mayors could prove to be more productive.

REVITALIZE THE LOOP AND NORTH MICHIGAN CORRIDOR

With the Loop o ce vacancy rate at more than 22% as of the rst quarter, Johnson must consider new ways to revitalize the central business district as businesses bolt and workers adjust to hybrid schedules. Predecessor Lightfoot launched an initiative to convert vacant o ce space to apartments but more measures will be needed. Help is required for the North Michigan Avenue corridor where the retail vacancy rate is more than 25%. A working group is exploring ways to bring new life to the area including more restaurants and entertainment. Business groups advocate more promotion of the city to draw tourists and business meetings.

—Judith Crown

AGENDA

Continued from Page 13

He’s suggested a raft of new taxes, which require either City Council or General Assembly approval.

“As we saw with the ght over the graduated income tax, opposition will come when someone’s ox is going to be gored,” Belsky says.

A proposal to tax nancial transactions drew a thumbs-down from the nancial community. Gov. J.B. Pritzker dismissed the idea of the tax, noting that he thinks it will be easy for those companies to move out of the state. Indeed, CME Group CEO Terry Du y told Bloomberg earlier this month that the exchange is prepared to leave Chicago if the city and state take “ill conceived” steps.

Johnson wants to impose a “mansion tax” on real estate transfers of $1 million or more, but that would penalize sellers of the twoand four- ats that provide relatively a ordable housing. Another Johnson idea: a monthly head tax of $1 to $4 per employee at large companies.

Pritzker could come to the rescue, as state revenues had been on an uptick. One possible funding stream: a restoration of previous cuts in the distribution of income tax revenue to the city and other Illinois communities. Until 2011, 10% of income tax collections was distributed to municipalities, but that was reduced to just above 6%. But the state’s nancial picture is

CTA RIDERSHIP STRUGGLES TO REBOUND

Ridership is counted as boardings — the number of riders boarding a bus or train.

Source: Chicago Transit Authority

243.5M

in ux as revenues from nonfederal sources declined 21.5% in April, the Commission on Government Forecasting & Accountability reported earlier this month.

On the plus side, the new casino is slated to generate $200 million a year in tax revenue.

E ciency measures can free up funds, and Johnson says cutting administrative sta could save $150 million, while IT streamlining could yield $20 million.

Another choice for the new mayor is whether to continue the Lightfoot administration’s push to

Illinois Gov. J.B. Pritzker and rst lady M.K. Pritzker attend Johnson’s inauguration.

pare down the city’s enormous unfunded pension liabilities. “I hope that would be a priority for any mayor,” Wetmore says. “ at they are getting closer to a better funding schedule has helped improve the city’s debt ratings.”

FISCAL CLIFFS AT CTA AND CPS

There are budget troubles, too, at the Board of Education, where federal pandemic relief is running out, leaving a $628 million deficit projected for the 2025-26 school year. Johnson has said he opposes the current system of budgeting based on enrollment, which penalizes the schools most in need.

Schools require direct investment, guaranteed sta ng and program o erings, he wrote in the Crain’s survey. “Every school should have a library and librarian, adequate numbers of counselors, thriving arts o erings, and a wide range of accessible sports programs and teams.”

Relief will have to come from state or federal resources, Wetmore says, because the district is subject to caps on its property tax levy. “A conversation will have to happen,” she adds. “CPS isn’t the only district using federal funds to back ll.”

Nonpro t organizations help ll programming gaps, says Kara Kennedy, executive director of Lumity, which provides STEM education and workforce development in six CPS high schools. ere may be 100 education nonpro ts serving

the district, but the e orts aren’t coordinated in a centralized way, she says.

Also, the needs are greater following the pandemic, which resulted in a decline in student attention spans and attendance, she says. ere’s less participation in after-school and summer programs, “and we’re trying to gure out how we get students to reengage.”

Johnson, a former CPS teacher, will have his allegiance to the Chicago Teachers Union tested next year when the union contract expires. But experts suggest that a relationship less adversarial as compared to previous mayors could be more productive. “He has more education experience than any previous mayor,” says Connie Mixon, a political science professor at Elmhurst University who taught at City Colleges of Chicago. “What we’ve been doing hasn’t worked for education, so why not try something new?”

Federal pandemic relief also is running out at the CTA and the other area mass transit systems that are experiencing a sustained loss of ridership as pandemic-era hybrid o ce schedules reduce the need to commute.

e General Assembly during the pandemic waived a requirement that mass transit agencies meet half of their funding through rider fares. at relief expires this year, and fare revenues aren’t expected to meet the 50% threshold anytime soon. e Chicago Metropolitan Agency for Planning is leading a 27-member steering committee to study ways to fund and govern area transit and o er solutions to Pritzker and the General Assembly. “It’s part of a national problem; every transit agency is facing this,” says Wetmore, who is a member of the committee.

One aspect in Johnson’s control is improving security so that commuters feel safe. A wave of violent incidents and anti-social behavior has discouraged riders who otherwise would use the CTA to commute downtown. In a recent survey by WBEZ, riders cited delays, dirty trains and stations, and smoking in train cars.

CTA spokesman Brian Steele says that a unit of Chicago police o cers is assigned to the transit system, supplemented by the CTA’s unarmed security guards and K-9 patrols, with more than 30,000 security cameras. e police department reported in May that overall transit crime is down 9% year to date and 15% lower compared to April 2022.

All the city’s problems, Johnson has stressed, are interconnected. Improving public safety requires providing access to mental health services, expanded economic opportunities and a reduction in poverty. Each of these, he adds, requires greater investments in education, in job training, and in neighborhood quality of life.

e question is whether Mayor Johnson can build coalitions and muster the resources to ful ll his vision.

CHICAGOANS OFFER UP IDEAS FOR BIG CITY PROBLEMS

New Chicago Mayor Brandon Johnson ran on a commitment of tackling the city’s toughest and most intractable problems by addressing “the root causes,” saying in his inaugural speech, “Together, we can build a better, stronger, safer Chicago.” Johnson himself has been short on speci c solutions. Chicagoans have plenty. Here are some that Crain’s collected.

