GREG HINZ: On gun control, the language of compromise isn’t working. PAGE 2
JOE CAHILL: Abbott’s formula crisis echoes 737 Max mess. PAGE 3
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INTERRUPTING HOMELESSNESS During the height of the pandemic, creative and innovative assistance for people living on the margins and on the streets in Chicago increased. But will it last and make a material difference? I PAGE 13 FIND THE COMPLETE SERIES ONLINE GEOFFREY BLACK
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2020s condo boom skips downtown
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South Side factory’s future is cloudy after automaker decides to make the first electric Explorers in Canada
Eighteen years ago, when they both worked downtown, Gail and Charles Zugerman bought a condo at Michigan Avenue and Huron Street for $1.3 million. Within a few blocks, “there was so much to do,” Gail Zugerman says. “Museums and restaurants and night clubs and stores. It
was a fun place to call home.” Now retired—she from market research, he from medicine—and living in Florida, the Zugermans have their Michigan Avenue condo on the market at just under $1.05 million. That’s 19% less than they paid for the three-bedroom unit.
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Initial electric versions of Ford’s Explorer SUV likely will be manufactured at a Ford factory in Oakville, Ontario—not the Chicago assembly plant that produces gas-powered Explorers and Aviator SUVs, industry sources say. That plan throws into question the future of the nearly 100-year-
old Torrence Avenue complex, as automakers accelerate the shift to electric vehicles. It also casts doubt on Gov. J.B. Pritzker’s vision to make Illinois a hub for EV production. Ford expects half its vehicles will be electric by 2030. And although incumbent plants like See FORD on Page 28
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ComEd electricity prices to be stable this summer—for now. PAGE 3
Mike Madigan wiretap is a jaw-dropping revelation. PAGE 10
5/27/22 3:13 PM
2 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
GREG HINZ ON POLITICS
Time to play hardball on guns
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that straw purchasing to get around such limits should be illegal, and that large, quickly changed ammunition clips with 20 or more rounds need to go. I’d be willing to bet one other thing. That’s that most Americans would be appalled that someone who turned 18 just a day earlier can walk into a gun store and, without training or parental involvement or anything except payment, stroll out with two AR-15 assault rifles and hundreds of rounds of ammo. Yet, that’s exactly what happened in Uvalde, Texas, where the law holds that you’re not mature enough to get a bottle of beer until you’re 21, but acquiring a kindergarten sweeper is A-OK. There’s talk of some possible compromise. Like extending background checks. Or red flag laws that allow a hold on sales to people whose conduct indicates they can’t be trusted. I’m not optimistic. The New York Times reported that only five of the Senate’s 50 Republicans now say they’re willing to consider such steps. And after this week’s hearing, it’s likely that Sen. Dick Durbin, D-Ill., will have to hold together all 50 of his Democrats to win confirmation of a new head of the Bureau of Alcohol, Tobacco, Firearms IF NOW ISN’T THE TIME TO DO & Explosives, the SOMETHING, WHEN IS THE TIME? lead federal agency in dealing with gun crimes, which has been is the time? If the GOP can’t without a permanent head for move itself to do something seven long and bloody years. about weapons that kill peoBack in Illinois, ple, maybe it’s time to throw would-be-governor Irvin caution to the wind and go for declared on TV this week everything. that the system the state uses Let’s for the moment set to vet gun buyers, requiring aside the hard 2nd Amendthem to possess a Firearm ment crowd. You know them. Owners ID card, “is broThe ones who insist that ken.” Irvin mumbled somebecause the founders wrote thing about “fixing” it, but something about keeping the clear impression he left is your musket for the town that FOIDs can go away—at militia in 1788 that they have least until after the Republian absolute right to own as can primary. Somehow, he many guns of whatever calineglected to mention that just ber and as large of a magazine nine months ago, he hosted as they want. Period. My right Gov. J.B. Pritzker at Aurora is supreme, they claim. It police headquarters, where overrules all other rights, like the guv, with a beaming Irvin the right to live in a sane and at his side, signed a new law safe society. expanding use of FOIDs and And the rest of us? Polls adding a fingerprint requireshow there’s widespread ment. agreement on much of this As Hadiya Pendleton’s mom subject. Most of us believe put it in a City Club appearin mandatory background ance six years ago, the only checks for prospective gun change since her daughter purchasers. Most agree that was shot down in 2013 was deranged and convicted that shootings have “gotten people should not be allowed worse.” Will anything change to have a gun. My suspicion now? is that most of us also believe he anger in Sen. Tammy Duckworth’s voice was clear as could be, even on a telephone 800 miles away. “Until the Democrats have total control of the Senate, I don’t think we’ll win a vote,” she said, referring to efforts to toughen national gun control laws after the latest American tragedy, the massacre of 21 children and teachers in a Texas school. Republicans “have (yet) to show they care more about dead kids than the NRA.” That’s not the language of compromise. It can raise hackles, even if it comes from someone like Duckworth, who has young children herself and clearly is seeing the news of the day through their eyes. But is it wrong? As Republicans from coast to coast insist that not some reasonable limits on firearms but only tougher security and mental health checks are the ticket to keeping kids safe from gun violence, and as leading Illinois GOP gubernatorial hopeful Richard Irvin dances all around the subject, I’m starting to come around to the hard-line view. If now isn’t the time to do something real about a crisis we as a culture should have dealt with decades ago, when
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Here’s why these big Chicago law firms are hot on Miami Kirkland & Ellis and Winston & Strawn are establishing their first physical footprint in the Sunshine State. And another, Sidley Austin, appears poised to join them. BY ELYSSA CHERNEY Two of Chicago’s largest and most locally entrenched law firms recently unveiled plans to open new offices in Miami, establishing their first physical footprint in the Sunshine State. And a third local giant, in the midst of a Florida hiring spree, appears poised to do the same. Kirkland & Ellis and Winston & Strawn both announced their moves last week. The new offices in Miami will allow them to capitalize on new industries taking root in the rapidly growing state, such as cryptocurrency, as well as lucrative connections to Latin American companies in need of legal services. Sidley Austin also seems to be setting itself up for a Miami outpost but hasn’t shared formal plans yet. A source close to the firm said Sidley has hired more than 30 attorneys for its Miami office, a mix of lawyers already practicing there and partners relocating from other locations in key areas such as litigation, real estate and sports. These Chicago powerhouses are just the latest firms keen on the Florida market. Two other Big Law firms—King & Spalding and Quinn Emanuel Urquhart & Sullivan, which have Chicago shops—launched Miami offices within the last year. Joseph Altonji, founding principal of consulting firm LawVision, said Miami is the spot to be for international firms looking to bolster client rosters. It’s a dense, bustling transportation hub that’s attracting high-net-worth individuals, Latin American ex-pats with vast real estate portfolios and, increasingly,
corporate headquarters. Large swaths of the financial services sector relocated to Florida, either permanently or temporarily, during the pandemic. That included Ken Griffin’s Citadel Securities, which rented space at the Four Seasons Palm Beach for almost a year and set up a trading floor so employees who moved there with their families could keep working.
ATTRACTIONS
The warm weather and lower corporate tax rates are also attractive to companies looking for a new home. Investment firm Elliott Management moved its headquarters from Manhattan to West Palm Beach in October 2020 and London-based Blockchain.com moved its U.S. headquarters to Miami in June. The city was also selected to host the largest Bitcoin industry conferences in 2021 and 2022. “Florida is probably the fastest-growing state in the country from an economic perspective,” said Altonji, a Florida resident himself who also works from Chicago. “There’s so much activity. People are moving businesses out of places like Illinois and a lot of other places, and Florida’s population is growing tremendously.” Mergers and acquisitions partner Enrique Martin, who’s leading Winston’s new office, said he’s seen the Miami market develop and become more desirable for law firms over his 30-year career in the city. Martin’s practice focuses on corporate clients in the U.S., Europe and Latin America, whom he advises on domestic and cross-border deals,
private equity and capital-raising transactions. “There’s no question that the geographic proximity (to Latin America) is something that’s really helpful,” he said. “Miami itself has evolved from being just a gateway to Latin America to being a destination from which business is being conducted upward into the U.S.” Demand for legal services from Latin American businesses and individuals is increasing as their markets become more sophisticated, Martin said. Many of their C-suite executives are educated at top-tier universities in the U.S. or the U.K. and expect a standard of excellence from their attorneys, he said. Winston’s office is starting with six partners poached from other South Florida firms, and more are expected to arrive soon, the firm said in a news release. Kirkland is relocating four corporate partners—three from Chicago and one from New York—to lead its Miami location. Winston also pointed to litigation opportunities for their latest outpost. Winston Vice Chair Michael Elkin said a significant uptick in product liability and class-action matters filed in the Southern District of Florida will keep litigators busy. A spokesman for Sidley declined to comment on the firm’s plans, but its website lists at least 12 attorneys as working from there. It’s not all that surprising given that Yvette Ostolaza, who was elected to chair the firm’s management committee last year, grew up in Miami and attended the University of Miami for college and law school. Her tenure began in April.
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CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 3
JOE CAHILL ON BUSINESS
When is baby formula like an airplane?
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imilac is starting to look like Abbott’s 737 Max. Consider the similarities between the situation jet maker Boeing faced after two of its 737 Max jetliners crashed, and the mess confronting Abbott after safety concerns forced it to recall baby formula, helping create a nationwide shortage.
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Summer prices for ComEd customers stable–for now Illinois regulators chose to act as power-market speculators last week by locking in ComEd’s power prices. But if prices fall in coming months, customers will pay later. | BY STEVE DANIELS
C
ommonwealth Edison customers will pay about the same for electricity this summer as they did the year before, even though the price of the juice contracted to keep the air conditioners humming is 77% higher than last year. Credit goes to a provision in the Climate & Equitable Jobs Act, signed into law last year by Gov. J.B. Pritzker, that effectively set prices over five years for three nuclear power plants in northern Illinois and required them to reimburse ratepayers if energy prices skyrocketed. Prices did just that, and the credit on electric bills to consumers from Baltimore-based Constellation Energy Group, which now owns the
plants, will offset all of the 77% increase. Or will it? If energy prices drop over the course of the summer, the value of the credit will fall as well. But as a result of a decision last week by the Illinois Commerce Commission, ComEd customers are locked into these extraordinarily high prices no matter what. That means energy prices they pay will be stable during the summer months. But if wholesale energy prices fall meaningfully over the season, ComEd See COMED on Page 30
Execs buy shares to counter doubts on Chicago bank deal
The stock performance of Indiana-based Old National badly trails other banks on worries rivals will poach First Midwest’s lenders and customers BY STEVE DANIELS It was nearly a year ago that Chicago’s First Midwest announced a deal to sell to Evansville, Ind.-based Old National in what the two billed as creating a “regional powerhouse” focused on the Midwest. Wall Street didn’t buy it then. It still isn’t. Since May 28 of last year, the last trading day before the June 1 merger announcement, Old National’s stock had dropped nearly 17% as of May
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26 this year. Its market value was $4.65 billion; the two banks separately were valued at a combined $5.55 billion just before the deal was unveiled. The KBW regional bank index had fallen 10% over that period. Rosemont-based Wintrust Financial, the last major commercial bank still headquartered locally and only slightly larger by assets than Old National, had risen more than 7%. So Old National has top executives—including former First
Midwest CEO Michael Scudder, who now is executive chairman of Old National—digging into their own pockets to buy shares. It’s a rare step, given how much stock corporate executives are regularly given as part of their annual compensation. Insider purchases en masse like this usually are reserved for major investor crises of confidence in a company’s future. But Old National executives See FIRST MIDWEST on Page 29
the company’s product. Check. Crashes eventually linked to faulty cockpit software in Boeing’s 737 Max killed 346 people. Four babies were hospitalized after consuming Abbott’s Similac, and two of them died. Fatalities have been far fewer in the formula crisis, but far more people are feeling its effects. And the toll in sickness and death could rise as the recall and shutdown of its Sturgis, Mich., formula plant leave millions of babies without the formula they need.
Ham-handed initial response
focused on minimizing liability. Check. Boeing was quick to defend the safety of its design when the jets went down, assertions eventually disproven when investigations revealed the software’s flaws. Abbott’s first statements were similarly defensive, emphasizing that the strains of bacteria that sickened and killed the infants didn’t match the types found in its plant. CEO Robert Ford repeated that disclaimer last weekend in a Washington Post op-ed apologizing for shortages and vowing to do better. Again, it’s early yet. The possibility that those strains might eventually be found to have caused illness in others can’t be ruled out.
Regulatory lapses. Check. A
cozy relationship between Boeing and aviation regulators came to light after the crashes. The Federal Aviation Administration effectively delegated many key regulatory functions to the company, creating an environment that enabled Boeing to downplay technical changes that made the software riskier. In Abbott’s case, Food & Drug Administration officials failed to inspect the Sturgis plant for months after they were told last fall that infants who consumed Similac got sick. That notification happened to come on the same day that the agency conducted its first inspection of Sturgis in two years—and gave the plant a clean bill of health. When FDA inspectors finally returned in January, they found five strains of bacteria on equipment that could come in contact with formula. Like the FAA, the FDA is taking heat from Congress and needs to
restore its reputation. That’s bad news for Abbott, as Boeing can attest. Tighter FAA scrutiny has delayed approval of new planes and stalled deliveries of some older ones. Abbott can expect similarly aggressive treatment from an embarrassed FDA out to prove it can do its job. Political pressure for a crack-
down. Check. As happened with Boeing, Congress is launching investigations and demanding reforms. Likely changes include an overhaul of the federal program that pays for about 45% of formula in the U.S. Terms of the program effectively promote monopolies, enabling Abbott and rival Mead Johnson to control 80% of the market. The impact of such market concentration became clear when the Sturgis shutdown crippled U.S. formula production. Lawmakers and administration officials are calling for changes that would open the market to more suppliers.
Short-term financial pain.
Check. Boeing’s revenue plunged when regulators grounded its top-selling jet for nearly two years. Baby formula isn’t as important to Abbott’s overall business, but a plunge in sales dragged down first-quarter revenue in Abbott’s third-largest business, nutritional products. Formula sales declines likely will weigh down secondquarter results, too.
Long-term competitive dam-
age. Check. The 737 Max grounding gave Boeing’s archrival an opportunity to win more orders from airlines, shifting market share to Airbus. With Similac off store shelves for months, Abbott faces a potentially greater threat to its market position. Whereas Boeing has only one major competitor, powerful new rivals such as Nestlé and Danone could soon challenge Abbott in a U.S. market it has dominated for years.
Shattered trust in an import-
ant product. Check. Before the crashes, travelers boarded Boeing jets without giving a thought to their safety. Until now, parents put equal faith in Similac. Now they associate the brand with sickness and shortages. Repairing the Similac brand may be even harder than rehabilitating the 737 Max. Boeing only had to regain the trust of airline executives who buy its planes. Airlines want to have two viable suppliers, so they’ll keep buying from Boeing. Abbott, by contrast, sells to the vast consumer market, where formula buyers may soon have a much wider range of choices, along with a compelling reason not to choose Similac.
5/27/22 3:04 PM
4 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
Jeff Wierus and Maddy Wierus
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long with the Ponce, Holt, Volkman and Jiggetts dynasties it’s time to add a new name to the list of Chicago’s multigenerational media families. Maddy Wierus, 26, who grew up in Orland Park and Robert Feder graduated from Illinois State University, has joined the Chicago bureau of CBS News as a digital journalist and associate producer. She’ll work with correspondent Adriana Diaz covering the Midwest and beyond. Her father, Jeff Wierus, has been an award-winning TV photojournalist in Chicago for 33 years — including the last 29 as a sports and news cameraman for Fox-owned WFLD-Channel 32. “Growing up, my dad would take me to work with him and I was always in awe seeing him in his element,” she told me. “It’s funny, too, because so many of my dad’s colleagues in the Chicago market have become family friends, so it feels like the ultimate homecoming.” Maddy most recently worked as morning news anchor and reporter for KTAL, the NBC affiliate in Shreveport, Louisiana. Before that she was a news anchor at KXLT, the Fox affiliate in Rochester, Minnesota, and a producer at WNDU, the NBC affiliate in South Bend, Indiana. Her credits also include a stint as a promotion and sales assistant at Hubbard Radio classic rock WDRV 97.1-FM and as a sports assistant at Fox 32. “I’ve worked my entire career to get to this moment and I’m still trying to find the words to express how thankful I am,” she added. *** Richard Milne, a 36-year veteran of WXRT 93.1-FM, has
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resigned as morning host at the Audacy adult album alternative station to care for his ailing wife. Milne told colleagues in an email his last day on the air will be June 10. He left the door open for a possible return, but said his full attention would be on his wife, Charlene Milne, who has frontotemporal dementia. She has been in hospice care since April. “It’s long been my intention to be with Charlene through every moment of our remaining time together,” he wrote. “Sadly, the end is coming more quickly than I ever would have guessed and now is the time for me to fully step away.” Until earlier this month Milne was on leave for five weeks before returning to the morning show he has hosted since 2020. The couple met in 1988 when Charlene was in sales at XRT. Greg Solk, vice president of programming and operations for Audacy Chicago, said a replacement for Milne would be announced soon. “I’m thankful for the opportunity to have become a dayto-day player, working alongside the most talented people in this business,” Milne wrote in his email. “Every day has been inspired and rewarding. “I do intend to return some day, host the occasional ‘Flashback,’ maybe do that Sunday afternoon thing again. We’ll see. Regardless, that won’t be until after a long period of mourning and reflection.” In the latest Nielsen Audio survey, mornings on XRT ranked 10th with a 3.2 percent share and cumulative weekly audience of 220,400. Robert Feder has been covering the media beat in his hometown since 1980. His column is published in Crain’s under an agreement with the Daily Herald.
ERIK UNGER
Second-generation journalist Maddy Wierus comes home to CBS News Dr. Helene Gayle
Chicago Community Trust leader discusses her experiences Dr. Helene Gayle reflects on her time leading the storied foundation and how it evolved to become more active in setting policy and combating racial inequity BY ELYSSA CHERNEY Dr. Helene Gayle, a pediatrician and nationally renowned philanthropic leader, became the Chicago Community Trust’s first female president and CEO nearly five years ago. During her tenure, the assets of the trust—one of the city’s oldest and largest foundations—increased from about $2.8 billion to $4.7 billion. It gave out $1.7 billion through grant commitments in 2021 alone, compared with about $236 million in the year before she took over. The organization also started embracing opportunities to shape policy, especially in its mission to close the racial wealth gap. That became the trust’s focus under a new 10-year strategic plan championed by Gayle. Now Gayle, 66, is set to leave the post later this month to become president of Atlanta’s Spelman College, a historically Black liberal arts school for women. Here’s what she had to say about her time in Chicago and future hurdles for the foundation. This interview has been edited and condensed. CRAIN’S: What legacy do you hope to leave behind at the Chicago Community Trust? GAYLE: The fact that we developed a 10-year strategic plan, focused on closing the racial and ethnic wealth gap. This isn’t something we will do on our own, but putting a marker down that this is such a critical issue for our region helped bring a lot of partners on board. There’s more dialogue now about this issue,
and people understand how important economic equity is if we are going to achieve all the other forms of equity—public safety, education, life expectancy and health. All of these things are intertwined with one’s economic opportunities. What are some of the other things you’re proud of? We’ve added some important roles. For instance, we’ve added the role of policy and advocacy. Before this, we thought about ourselves as a foundation and giving grants as our main product. We recognize that grant dollars are important, but how we use our voice, how we help to fund organizations that can push for key policy changes—all of that is critically important because we know bad public policy affects the wealth gap. If we really think about ways to change the policy landscape, we can have potentially even greater impact than we have with our grant dollars. What are some of the factors that contributed to the Chicago Community Trust’s positive financial health? We did a lot of internal infrastructure upgrades. As dull as that may seem, it was really critical for us to be able to effectively manage and steward resources. As a result of that, we were better able to build programs, particularly around donor-advised funds, that helped us expand our resources. During the time of COVID, people really felt how important it was to be generous. We also had markets during the last two years that did incredibly well, so people who had
health had more wealth. What type of leader will the Chicago Community Trust need next? Somebody who is committed to this issue of closing the racial and ethnic wealth gap and the issue of economic equity. Our staff, our board, are really committed to staying on that path. We have a 10year strategy, so we want someone who would embrace that. What challenges will the next president face? There are a lot. We know we are going through a time where inflation is high, where we’re seeing a lot of challenges with talent retention. On the other hand, in the communities we serve, even in this tighter labor market, there’s still high rates of unemployment, particularly in the Black community. You’re speaking to the City Club on June 1. Does it feel like a “goodbye” of sorts? It does. It will be my last month. City Club was one of the first places where I had the opportunity to talk, and I talked about our strategy and where we were going and what I hoped to accomplish. It’s an opportunity five years later to be able to answer some of those questions. What will you miss most about Chicago? Lake Michigan! I love water. I’m going to a landlocked city. But what I’ll really miss is the warmth of the people. Chicago welcomed me, and the people care very deeply about their city, and it’s one of the most civically engaged cities that I ever lived in.
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6 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
Last year was best ever for Chicago retail sales After being stuck in their homes in 2020, consumers ‘were out with a vengeance, shopping and dining and drinking’ as the economy rebounded, says a consultant Local retailers and restaurants swung from doom to boom last year, ringing up record sales as the economy bounced back from the pandemic and consumers opened their wallets. Retail sales in the Chicago area soared to $152.5 billion last year, a remarkable 28.6% jump over 2020, according to Melaniphy & Associates, a local consulting firm. It’s the biggest annual increase by far since at least 1988, when Melaniphy began tracking local retail sales. After dropping 8.7% in 2020, sales rebounded last year as COVID-19 vaccines became available and restrictions to contain the pandemic were relaxed, illustrating the power of pent-up demand. People bought more clothes in stores, increased their spending on gas and ate out more often. Many were in the mood to splurge after receiving government stimulus checks. “They had money to spend,” said John Melaniphy, president of Melaniphy & Associates. “They were out with a vengeance, shopping and dining and drinking.” Yet consumers aren’t as optimistic today amid the highest inflation in four decades, rising interest rates, a stumbling stock market and recession jitters. Melaniphy forecasts local sales to
increase 6% to 8% this year but expects higher prices to account for much of the rise. In other words, inflation will make sales look better than they actually are. Higher prices usually mean consumers have less money to spend. “Inflation-fueled sales will increase, but we have a consumer who is moderating their discretionary spending,” he said. With more consumers shopping online, the outlook for brickand-mortar retailers was dimming even before the pandemic spread to the U.S. in early 2020. But COVID pushed the industry into an existential crisis, as restaurants and non-essential stores closed by government order and consumers, holed up in their homes, bought more stuff over the internet. Retailers including Brooks Brothers, J. Crew, Lord & Taylor and Neiman Marcus filed for bankruptcy protection.
STRUGGLES
Many retailers and restaurants are gone for good, and the recovery has bypassed some places. North Michigan Avenue, Chicago’s most famous shopping district, continues to struggle with a 24.7% retail vacancy rate, up from 12% in 2018, according to Cushman & Wakefield. Retailers and restaurants in the Loop are still suffering as many of their key customers, downtown professionals,
continue to work from home. And some big shopping malls, including Chicago Ridge Mall and Lincolnwood Town Center, have run into loan trouble. Still, the big jump in sales last year offers a hopeful message for retailers with physical stores—and their landlords: “Brick-and-mortar is not dead,” Melaniphy said.
COMEBACK
One segment especially vulnerable to e-commerce—apparel— staged an impressive comeback in 2021. Chicago-area apparel sales rose 73.1% last year—more than any other category—to $5.54 billion, as more people refreshed their wardrobes in anticipation of their return to the office and bought new outfits for vacations, Melaniphy said. But the longterm trend illustrates the impact of e-commerce: Local apparel sales rose just 11.7% from 2007 to 2021, well below the 42.8% increase for all retail categories over the same period. Sales rose 10.8% last year, to $10.85 billion, in another category threatened by online retailing: General merchandise, which includes department stores. But department-store chains are losing the war. Many, including Macy’s, which closed its Water Tower Place store last year, are shrinking their footprints, while others, like Carson’s, have gone
BLOOMBERG
BY ALBY GALLUN
out of business. The local sales data underscore their struggles: General merchandise sales dropped 9.2% from 2007 to 2021, according to Melaniphy. The Melaniphy report also highlights the zero-sum game between grocery stores and restaurants. In 2020, as more people ate at home, sales at Chicago-area grocery stores rose 6.4%. It was only one of two categories—the other was home improvement stores—with rising sales in 2020. Sales at restaurants and bars, meanwhile, plunged 30.8%. The pendulum swung back in 2021. As more people went out to eat and drink, restaurant and bar sales rose 31.6%, to $17.80 billion; grocery sales slipped 0.4%, to $17.94 billion, according to Melaniphy. It was the only category of 10 in the report with a decline last year.
Melaniphy expects a big jump in automotive and gas sales this year, mainly due to surging gas prices. An average gallon of gas costs $4.49 in the United States today, up 37% from $3.28 at the beginning of the year, according to the U.S. Energy Information Administration. Even if motorists buy less gas, sales are likely to increase because of the price hike. Retailers and their landlords weren’t the only ones happy about the increase in sales last year. The big jump boosted sales tax collections for state and local governments, helping them balance budgets that looked precarious just a year earlier. Sales rose 38.3% in the city of Chicago, 31% in Naperville and 33.8% in Schaumburg, according to the report. “This was very good news for municipal governments,” Melaniphy said.
Could this Mag Mile high-rise turn into apartments? BY DANNY ECKER The owner of a mostly vacant Magnificent Mile office tower has put the property up for sale as a redevelopment opportunity, testing how investors feel about the future of high-rises on the renowned-but-pandemic-battered corridor. A group of investors led by New York real estate investor Samuel Schapira has hired Colliers International to sell the 24-story tower at 500 N. Michigan Ave., according to a marketing flyer for the property. There is no asking price listed, but a source familiar with the offering said the 343,000-square-foot building is expected to fetch bids of more than $110 million. The building stands to provide clues on the post-COVID future of one of the city’s most famous tourist and shopping destinations, which has seen retail vacancy jump with major chains moving out amid the public health crisis and property values plummet at Michigan Avenue staples Water Tower Place and the Shops at North Bridge.
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Colliers is framing the 54-yearold building at 500 N. Michigan Ave. as an opportunity to turn most of it into something else, suggesting the 321,000-square-foot office portion of the tower—which is nearly 70% vacant—could be repurposed with a residential, senior living, medical office or hospitality use, or some combination of them. The building includes separate low-rise and high-rise elevator banks that could serve different users. While office demand has been sluggish during the pandemic, demand for downtown apartments has recovered past pre-crisis levels, and medical office uses have become more popular on and near North Michigan Avenue with the growth of Northwestern Memorial Hospital and Lurie Children’s Hospital in neighboring Streeterville. The flyer plays up the tower’s proximity to the intersection of Michigan Avenue and the Chicago River, which in recent years emerged as the Mag Mile’s center of gravity with the redevelopment of Tribune Tower, a massive renovation of the Wrigley Building and the debut of a glassy Apple store
along the river in 2017. Schapira’s building lost a slew of small office tenants since his venture paid $86 million for the property in 2017, when about two-thirds of the building was leased. Its roughly 15,000-squarefoot floor plates were out of style for many users despite strong demand for workspace before the pandemic, and the lease-up job got even harder when the public health crisis fueled the rise of remote work and clobbered the downtown office market.
RETAIL WINS
The ownership venture had much more success with the retail space on the lower floors of the building, where it spent close to $20 million renovating and adding a new facade wrapping around the first two floors. Schapira inked a deal in 2019 with Chick-fil-A to occupy space vacated by the Purple Pig restaurant, kept Bank of America as another retail tenant and signed a deal in 2020 with shoe and apparel company Vans to open a store on the building’s northeast corner.
GOGGLE
The owner of a mostly vacant office tower is looking to cash out, offering a glimpse at what investors think of the future for pandemic-battered Michigan Avenue
500 N. Michigan Ave. is expected to fetch bids of more than $110 million. The Schapira venture refinanced the property in 2019 with a $94 million loan, according to Cook County property records. The flyer said the retail portion of the tower is fully leased with a weighted average lease term of 10 years, a measure of the tenants’ remaining lease commitments. Colliers frames that retail revenue as a source of income to help fund a repositioning of the rest of the building. Some investors have bet on the Mag Mile’s future as COVID restrictions have begun to wane. A Texas investor last month paid $94 million for the 196,000-squarefoot Neiman Marcus building at 737 N. Michigan Ave., property re-
cords show. That building was also thought to be a redevelopment candidate, but the buyer isn’t a developer and has signaled it aims to keep the property as is. Another high-rise just off the Mag Mile looking for a developer to give it a shot of life is three blocks north of Schapira’s building at 101 E. Erie St., in the shuttered Conrad Chicago hotel. The owners of that property were hit with a $70 million foreclosure lawsuit in late 2020 and have been quietly marketing the hotel to prospective buyers in an effort to resolve the dispute. Colliers’ John Homsher and Alissa Adler are marketing 500 N. Michigan Ave. on behalf of the Schapira venture.
5/27/22 2:22 PM
CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 7
Suit accuses Wintrust of racial bias in home lending BY STEVE DANIELS
Wintrust Financial is accused of systemic discrimination against Black people in mortgage lending in a lawsuit seeking class-action status filed in federal court in Chicago. The lawsuit, filed May 25, is being handled by prominent boutique civil rights firm Stowell & Friedman, which over the past two decades has won settlements in the hundreds of millions from Wall Street investment firms for alleged employment discrimination. Rosemont-based Wintrust is the second bank to be accused of racial discrimination in the mortgage business by Stowell & Friedman. San Francisco-based Wells Fargo, one of the largest mortgage lenders in the U.S., is a defendant in a class-action suit filed in February, now led by high-profile civil rights lawyer Ben Crump. Chicago-based Stowell & Friedman is co-counsel in that case. At $50.3 billion in assets and focused on community banking in the Chicago area and southern Wisconsin, Wintrust is in a different league than Wells Fargo, the nation’s fourth-largest bank, with $1.9 trillion in assets. But Wintrust is a substantial mortgage lender all the same, with a national business that originated $6.8 billion in 2021 and $8.0 billion in 2020. The plaintiff in the suit is Kathleen Bankhead, who for more than two decades was an assistant Cook County state’s attorney and then an
independent juvenile ombudsman for the Illinois Department of Juvenile Justice. The complaint alleges that Bankhead in 2020 paid Wintrust higher rates and fees for a mortgage financing the purchase of a home in a “majority-minority” neighborhood in Chicago than what Wintrust was charging “similarly situated non-African American borrowers.”
ALLEGATIONS
The lawsuit alleges Bankhead’s experience was “consistent with Wintrust’s nationwide policies and practices.” The complaint cites 2020 Home Mortgage Disclosure statistics that it says show Wintrust approved 56% of refinancing applications from Black people in that year while approving nearly 69% of applications from white people. Black homebuyers approved for loans to finance home purchases received interest rates of 3.31% compared with 3.21% for white homebuyers, according to the complaint. Wintrust charged Black homebuyers fees equal to 3.3% of their mortgage loan value in that year versus 2.9% for white homebuyers, the complaint stated. “Wintrust has created artificial, arbitrary, and unnecessary barriers to fair housing opportunities for Black and/or African American borrowers,” the complaint stated. “Wintrust’s policies have discriminatorily extracted an enormous amount of wealth out of Black and/or African American households through
higher costs, fees, and interest rates than charged to non-Black, non-African Americans.” In a statement, Wintrust responded, “While we are unable to discuss the specifics of pending litigation matters, we can say that we believe that this lawsuit is without merit and will defend ourselves vigorously against the allegations in this case. During our more than 30-year history, Wintrust and its employees have taken great pride and care to treat all of our customers equally and respectfully. It is a core value of who we are and how we do business in the numerous communities we serve.” In an email, Linda Friedman, the lead attorney, said her firm is scrutinizing the home-lending records of other banks. “Stay tuned,” she wrote. The process for class-action lawsuits like this one often is lengthy. Plaintiffs will have to surmount a likely motion to dismiss from Wintrust. Assuming the suit survives that, the biggest step in the case will be the judge’s decision on whether to certify the class of would-be plaintiffs. That can be a substantial impediment for many class actions. Once a class is certified, frequently settlement discussions will begin in earnest. Friedman has a formidable track record. She is perhaps best known for winning big-money settlements on behalf of employees of Wall Street firms like Merrill Lynch and Smith Barney. Perhaps the best known of those was the $150 million settle-
Back-alley craft cocktail bar set for Logan Square this summer
The Meadowlark will be the third establishment from the team behind Lardon and Union BY ALLY MAROTTI A back-alley cocktail bar is set to open this summer in Logan Square, completing a trifecta of restaurants in a building across the street from the California Blue Line stop. The Meadowlark, as it will be called, is the third project from the hospitality group that opened salumeria Lardon last year and neighborhood restaurant Union in March. Unlike Lardon and Union, whose entrances are on California Avenue, The Meadowlark’s door will be on the adjacent Palmer Street, tucked away near the back alley. “I’d always been intrigued by opening a cocktail bar,” said Steve Lewis, partner of the group behind the restaurants, Meadowlark Hospitality. “We’re not trying to reinvent the wheel, but just creating another immersive experience for guests when they walk in. That’s the most intriguing thing about opening a cocktail bar and doing what we can do in the back of the building. It’s a little tucked away.” The establishment will seat 30 people, half at bar seating, Lewis
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said. Some of the details are still being hashed out, but Lewis said craft cocktails will feature house-made syrups, bitters, infusions and more. Lewis hasn’t decided whether food will be part of the mix. The cocktail bar will build on what Meadowlark Hospitality has done already at Lardon and Union, but with its own distinct ethos, Lewis said. Lardon is bright and airy, with white tiles and big windows. It’s an all-day cafe serving breakfast, lunch and dinner on the weekends, but focusing on housecured charcuterie. Union is a little darker and heavier, with beams and exposed brick. Its bar is beer- and whiskey-focused, with a concise wine list and cocktails with some of those house-made bitters and ingredients, and it’s more of a nighttime spot. Meadowlark will be dimly lit and intimate, Lewis said. Guests will not be able to get there from the inside of Lardon and Union, just as guests today cannot walk between Lardon and Union without going outside. They also can’t order a Lardon charcuterie board at Union, for example.