PUBLIC SAFETY

• Fast-track implementation of the consent decree for the Chicago Police Department; embrace community policing; hold all stakeholders accountable; and apply data analysis and best practices to deploy, recruit, retain and modernize Chicago’s police force.

REVENUE

• Tax services, not just goods, to raise more city revenue.

CHICAGO PUBLIC SCHOOLS

• Provide assistance for schools in disadvantaged neighborhoods to apply for grants and private donations.

• Bring back vocational education at high schools and electives as part of the general curriculum.

PUBLIC TRANSIT

• Expand security on Chicago Transit Authority trains so people aren’t fearful of riding the el. Use congestion fees to fund mass transit.

• Direct the Chicago Department of Transportation to engage communities and build a network of safe, slow residential corridors.

CULTURE

• Engage artists to partner on community projects that increase curb appeal and safety through aesthetics and residents’ investment.

YOUTH

• Invest in youth-led organizations and leverage their knowledge to address homelessness and mental health issues.

—Cassandra West

Bringing down crime is an immediate priority for Johnson

Homicides have declined but trends portend violent summer

BY STEVE HENDERSHOT

Among the most pressing challenges facing Mayor Brandon Johnson will be addressing concerns about crime. ose concerns helped animate the mayoral campaign, and again rose to the forefront after an April melee in the Loop that involved hundreds of young people and attracted national headlines.

Just how bad is Chicago’s crime problem?

Violent crime is on the rise across the city, according to city of Chicago data, creeping upward each year since 2019 and surging higher this year, up 12.6% in early May compared the same time in 2022. If the year-to-date trend holds for the remainder of 2023, Chicago will experience more violent crime than at any point during the last decade.

Likewise, the number of reported robberies across the city is surging, rising by 23.5% in 2022 and spiking again this year by 34.6%. e trend is especially pronounced in a few speci c areas of the city: Robberies are up 80% across Chicago’s three Northwest Side police districts, including the Je erson Park and Portage Park neighborhoods, and 59% across the city’s ve West Side police districts, including Austin and Gareld Park.

And o cials are concerned about a violent summer, given the turnover in City Hall and police department administrations.

“ ere isn’t going to be a lot of time for us to be picking sides in the ght,” says new 5th Ward Ald. Desmon Yancy. “We know what the ght is: keeping Chicagoans safe.”

CHICAGO’S SCOURGE

To that end, a few silver linings can be seen in the year-to-date data. e number of homicides in Chicago is down compared to this time last year, continuing a downward trend that suggests the city is moving beyond a spike in murders during the COVID-19 pandemic. And while violence in the city remains concentrated in pockets of the South and West sides, the number of murders in both regions fell sharply last year and that progress has held during the rst third of 2023. While Chicago led the nation in number of homicides in 2022, according to FBI data, the rate of homicides per resident is lower than that of Milwaukee, Cleveland and St. Louis.

Carjackings in the city also appear to be declining after a yearslong surge. e number fell in 2022 and that trend is continuing this year.

Despite those areas of progress, the pronounced and worrisome surge in robberies and violent crime underscores the concern that crime remains a front-burner issue as Johnson takes o ce — and one that has the potential to worsen during the summer months.

Johnson is acutely aware of the challenge he faces in tackling the city’s violence problem. He acknowledged as much in his May 15 inauguration speech. “We don’t want a Chicago that has been overwhelmed by the traumatization of violence and despair, that our residents felt no hope or no choice but to leave, shrinking our economy and making it di cult for this city to remain a world-class city,” he said. “And so a better day is ahead, Chicago.”

Violent crime is on the rise across the city, creeping upward each year since 2019 and surging higher this year, up 12.6% in early May compared the same time in 2022. ALL VIOLENT CRIME VICTIMIZATIONS BY YEAR

Sarah Wetmore is acting president of the Civic Federation.

JOHN R. BOEHM

ENGAGEMENT

See youth as problem solvers, not the problem

The last few years have not been easy for Black and Latinx Chicago youth. School closings, police violence, the COVID-19 pandemic and continued divestment of neighborhoods have only compounded their struggle. e U.S. surgeon general and a plethora of medical societies warn of a youth mental health crisis like we’ve never seen before. Moreover, the lack of safe youth spaces in Chicago’s built environment only adds to the need to put young people and the care of them at the center of everything we do.

With newly elected Mayor Brandon Johnson in o ce, the opportunity arises to drastically shift decision making, policy sensibilities and funding priorities.

What will it take to drastically shift the realities of Chicago youth? In April 2019, Ruth Wilson Gilmore, a lifelong abolitionist, said abolition is about

MOBILITY MEASURES

presence, not absence. e strategy for youth in Chicago must include presence and trust. We need the unfaltering presence of adults willing to form meaningful relationships with young people. We also need to trust that youth know their lives and what they need.

So few of us know youth, their stories, their struggles, their dreams, and take the time to extend grace and empathy to them in a time of their lives when they are guring out who they are.

Young people understand their needs best. In my 15 years of working with Chicago youth, I’ve come to know young people who have powerful ideas, yet they lack the stability and support to bring these ideas to fruition.

One teen, who has been housing insecure for months, has struggled with mental health issues since childhood. When

Invigorate city’s ine cient and unsafe transit systems

Since 2018, over 1.2 million people, almost half of Chicago’s population, have been in a tra c crash in the city. Chicagoans are regularly stranded at bus stops and train stations and Chicago Public Schools-provided transportation services have failed students with disabilities.

To address this, the Johnson administration must invest in a slow streets network, expand and improve the Chicago Transit Authority, and provide proper transportation services to our students.

Sixteen alderpersons and Mayor Johnson have endorsed the policy proposal put forward by Chicago, Bike Grid Now!, which calls for safe streets infrastructure on at least 10% of Chicago streets. e mayor should immediately direct the Chicago Department of transportation to engage communities and build a network of safe, slow residential corridors.

Within two construction seasons, CDOT can deploy a citywide network of planters, jersey barriers, bumpouts, and tra c diverters that make our streets safer and connect people to their local commercial corridors, jobs, schools, parks and transit centers.