“With all of our spaces, the premise is that each has its own identity,” Lewis said. Lewis moved to Chicago after college and worked in the finance industry. The Nebraska native jumped into hospitality in 2017 and worked for a few years as operations manager at Centennial Crafted Beer & Eatery in River North. He had an idea of the restaurant concepts he wanted to open before he found the building, which checked all his boxes. It’s over 110 years old and is in his neighborhood. Lewis lives with his family in Logan Square, and he wanted his restaurants to be neighborhood spots. Over the years, the building has housed a bakery, a laundromat, a Cuban restaurant and, most recently, diner and music venue Township. Lewis’ business partner is chef Chris Thompson. He has worked at Coda di Volpe in Lakeview and at restaurants in San Francisco and Denver. Lardon, where Thompson has built a menu full of house-cured meats, was named to the Michelin Guide’s Bib Gourmand list this spring.
JOHN R. BOEHM
Prominent Chicago civil rights law firm Stowell & Friedman is handling the case. The firm also is involved in a similar class-action suit against Wells Fargo.
ment for female employees of Smith Barney in the well-remembered case detailing the sordid “boomboom room.” In Chicago, she successfully challenged the Fire Department’s promotional exam as a form of discrimination (in this case, against white firefighters) and won $6 million in damages, as well as tens of millions more in reversals of denied promotions and pension benefits. Much of the firm’s work has focused on workplace discrimination—based on age, race or gender. Friedman says the suits alleging lending discrimination are a logical progression. “We have handled many class actions for Black advisors in the banks and mortgage loan officers,” she says. “The claims often involve steering Black advisors or mortgage loan officers by zip code to neigh-
borhoods that census data shows are not white. The data showing that customers face discrimination too is a deeper dive or an extension of the same work.” Faced with statistics on disparate home lending patterns like the ones set forth in the Wintrust lawsuit, bankers generally will respond that they originate loans they can sell to the secondary market—primarily federally chartered Fannie Mae and Freddie Mac. If potential loans don’t conform to Fannie and Freddie’s specifications, bankers say, they don’t make them—or make them on terms acceptable to the secondary market. The exception typically are larger-dollar mortgages for high-priced homes, which are called “non-conforming.” Those are held on banks’ balance sheets or sold off as parts of securities to private investors.
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5/27/22 2:23 PM
8 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
Make no little plans? This apartment landlord is.
A 41-story high-rise is out and a three-story building is in for a prime corner at Michigan and Randolph, across from Millennium Park After mulling big plans for a long-vacant site across from Millennium Park, a local landlord is now thinking small. Park Ridge-based BJB Partners for now has shelved a plan to build a 41-story residential/ hotel tower at the northeast corner of Michigan Avenue and Randolph Street. BJB instead wants to build a three-story commercial building on the parcel, according to a letter sent to owners of neighboring properties. It’s a logical location for a restaurant, given its proximity to Millennium Park and Michigan Avenue address. The site at
clude a hotel within the building. But BJB never broke ground. BJB representatives did not respond to requests for comment. The firm has filed an application with the city for a zoning change that would allow its proposed project.
OPTIONS OPEN
By constructing a small commercial building with retail and restaurant space on the parcel, BJB can generate some income from its investment and keep its options open. It could build a tower on the site in the future, or sell the property to a developer that would pay up for it. Downtown restaurants and retailers are still smarting from the coronavirus pandemic, and their A RESTAURANT WITH A ROOFTOP recovery will deTERRACE OVERLOOKING MILLENNIUM pend on how many downtown profesPARK COULD DRAW TOURISTS AND sionals return to the office after working OFFICE WORKERS DURING THE WARM from home for such a long time. It’s still MONTHS. a question without an answer. But in a shaky market, some 151 N. Michigan Ave. has been empty since 2008, when La landlords will do better than Strada Ristorante closed there others, and BJB and its brokers could have a locational advanafter 28 years in business. At the time, BJB, the owner of tage as they market the new the apartment building to the space to prospective retail and north, had teed up plans for a restaurant tenants. A restaurant skinny 185-unit multifamily with a rooftop terrace overtower on the tiny site, smaller looking Millennium Park—like than a tennis court. By 2015, it one Rosebud operates in Pruhad revised its proposal to in- dential Plaza next door—could
ALBY GALLUN
BY ALBY GALLUN
The northeast corner of Randolph and Michigan, where BJB Partners wants to put up a three-story commercial building. draw tourists and office workers during the warm months. BJB’s building to the north, Millennium Park Plaza, includes retail space leased to tenants including Protein Bar & Kitchen, Nutella Cafe, Bubblelicious Bubble Tea and Orangetheory Fitness. Founded in 1969, BJB specializes in apartments, with dozens
of properties in the Gold Coast, Lakeview, Rogers Park, Lincoln Park and Evanston. The firm paid $101 million in 2004 for Millennium Park Plaza, its biggest Chicago apartment building, with about 550 units. The property’s performance has slipped over the past couple of years. Its net operating income fell to $7.4 million,
down 39% from 2020, according to Bloomberg data. The property also didn’t generate enough cash flow to cover its $7.8 million in annual debt payments last year, the data show. Its commercial space, which includes about 85,000 square feet of office space, is 71% occupied, while the apartments are 100% occupied.
Woodlawn apartments named for housing activist who saved them “burned out and ready for demolition,” according to archived Two affordable rental build- Chicago Tribune articles, beings in Woodlawn have been fore Butler and a group she renamed in honor of the long- founded, Woodlawn East Comtime neighborhood housing ac- munity and Neighbors, or Wetivist who rehabbed them in the Can, bought it from the city for $1 and secured $2.1 million in 1990s. With a combined total of 102 grants and loans to rehab it into apartments, the buildings at 29 studio and one-bedroom units for formerly home“SHE’S BEEN A STRONG ADVOCATE FOR less people. “She made it . . . MAKING SURE THAT PEOPLE IN possible for so WOODLAWN, PARTICULARLY LOW-INCOME many people to have housPEOPLE, HAVE A PLACE GOING FORWARD.” ing,” said Venus Scott, ButBill Eager, Preservation of Affordable Housing ler’s daughter. Butler was not 6146 S. Kenwood Ave. and 6230 available for comment because S. Dorchester Ave. were rechris- of a health situation. “I’m so tened the Mattie Butler Apart- proud of what she did for peoments at a May 26 event hosted ple in Woodlawn,” Scott said. Mattie Butler is the younger by Preservation of Affordable sister of Jerry Butler, a former Housing, their present owner. In the mid-1990s, the 64- Cook County commissioner. In unit Dorchester building was 1995, he told the Tribune her
BY DENNIS RODKIN
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success with community development came in part from having a personality that was “argumentatiive, determined, compassionate. I don’t recall ever having won an argument with her.” WeCan operated the buildings as affordable rentals for two decades before Butler approached Preservation of Affordable Housing, or Poah, a nonprofit developer that has been active in Woodlawn. Butler was in her 70s and “She said, ‘I think I’m ready to not do this anymore,’ ” said Bill Eager, vice president for real estate development in the Midwest for Boston-based Poah. His group bought the two buildings for about $1.5 million and in 2019 began a round of renovations that Eager said cost about $15 million.
RENOVATIONS
The renovations included updating kitchens, baths, flooring
POAH
Mattie Butler, who rescued a pair of buildings from decay and possible demolition in the 1990s to create affordable housing, was honored with their rechristening
Signage on the 42-unit building at 6146 S. Kenwood Ave. shows the building’s new name. and climate systems, adding air conditioning where it had not been available, replacing the roofs and repairing the exteriors. The work was all done without moving tenants out, Eager said. Tenants were shuffled around to vacant units to make that possible. Of the 106 units, 93 have some sort of rental subsidy from agencies including the Chicago Housing Authority and U.S. Department of Housing & Urban Development, Eager said. Putting Butler’s name on the
two buildings acknowledges that “she’s been a strong advocate for affordable housing and making sure that people in Woodlawn, particularly low-income people, have a place going forward.” Butler’s projects also included a housing counseling center that helped low- and moderate-income people find housing and hold onto the housing they had. “She’s an icon of affordable housing,” said Felicia Dawson, vice president of strategic partnerships at Poah.
5/27/22 2:26 PM
CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 9
Brookfield-backed firm buys River North landmark BY DANNY ECKER The Arizona real estate firm that bought a Gold Coast landmark last fall has picked up another one in River North, completing a long-stalled cash-out by Chicago developer Sterling Bay. Phoenix-based Fundamental Income paid close to $30 million last week for the 34,000-squarefoot historic building at 632 N. Dearborn St., according to sources familiar with the deal. The 130-year-old Romanesque Revival building is home to the Tao Chicago restaurant and nightclub that Las Vegas-based Tao Group opened in 2018. It’s the latest in a run of bets on single-tenant buildings with long-term leases by Fundamental Income, a two-year-old venture backed by real estate investment giant Brookfield Asset Management that specializes in buying properties and leasing them back to the sellers. Such deals have been popular amid the uncertainty of the COVID-19 pandemic as sources of long-term, stable income. Fundamental Income made a similar Chicago wager in October, when it paid nearly $45 million for the historic Gold Coast building that houses Restoration
Hardware on a long-term lease. For Sterling Bay, selling the building wraps up a project it took on in 2014, when it bought the property for $11.5 million from the operator of Castle, the nightclub in the building at the time, according to Cook County property records. The building was then vacant for a few years as a joint venture of Sterling Bay’s hospitality offshoot Four Corners and Tao Group spent another $25 million transforming the former Chicago Historical Society building into Tao Chicago, which opened in 2018.
LEASE TERMS
Tao Group owner Madison Square Garden inked a 20-year deal at the time with no termination or contraction options to operate the restaurant and pay rent to the building’s owner through September 2038, according to marketing materials from Cushman & Wakefield, which brokered the sale. The Tao brand’s cachet attracted Fundamental Income, which saw the purchase as “a really good opportunity to be in a property that we think will be successful,” said Alexi Panagiotakopoulos, the firm’s chief investment offi-
cer. “Obviously there have been COVID impacts on restaurants and entertainment as a whole, but in a post-COVID world, operators like Tao and experiential assets like this are going to thrive.” Fundamental Income has been aggressive with sale-leaseback deals since its April 2020 inception, picking up more than $600 million in assets, according to Panagiotakopoulos. Such long-term, single-tenant properties—known as net lease deals in real estate parlance— have recently encountered a big enemy in inflation, which has reduced the value of the longterm rents that landlords locked in. That’s historically a risk of net lease deals, as well as the possibility that the tenants could fold and leave landlords with big empty properties. Panagiotakopoulos acknowledged the inflation headwind, but said his firm has been especially careful not to lock in leases with rents that rise too slowly, while others that have flocked to the sale-leaseback sector over the past 24 months have. “A lot of people are buying real estate in a net lease space that maybe they don’t truly understand.” Financial details of Tao’s lease
COSTAR GROUP
The real estate investor that recently bought the home of Restoration Hardware has purchased the historic building that once held Limelight
Tao Chicago at 632 N. Dearborn St. are unclear, but the deal comes with 6% escalations in rent every three years, according to Cushman. The property at the northwest corner of Dearborn and Ontario streets also benefits from a Class L property tax designation that Sterling Bay won for refurbishing a Chicago landmark. The incentive reduced the owner’s property taxes by $2.5 million over a 12-year period. Sterling Bay initially put the building up for sale in 2018 shortly after the restaurant opened and had a deal lined up to sell it in early 2020, but that fell apart with
the onset of the pandemic, according to a source familiar with the property. The developer, which built its reputation in Chicago by redeveloping vintage properties, has been unloading properties tied to the hospitality sector during the pandemic. Other Sterling Bay ventures recently sold the Talbott Hotel in the Gold Coast and the former Ace Hotel in the Fulton Market District. Cushman & Wakefield Managing Director Michael Marks marketed the Tao Chicago property on behalf of Sterling Bay.
Benesch is pleased to announce that Manish K. Mehta has been named Partner-in-Charge of the Chicago Office Manish joined Benesch in 2017 and is a Partner in the firm’s Intellectual Property Litigation Practice Group. As Partner-in-Charge, Manish will focus on maintaining the strong culture of Benesch’s Chicago team, as well as supporting continued growth, the integration of new talent and further enhancement of the firm’s brand and reputation in the Chicago market. Manish focuses his practice on intellectual property litigation, post-grant reviews, patent prosecution and counseling. He is responsible for developing, creating, and managing IP portfolios for his clients across a variety of industries. “Manish has consistently demonstrated strong leadership skills and I’m confident he will continue to drive the success of our Chicago office as Partner-in-Charge,” said Gregg Eisenberg, Managing Partner.
www.beneschlaw.com Since launching its Chicago office with just two partners in 2016, Benesch has quickly established itself as a powerhouse in the region and the office is now home to nearly 100 attorneys, almost all of whom are lateral hires who left larger, more established firms in order to become part of Benesch’s bold, vibrant culture. Chicago Lawyer recently announced that Benesch has had the largest growth percentage in the city over the past five years, at 211%.
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5/27/22 2:27 PM
10 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
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EDITORIAL
A dispiriting reality: Teens killing teens
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n any warm-weather Monday, a glance at the newspaper provides a sobering catalog of gun violence that killed or maimed young people over the weekend just past. There’s the 17-year-old boy shot and killed while standing near a sidewalk around 7:30 p.m. on a recent Friday evening in May on the 6900 block of South Ada Street. There’s the two teenage boys— one 16, one 13—hospitalized after being shot while walking down the 7700 block of South Essex Avenue at about 4 p.m. on a recent Sunday afternoon. And there’s the 16-year-old girl who died days after being shot in the head on the 4300 block of West Adams Street around 7 p.m. on a recent Friday. The Monday morning police blotter of course doesn’t account for the number of shootings that take place on every other day of the week, in nearly every other neighborhood of the city, involving victims of all ages. And it of course also doesn’t account for several of the more headline-grabbing incidents that have taken place since the temperatures started to creep up, inspiring young people to take to the streets presumably to enjoy the first glimmers of summer. There was the shooting by The Bean in Millennium Park, of course—the one that claimed the life of a 16-year-old boy on a Saturday evening in May. And then there was the Thursday night shooting near a notorious trouble spot at Chicago Avenue and State Street, an altercation in which two young people were killed and seven were wounded. But the Monday shooting roundups underscore a few especially troubling aspects of what’s shaping up to be another
summer of seemingly random mayhem in Chicago: Weekends are a particularly dangerous time. And, when the bullets fly, the victims are often very young—and, often, so are the shooters. Kids shooting kids. As The Wall Street Journal pointed out recently in an editorial that furthered Chicago’s national image for violence, more than 100 children have been shot so far this year in the city. We should note, of course, that the citywide murder rate overall is down 9% so far compared to this
time last year, according to Chicago Police Department statistics. But that won’t be much comfort to loved ones of the 224 people shot and killed in Chicago this year as of this writing, nor to the 942 shot and wounded so far. The really dispiriting thing, though, is the age of the people involved in many of these incidents. So many teenagers. The newspaper tallies offer only a surface glimpse of the problem. Just beneath that surface is a story of diminished hopes, thwarted ambitions, limited opportuni-
ties, failed education, few constructive social outlets and a sense of utter futility. How can this community undo that deeper damage? That’s the ultimate challenge of our time. We can’t have swarms of teenagers roving hundreds-strong and causing havoc for themselves and others; we can’t have young people settling street-corner disputes at the point of a gun; we can’t have residents feel unsafe sitting on their front stoop or strolling to the store, not only for all the economic ABSOLUTELY NO and optical reasons we often cite—it’s ONE WANTS TO bad for business, it LIVE THIS WAY. damages Chicago’s reputation and so on—but because absolutely no one wants to live this way. So far, the Lightfoot administration has not articulated a coherent plan to curb the violence that’s percolating in the runup to this Memorial Day weekend. The citywide curfew enacted after the recent Millennium Park incidents have the feel of a Band-Aid applied to a gaping wound, serving mainly to criminalize youth and to give a sense that the administration is doing something—anything. But does anyone honestly think this measure will put a significant dent in the problem? Do the mayor and her police chief have any other strategy in mind to anticipate where violence is likely to flare up and, perhaps more important, to get more police officers onto the streets where they’re needed most? Sadly, the answers to these questions will likely come in the next batch of Monday morning crime reports over what is historically a bloody weekend, Memorial Day.