While our neighborhood streets are important, tra c violence is also persistently high along our lakefront, where crashes and pollution from cars stuck in chronic tra c threaten our health daily. Instead of rubber stamping the status quo, Chicagoans are demanding our city and the Illinois Department of Transportation re-imagine our lakefront. e administration must develop a plan that centers people and public transportation, not private cars and an ine cient highway.

e mayor must engage state leaders to reshape the conversation around DuSable Lake Shore Drive, address the climate crisis, and tackle the Drive’s role in polluting our city. Tra c engineers have long known that more lanes create more tra c, and eliminating lanes does not make tra c worse.

Safe streets require more than reducing car use, though. ey also include access to reliable and frequent transit options for everyone, including students. Poor service and reliability of the CTA continues to plague riders, and the incoming administration must focus on improving the system.

However, sta ng alone is not enough. e mayor must push the CTA to build protected infrastructure for buses and open new stations. Across the world, we have seen how investing in more service, new lines and stations, and increased frequency can cause a surge in commercial/ housing investment and ridership.

Adequate access to transit for students includes free access to the CTA. San Francisco has provided free Muni service to select students and recently expanded the pilot to provide free transit rides for all youth under 18 years of age.

While the CTA can serve most students, those that need specialized transportation assistance cannot be left behind. When our systems fail, the vulnerable are impacted the most. Sixteen percent of CPS students have Individualized Education Programs. ose students with disabilities must have prioritized access to transportation. Accord-

she turned 18, she lost many of the support services she had. But she’s out there organizing in her community because she cares deeply about it. She even established an organization centering the issues facing Black women and girls.

Another young person, who lost his mother at 9 years of age, now faces housing insecurity and incessant police harassment. In the years since, he has lost other loved ones to gun violence. He lives with crippling anxiety and yet is expected to hold a steady job. He is a co-founder of the Revolutionary Youth Action League, a community organization for Black, Indigenous and youth of color. He recently established a grassroots hip-hop incubator project for young people to have a safe space to express their creativity.

Anyone can play a part in building strong, intergenerational relationships in our city. Our presence must be coupled with trust in our young people already doing the work.

Youth-centered community organizations

already exist across the city. Each has a deep understanding of their respective neighborhoods. e Chicago Freedom School o ers youth-run workshops on understanding adultism and identity, power and oppression. e Good Kids Mad City chapters run local mutual aid e orts and authored the peace book ordinance that Brandon Johnson vowed to implement. Not only are these organizations providing essential youth services and much needed spaces for them, but they are doing so with meager budgets. Trusting organizations like these by providing accessible, unrestricted funding is necessary if we are to shift the tide.

We must stop seeing Black and Brown youth as the plague and start seeing youth as the critical, full, dynamic problem solvers that they are. e administration of Brandon Johnson must radically change how city funds are distributed to youth organizations like the ones mentioned. Full, accessible and unrestricted funds are key if we are to give our young people needed grace, love and support.

ing to the latest CPS positions listing, there are over 150 vacancies for school bus aides. Providing updated job postings and paying aides for all their work are short-term steps that must be addressed.

In August 2022, CPS CEO Pedro Martinez said 80% of students are on routes under an hour, a metric that falls short of the legal mandate that CPS make every

effort to create routes that are an hour or less each way. Practices like doubling bus runs and mismanagement of 22 separate bus vendor contracts leaves our students behind.

Cities like Toledo, Ohio, and New York City are improving transparency for families through school bus GPS tracking and real-time communications between families,

Cynthia Brito is a graduate student in the department of Urban Planning and Policy at the University of Illinois Chicago and co-founder and adviser to the Revolutionary Youth Action League.

Rony Islam and Sahal Ansari are organizers with Chicago, Bike Grid

schools and bus companies. Chicago Public Schools should do the same. Finally, invigorating our transportation systems must take into account the city’s long history of neglect and disinvestment on the South and West sides. Black and Brown Chicagoans are disproportionately a ected by vehicular violence, poor air quality, noise pollution and longer com-

mute times. People in those communities are less able to access car ownership while simultaneously living in transit deserts. is must change.

Chicago is a world-class city that deserves world-class solutions and vision.

Chicagoans have been fighting for a stronger, better city and we won’t stop fighting.

HIGH STAKES

Chicago’s business community is critical to crafting solutions

As we usher in a new mayoral administration, we must be honest about the challenges confronting our city and economic development, including persistently high crime rates, long-standing scal and pension challenges, and increasing regulatory hurdles for the business community. Luckily, with any challenge comes opportunity, and a new administration presents the opportunity to reset and face these challenges head on. As Mayor Brandon Johnson takes office and begins to work to find solutions to these challenges, the business community stands ready to be a pragmatic partner in that effort.

Let’s not forget, businesses create jobs, and those jobs create opportunities for upward economic mobility for workers in small neighborhood businesses as well as in the Central Business District. Businesses generate revenue that funds schools, public safety and needed public services creating a better quality of life. Businesses invest in people every day, but we cannot continue to do so if the city disinvests in us. Chicago’s business community cannot grow and thrive if we have policies that detract from all that Chicago has to offer, discourage businesses from coming to Chicago or drive businesses out of the city.

cannot withstand another summer of violence.

Whether it be public-private partnerships that offer knowledge-sharing and best practices from the private sector or collaborations between the business community and violence prevention organizations, the Chicago business community has a lot to offer in helping to resolve the current crime situation. Mayor Johnson needs a plan to communicate to Chicago businesses and residents and the stakeholders beyond our city to change the narrative that Chicago can be the safest city in America.

Our fiscal hurdles are also creating challenges for jobs and investment in our future. Skyrocketing property taxes, over $37 billion of unfunded pension liabilities with new pension sweeteners on the way and regulatory hurdles continue to create fiscal instability and drive up the cost of doing business. An impending fiscal cliff for public transit of more than $700 million is staring us in the face. All this in the context of hundreds of millions of proposed new taxes, including reinstating a job-killing head tax that will not only deter headquarters and facility relocations and expansions, but will penalize employers for hiring and result in fewer job opportunities for residents.

We urge Mayor Johnson to evaluate all these fiscal challenges and pension obligations and find alternative long-term solutions before adding to the growing tax burden on the business community that employs our residents and creates revenue to invest in education and critical city services.

In this post-pandemic world, the competition among states and cities to win generational economic development and job creation opportunities is more intense than ever. Every decision and policy proposal, from public safety to unfunded pensions and property taxes to public transit, has a ripple effect that can either help or hinder this effort, and that effect will inevitably be felt by residents across the city.

One of the business community’s top issues continues to be crime and public safety. It’s the No. 1 issue facing our economy. The Johnson administration needs to fast-track implementation of the consent decree, embrace community policing, hold all stakeholders accountable, and apply data analysis and best practices to deploy, recruit, retain and modernize our police force. We need to immediately address safety and reliability on the CTA to keep our workers and tourists safe and get people back to the office. We need a plan to ensure we have long-term funding for critical violence prevention groups and summer jobs programs, because we

We share the new mayor’s optimism for our future because Chicago is second to none. We have a diversity and depth of talent that no city can match. Our central location, affordability, and robust culture make Chicago a prime destination for companies and an inclusive and welcoming place for people. Our dual airport system and transportation infrastructure are world-class. We did not get here by accident. It was common sense, pragmatic public policies and collaborations between the business community, government leaders and community organizations.

We are better when we work together, and with a new administration, we have a renewed opportunity to do just that. We are encouraged by the new mayor’s outreach to business leaders. Because if we want to succeed, the business community cannot be left behind as Mayor Johnson works to put our city on the right path and develop a healthy and robust economy that creates jobs, benefits all Chicagoans and continues to make Chicago a worldclass city.

BLOOMBERG

BLOOMBERG

Jack Lavin is president and CEO of the Chicagoland Chamber of Commerce.

CHICAGO’S BUSINESS COMMUNITY CANNOT GROW AND THRIVE IF WE HAVE POLICIES THAT DETRACT FROM ALL THAT CHICAGO HAS TO OFFER, DISCOURAGE BUSINESSES FROM COMING TO CHICAGO OR DRIVE BUSINESSES OUT OF THE CITY.

Leadership change sparks limited optimism for future

Chicago Mayor Brandon Johnson has his work cut out for him, but he has one advantage to start: cautious optimism.

tectives to the force not only fails to prevent new crimes but rather reactively solves crimes already committed.

OUTLOOK ON LOCAL LEADERSHIP

Overall, do you think (the mayor’s o ce and aldermen) in the Chicago area will be better, worse or about the same ve years from now?

William

e scope of the challenge can be summed up in one statistic: Nine in 10 city residents (91%) consider Chicago’s leadership an issue of personal importance, according to a recent Harris Poll survey. Johnson’s edge comes in the area of expectations. Once the Feb. 28 election results guaranteed a new mayor, Chicagoans exhibited increased optimism about the city’s future leadership, with 35% of city residents subsequently predicting that it would improve over the next ve years. at gure had been 26% in December, signaling residents’ view that virtually anyone would be an improvement over outgoing incumbent Lori Lightfoot.

Mayor Johnson has a long list of issues to tackle, including housing a ordability and the local economy. Public safety is far and away the public’s top priority, however. Almost all (96%) city residents consider it an issue of personal importance, for example. And when we asked them to prioritize a variety of pressing issues, public safety topped the list with a plurality of 46% citing it — more than three times as many that named taxes and fees, the No. 2 issue.

Johnson’s approach to public safety has been controversial, including his admonishing residents not to “demonize youth” in response to April’s “teen takeover” incidents across the city. He plans to reallocate $150 million of the police budget, sending mental health professionals on crisis calls instead of police o cers, and training 200 new detectives. Critics argue that adding more de-

Regardless of his tactics, Johnson faces an uphill battle in Chicago’s public safety crisis: Twothirds (63%) of city residents think Chicago’s public safety situation is worse than in other cities. Nevertheless, the change in leadership increased city residents’ hope that crime could decrease. A quarter (24%) of residents reported thinking in March that Chicago’s public safety will improve over the next ve years (up from 19% in December).

In addition to his proposed public safety measures, Johnson has advocated for more a ordable housing, a message that resonates with Chicagoans. Nine in 10 (91%) city residents consider Chicago’s housing situation (e.g., a ordability, availability) an issue of personal importance.

Johnson notes that a quarter of Chicago renters spend more than half of their paychecks on rent, while homelessness rates have risen 12% since 2019. Residents remain divided as to whether the situation will improve (24%) or worsen (29%) in the next ve years. Part of Chicagoans’ pessimism could stem from the surge in in ation we’ve all experienced since mid-2021.

Mayor Johnson campaigned on the idea of raising funds through taxing the “ultra-rich.” He rejected the idea of raising property taxes, looking elsewhere to propose an additional $800 million in taxes, including a tax on nancial transactions, which would have required the approval of Gov. J.B. Pritzker and the General Assembly. But Pritzker

ruled out the proposed tax, afraid that it could cause more companies to leave the city, like Citadel, Boeing and Caterpillar did in 2022. Chicago has already been the slowest-growing major U.S. city for the past two decades, according to a study conducted by the University of Illinois Chicago. Many are concerned that anti-business policies will further impede the city’s appeal and growth. Enacting policies that deter corporations from coming to Chicago could hurt Johnson’s approval ratings. More than half (54%) of residents expect local leaders to manage the city’s economy, and the overwhelming

majority (92%) consider the local economy (e.g., health of local businesses, ability to attract new businesses) an issue of personal importance. After the rst round of the mayoral election, residents were more hopeful that the local economy could improve. In March, a third (34%) of city residents said they expect the local economy to improve over the next ve years (up from 26% in December 2022).

e mayor has four years to ignite positive change in the city. While Johnson’s proposed policies have faced scrutiny, the shakeup in local leadership has already sparked some optimism that positive changes for public safety, a ordable housing and the local economy are within reach. Now he needs to act on his opportunity.