YOUR VIEW
B
and passing or killing legislation—for cash and clout. Most of the highest rollers get away with their schemes until one or more bit players wronged by the power broker, incensed by his or her venality, or under pressure from the feds for their own alleged misdeeds, drops a dime or becomes an informant—a wiretap facilitator. The feds recruited deal-making miscreants as moles to reel in corrupt Chicago aldermen in the 1980s; angry office employees turned on then-Illinois Secretary of State George Ryan in the ’90s; a “loyal” insider tipped off the feds to then-Gov. Rod Blagojevich’s shakedown schemes in the early 2000s; and an unlikely snitch or two helped the feds indict two previously bulletproof kingmakers: Chicago Ald. Ed Burke and the ultimate untouchable, Michael Madigan.
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Mike Madigan: Untouchable—until he wasn’t messes up occasionally. And asketball legend Michael teammates, mostly inadverJordan threw up an occatently but sometimes intentionsional air ball. Quarterally, facilitate the stumble. back extraordinaire Tom Brady In sports, it means an occatossed an occasional intersional loss or embarrassment. ception. Hockey great Wayne In business or entertainment, Gretzky missed an occasional an occasional flop. Painful but empty net. And political powergenerally overcome, sooner or house Michael J. Madigan—the former Illinois House speaker, Andy Shaw covered later. In politics, however, when state Democratic Party chair- politics for WLSmessing up involves corrupman and Chicago’s 13th Ward TV/Channel 7, tion—violating federal law—it boss—finally, after decades of led the Better usually lands the offender in pitch-perfect and impenetrable Government prison jumpsuits. And the road opportunism, allegedly said in- Association and criminating things to the wrong chairs the Change to perdition begins with the sad, decades-long reality of perverse confidants during phone and Illinois Action Chicago and Illinois’ politics: in-person conversations that Fund board. Too many elected officials ilwere secretly recorded. The moral of the story: Even a GOAT—a legally using their offices to accumulate Greatest Of All Time, best at whatever his wealth, power or both by trading official or her chosen pursuit happened to be— actions—doling out jobs and contracts,
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Burke and Madigan accumulated an enormous amount of political power over their city and state fiefdoms, and that enabled them to amass millions for themselves and their law firms by using clout, connections and nonexistent conflict-of-interest rules to help wealthy clients save even more millions of their own property tax dollars. Nabbing Burke for allegedly discussing a Southwest Side shakedown scheme in a wiretapped conversation about a zoning permit in exchange for law firm business was surprising, given his ability over the years to maintain the loyalty of subordinates and the privacy of conversations. But if “surprising” is the right word for the fallout from his potentially incriminating choice of words on a federal wiretap, Madigan’s fall from grace was a high-voltage shock—a veritable
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5/27/22 2:31 PM
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YOUR VIEW Continued jaw-dropper akin to M.J. missing a game-winning slam dunk. Madigan was the epitome of discretion over the years—arguably paranoid and preternaturally cautious in his exercise of unrivaled influence over all state and some city business and legislation. He didn’t use email or a cellphone, he talked in code, even to close associates, and he let underlings do most of his dirty work. But his uncharacteristically inept handling of an inner-circle sex abuse scandal raised questions about his invincibility; the unexpected willingness of a powerful former Chicago alderman and close political ally to save his own hide by wiretapping phone conversations; and his
close connection to a burgeoning Commonwealth Edison corruption scandal, which may have produced another cooperating defendant, created a perfect storm for federal prosecutors to build a strong corruption case. Recent disclosures of titillating phone conversations between Madigan and his indicted longtime confidant Mike McClain, following earlier eye-opening revelations of his chats with alderman turned snitch Danny Solis, offer a rare glimpse into the mechanics of Madigan’s allegedly corrupt quid pro quo maneuvers. And the irony, for longtime political reporters who covered the Madigan political empire for decades, is that we
wrote and broadcast ad nauseam about the inner workings of the city, county and state’s corrupt transactional political system, and how Madigan appeared to be gaming it. But we didn’t have whistleblowers or wiretaps to confirm our observations. The feds apparently did, and the upcoming trials of Team Madigan will entice other defendants to consider dropping dimes on the boss and empower pundits eager to pontificate on the final chapter in the storied career of the country’s longest-serving and most powerful House speaker. Enigmatic. Inscrutable. And apparently infallible Michael J. Madigan. Until, like everyone else, he wasn’t.
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CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 11
Mike Madigan
CRAIN’S CHICAGO BUSINESS
President/CEO KC Crain Group publisher/executive editor Jim Kirk Editor Ann Dwyer Creative director Thomas J. Linden Director of audience and engagement Elizabeth Couch Assistant managing editor/audience engagement Aly Brumback Assistant managing editor/columnist Joe Cahill Assistant managing editor/digital Ann R. Weiler Assistant managing editor/news features Cassandra West Deputy digital editor Todd J. Behme Deputy digital editor/audience and social media Robert Garcia Digital design editor Jason McGregor Associate creative director Karen Freese Zane Art director Joanna Metzger Copy chief Scott Williams Copy editor Tanya Meyer Contributing editor Jan Parr Political columnist Greg Hinz Senior reporters Steve Daniels, Alby Gallun, John Pletz Reporters Elyssa Cherney, Katherine Davis, Danny Ecker, Corli Jay, Ally Marotti, A.D. Quig, Dennis Rodkin, Steven R. Strahler Contributing photographer John R. Boehm Researcher Sophie H. Rodgers Senior vice president of sales Susan Jacobs Vice president, product Kevin Skaggs Sales director Sarah Chow Director of research Frank Sennett Events manager/account executive Christine Rozmanich Marketing manager Cody Smith Production manager David Adair Events specialist Kaari Kafer Custom content coordinator Ashley Maahs Account executives Claudia Hippel, Bridget Sevcik, Laura Warren, Courtney Rush, Amy Skarnulis Sales assistant Brittany Brown People on the Move manager Debora Stein Digital designer Christine Balch
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PEOPLE ON THE MOVE
Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com
ACCOUNTING / CONSULTING
BANKING / FINANCE
EDUCATION
LAW
LAW
John Kasperek Co., Inc., Mokena / Calumet City
Amalgamated Bank of Chicago, Chicago
George M. Pullman Educational Foundation, Chicago
Levenfeld Pearlstein, LLC, Chicago
Thompson Hine, Chicago
Corey Burbridge, CPA, of Chicago, joins John Kasperek Co., Inc. as a Senior Associate with more than 15 years’ experience in nonprofit accounting, accounting systems design and maintenance, and internal controls design, implementation and testing. Burbridge earned his M.S. in Accountancy from DePaul University and his B.S. in Computer Science from Truman State University. This highly technical education contributes to Burbridge’s expertise in mastering multiple accounting and evaluation systems.
Amalgamated Bank of Chicago (ABOC) is proud to announce the return of Cherie Duve as Senior Vice President and General Counsel! Cherie previously worked in ABOC’s Trust Department for 10 years in an Associate General Counsel role which was followed by a period with Wells Fargo/Computershare. ABOC is committed to growing our talent to better serve the Chicagoland community and also in investing in the career growth of women in the financial services industry. Welcome back to ABOC, Cherie!
Eric Delli Bovi joins the George M. Pullman Educational Foundation as its Executive Director. Eric brings 20+ years of nonprofit leadership experience with a record of implementing numerous successful innovation and growth strategies. Eric will lead the Pullman Foundation’s initiatives to support the dreams and aspirations of outstanding high school seniors from Cook County with merit-based, need-based college scholarships. Eric earned his MA at DePaul University and his BA at Ithaca College.
LP is honored to welcome Rasha Elganzouri Gad as a partner in the firm’s Real Estate Group. Rasha has significant experience handling complex commercial real estate transactions among many asset classes, including office, retail, hotel, shopping center, health care, industrial, data centers, multifamily and mixed-use projects. She also has particular experience in hotel acquisition, development, and management and cross-border commercial transactions.
Eric Zelepugas joins the firm’s Intellectual Property group, focusing on patent litigation, post-grant proceedings and patent prosecution. He has extensive experience with inter partes review, district court patent litigation, managing client portfolios, and prepping and prosecuting numerous patent, trademark and copyright applications. Eric has worked with a wide variety of technologies in the fields of computer, electrical, mechanical, and civil engineering, and computer and material sciences.
LAW Levenfeld Pearlstein, LLC, Chicago
ARCHITECTURE / DESIGN KTGY Simeone Deary Design Group, Chicago Stefanie Hajer joins KTGY SDDG as Creative Director of the firm’s global and domestic branding discipline. An experiential graphic design leader with expertise in customer journey analysis, branded environments and retail strategy, Stefanie structures creative collaborations with inspiration, trust and success. Previously with Niven, CallisonRTKL, & Upshot, Stefanie’s refined, strategy-driven approach delivers precise and impactful solutions to create brand identities and evolve brand stories.
BANKING / FINANCE J.P. Morgan Private Bank, Winnetka John Eichelberger has joined J.P. Morgan Private Bank as a Vice President and Banker in Chicago. John works closely with high-net-worth individuals and families, corporate executives and business owners. He delivers personalized approaches and exceptional service to his clients. John understands the priorities of highperforming individuals and brings an insightful perspective as a former professional athlete. Most recently, John joins us from Merrill Lynch where he held a Wealth Advisor role.
ARCHITECTURE / DESIGN
CONSULTING
Partners by Design, Chicago
Proxima, Chicago
Through his dedication to his craft, his continuous contributions to the profession, and his commitment to our firm, we are pleased to announce the promotion of Joseph “Buzz” Leffelman to Partner. With 14 years of diversified industry experience, including 7 at Partners by Design, Buzz, PBD’s Director of Architecture, has made tremendous strides in enhancing our studio’s design and technical capabilities, furthering internal mentoring efforts, and reinforcing PBD’s position as a design industry leader.
Patrick Hoffmann joins Proxima as Senior Vice President where he advances new business and endeavors for supply chain strategy, cost reduction and transformation. He addresses market challenges, resiliency and decarbonization efforts across industries such as banking and healthcare. He has experience in advanced digital transformation solutions, M&A and strategic sourcing. He holds an MBA from the Thunderbird School of Global Management and is a member of the Sustainable Procurement Pledge.
BANKING Capital One, Chicago Capital One welcomes Paulina Sihakom as Vice President and Senior Business Banker in Chicago, where she will focus on developing relationships with clients to advise on personalized cash flow solutions. She joins from PNC Bank, where she was a business banker for nearly two decades. Paulina also actively helps minority-owned business communities revitalize their neighborhoods as a Lao-American Association of Northern Illinois board member. She lives in Illinois with her husband and children.
LAW Bernstein Law Firm, LLC, Chicago The Bernstein Law Firm is pleased to announce Andrew Fraerman has been promoted to partner. Andrew joined the firm in December 2016, after several years at DLA Piper and the City. Andrew has impressed clients, opposing counsel and jurists with his creativity and persuasive writing style. His gifts have resulted in many notable successes, including a dismissal of a multi-million dollar RICO claim in Federal Court, and successful discrimination settlements through the ND trial bar program.
LAW Bernstein Law Firm, LLC, Chicago The Bernstein Law Firm is pleased to announce James Trail has been promoted to partner. James joined the law firm in August, 2011, and has been integral to the firm’s growth. James stealthily matured from law clerk to a trial and appellate attorney amassing victories in State and Federal courts. Among his notable achievements are the entry of a $30 million court order authorizing the sale of over 50 different companies, and multiple appellate court victories.
CONSUMER PRODUCTS Jelmar, LLC, Chicago Jelmar, LLC, known for its CLR® (pronounced CleaR) and Tarn-X® brands, is excited to announce the hiring of Sarah Chadwick, Chief of Sales. Chadwick will lead all retail sales efforts for Jelmar, including developing new strategies and managing business goals. In Chadwick’s over twenty years of experience in the CPG industry she has held multiple positions in Brand Marketing, Customer Marketing and Sales Account Leadership and has a proven track record of delivering sales and growth.
LAW Ice Miller LLP, Chicago Ice Miller partner Reena Bajowala was recently named Practice Group Chair of the firm’s Data Security & Privacy Practice Group. A Certified Information Privacy Technologist (CIPT), a Certified Information Privacy Professional – US (CIPP/US) and a Certified Information Privacy Manager (CIPM), Reena has deep experience with data security, information technology and privacy law issues.
LP welcomes Grant Hendricks as a partner in the Trusts and Estates Group. Grant will focus on estate and gift tax planning, wealth transfer strategies, asset protection and charitable planning and formation. LP is honored to add Grant to this growing team.
LAW
NON-PROFIT Museum of Contemporary Art Chicago, Chicago MCA Chicago appoints Nina M. Yung as its new Director of Development. Ms. Yung joined the MCA in 2018 as Director of Individual Giving and Major Gifts where she played a key role in implementing collaborative partnerships to develop fundraising opportunities for programs. As the new Director of Development, Ms. Yung is responsible for the planning, management and success of the MCA’s fundraising and membership strategies in pursuit of advancing strategic and institutional priorities.
Levenfeld Pearlstein, LLC, Chicago Nancy Lieberman joins LP as a partner in the firm’s Corporate group. Her practice focuses on mergers and acquisitions and other corporate transactions. She has extensive industry experience in the accounting industry, though she has represented clients in various other industries, including manufacturing, distribution, franchising, and software. Over the course of her career, she has completed over 100 transactions valued at over $1 billion across several states and in eight countries.
LAW Lorium Law, Chicago Lorium Law, a leader in corporate transactions, restructuring, and litigation practices, welcomes Qasim Rashid to its Chicago team. Rashid brings a wealth of experience in business litigation, non-profits, civil rights, business and media consulting. His client roster has included financial institutions, business executives, non-profits, incarcerated citizens, undocumented immigrants, and elected officials. Rashid also hosts The Qasim Rashid Show on SiriusXM.
To order frames or plaques of profiles contact Lauren Melesio at lmelesio@crain.com or 212-210-0707
REAL ESTATE Bridge Industrial, Chicago Bridge Industrial promotes Cory Welper to Director, Acquisitions. In this role, Welper will head the pursuit of new leads, manage broker relationships, and underwrite acquisitions in Chicago and South Florida, which comprise Bridge’s Central region. Since joining Bridge in 2020, he has been involved in 22.2 million square feet of successful transactions across the U.S. and London, valued at $4.1 billion. Welper is also the Vice President of the Associate Board of Habitat for Humanity Chicago.
REAL ESTATE DMG, Chicago Gerry Ostergard is the Chief Financial Officer at DMG. Gerry has more than 30 years of experience and previously served as CFO for Foresite Realty Partners, as a Controller for AMLI and as a Controller for Trizec Properties. He also has audit experience with Ernst and Young.
CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 13
EVOLVING POLICIES: How Chicago has dealt with a population living without shelter. PAGE 14 SPACE TO FILL: Formerly homeless make withdrawals from Chicago Furniture Bank. PAGE 16
INTERRUPTING HOMELESSNESS During the height of the pandemic, creative and innovative assistance for people living on the margins and on the streets in Chicago increased. But will it last and make a material difference? I BY STEVE HENDERSHOT
FIND THE COMPLETE SERIES ONLINE
ChicagoBusiness.com/CrainsForum
T
he pandemic could have been a horror story for Chicago’s homeless population. Many of the city’s 3,000 shelter beds sat in cramped, communal spaces. Comorbidities were practically a given. And some of the unhoused resisted the notion of taking precautions. But something interesting happened on the way to unmitigated disaster. The area’s constellation of homelessness-focused nonprofits and governmental agencies banded together and got creative to serve the city’s homeless population—a little more than 20,000 people access homeless services each year, a number that’s held steady over the course of the pandemic. The emergency pandemic efforts succeeded not only in mitigat-
GEOFFREY BLACK
HOMELESSNESS
FORCED OUTSIDE: Broken housing market leaves people vulnerable. PAGE 21
ing COVID-related deaths, but also improved overall health care among homeless people and sped up the time required for rehousing. “We took a terrible thing and had something great come out of it,” says Nicole Richardson, vice president of clinical operations at Thresholds, a Chicago-based nonprofit that serves people struggling with substance abuse and mental-health disorders, including those who are homeless. “If we could continue to operate in this way collectively, I think it could really impact homelessness in Chicago in the long term.” That’s the challenge now: As emergency government funding dries up and an era See INTERRUPTING on Page 18
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14 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
HOMELESSNESS Pandemic pushed Chicago to redouble its efforts Facing a health crisis, the city saw that it needed to stay nimble in implementing strategies that assist those who are homeless
At the policy level, Chicago has tried to tackle homelessness with a sense of urgency since 2001, when the city devised its “Getting Housed, Staying Housed” plan. Eleven years later, when that plan was set to end, former Mayor Rahm Emanuel proposed “Chicago’s Plan 2.0: A Home for Everyone,” a sevenyear plan with seven priorities designed to improve access to housing and services, end youth homelessness and help more people secure employment. Advocates with the Chicago Coalition for the Homeless, or CCH, say Emanuel’s plan was needed because the city didn’t commit the necessary resources to the first plan. The 2.0 plan’s last progress report, released in April 2017 in a chart-filled document, showed a 13% decrease in homelessness over the previous two years. But it is difficult to get a handle on just how many people in Chicago are homeless because so many factors are at play, advocates say. Contrary to what city reports proclaim, the count didn’t actually go down because it doesn’t reflect different populations, says Julie Dworkin, director of policy at CCH, which has pushed for permanent solutions to homelessness since 1980. Public school students make up one of those populations. “The Chicago Public Schools numbers went up for many years. (Numbers) took a big dip during the pandemic when students were working remotely, but now they’re up at pre-pandemic levels,” Dworkin says. “So there hasn’t really been a decline in terms of students experiencing homelessness.” A July 2021 study by University of Chicago Inclusive Economy Lab looked at student homelessness. “In Chicago alone, nearly 18,000 students lack a stable place to call home,” the authors wrote, and of those students experiencing homelessness, 85% identify as Black.
ASSESSMENTS
Another measure of homelessness, the Point-in-Time, or PIT, count, annually assesses sheltered and unsheltered people experiencing homelessness at one moment in time. Although the U.S. Department of Housing & Urban Development requires a count every two years to determine federal funding, the Chicago Department of Family & Support Services in 2013 implemented yearly counts for the city. Housing advocates have called that count inaccurate, too. “HUD has a much narrower view of homelessness, and the PIT count dramatically undercounts homelessness while pointing to the wrong policy solutions,” Dworkin says. In 2019, the PIT count showed 5,290 people in Chicago experiencing homelessness, while
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GEOFFREY BLACK
BY CORLI JAY
Harry Williams has been on a Chicago Housing Authority waitlist since November. “They didn’t tell me that the waiting list was like a 10-year waiting list,” he says.
“THE CITY RECEIVED MILLIONS OF DOLLARS FOR COVID RELIEF. . . . BUT THOSE SUBSIDIES ARE GOING TO RUN OUT AT SOME POINT.” Molly Brown, director of the Homelessness Advocacy, Research & Collaboration Lab
the coalition estimated the homeless population to be 58,273. Brandie Knazze, DFSS commissioner, admits that PIT doesn’t show the actual number of homeless people. “That’s one point in time. That’s one metric,” she says. “That’s why there’s that difference, but we have to follow the guidelines of our funder (HUD) in order to provide services for the city.” In 2021, about a year into the pandemic, PIT tabulated 4,477 Chicago residents experiencing homelessness. The city attributed the decrease since 2019 to Gov. J.B. Pritzker’s eviction moratorium during the early part of the pandemic and economic stimulus payments that increased housing and homeless prevention resources. The city has yet to release 2022 PIT data. The pandemic did push many Chicagoans into homelessness, but
HOW MANY PEOPLE ARE HOMELESS IN CHICAGO? Determining how many people in Chicago are unsheltered is easier said than done. Chicago’s annual Point-in-Time analysis offers the most recent data available, but a look at data from 2019 shows it may dramatically undercount people compared with data from the Chicago Coalition for the Homeless. 2021 Point-in-Time
4,477
2019 Point-in-Time
5,290
2019 Chicago Coalition for the Homeless
58,273
Source: Chicago Coalition for the Homeless
just how many is still unknown, Dworkin says. To speed up getting more people permanently housed, advocates have sought an ordinance that would require the Chicago Housing Authority to fill more of its vacant units. Some of those units could be filled by those experiencing homelessness. But the waitlist is long. Harry Williams is one of those people. He has been on a CHA waitlist since November. Getting housed is one of the most difficult challenges he has faced. “They didn’t tell me that the waiting list was like a 10-year waiting list,” he says.
FUNDING
As the pandemic dragged on, Chicago began putting more funding toward homelessness. In September 2021, Mayor Lori Lightfoot and DFSS announced
that more than $35 million in CARES Act funding and $1.3 million from Chicago Funders Together to End Homelessness would go to the Expedited Housing Initiative, a homeless intervention program aimed at connecting residents experiencing homelessness to available rental subsidies and units by removing barriers, such as income verification, and other limitations that can impede expeditious placement. In total, Chicago allocated $117 million for homeless support services in the city’s 2021 recovery plan. To further aid those affected by COVID-19, Lightfoot backed the Chicago Resilient Communities Pilot. Under the cash assistance program, 5,000 low-income Chicagoans will receive $500 in monthly installments for one year to use as they wish. Lightfoot supported the pilot program after seeing the im-
pact that federal payments, received at the height of the pandemic, had on those living in poverty. The city’s efforts are only temporary and should focus on more permanent solutions, says Molly Brown, associate professor of clinical community psychology at DePaul University and director for the Homelessness Advocacy, Research & Collaboration Lab. “The city received millions of dollars for COVID relief, and they used that money predominantly to fund a rapid rehousing-type housing model, where people were being placed in apartments and given temporary rent subsidies,” Brown says. “But those subsidies are going to run out at some point, and then folks are going to have to be able to financially sustain themselves independently. And the problem with that is that the forces of poverty don’t go away.”
5/27/22 1:51 PM
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HOMELESSNESS Withdrawals from this bank furnish much-needed homes
N
AD
BY STEVE HENDERSHOT When Brian Evans turned the key to his new Rogers Park apartment on the day after Thanksgiving, it marked a turning point in his journey back from rock bottom. Evans spent most of 2021 on the street, weathering the winter in a Millennium Park parking garage. He bounced around the Loop for the next several months, including a summertime stint in Millennium Park before he had to clear out during the run-up to Lollapalooza. He was living under the raised tracks at Lake and Clinton streets when he learned he’d finally been approved for his new Far North Side home. “I’m not an animal. Animals can live outside, but I can’t,” Evans says. But there was a catch on move-in day: The place had no furniture. For months, Evans slept on the floor. For years, that sort of slow, awkward transition plagued Chicagoarea rehousing efforts. But in 2018, the city received a jolt of support from an unlikely source: a pair of graduates from the Wharton School of the University of Pennsylvania. Griffin Amdur and Andrew Witherspoon won a social-enterprise business plan competition at the school
for their vision to create a furniture bank in Chicago following the model of a similar organization in Philadelphia. Their research showed an abundance of used furniture was tossed each year, rather than reused—from hotels, universities, corporations and private homes. After graduation, armed with $200,000 in prize money, the pair moved to Chicago and created the Chicago Furniture Bank. For Amdur, 26, a Francis W. Parker School alumnus, it was a return home; Witherspoon, 27, is a St. Louis native. They rented 4,000 square feet in a warehouse in North Lawndale, gathered letters of support from housing nonprofits attesting to the need for furniture, then took those letters to estate-sale companies and corporate decommission agencies, asking for donations. Those organizations were wary of volunteer groups that aren’t “as professional as they need when they’re doing major renovations with lots of subcontractors and a tight timeline,” says Amdur. So he and Witherspoon tailored their facility and operation to ensure it met their partners’ standards. The Chicago Furniture Bank’s capability to quickly load and unload
GEOFFREY BLACK
An idea conceived by two business school grads provides daily necessities for those settling into homes of their own
Griffin Amdur, left, and Andrew Witherspoon are founders of the Chicago Furniture Bank. multiple semi-trucks full of couches, dressers and armoires is one of the features that separates it from smaller outfits around the country. By uniting those with a supply of furniture with those who needed it, Amdur and Witherspoon built a classic, two-sided market—the stuff of Silicon Valley-backed startups such as Uber, Grubhub and Groupon. Except that the “demand” side of the market consisted of homeless people, a group not routinely targeted by the venture-capital crowd. “I’m still a banker, just not an investment banker,” Witherspoon says. The Chicago Furniture Bank furnished 232 homes in 2018, then 1,400 the following year and 2,100 in 2020. In 2021, the Chicago Furniture Bank furnished 3,300 homes. That year, Witherspoon and Amdur also launched a second nonprofit, Honest Junk, which cleans out furniture and other unwanted items for
$1.80 per cubic foot, diverting usable items to charity partners—including the Chicago Furniture Bank. This year, the Chicago Furniture Bank is on pace to reach 4,000 clients. Amdur believes it is now the country’s largest furniture bank— quite a transition for a city that had no such service at all five years ago. Revenue from Honest Junk, along with the flat $50 fee that referring agencies pay for furniture and delivery, covered about 90% of the Chicago Furniture Bank’s $5.5 million operating budget last year; the remainder came from private fundraising. The organization now operates three warehouses with 70,000 square feet and has a staff of 55. After four years of full-time work, Amdur and Witherspoon are preparing to transition toward more typical Wharton-grad careers. They’re in the process of hiring an executive director for the Chicago Furniture Bank and plan to remain
as directors on its board. “This is always going to be in our blood,” Witherspoon says. “We’ll just be helping lead it from a little higher up.” Case workers previously accustomed to placing people in empty homes say the Chicago Furniture Bank has made a tangible impact on their work and on their clients’ lives. Touring the Chicago Furniture Bank’s cavernous showroom in Brighton Park with a client can be an emotional experience. “One man was so excited, he actually cried. He said he could not believe that this was happening for him,” says Sherri Allen-Reeves, associate director of Matthew House, a daytime shelter in Bronzeville that helps unhoused people transition to permanent housing. “I just applaud those young men who had the vision, the forethought, the will, the tenacity and the joy of doing this work.”
Housing instability weighs on Chicagoans’ minds A plurality worry about being able to afford a place to live, along with economic inequality and not having a home at all Harris Poll survey of Chicagoans, pluralities see economIn the face of an uncertain pres- ic inequality (46%), affordable ent, Chicagoans still remain opti- housing (50%) and homelessness (54%) as worse here mistic about the city’s than elsewhere. economic direction— It’s worth noting that except when it comes in many cases, realito their and their neighty doesn’t line up with bors’ living situations. locals’ views. Chicago Like the rest of the doesn’t appear on “most U.S., the Windy City expensive” or “least afis recovering from the fordable” national surCOVID-19 pandemic’s veys, for example, or battering, and the reamong the cities with sulting financial, men- William Johnson the worst homelessness. tal health and crime is CEO of The Har(Government estimates problems and, now, ris Poll, a global show that Chicago’s soaring inflation. But public opinion, homeless population gauging what people market research decreased by 16% from anticipate down the and strategy firm. 2020 to 2021 levels, alroad after these storms though housing advohave passed helps to arrive at their underlying concerns. cates are skeptical that the improveOur survey data shows that Chica- ment is genuine, owing to COVID goans are worried about housing protocols altering data collection instability and its constituent is- procedures in 2021, among other sues, affordability and homeless- factors.) In several areas, those who exness. Overall, according to a recent pect improvement outnumber
HARRIS POLL ON HOMELESSNESS
BY WILLIAM JOHNSON
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Chicagoans were asked to share their views on homelessness. How does homelessness in Chicago compare to other cities in the U.S.?
those who foresee backsliding. A plurality, 44%, said that the postCOVID economic recovery will be better in five years, while 25% expect it will be the same and merely 19% worse. This economic optimism doesn’t extend to housing. More Chicagoans expect the affordable housing situation to worsen (33%) than improve (21%), with 39% seeing no change. More than twice as many locals see homelessness worsening rather than improving (36% vs. 17%), with 39% expecting more of the same. Those fears are rooted in current experience. A majority (52%) of Chicagoans say that they cannot afford to buy in their current neighborhood. More than 2 in 5 locals (42%) are spending more than 30% of
Better
17%
7%
About the same
33%
Worse Not at all sure
Five years from now, will Chicago homelessness be:
39% 54%
6%
36% 8%
Source: Harris Poll
their income on their home (that’s the threshold for classifying whether housing is affordable)— and that percentage worsens in lower income brackets, rising to nearly 3 in 5 of those making under $50,000. Nearly 1 in 4 say that their personal housing situation is unstable, meaning that they lack permanent housing or are behind on their monthly payments. That stat also gets worse lower down the income scale, hitting 31% of households with incomes between $25,000 and $50,000 and
40% in those making less money. This is a reminder that a thriving city must be affordable for all of its citizens—and it establishes a goal for which our local leaders can aim. Nearly two in three residents identify housing insecurity as a public health issue impacting Chicago, situating it behind only COVID (79%), public safety (70%) and mental illness (69%). And 2 in 3 Chicagoans said that city government is not doing enough to address homelessness in the city.
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CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 17
No easy solutions for tackling such a multifaceted issue
GEOFFREY BLACK
BY CORLI JAY
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Molly Brown, Ph.D., is director of the Homelessness Advocacy Research & Collaboration Lab and associate professor of clinicalcommunity psychology at DePaul University. Brown became interested in homelessness research after graduating from college, first working for a homelessness service organization in Seattle. While there, she came to understand the scope of the issue and witness some evidence-based solutions to addressing homelessness. At DePaul, Brown engages in community partnerships to address issues and gaps within homelessness services. This interview has been edited for length and clarity. CRAIN’S: How does your position as both the HRC lab director and an associate professor intersect on the issue of homelessness? BROWN: In our lab, we engage in community-engaged or community-collaborative types of research projects. So typically, it
MOLLY BROWN
will be an organization or homelessness service provider that has identified an issue within their services that they’re interested in addressing and learning more about and getting some recommendations for how to improve services and how to advocate for certain needs. Share an example of a project you have done. We have partnered over the past few years with an organization called One Northside. They’re an advocacy organization. One of their arms of advocacy is around the preservation of single room occupancy housing. This is a form of
affordable housing that is accessible financially for people who are economically marginalized. Unfortunately, these buildings are essentially being bought up by luxury developers, and then folks don’t have a lot of places to go when they get displaced from their housing, because there aren’t very many affordable units at that level within the city of Chicago. So we’re working with One Northside to get some narratives of folks who have been displaced from their single room occupancy housing to learn more about their housing options after they were displaced. Can you expand on this idea that homelessness requires localized systems, planning and homelessness strategy that can connect systems of care? Homelessness is a multifaceted issue. People are placed at risk of homelessness due to systemic failures through the criminal justice system, through failures in our health care system, our educational system, lack of employment opportunities. Oftentimes, people
GEOFFREY BLACK
A DePaul professor’s research confirms that homelessness is a complicated societal issue that requires a comprehensive solution
who are experiencing homelessness have touched multiple different systems, criminal justice or hospital settings, health care, mental health care. And yet, the record sharing and information sharing across those systems to understand a given individual’s barriers to housing is very limited. What did the pandemic reveal about the state of homelessness in Chicago? The pandemic made the connection between housing and health crystal clear. We learned that con-
gregate shelters and overcrowded housing are unsuitable environments for protecting the health of individuals and families, and for promoting public health in our city. The pandemic illuminated the importance of caring for people in our communities, particularly those who have currently and historically been affected by systems of oppression. The city must act fast to support initiatives like Bring Chicago Home (campaign to combat homelessness) to ensure everyone in our community has a safe, affordable and accessible place to live.