Apply artists’ expertise to ght crime and support economy

Chicago’s reputation as the cultural capital of the Midwest, and one of the world’s global art destinations, is well earned. Too often, however, our civic leaders underestimate artists’ capacity as citizens to shape our shared society. We can be hopeful that the impressive list of practitioners and arts administrators that Mayor Brandon Johnson named to an arts and culture transition subcommittee means that the unique talents artmakers possess won’t go underutilized. Citizen artists can be a boon to economic recovery, community-building, lingering e ects of the pandemic and countless other problems.

Consider how artmakers improve the economy. According to the Chicago Loop Alliance’s most recent study of the arts’ economic impact (2019), $2.25 billion of economic activity was generated each year by downtown arts organizations and their patrons before the pandemic. More recently, Indiana University’s Arts, Entrepreneurship,

and Innovation Lab’s 2021 report on the economic recovery and resiliency notes that arts economies are stable — “ranging from 4.2% to 4.7% of GDP since 2001, a time span that includes two national recessions” — and “tend to grow independently from other sectors.”

ose tendencies suggest that the density of cultural assets downtown — showcasing the work of artists through dozens of art exhibitions and performing arts venues, over 120 works of public art and several collegiate arts programs — will be an indispensable element of the city’s nancial resurgence. at’s especially true as residents’ social lives return, tourism rebounds and college students — 200,000 of which study in the city, many moving here and remaining after graduation — re-enroll. But the contributions artists make are neither solely economic nor conned to the city’s center.

Artists work in all of Chicago’s neighborhoods. For example, the School of the Art

Institute of Chicago (SAIC) has classrooms in North Lawndale as well as the Loop. From this West Side campus, a nearly decade-long partnership with the Foundation for Homan Square, a range of multidisciplinary projects are made in deep collaboration with neighborhood residents and organizations.

To do this work, creative practitioners understand that, as designer and faculty member Eric Hotchkiss put it, “To facilitate connectivity and understanding among the community, everyone has to be at the table to gure out what this design interaction that we may be creating will be.” In a course he taught, North Lawndale high school students made a lighted mural, informed by community research, to re-energize a neglected intersection near the CTA Blue Line.

ey made it safer, too. “Asphalt art” embellishments like this, though not police interventions, were shown in a recent Bloomberg Philanthropies study to decrease vehicle/ pedestrian crashes by 50%. at’s how artmakers can increase both curb appeal and safety through aesthetics and residents’ investment.

Artists and designers have a proven knack for this kind of generative work that requires

a high tolerance for ambiguity and identies creative possibilities within a context of constructive feedback. From 2013 to 2018, an intercollegiate study led by SAIC looked at critique, the classroom evaluation during which student artists receive verbal feedback on their creations, which showed that artists and designers are expert metacognitive thinkers. at means they have the ability to re ect, iterate and execute anew within, and in response to, group dialogue.

Another way of naming this talent is “what artists know,” nomenclature coined by Frances Whitehead, who was lead artist on e 606 pedestrian corridor, among other civic projects. is idea recognizes artists’ contributions go beyond an ability to draw or sculpt. Artists have expertise in generating and executing ideas, navigating social dynamics and valuing non-monetary aspects of culture. ese skills allow artmakers to take risks, facilitate process-heavy collaborations and be the problem-solvers our city needs to achieve Johnson’s goals.

Whether making our world more beautiful, more honest or more in touch with who we could be, citizen artists are key to Chicago’s success.

Johnson is CEO of e Harris Poll, a global public opinion polling, market research and strategy rm.

Elissa Tenny is president of the School of the Art Institute of Chicago, the rst woman to lead the school in its more than 150-year history.

CRAIN’S DINING AND ENTERTAINMENT GUIDE

From private dining to specialty steakhouses, here are options for your next business meal.

BANDOL

100 West Monroe Street, Chicago, IL 60603 312-877-5713 • bandolrestaurant.com

Brasserie & Raw Bar. A Southern French coastal inspired urban oasis, Bandol’s menu intertwines French and Mediterranean classics with modern seafood, raw bar and a sophisticated-casual touch. Using freshest ingredients and local seafood, Bandol creates delicious steak tartare, prime rib sandwiches, burgers, salads, and more! Our raw bar features the best selections with oysters, salmon, and nancial district’s best shrimp cocktails.

BLVD STEAKHOUSE

817 West Lake Street, Chicago, IL 60607

312-526-3116 • blvdchicago.com

Located in the Fulton Market District, BLVD

Steakhouse is a classic American steakhouse inspired by Hollywood’s Sunset Blvd. Helmed by Celebrity Chef/Partner Joe Flamm, the restaurant embodies the glamour and luxury that de ned Old Hollywood offering sophisticated yet approachable service along with prime cuts and fresh seafood, innovative twists on 1950s cocktails, and an award-winning list of wines.

GRILL ON 21

208 South LaSalle Street, Chicago, IL 60604

312-634-0000 ext. 3 • grillon21.com

A Cut Above Classic. Located on the 21st oor of the Lasalle Hotel, Grill on 21 is a modern approach to a classic steakhouse, blending timeless dishes with a contemporary ambiance. Centrally located in the heart of Chicago’s Financial District, an ideal destination for professionals, fancy date nights, and locals alike. The menu features a diverse array of grilled steaks, chops, hearth-roasted sh, poultry, and plant-based items.

ROSEBUD ROSETTA ITALIAN

1 South Dearborn Street, Chicago, IL 60603

312-384-1900 • rosebudrestaurants.com

/locations/rosetta-italian/

Located amidst Chicago’s nest entertainment venues and steps away from the heart of the Loop, Rosebud Rosetta Italian features a stunning indoor dining space, bar and outdoor piazza! With Rosebud’s impeccable reputation for serving only the highest-quality steaks, seafood an Italian recipes, you’re sure to leave the restaurant satis ed. Rosebud Restaurants have been serving Chicago and the surrounding suburbs since 1976.

BERNARD’S

11 East Walton, Chicago, IL 60611

312-646-1402 • bernardschicago.com

Bernard’s is a landmark cocktail lounge built upon precise cocktails that pay tribute to the past through moments grounded in the present. Returning after an extended hiatus, the resurrection of Bernard’s takes root in the heart of Chicago’s Gold Coast, offering unforgettable experiences guided by knowledgeable staff, re ned cocktails that each have a story, and exceptional plates of nosh.