The Great Lakes — a fifth of the world’s fresh water. We’re invested in protecting this vital resource for generations to come. Learn more about our efforts to support policies that ensure all people in the Great Lakes region have clean water from lake to tap.
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HOMELESSNESS INTERRUPTING
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non-congregate shelters that allow for individual privacy appear to have a positive effect; and second, stronger partnerships between different types of health care providers as well as housingand shelter-focused groups can lead to improved outcomes. During the pandemic, people came together and started talking—”primary care providers, heads of academic medical centers and agencies that provide housing. We had all kept in our own lanes and hadn’t seen the opportunity to work together,” says Huggett. “What we discovered is that we have more energy together than individually. For a person to move successfully into housing, (health care providers) could play a role and be supportive by taking an integrative approach.” INNOVATION AND COLLABORATION In some ways, Huggett’s exIn the first months of the pandemic, isolation felt like an im- perience at Hotel One Sixty-Six possible goal for shelters that was only possible during the housed people in big, open pandemic, a unique moment rooms. But nonprofits got cre- when swanky downtown hotels ative, such as when A Safe Haven were bereft of guests and willFoundation partnered with ing to open to homeless people. Rush University Medical Center The Hotel One Sixty-Six project and retrofitted its transitional ended in September 2020, and housing facility in Douglas Park a similar arrangement between with a negative air system so Chicago’s Department of Family that it could function as a treat- & Support Services and the Hotel ment-and-recovery center for Julian on Michigan Avenue endCOVID-positive homeless peo- ed this year in February. And for all the learnings about the powple. More than a thousand people er of non-congregate spaces and received treatment there, and not integrated health care, it remains only did every one survive, but unclear how common those ofthanks to the concentrated care ferings will be moving forward. Yet the experiment lives on in they received, many also made progress toward recovery from places such as Evanston’s Maraddiction and toward gaining garita Inn, where nonprofit Concontrol of mental illnesses. The nections for the Homeless has hosted guests since 2020, includ“WE TOOK A TERRIBLE THING AND HAD March ing 187 people in the last year. SOMETHING GREAT COME OUT OF IT.” One of those Nicole Richardson, vice president of clinical residents is David operations at Thresholds Coleman Jr., 64, who became homestaff also got to know the patients less for the second time after the well enough to make discharge death of his wife. He lived on the plans tailored to their individual street for months before moving to the Margarita Inn in April. Cacircumstances. “We were in a place where we ble news plays on the TV in his could actually be turnkey, and private room, and he has his own put them into a level of care bathroom, too. He says the qualwhere they would be able to com- ity of life there is markedly differplete the process” of recovery ent both from the street and from and, ultimately, rehousing, says dense shelter settings. “You have the privacy to do Neli Vazquez Rowland, president what you want to do, you know, of A Safe Haven Foundation. Lawndale Christian Health and that means a lot,” says ColeCenter had similarly positive re- man. Connections for the Homeless sults when it welcomed homeless guests to Hotel One Sixty-Six is in negotiations to buy the his(now the Hotel Audrey) in Stree- toric hotel and convert it into a terville. Tom Huggett, a physi- permanent shelter that will concian at North Lawndale Christian tinue to include support services Health Center who lived on-site, such as behavioral health care. The concept is called “hotelpublished a study in the Journal of the American Medical Asso- ing,” but whether or not it occurs ciation that detailed the prog- in literal hotels, area leaders say ress that guests made not only in they’re determined to provide arweathering COVID but in better rangements that feature greater controlling their blood-pressure privacy for residents. “I do think there’s a commitand glucose levels. Huggett says the hotel experience point- ment in Chicago that if we have ed to two big takeaways: First, to add shelter beds, we will make of frantic innovation comes to an end, nonprofits focused on homelessness must determine which elements of their pandemic response can be grafted into a new long-term approach. Longtime leaders have seen what’s possible—and fear that a return to business as usual would mean a huge wasted opportunity. “The level of flexibility was surprising, and let us know that it can be done,” says Paul Hamann, president of The Night Ministry, a Chicago-based nonprofit whose services include providing health care to people living in the city’s homeless encampments. “What we need now is for our people and systems and governments to be permanently flexible, but I’m not sure we’re ever going to see that day.”
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David Coleman, twice homeless, now lives in Evanston’s Margarita Inn, an example of a concept for homeless people called “hoteling.”
Number of unsheltered people
0 to 5 6 to 10
MAPPING CHICAGO’S UNSHELTERED POPULATION
11 to 30 31 to 100 101 to 236
Every winter, Chicago conducts a Point-in-Time count, which provides a snapshot of people experiencing homelessness at a moment in time rather than everyone who experiences homelessness in a year. The 2020 PIT count identified 5,390 people experiencing homelessness. The map shows the unsheltered homeless count by community area in 2020.
Nia Tavoularis is director of development and communications at Connections for the Homeless in Evanston.
Source: City of Chicago
them non-congregate,” says Mary Tornabene, a nurse practitioner at Heartland Alliance who specializes in health care for homeless people. That desire is apparent at traditional shelters that have introduced room dividers for greater privacy. It’s also evident in the design of the new East Garfield Park home of youth shelter Covenant House Illinois, which opened in early May and aims to be “a space where young people have privacy, but they also have a space for community,” accord-
ing to Executive Director Susan Reyna-Guerrero.
RED-TAPE REDUCTION
Housing leaders, meanwhile, cringed as many state agencies closed in the pandemic’s first days: gathering paperwork such as birth certificates, Social Security cards and state IDs already posed a logistical barrier for many homeless clients pursuing housing. In response—and with the aid of emergency federal funding—a group of nonprofits teamed up to offer Accelerated Moving Events,
job fair-type gatherings at shelters and encampments in which unhoused people could complete several of those logistical steps at once and even take a virtual tour of potential residences. Recipients also could opt to quickly furnish their new homes using wares from the Chicago Furniture Bank, and health care providers were on hand to assess the need for special supports once someone is placed in a new apartment. “So many people have to go through so many doors just to get a little bit of help,” says Carolyn
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PHOTOS BY GEOFFREY BLACK
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63 people on the fast track toward housing—compared to Matthew House’s normal pace of placing seven or eight people per month. “It was an amazing feat, because everything had slowed to a crawl” during the pandemic, says Tia Singleton, a case worker at Matthew House. One of the participants that day was Larry Bradley, 58, who had been homeless for a decade and recently welcomed his grandchildren to his new apartment in Marquette Park. “It’s something I never thought could happen,” recalls Bradley. “I was bubbling with pride and joy.” There are a couple of catches, however. For one thing, to take advantage of an Accelerated Moving Event, you had to be in the right place at the right time. “A lot of great things came out of (Accelerated Moving Events), but you’re just getting a fraction of the people,” says Sam Carlson, director of research at the Chicago Coalition for the Homeless. Also, there are no more such events on the calendar. The Accelerated Moving Events are part of a larger project funded by federal emergency money that expires in September. All Chicago Making Homelessness History, which organized the events, aims to incorporate some aspects of the project into its ongoing operations and perhaps to host more of the events, but the last of more than 60 scheduled Accelerated Moving Events occurred in April.
Sherri Allen Reeves is associate director of Matthew House, which hosted Accelerated Moving Events in response to the COVID-19 crisis.
FRESH APPROACH, INTRACTABLE PROBLEM
Ross, president and CEO of All Chicago Making Homelessness History, a nonprofit that serves as leader of the federal Department of Housing & Urban Development’s “Contiuum of Care” in Chicago—a collection of organizations that coordinate homeless-services efforts. “Our aim was make it simple: Give them choices, and don’t make the choice feel like a chore—make it feel like empowerment.” For example, an Accelerated Moving Event at Matthew House, a daytime shelter in Bronzeville, put
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Not every maddening bit of red tape connected to homeless services lifted during the pandemic, as Jamileta Williams can attest. For example, there are multiple definitions of homelessness in America, and if you fit the one used by the federal Department of Housing & Urban Development, your chances of getting your own place improve dramatically—including through projects like Chicago’s Accelerated Moving Events. But Williams, 21, doesn’t qualify. She has bounced around since her adoptive mother died when she was 12, sometimes living with friends and relatives, and other times on the street. A month ago, she was staying with her brother—until he kicked her out following a disagreement. Now she’s holding down a job selling tickets and concessions at the AMC NewCity movie theater in Lincoln Park, stuffing all of her possessions in a locker during her shift. When she clocks out, she heads to a bench to sleep, or rides the el train. The hardest part is that “I want to feel safe, not looking to see who’s going to do what to me—but I got to watch my own back,” Williams says. Sure, Williams could sleep in a shelter. It’s competitive but not impossible, with 3,000 beds and just under 10,000 people listed as “active clients” within the city’s Homeless Management Informa-
Matthew House provides food, daytime shelter, permanent supportive housing and other supportive services to adults, families and children who are experiencing homelessness or at risk of becoming homeless. tion System—the system HUD uses to oversee its funded programs. But few of Chicago’s shelters are always open. Most either require that you’re in by 8 p.m. and out by 8 a.m. the next morning, or they allow you in during the day until closing in the evening. Currently, no youth shelters in the city are funded for 24/7 operation. That’s a rough setup for someone trying to maintain a job with evening hours. That’s the urgent problem. The more serious long-term obstacle for Williams is that every time she crashes with a relative, she disqualifies herself from HUD’s definition of homelessness, which means she can’t access HUD-funded services. People on the HUD lists can be living in their own subsidized
apartments within a year or so of enrollment. But Williams’ best bet is a Chicago Housing Authority affordable-housing voucher. She’s been on that list three years and counting with no home of her own in sight. Williams’ situation isn’t uncommon. The Chicago Coalition for the Homeless estimates that the number of people couch-surfing or doubled up with family is about a little more than 41,000—roughly twice the number of people who access homeless services each year. The numbers may also be poised to grow. Chicago hasn’t yet seen a surge in evictions following the expiration last fall of the state’s COVID-related eviction moratorium. But nonprofit leaders fear
it’s coming—and that, in conjunction with high inflation and rising rents, it could strain the system. “What we’re currently doing is not going to be enough for what’s to come in the next year and a half to two years,” warns Cheron Massonburg, senior director of adult services at Breakthrough Urban Ministries in Garfield Park. That means for all of Chicago’s COVID-era innovation, collaboration and success, the pressure is on to find ways to consolidate and expand those gains into a sustainable, long-term approach. “I just don’t think we can say no” to continued investment in the new programs that worked, says Heartland Alliance’s Tornabene. “We can’t walk away from this work that we’ve done.”
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20 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
SUPPORT FOR FAMILIES
S
O to
The hidden face of homelessness is often that of a child
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and lack of affordable housing are t the end of 2020, I began all contributing factors. sleeping in cars with my Child homelessness may be kids, going from house hidden, but its impact is devastatto house, and staying in shelters. ing. The Chicago Coalition for the Once, I had to sleep in a hallway Homeless estimated that almost with my son.” 13,000 children under 18 experiThis is the reality that Shenany enced homelessness in 2019. For and many parents of young chilschool-age children, the routine dren face. Before experiencing of school may offer some stabilhomelessness, Shenany lived with her mother, but once the COVID-19 Laura Bass is deputy ity and extra support. Younger children—infants and toddlers— pandemic hit, she says tensions director of Facing are most vulnerable to negative rose to a point where she had no Forward to End outcomes related to homelesschoice but to move out. Pregnant Homelessness. ness. Without the connection to and having just tested positive for COVID-19 herself, Shenany was anxious to schools, they are also the group that is most difficult to identify and serve. Babies born find a way out for herself and her children. All homelessness is harmful, but home- into homelessness are more likely to be born lessness among children and families is of- prematurely, to have low birth weights and ten unseen. Unlike the visible homelessness to require medical interventions such as a of street encampments, a family with chil- ventilator or an ICU admission. For infants dren might sit next to you on the bus or pass and children, the stress of homelessness can you on the street without any outward sign have a long-reaching and even permanent that they don’t have a place to stay. Parents impact on their health, development and often shield their children from having to life outcomes. Homelessness can derail a young child’s disclose their housing status to others, even while staying in shelters, sleeping in cars, future. We know children can thrive when living in hotels, and staying with friends families have access to a safe, stable and afand family. There is no one cause of family fordable home. This whole family approach, often called homelessness, but family conflict, evictions
a Two Generation approach, recognizes that parents do better when their children are supported, and vice versa. Parents are better able to focus on their own goals when they are comfortable with their children’s health and educational progress. When parents make progress toward their goals, they increase the likelihood that their children will do the same. A relatively small increase in a parent’s income has been correlated with a 17% increase in their child’s future earnings. Facing Forward to End Homelessness, a Chicago-based nonprofit, connects families to stable housing and provides support using this Two Generation lens. Families with expectant parents and children under 3, like Shenany’s, are ending their homelessness through the organization’s new housing pilot program, First Foundations. The program matches families with market-rate housing and provides up to two years of rental
assistance and comprehensive supportive services. Services include help with basic needs, such as diapers and furniture, and support toward long-term goals, including employment support, parent coaching, and developmental screening for young children. With the option to stay in their apartment once the rental assistance ends, the program is designed to help parents stay housed permanently. The First Foundations program launched in 2021 with pilot funding from the Day 1 Families Fund and will house at least 40 families. While First Foundations is still in its pilot phase, Facing Forward points to the journeys toward success it has seen thus far. Journeys of resilience, perseverance, and hopes for a brighter future, like Shenany’s. “Right now, my goals are to have a healthy baby and get my GED. My kids are my motivation. . . .(They) motivate me to push forward.”
COMPLEXITIES
R
People end up without permanent shelter for a multitude of reasons T
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We need to address all these issues in a comprehensive manner. Thousands of adults, youth, families and seniors are experiencing homelessness. Why aren’t we able to help more people? As a society, we should be able to get people housed, provide better access to mental health services and health care, to employment and public benefits. It is expensive to be poor. Low wages, lack of sufficient affordable rental housing, and the cost of living take a greater percentage of wages, making expenses disproportionately high. The minimum wage in Chicago equates to $31,200 in annual earnings. To meet the Federal Housing and Urban Development definition of affordable housing (spending 30% or less of income on housing), an individual should only spend $780 per month on rent. Unfortunately, according to RentCafe, only 10% of Chicago rental units are less than $1,000 per month. There is a clear need to create more affordable rental options in neighborhoods with the transportation and basic needs infrastructure to lift people out of homelessness. Furthermore, wages aren’t keeping pace with housing prices. To afford housing over
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For Arnold, bills began to pile ypes of homelessness are as up after he lost his job and was varied as the causes. Many unable to find work. Overdue rent associate homelessness with and utilities took a back seat to individuals sleeping in tent cities, paying for food and medication, on the streets, in parks, or on trains. and he was evicted. John’s partner While this housing insecurity often died suddenly. The grief sent him stems from mental illness or a series into a deep depression. He was of choices that led to incarceration unable to work and ultimately lost and addiction, there are a number his apartment. of complex issues at play, and the Joanne left an abusive relationvisible and invisible homeless can Julie Youngquist is ship, only to couch-surf until that get caught in a cycle of poverty that executive director was no longer possible. She ended is traumatic and expensive to break. of StreetWise, What I have learned at Street- which aims to ele- up in a shelter. Once you become homeless, it Wise in talking with vendors, is vate marginalized that, often, it was a traumatic voices and provide is a long road back. Survival is the only mode. The entire day is conevent or set of circumstances that opportunities for sumed with meeting basic needs resulted in eviction and eventual individuals to of food, shelter, clothing, personhomelessness. In most cases, in- earn an income, al hygiene and safety. There is an dividuals lacked the financial re- gain employment inability to consider tomorrow. sources and friends or family that and receive supTrauma, pain, loneliness and could have prevented them from portive services. desperation take root and can befalling through the safety net. The slide into homelessness was quick. The jour- come all-consuming. Understanding that there are personal, ney out was long and painful. People unprepared to weather difficult economic, relational, financial, and sofinancial and personal storms can lose ev- cial issues that impact individuals who are homeless should naturally lead to solutions. erything.