FILLMORE

120 West Monroe Street, Chicago, IL 60603 312-312-2142 • llmorerestaurant.com

West Coast American-Asian-Sushi. Inventive in spirit and modern in approach, The Fillmore updates the traditional bistro, seamlessly blending contemporary West Coast cuisine with Asian-fusion in uences. Menu signatures include premium steaks and seafood, hearth-roasted sh and chicken, Wagyu burgers, healthy salads and more. Creative, hand-rolled sushi, sashimi and nigiri play the menu’s center stage along with bourbons, Japanese whiskeys and sakes.

REMINGTON’S AMERICAN GRILL

20 North Michigan Avenue, Chicago, IL 60602 312-782-6000 • remingtonschicago.com

Located across the street from downtown Chicago’s cherished Millennium Park is Remington’s – a classic American grill and steakhouse serving up warm hospitality, unparalleled service, and satisfying cuisine. Remington’s menu features classic American fare and Chicago Steakhouse classics. The luxurious and rich interiors create an appealing ambiance for travelers and locals alike with the perfect setting for social gatherings and private parties.

ROSE MARY

932 West Fulton Market, Chicago, IL 60607 872-260-3921 • rosemarychicago.com

Located in the Fulton Market District, Rose Mary is inspired by Celebrity Chef/Partner Joe Flamm’s Italian heritage and the bold, bright avors of Croatian cuisine. The award-winning restaurant offers a seasonal menu featuring house-made pasta and risottos, fresh seafood, and grilled meats, along with craft cocktails and a diverse list of Eastern European wines.

Crain’s Dining and Entertainment Guide showcases a variety of Chicagoland restaurants, bars, private spaces and entertainment venues. This special advertising guide will highlight new menus, spotlight chefs and promote any upcoming special events. To reserve your spot in the guide, please contact Menia Pappas at menia.pappas@crain.com.

Financially weakened Allstate gets Fitch Ratings downgrade

The insurer’s debt costs are rising higher than key competitors’, as continuing auto insurance losses create pressure to rein in stock buybacks

BY STEVE DANIELS

Fitch Ratings has downgraded Allstate’s credit ratings, the latest sign that the insurer’s financial flexibility is tightening due to reduced capital levels and continued profitability challenges.

Two other ratings agencies, Moody’s and Standard & Poor’s, have Allstate’s ratings on negative watch, reflecting the same trends.

Until recently, the Northbrook-based auto and home insurer had aggressively repurchased shares, attempting to prop up its stock price, even as it endured one of its worst years ever in 2022.

Allstate posted a net loss last year of $1.4 billion, or $5.22 per share. That didn’t stop the company from spending $2.5 billion on share buybacks. Dwindling capital, needed to assure regulators the company can cover claims payments and debt obligations, began to alarm analysts late last year.

RATE HIKES CONTINUE

e company continues to dramatically hike auto insurance rates to restore pro tability to its largest business line. Auto insurers across the board have struggled to keep up with claims-payment in ation, caused by used-car values, parts cost increases and medical cost in ation. But Allstate has found auto-insurance pro tability harder to achieve than key rivals like Progressive and Geico.

Fitch foresees a difficult 2023 for Allstate.

“Fitch expects environmental challenges in personal auto from persistently high loss-severity trends to challenge Allstate’s ability to return by (year-end) 2023 to the strong risk-based capitalization levels that the company has historically maintained,” it said in a May 22 release on the downgrades.

Downgrades only will exacerbate Allstate’s cost woes, making it more expensive to borrow.

Those challenges were evident even before Fitch acted. In late March, Allstate issued $750 million in 10-year bonds at an interest rate of 5.25%. Progressive last week floated $500 million in 10year bonds. The interest rate on those was 4.95%.

Likewise, Allstate was forced earlier this year to redeem $575 million in preferred stock because provisions in those shares would have meant halting common-stock dividends because of the company’s worsening financial condition.

The company issued $600 million in new preferred shares earlier this month. The dividend on those is 7.375%. The dividend on

the redeemed preferred shares was nearly 2 percentage points less — 5.625%. That’s a difference of $10 million annually right there.

In the first quarter, Allstate’s interest costs totaled more than $14 million, up from $11.5 million in the same time frame last year, according to a Securities & Exchange Commission filing. Preferred-stock dividends totaled $26 million, the same amount as the year before.

Both those costs will rise going forward due to the bond issuance in late March and the new preferred shares just issued.

Additionally, Allstate in the first quarter hiked its common stock dividend by nearly 5% despite the financial pressures. The company paid $224 million in dividends to common shareholders in the first quarter. That will be more like $234 million after the increase.

DEADLINE APPROACHING

A key question is whether Allstate meets the timetable CEO Tom Wilson has given for completing its existing $5 billion share-buyback program, which had $649 million left on it as of March 31. He said late last year that would be finished by the third quarter of 2023.

If so, Allstate will have to do more than lay out the $153 million it did for buybacks in the first quarter.

Allstate’s stock price has fallen 5.5% since Fitch’s announcement after the close of trading May 22. In 2023 so far, the company’s stock has declined nearly 18%.

By contrast, Progressive, based in the Cleveland suburbs, has seen its stock price fall just 0.4% so far this year.

An Allstate spokesman didn’t

respond to a request for comment.

Fitch in its report also flagged another issue at Allstate that has it concerned. Allstate’s $55 billion investment portfolio as of March 31 held more than $9 billion of what the company terms “performance-based” investments. These are illiquid holdings other than conventional stocks and bonds, such as private equity, commercial real estate and infrastructure funds.

“Fitch views investment and asset risk as Allstate’s weakest relative credit factor,” the agency said in its release. “Fitch expects Allstate will maintain a meaningful portfolio of performance-based investments, consistent with the company’s strategy to have a greater proportion of return derived from idiosyncratic asset or operating performance. On a GAAP basis, Allstate’s risky asset ratio was approximately 90% of total equity at (March 31), down from 106% at (Dec. 31), which remained higher than Fitch’s guideline for the current rating category.”

Wilson has said that greater returns afforded by these investments than those from stocks and bonds justify the relatively large exposure for a company like Allstate.

The sharp rise in interest rates over the past year, though, has the potential to crimp private-equity returns, which often depend heavily on access to cheap debt. The valuations on Allstate’s private-equity holdings rely, too, on how readily and quickly private-equity managers write down lost value in their own investments. That makes analysts nervous about whether Allstate’s performance-based portfolio truly reflects current performance.

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Live Reveal of the Fastest-Growing Companies in Chicago

Programming will feature a conversation between Grubhub

Co-Founder Mike Evans and Betsy Zeigler, CEO of 1871, about how to succeed in Chicago’s startup scene and lessons learned along the way.

Featured Speaker: Mike Evans Founder, Fixer.com; Co-Founder, Grubhub

Moderator: Betsy Ziegler CEO, 1871

Retail crime ‘getting worse’ for Ulta, CEO says

BY ALLY MAROTTI

Ulta added its voice to the chorus of retailers lamenting a rise in shoplifting by organized gangs.

CEO Dave Kimbell said during an earnings call May 25 that the Bolingbrook-based beauty retailer continues to see inventory shrink, in part from theft.

Kimbell did not quantify how much the company was losing to theft.

e company disclosed that gross pro t as a percentage of net sales dipped last quarter to 40%, compared to 40.1% a year ago.

Net sales totaled $2.6 billion in the quarter ended April 29.

Kimbell, who often spends time visiting Ulta stores, said he was concerned for the safety of workers and customers.

e issue goes beyond petty shoplifting. Kimbell named organized retail crime as the main concern. Such incidents are orchestrated by professional thieves who make o with large hauls

of merchandise, often intending to sell it online. Many such cases come with smash-and-grab incidents. Indeed, Kimbell said “we’ve seen a rise of violence and aggression during these incidents.”

ADDING ARMED GUARDS

Ulta plans to increase investments in measures to combat the issue, including hiring armed security guards.

“Unfortunately, despite our efforts and investments, it’s getting worse, not better,” Kimbell said.

For the past couple of years, retailers have fought mightily against organized retail crime. Illinois Attorney General Kwame Raoul launched an Organized Retail Crime Task Force in late 2021, and Chicago-area retailers battened down the hatches during the 2021 holiday season.

Retail shrink, or preventable losses, which are taken as a percentage of total retail sales, accounted for $94.5 billion in losses

in 2021, according to the most recent data from the National Retail Federation.

Kimbell said a solution can come only through a partnership with local leaders and law enforcement.

“ is is a macro problem, it needs a macro answer,” he said.

At Ulta, the fragrance section is

often targeted, so the company is installing locked fragrance cabinets, said Chief Operating O cer Kecia Steelman. By the end of the year, 70% of Ulta locations will have the cabinets.

e retailer has 1,355 stores nationwide, 55 of them in Illinois.

Ulta is also hiring more workers at speci c locations and training

employees on how to best handle retail crime. It is also hiring armed security guards and partnering with landlords to survey parking lots and surrounding areas.

“It’s upsetting if you’re shopping in a store and see this activity happening,” Steelman said during the earnings call. “It’s pretty shocking.”

Cooper’s Hawk is closing its only Chicago location, citing underperformance

COOPER’S HAWK from Page 3

think of our business model,” said CEO and founder Tim McEnery.

The restaurant was meant to be a draw for Cooper’s Hawk’s 600,000 wine club members. It features rotating chefs, and has a collection of more than 3,000 wine bottles. The tastings of rare and luxury wines that are available go beyond the company’s typical offerings. Patrons need not be wine club members to dine at Esquire, but like at Cooper’s Hawk’s other restaurants, wine club members are tantalized with rewards and discounts.

McEnery said wine club members ew in from around the country to scope out Esquire. Ultimately, it wasn’t enough.

“It’s a 24,000-square-foot restaurant,” he said. e “type of volume we have to do in a space like that is huge.”

CHANGING FOCUS

e sprawling restaurant took up residence in the former Esquire eater space at 58 E. Oak St., replacing Del Frisco’s Double Eagle Steak House and its Esquire Champagne Room bar with a three-story wine tower, open kitchen and Cooper’s Hawk signature retail store selling trufes, wine and other gifts. McEnery declined to comment on how much Cooper’s Hawk invested into the restaurant.

e restaurant industry has su ered mightily over the past couple of years. e long tail of COVID closures blending with in ation has caused margins to shrink even further in the notoriously low-margin industry. Some

experts argue that it is more dicult than ever to open and run a restaurant.

The more than 150 employees at Esquire will be given the option to transfer to other Cooper’s Hawk locations. The Downers Grove-based company has 57 locations, including a Neapolitan pizza concept, called Piccolo Bucco by Cooper’s Hawk, in Oak Brook. It plans to open four more restau -

rants this year and continue expanding next year.

Closing Esquire will allow the company to focus on expanding its other concepts, McEnery said. He declined to disclose revenue for the privately owned company. Crain’s 2023 list of the area’s largest privately held companies reported that Cooper’s Hawk had $340 million in revenue last year, up 6.3% from 2021.

ough the Esquire brand is

being shelved for now, McEnery said the company learned some valuable lessons from running the restaurant. Among them: wine club members’ desire for more from the company.

BUSINESS MODEL

Cooper’s Hawk launched in 2005 and has about 8,000 employees. With its approachable wine and food, it quickly became a haven for suburbanites. McEn-

ery said the company’s business model puts the wine club at the center. Members join at the restaurants, which act as hubs to the wine club spoke. e company also leads wine-focused trips for its club members.

Esquire was Cooper’s Hawk’s rst foray into an urban setting. “We think that one day we’ll return to Chicago,” he said. “It’s our hometown, our home market … we’ve got it surrounded.”

The Bubble Bar on the third oor of Esquire by Cooper’s Hawk in the Gold Coast.