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$1,000, we need to increase the minimum wage to $19.57 per hour (or $40,705 annually), according to the Massachusetts Institute of Technology’s living wage calculator. Housing and wages are the primary issues, however, additional financial supports to combat inflation at the lowest levels of the economy are also essential. The Chicago Resilient Communities Cash Assistance Pilot will prove an interesting experiment on the impact of providing residents with income assistance at $500 per month for a year. This will surely help cover basic expenses like health care, transportation, phone, food, and utilities: a ladder to climb out of the burden of debt. When someone is living on the margins with little disposable income, with low wages, high housing costs, and rising cost of living, it isn’t surprising that one event can topple this house of cards.
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CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 21
STRATEGIES
Oak Park coalition aims to get everyone housed
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doors to people without permanent housing. Once clients were settled in hotel rooms, a semblance of stability was achieved. “Our clients got to sleep in a bed, and the same bed, for the first time in a long time,” says Schueler. “We got to know our clients as individuals and what they really wanted and needed to help them with their lives.” Shortly after, the coalition connected with the owners of Write Inn, a pandemicshuttered 65-room hotel in Oak Park. Working with the owner, Housing Forward leased the space, converting it to a new interim housing model, while the coalition supported the effort by working with the community to ensure strong relationships were forged between tenants and neighbors. The shift from a temporary overnight shelter to a relationship-driven interim housing model is profound. In its first year of operation, 80% of all clients exiting the interim housing model moved into permanent housing. This is a steep increase over the number of clients who could be permanently housed directly through the shelter model. A more specialized interim housing program addresses those recovering from medi-
cal procedures who do not have stable housing in which to recover. In partnership with both MacNeal Hospital and Cook County Health, an entire floor of the former hotel space and another six-unit home are dedicated to those who require the support of both a medical staff and the housing team. While we have made significant progress, there is still work to be done. More units of affordable housing are needed and mental health services are crucial to ensuring successful permanent housing solutions for many who experience homelessness. Our model has influenced other communities, including Evanston, which developed its own Coalition to End Homelessness in Evanston. Twenty-five organizations, including government, faith-based communities, social service providers, health care providers and businesses, have assembled to work together to address homelessness—a model built off the Oak Park approach. While homelessness has not yet been ended in Oak Park, the combination of housing first, strong advocacy and wraparound services has put the community on a path to ending homelessness.
REALIZABLE GOALS
Broken housing market is what puts people on the street
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Homelessness and the Commuach night in Illinois, about nity Advisory Council on Home10,500 people live outside lessness. The task force includes or in shelters. The number the directors of 16 state agencies, of visibly homeless persons living charged with creating a strategic outside or on public transportaplan to end homelessness. tion is a reminder of brokenness— The task force aligns state renot the brokenness of individuals sources and strategies to address living outside, but that of our houshomelessness and housing inseing market and safety-net systems. curity. By developing a strategic Before being appointed by plan, set for release June 1, state Gov. J.B. Pritzker as the first state Christine Haley agencies have identified over 100 homelessness chief, I led the was appointed in activities and will invest over $500 operations of COVID-isolation November 2021 million in federal and state recenters for persons experiencing as state homesources to address homelessness. homelessness. In collaboration lessness chief, a Although investments alone will with Cook County Health, the city role created by of Chicago and Housing Forward, Gov. J.B. Pritzker’s not end homelessness, we will provide housing stabilization for thouwe cared for persons experienc- executive order to ing homelessness in need of recu- flight homelessness sands of Illinoisans facing a housing crisis. Additional strategies perative care. in Illinois. along with public and private inIn the winter months, we provided COVID isolation and supported peo- vestments are needed to reach the finish line. Homelessness is a solvable problem. ple recovering from inpatient hospital stays due to frostbite. The clinical staff cared Since 2005, we have seen deep declines in for men who lost fingers and toes and had the number of persons experiencing homebelow-the-knee amputations due to frost- lessness in our state. The number of persons bite. In a country as resource-rich as ours, experiencing homelessness on any given no one should become permanently dis- night in Illinois (10,431) pales in comparison to those in New York (91,271) and Calabled due to homelessness. Last September, Gov. Pritzker signed an ifornia (161,548). Some communities across the United executive order to fight homelessness, creating the Illinois Interagency Task Force on States have ended homelessness for veter-
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e can end homelessness. Expand the capacity for housing That’s the mission of response for specific populations the Oak Park Home(i.e., those coming out of the hoslessness Coalition, a 50-member pital with nowhere to recuperate). strong group of organizations Strengthen job and career opand individuals working to make portunities. homelessness rare, brief and one Create and coordinate service time in Oak Park. And it’s workintersections (i.e., mental health, ing, even in the face of a pandemgambling and substance addiction, ic, which accelerated a “housing etc.). first” approach that gets individ- John Harris, Strengthen community touchuals the help they need to remain president at a5 points and mobilize for advocacy, stably housed. Branding & Digiincluding a street outreach team The coalition came together tal, leads the Oak that works directly with those expefive years ago. Housing Forward, Park Homelessness riencing homelessness. which works to end homelessness Coalition and The coalition got behind a across the western suburbs; the the newly formed now-village-approved inclusionvillage of Oak Park; and the Com- Coalition to End ary zoning ordinance that calls munity Mental Health Board of Homelessness in for real estate developers to either Oak Park Township drove the ini- Evanston. provide affordable housing units tial efforts, identifying about 200 or a fee in lieu of units. people experiencing chronic homelessness The coalition also backed The 801, a 37in Oak Park—in addition to kids in the school unit transit-oriented, affordable developdistrict who had no permanent home. ment on South Oak Park Avenue by The A facilitator was hired, a plan was created Community Builders, an excellent example and the community organized into five work of high-quality architecture and a commugroups. Those groups worked on affordable nity-driven approach that welcomes a mix housing, strengthening ties among social of incomes. service providers and raising awareness of When the pandemic hit in March 2020, what it’s like to experience homelessness. the Housing Forward overnight shelter shut The coalition led, supported, and champi- down. “My heart jumped,” says Lynda Schueloned several key policy decisions and initia- er, executive director of Housing Forward. tives that made progress in Oak Park. “We knew that the overnight shelter model Five strategies have been key to making we had employed for our 27-year history was progress: going to go away—literally overnight.” Hotels, now emptied of guests, opened Advocate for affordable housing.
ans by engaging those living on the street or seeking shelter, supporting veterans to access community-based services and facilitating access to safe, affordable and supportive housing. Private-market landlords, employers and human services organizations work together to house veterans. Replication of this model—focusing on families, young adults and chronically homeless individuals—can end homelessness in Illinois. The business community can play a pivotal role in addressing homelessness and housing insecurity. The Los Angeles Area Chamber
of Commerce is deeply engaged in ending homelessness. Together, with the United Way, the L.A. Area Chamber of Commerce founded a Business Leaders Task Force. Led by 11 members of the chamber and 11 members of the United Way, they traveled across the U.S., from New York to Seattle, to learn what interventions worked. They met with lawmakers in Washington, D.C., promising to support interagency collaboration with state and local government. Together with the community, the L.A. Area Chamber of Commerce launched one of L.A.’s first strategic plans to end homelessness. Ending homelessness cannot be solved by any one individual or sector. It will take investments in education and employment and paying a living wage. Ending homelessness requires bold political will and alignment across all levels of government. Coordinated, strategic and ethical approaches will launch us into a new landscape, one where each Illinoisan goes to sleep at night in their own safe and warm home. I can see an Illinois where each child goes to school without the uncertainty of where they will sleep that night. I can see an Illinois where college students have a home to go to over summer break. I can see an Illinois where families can afford an apartment when working a full-time job. I can see this, Illinois. Can you?
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22 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
One step forward and another back for planned St. Regis hotel was originally meant to open. The property on 11 lower floors The luxury hotel that was of the 101-story Lakeshore East slated to debut this summer in tower has been delayed by supthe city’s third-tallest tower has ply chain issues and was most pushed back its planned open- recently pushed back because ing to early next year, and its of Alinea Group dropping its owner is expected to tap Chi- plan to oversee the hotel’s food cago-based Lettuce Entertain and beverage offerings, said Rob You Enterprises to operate its Pontarelli, senior vice president restaurant after a previous deal of marketing for Chicago-based Magellan, the tower’s developer. with Alinea Group fell apart. The 191-room St. Regis Chi- “Because of Alinea dropping out, cago is now on track to open to we had to re-evaluate the designs for some of the hotel he said. THE LATEST DELAY IN OPENING THE space,” While the hotel’s rooms are mostly HOTEL COSTS THE PROPERTY THE completed, work is OPPORTUNITY TO DEBUT DURING underway to build out restauTHE PEAK SUMMER TRAVEL SEASON. arantfine-dining that is likely to be run by Lettuce, guests in February, a spokes- according to sources familiar man for Magellan Development with the plans. Pontarelli said the Group confirmed, eight months restaurant operator has not been later than the June launch it had determined but added that “we targeted as of late last year and anticipate an announcement roughly a year and a half after it shortly.”
BY DANNY ECKER
The Jeanne Gang-designed tower at 363 E. Wacker Drive has seen plenty of changes since Magellan first broke ground in 2016. The project was known as the Wanda Vista Tower then, but the Wanda name was later removed after Chinese conglomerate Wanda Group bowed out and eventually sold its 90% stake in the development to Magellan and partners Goldman Sachs and J.P. Morgan.
TURBULENCE
Wanda had been in line to operate the hotel until Magellan struck respective deals in 2020 with St. Regis Hotels & Resorts and Alinea for the hotel and restaurant operations. Then Alinea walked away last year, blaming staffing shortages and supply chain issues caused by the pandemic. The turbulence has frustrated some people who had signed contracts to buy condominium units in the tower, including a
COSTAR GROUP
The luxury property landed another restaurant group to run its food and drink operations, but its debut has been delayed again, this time to early next year
The St. Regis Chicago at 363 E. Wacker Drive few who sued to back out after Wanda’s departure from the project. Condos in the tower range from $1 million to $18.5 million, and sales have been relatively slow amid a sluggish downtown condo market. The loss of a renowned operator in Alinea likely didn’t help, and it’s unclear how buyers would respond to Lettuce stepping in. The developer said it has sold 229 of the tower’s 353 condo units, including 21 that are scheduled to close soon. A Lettuce spokeswoman did not respond to a request for comment.
The latest delay in opening the hotel costs the property the opportunity to debut during the peak summer travel season and at a time when leisure travel has come back strong from the pandemic doldrums. Yet downtown hotel owners are still struggling overall, with occupancy still well below 2019 levels. Higher costs of labor and goods have shrunk hoteliers’ margins, problems that could ease to some degree by the time the St. Regis Chicago opens. Dennis Rodkin contributed.
DEADLINE EXTENDED! 2022
EXECUTIVES OF COLOR IN FINANCE Crain’s 2022 Notable Executives of Color in Finance will recognize top minority executives in finance for their success and accomplishments during the last 18 months.
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Nominate at ChicagoBusiness.com/NotableFinance To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.
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Illinois lawmakers blast State Farm move to dump transgender support The insurance giant cut off funding to a group that pushes transgender equity A major Illinois company is caught in crossfire over whether and how to help transgender youth, and its actions are drawing a loud public rebuke from several members of the Illinois General Assembly. In a written statement and later interview, Illinois House Majority Leader Greg Harris, D-Chicago; Sen. Mike Simmons, D-Chicago; and three other members of the Legislature’s LGBTQ caucus ripped Bloomington-based State Farm Insurance after the company decided to stop contributing to a group named GenderCool that, among other things, distributes books to schools, libraries and other locales. GenderCool is based in Highland Park. According to its website, it not only distributes books
but, on occasion, introduces transgender people to others as part of its effort to tell positive stories about how nonbinary people deserve respect and fair treatment. An ally of the group obtained an apparent internal State Farm email dated May 23 and posted it to her Substack site. The email, from State Farm Chief Diversity Officer Victor Terry, said that after “news and customer inquiries,” the firm has decided that “conversations about gender and identity should happen at home with parents.” “We don’t support required curriculum in schools on this topic,” the memo adds. “We support organizations providing resources for parents to have these conversations. (Therefore), we will no longer support that (GenderCool) program.” The memo did not indicate why all such material must be fur-
nished only through parents. State Farm so far has failed to respond to several requests for comment. But the lawmakers are quite upset about it: “We are disappointed that State Farm chose to make a knee-jerk concession to bigotry rather than stand in solidarity with our LGBTQ community and our allies who support inclusion.”
‘PEOPLE ARE WATCHING’
Harris, in an interview, said he suspects the decision is connected to the flap over recent passage of the “Don’t Say Gay” law in Florida, which bans any instruction on sexuality in grades one to three and limits discussion in higher grades, potentially even preventing a gay teacher from discussing her life with her high school students. “We want the company to understand that, in Illinois, people are watching what they’re doing.”
ISTOCK
BY GREG HINZ
The lawmakers said they haven’t yet decided on their next step. Kelly and Simmons noted that the firm traditionally has a contingent in Chicago’s annual Gay Pride Parade, which is next month. “We absolutely need to call out this sort of thing when it happens. . . .This is how we discriminate.” The lawmakers said they haven’t yet decided on their next step and won’t do so until it’s clear whether and how State Farm will respond.
But the joint statement says that if the company chooses to contract its own stated values, “we will be compelled to call out State Farm’s hypocrisy, including but not limited to any LGBTQ marketing State Farm plans on doing during Pride Month.” The letter also is signed by Brian Johnson, CEO of Equality Illinois, a civil rights advocacy group.
Here’s what new grads are demanding from their employers Human resources pros think their expectations can be . . . impractical. But data shows that the newest members of the workforce are more in control. BY CORLI JAY With graduation season underway, it’s an exciting time not only for graduates who are starting a new chapter in their life but also for employers who are looking for fresh talent. According to studies, Gen Z graduates are demanding more from entry-level positions including salary, flexibility and the prioritizing of mental health. The Class of COVID-19 Report from recruiting software company iCIMS shows that the business landscape has shifted dramatically from the first graduation season of the pandemic in spring 2020 to spring 2022, with job seekers holding more power. The study shows college seniors and recent grads expect an entry-level salary of $70,005 compared to the $52,575 HR pros expect to pay new employees—more aligned to the $58,172 that the classes of 2020 and 2021 expected. In data collected by employment agency LaSalle Network, 80% of soon-to-be graduates haven’t responded to job offers with 20% saying they are looking for salaries between $61,000 and $70,000. While most HR and recruiting professionals believe that entry-level job seekers have impractical expectations, numbers show that entry-level hiring exceeds last year’s. The National Association of Colleges & Employers found that employers plan to hire almost one-third more new college graduates from the class of 2022 than they hired from the class of 2021. With their demands, younger employees have been moving into
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more nontraditional roles and startups because they are smaller and more open-minded, according to Janelle Tiulentino, chief technical operator and co-founder of startup talent marketplace Talentdrop. She also said that more established companies have been changing their business models based on these demands. Tiulentino said graduates are focused on going into spaces where they can get mentorship and good team collaboration, which outweighs applying to a company because of its brand and establishment. “They’re not really one-trackminded like, ‘We need to join Goldman and then climb the ladder for 50 years,’ ” she said.
SEEKING GROWTH
Shivaen Ahuja, 21, a recent graduate of Washington University in St. Louis, says he isn’t looking for a strict corporate America job but is instead looking at places that give him real responsibilities where he can grow and learn. With a major in biomedical engineering, a second major in entrepreneurship and a minor in art, Ahuja says he wants to combine his skills to create medical devices for a startup. “(Startups) are more free-flowing; you get to work on a lot of things at once. It’s less rigid and it’s just more open to creativity. I also find that they tend to be more respectful of work-life boundaries,” said Ahuja, who is looking to work in the Bay Area because of its density of startup companies. In her role, Tiulentino has seen
bigger companies changing their marketing to mimic startups and combining their resources. But she says this new generation of workers are privy to their tactics and with their distrust for bigger companies, aren’t falling for it. “They’re trying to borrow these aspects of startup life, combining it with the resources and maybe the better pay, the benefits of a bigger company, because they’re trying to kind of capture that ethos,” said Tiulentino. “The younger students pay attention to all of that, so they’re not as easily bought in. They are looking more at the whole package and what they’re signing up for.” Perhaps one of the most interesting results of the data is that more than 90% of respondents say they care how long they stay with an employer, and nearly 70% see themselves staying with an employer long term. Though the Gen Z workers care about staying for the long haul, they are only willing to do so if the workplace meets their initial stipulations. Ahuja resonated with this point, stating that he isn’t opposed to staying with a company if it is everything that he is looking for in a work environment. “I’m more than happy to stay at a job long-term if I’m happy with my work environment, happy with my growth, but I’m learning. If I like the salary, I’m more than happy to stay long term. And if that’s not the case, I’m also super happy to jump between jobs.” Ahuja is looking for an entry-level salary of $80,000 as he is job hunting in San Francisco. He
says that if he was looking for a job in St. Louis, he would expect to be paid around $70,000. Asked if he thought the demands of his generation were impractical, as some suggest, Ahuja agreed but said that they shouldn’t be expected to lower their demands because they bring too much value and know their worth. “I think when you’re hiring a young person, you’re making an investment in that person, because we’re young, we absorb
knowledge super quick. We bring creativity and we bring new blood and new ideas to what might be a stagnant company,” said Ahuja. He said they are not like prior generations who were OK with the idea of working 60 hours a week and accepting it as the way life is. “We feel like we can be different; we know these companies can afford to pay us. We know we can give good work to companies and be well compensated in return and enjoy our lives outside of work.”