‘Unfortunately, despite our e orts and investments, it’s getting worse, not better,’ said CEO Dave Kimbell

BLOOMBERG

Experts question value of new SEC reporting requirement for CEO compensation

and option awards from the date they were granted — usually early in the reporting year — to the end of the year. That means the performance of a company’s stock during the intervening period can have a big impact on CAP. What’s more, CAP also takes into account fluctuations in value of unvested awards granted in preceding years and of previously granted awards vested during the current year.

At pharmaceutical giant AbbVie and agricultural commodity firm Archer Daniels Midland, whose recent stock performance has been relatively strong, this meant mindboggling CAP numbers of $67 million and $66 million respectively for CEOs Richard Gonzalez and Juan Luciano. Each figure is about triple the number reported by the companies under the traditional measure of “total executive compensation.”

Conversely, the huge negative CAP number for Oak Street Health’s CEO followed a year in which its share price tumbled two-thirds from a threeyear peak. Zebra’s and Dover’s shares also declined during 2022.

“Big changes in CAP are going to be driven by big changes in prior-year stock awards that have to be marked to market,” says Mike Kesner, a Chicago office partner with executive compensation consultant Pay Governance. Looking at more than 100 early-filing public companies, Pay Governance said five of six showed “directional alignment” between CAP and total shareholder return. Only 3% showed executive compensation rising under CAP when shareholder return fell.

Under the old rules, former Exelon CEO Christopher Crane was the highest-paid executive among Chicago’s largest public companies last year. He earned $30 million — twice as much as in 2021 — consisting of $1.3 million in salary and the rest

mostly from restricted stock awards and changes in pension plan and non-qualified deferred compensation earnings.

Under CAP, however, Crane’s 2022 pay fell to $10.8 million — the biggest drop on the list, excluding those CEOs like Pykosz who were in negative territory. In an email, an Exelon spokesman said, “Valuation differences are primarily driven by the change in share price from the prior year.” Crane retired at the end of the year.

ANOTHER BIG LOSER

CME Group’s Terrence Duffy was another big loser under the new rule: His compensation was adjusted from $22.9 million to $12.5 million. CME stock finished the year at $168, compared with a five-year peak of $250.

“The takeaway from seeing so many numbers is, CEO pay is incredibly well aligned with share prices,” says Steven Seelig, a senior director of executive compensation at Willis Towers Watson. For the

layperson, he concedes, “this makes life even more confusing than it has in the past.” But for investors, shareholders and proxy advisers, he says, the data offers “much greater insight as to whether pay programs are working as intended.”

Kesner, citing a wait-and-see attitude by proxy advisers, says it’s unclear what investors will make of the additional information. Companies themselves aren’t saying much beyond what they’ve reported in their proxy statements.

Among 152 proxies, Willis found that the highest CAP was more than $1 billion and the lowest a negative $644 million. (Fortune magazine said a single CEO accounted for both extremes, in different years: Peter Rawlinson of EV maker Lucid Group, whose stock quintupled in 2021 and fell back to earth last year.)

The new rule is an outgrowth of the 2010 Dodd-Frank Act, enacted as a consumer protection measure in the wake of the financial crisis and a response

JPMorgan adding private bankers in Chicago

the future of private banking — o ered not just by JPMorgan, but also Chicago-based Northern Trust, Goldman Sachs, BMO and many others — because business owners make up the bulk of the households needing high-touch nancial services locally. JPMorgan’s private bank caters to those who already are ush as well as the “emerging” wealthy, whose fortunes are largely illiquid and tied up in relatively early-stage

businesses.

Chicago is home to a bounty of privately held, often family-owned businesses. As those owners near retirement age, they either sell and need help managing the fortune they’ve liquidated or they require assistance in passing the business onto the next generation.

Private banking services include tax planning, estate planning, investment advice and cash management.

e leadership transition in

BIGGEST PAY INCREASES (DOLLARS IN MILLIONS)

Richard Gonzalez, AbbVie

Juan Luciano, ADM

Anthony Will, CF Industries

David Kimbell, Ulta Beauty

Thomas Wilson, Allstate

BIGGEST PAY LOSERS (DOLLARS IN MILLIONS)

Michael Pykosz, Oak Street Health

Anders Gustafsson, Zebra Technologies

Richard Tobin, Dover

Jose Almeida, Baxter International

Pietro Satriano, US Foods Holding

Note: Gustafsson was Zebra’s CEO until March, when he became executive chair. Satriano left US Foods in May 2022.

to agitation for shareholder “say on pay” (some elements were rolled back in 2018). For the first time, it applies to companies whose 2022 fiscal year ended on or after Dec. 16. Filers like Walgreens Boots Alliance and Deere, with earlier-ending fiscal years, did not report CAP in their latest proxies.

“The SEC dawdled on this forever,” says Alan Johnson, a New York-based compensation consultant, and arrived at something less than revolutionary, he argues. He says CAP amounts to a roundup of infor-

mation reported elsewhere in proxies and isn’t addressed in the “compensation discussion and analysis” section of the filings.

“The additional value is really scanty,” he argues. “If we’re trying to get the right ZIP code, it’s fine, but for serious company-to-company performance, it’s kind of useless.” He does credit the measure with providing more insight into how corporate compensation is figured, a mild antidote to complaints that the process is nothing but a “shadowy backroom deal.”

Chicago was part of a regional reorganization of JPMorgan’s private bank, in which a new Midwest region was carved out of what before had been a broader Central region. One hundred of the 175 private bankers working in the new 11-state Midwest region serve the Chicago market.

New York-based JPMorgan Chase also is Chicago’s largest bank by deposits and has the leading market share in the area for middle-market business banking.

JPMORGAN CHASE from Page 3

Juan Luciano

BLOOMBERG

BLOOMBERG

The diversity of the people and neighborhoods are the heartbeat of the Chicago region. United Way works to ensure every person has equitable access to opportunities and neighborhoods can thrive. With your support, we can invest in continue d progress and create a Chicago region where every child has better access to quality education, communities are safer, our neighbors are healthier, incomes increase, and our region prospers.

Now is the time to LIVE UNITED and build a stronger, more equitable Chicago region. Join us at LIVEUNITEDchicago.org