COMPANIES ON THE MOVE
ADVERTISING SECTION
To place your listing, visit www.chicagobusiness.com/companymoves or contact Debora Stein at 917.226.5470 / dstein@crain.com COMPANY LAUNCHES
MERGERS & ACQUISITIONS
MNJ Technologies Buffalo Grove, IL 800-870-4340 www.mnjtech.com
Mark-It Express Lemont, IL 708-910-2840 www.mark-itexpress.com
MNJ Technologies is a top technology solutions provider based in Buffalo Grove. MNJ Tech works mostly with midsized companies, which have more clients to manage than small startups, but less IT talent and resources than large enterprises. To overcome this midmarket challenge, MNJ Tech has launched Ignyte, a new digital transformation unit. Ignyte provides cuttingedge solutions to accelerate hybrid cloud migrations and cybersecurity protections against malicious threats and compliance risks.
Mark-It Express Logistics LLC, a leading Midwest intermodal trucking and freight brokerage company, has acquired the operating assets of Clean Car Connexion, Inc., based in Joliet, Illinois. Tony Apa, President & Founder of Mark-It, said, “the acquisition is a good strategic fit and strengthens our capacity in a tight labor market in the U.S.’s largest inland intermodal hub. This is our third acquisition since 2020, each focused on driving value for customers, drivers, and supply chain partners.
5/27/22 2:16 PM
24 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
Wish that cute house down the street were for sale? BY DENNIS RODKIN For people who’ve been admiring the cute house down the street and wondering if it will ever go up for sale, Katie Hill has devised a solution, and it involves baked goods. Hill’s startup, called Unlisted, notifies people whose houses aren’t for sale that somebody’s interested, and sweetens the note with a batch of cookies. On May 12, Unlisted won the Alumni New Venture Challenge at the University of Chicago’s Polsky Center for Entrepreneurship & Innovation. “The idea is less ‘I need to move tomorrow’ than ‘I’ve seen houses in my community that I’d really like to live in when they’re available,’ ” said Hill, a 2013 MBA graduate of the University of Chicago Booth School of Business. The $40,000 prize Hill received brings the amount she has raised to about $260,000 since launching Unlisted in December. She said she’s working on raising a total of about $1.5 million to $2 million. Hill lives near Dayton, Ohio, and has rolled out Unlisted in that state and her native Illinois. She hopes to be operational nationally by the end of 2022. Unlisted rewards people who are patient, said one judge in the new venture challenge. “If you’re in the real estate market at any given time, you’re restricted to what sellers have listed on the market,” said Mark Tebbe, an adjunct professor at Booth and a veteran of two startups, includ-
ing Answers.com. “Katie’s solution is for people who love a certain house, its style, its neighborhood,” Tebbe said, “and would hate to wake up one day and find out it’s been sold.” Users identify a house they love by its address, and Unlisted lets the owner know. “They get a sparkly gold package with a letter and some cookies,” Hill said. “It’s nice to know someone likes your house enough” to ask about it. The letter to potential sellers includes a code they can use at the website to communicate with the potential buyers, who have paid $25 for the letter and cookies to go out. All communication is anonymous, and it’s strictly preliminary, Hill says. Price, inspection of the property conditions and other details that would come before an actual transaction would be handled through real estate agents or attorneys, she said. Unlisted “is for an expression of interest, and we leave it at that,” Hill said. In future versions, she said, existing homeowners who haven’t been approached will be able to go to the site, claim their house and upload photos, details of the condition and an intended asking price.
DATA IN HAND
If a potential buyer or buyers then expresses an interest, the homeowners may feel more confident moving forward with their plans, and have some data to show a listing agent, Hill said.
SAM PARKER
This startup can help. Unlisted recently won the Alumni New Venture Challenge at UChicago’s Polsky Center for Entrepreneurship & Innovation
Katie Hill, in front of the neighbor’s house that inspired her to start Unlisted, with one of the cookies her company delivers to unlisted homeowners. From interactions on Unlisted, “they see that there’s a market for their house,” Tebbe said. The idea for Unlisted came from Hill’s own experience. Stuck at home in a suburb of Dayton with her two bored children during the pandemic, Hill happened to notice that a house on the other side of the street had a pool. When a different house she had also admired sold in an off-market transaction, she said, “that fired me up to go walk across the street to say,
‘If you’re ever interested . . . ’ and to my surprise, they were packing their car to go look for a home” in a locale where they planned to retire. The neighbors have not yet retired and Hill has not yet bought their house, but the ease of the interaction “told me this is how we should do this more often,” she said. Hill has experience with startups. She launched CommuterAds with her ex-husband. The firm, which places ads on public transportation,
is now in Chicago, Milwaukee, Cleveland and several other cities. Now a board member at CommuterAds, Hill is an entrepreneur-in-residence at the not-for-profit Entrepreneurs’ Center in Dayton. In the new venture competition, Tebbe said, Unlisted stood out as “an innovative solution to a problem many people have,” but on top of that, “Katie was very infectious, even presenting on Zoom, very personable.” And that presentation didn’t even come with cookies.
Shedd launching $19 million ESG investment portfolio BY STEVE JOHNSON The Shedd Aquarium, in partnership with Builders Initiative, is launching a new ESG investment portfolio focused on sustainability and aimed at funding its major conservation work. Billed as a pilot program, the $19 million environmental, social and governance fund, boosted by $3 million in seed money from Walmart heir Lukas Walton’s Builders Initiative philanthropy, looks to more closely connect the aquarium’s resources with its values, said Shedd President and CEO Bridget Coughlin. “It’s another example of how Shedd, even prior to my arrival, has moved to align operations, as we run this as a business, with our mission,” Coughlin said. “And it adds stability and helps us crescendo and scale some of our really important work.” Beyond the fund’s impact within the Museum Campus mainstay, perennially one of Chicago’s most popular attractions, officials hope it will serve as an
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industry model. Large nonprofits such as Shedd can have hundreds of millions of dollars under investment. “It is still the case that the preponderance of these nonprofit assets out there are not invested for mission,” said Bruce McNamer, president of the Chicago-based Builders Initiative, which focuses on areas including environmental aid and rural development. “What we’d really also like to do is take this experience and this example and go out to other institutions that we work with—nonprofit institutions, other philanthropic institutions with endowments—with the same kind of message: Here is an approach . . . to marrying mission to investing.”
INVESTMENT TARGETS
The new fund will target investments in private equity in areas such as aquaculture, ocean health, renewable energy, emissions reductions, and sustainable agriculture and water management, the aquarium said.
The Shedd’s plan is to begin drawing on the investment results in four years and then put the planned 4% draw toward such initiatives as energy efficiency at the aquarium and its work to restore staghorn coral to Caribbean reefs damaged by warming oceans. “We want to make sure we build up some balance,” said Gary Gordon, the Shedd’s chief financial officer. “It’ll also take some time for these investments to mature, as well, since they are private-equity investments.” The idea for the fund, McNamer said, developed out of conversations Builders Initiative had with the aquarium about contributing to its ambitious, $500 million Centennial Commitment that will makeover key parts of the Shedd building and more closely tie the institution to surrounding communities as it approaches its 100-year anniversary in 2030. “It was seeded by us and by Bridget and leadership there jointly kind of thinking this
SHEDD AQUARIUM/BRENNA HERNANDEZ
The aquarium, with seed money from Walmart heir Lukas Walton’s Builders Initiative, is starting an environmental, social and governance fund to support conservation work
The aquarium hopes other funders might be attracted by the thought of adding to the $19 million ESG portfolio, invested with Chicago firm Adams Street Partners. through,” said McNamer. Builders is giving another $5 million toward the centennial campaign. The aquarium hopes other funders might be attracted by the thought of adding to the $19 million ESG portfolio, invested with Chicago firm Adams Street Partners, said Gordon, who noted the Shedd has about $300
million in total investments. The pilot program makes the Shedd something of a pioneer, according to Coughlin. She said ESG investing has taken hold more firmly in the worlds of academic institutions and hospital systems than among cultural institutions such as zoos, aquariums and museums.
5/27/22 2:10 PM
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SUCCESSION PLANNING
No matter the size, every company needs a plan to retain top talent and prepare for leadership exits. Succession of leadership and ownership is a crucial part of ensuring the long-term health of a company. That’s especially important now as more baby boomers are looking to make an exit and major tax changes could be on the horizon. Three Chicago-area executives shared their thoughts on this key process with Crain’s Content Studio.
What recent trends are you seeing in succession planning? What effect has the pandemic had on these transitions? Are you seeing more of them or less? Alan Weed: We’re seeing increased interest and awareness. Companies that successfully navigated through the health aspects of the pandemic are now dealing with inflation, supply chain and labor issues and the problems are more challenging than ever. Many baby boomer owners who delayed an exit during the pre-pandemic economic boom are spending their late-stage career years in a different way than they envisioned. We have seen this cause more business owners to focus on finding a solution that allows them to retire or exit from their business and get some help navigating this challenging operating environment. Melissa Mabley: The pandemic and subsequent market conditions, coupled with an aging generation of business owners, have led to several trends in succession planning. The Great Resignation brought into sharp focus the fact that succession planning can’t center only on c-suite or senior-level executives. An organization is vulnerable any time a key producer or stakeholder departs, and as a result emergency
to entry, reducing the pool of potential buyers. Michael Gray: Potential tax law changes are driving family-owned and privately held companies to review and update their succession plans. Additionally, the influx of private equity firms entering the market has changed the way many companies view their succession planning. The potential for a private equity backed exit transition has become an increasingly attractive option. The pandemic has changed the dynamic for many businesses and increased their risk profile. How can companies avoid contentious exits of leadership and key staff during transition periods? Weed: One effective approach is to practice transparency and communicate the succession plan to key members of the company. In doing this, you are showing your key employees that not only do you care enough about them to keep them informed, but that they have an opportunity to be part of the company’s future growth. This is very important because a common reason that employees leave a company is that they don’t see potential for the future. Additionally, there are other compensation-based strategies such as
“LOOKING AHEAD AND EVALUATING THE FUTURE NEEDS OF THE BUSINESS IS THE CORNERSTONE FOR DEVELOPING TALENT AND IDENTIFYING FUTURE LEADERS.” — MICHAEL GRAY, NEAL GERBER EISENBERG
or contingency planning has become an increasing trend. Baby boomers approaching retirement age own 51% of private companies, and have cited market conditions and economic outlook along with their health as primary reasons for considering transitions. The rise in interest rates and increasing cost of capital could negatively impact the sale price of businesses. Additionally, as interest rates rise, securing financing can be a barrier
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MICHAEL GRAY
Partner Neal Gerber Eisenberg mgray@nge.com 312-269-8086
concerns about nepotism that can be difficult to overcome; a primary goal of a family-owned business is often
MELISSA MABLEY
Wealth Advisor Bartlett Wealth Management mmabley@bartlett1898.com 312-588-7787
to provide employment opportunities for future generations within the family. Demonstrations of the future
ALAN WEED
Partner Arbor Investments weed@arborpic.com 312-981-3776
leadership team’s aptitude and commitment to non-family employees over time will also inspire confidence.
Succession Planning Starts With a Partner You Can Trust We help our clients preserve wealth, structure multigenerational businesses and implement comprehensive strategies that address succession and estate planning, wealth transfer and tax implications. Our nationally recognized team of attorneys serve as trusted legal business advisors, helping families and family offices manage their investments, business needs, and the seamless transition of their assets to future generations.
retention bonuses that can be useful options to help make sure a team stays in place after a business has been sold. Mabley: Just like in any relationship, communication is key. Absent communication, people may draw inaccurate or incomplete conclusions. In a family-owned business with non-family employees or leadership, communication is especially important during times of transition. Non-family employees often have
Learn more about our practical approach to helping you, your family and your business at nge.com/Client-Services
5/26/22 9:23 AM
SUCCESSION PLANNING What tactics are most successful for cultivating and maintaining talent and future leaders? Gray: Looking ahead and evaluating the future needs of the business is the cornerstone for developing talent and identifying future leaders. The business needs a roadmap to guide it regarding what sort of talent is needed and how to foster and maintain it. Focus not only on the strengths of the current team members but also their weaknesses. This analysis provides company leadership with a chance to address weaknesses in advance, whether it be through training to address skill deficits or the identification and hiring of outside talent to fill the specific needs for the future of the business. Structuring the company’s board and its meetings properly is important. Be sure the board includes third parties from outside the business. The board needs to plan out an annual roadmap of key items to be discussed at each meeting in addition to the day-to-day activities. Meetings should include senior management and the next generation of leaders and give them the opportunity to present to the board, grow their presentation skills and feel part of the enterprise’s future. Weed: We attract and maintain talent at our portfolio companies by creating a strong culture where our employees are empowered and
see opportunities for advancement. One way we do this is by formulating a joint strategic plan alongside our management immediately post-acquisition to align on a growth strategy for a company. We collectively identify areas of opportunity or needed investment and execute on them together. This complementary approach provides key employees the autonomy to drive the direction of the company, but with a partner to support them with capital and expertise. Additionally, we also focus on compensation design to make sure that our packages are leading-edge and frequently utilize stock-based compensation plans to let key employees participate in the meaningful value that they create. How is succession planning different for family-owned vs. non-family-owned companies? Gray: In a non-family-owned business, more diverse and independent voices are likely to have input in the decision-making process. Leadership needs to start early to educate and communicate while building consensus for succession plans. Depending on the structure of the business and the make-up of the company’s board, the viewpoints of the operators of the business versus people outside the business need to be considered. The time horizons for succession planning are typically quite different for family versus non-family
owned businesses. Family-owned businesses tend to have a longer time horizon for transferring control from family member to family member, usually accounting for transfers across future generations. Non-family owned businesses are usually subject to shorter timeframes as leadership considers business in economic terms and exits for investors. The long-term goals of family businesses usually focus on control and a disciplined transition to the next generation while non-family businesses focus on the liquidity and profit generated by a sale or transition of the business.
30% most likely had a realistic and deliberate succession plan that aligned all the family constituencies to allow for owners to decide what succession planning solution was truly the best fit for their company. Mabley: Family-owned businesses will often look to members of the next generation when succession planning. In this scenario, there can be complicated tax and estate planning considerations related to gifting shares of the business and/or the eventual sale of the founder’s interest over time. In a
“THE GREAT RESIGNATION BROUGHT INTO SHARP FOCUS THE FACT THAT SUCCESSION PLANNING CAN’T CENTER ONLY ON C-SUITE OR SENIOR-LEVEL EXECUTIVES. AN ORGANIZATION IS VULNERABLE ANY TIME A KEY PRODUCER OR STAKEHOLDER DEPARTS.” — MELISSA MABLEY, BARTLETT WEALTH MANAGEMENT
Weed: Both family owned and nonfamily owned companies are generally both seeking to create a succession planning solution that preserves the long-term success and value of the business. However, succession planning in a family business has a lot more emotional elements with family issues added to the mix. I think most people have seen the statistic that only 30% of family-owned companies make it to the second generation. That
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Let’s talk about your future today.
non-family-owned company, the challenge comes with buying out retiring partners. There are two main options: a buy-sell agreement or a management buyout. A buysell agreement is a document that determines how a partner will be bought out in the event of his/ her disability, death, or retirement by the remaining partners, while a management buyout sells the business to current employees or managers. It’s helpful if the partners are willing to finance the sale to their younger employees over time, allowing enough working capital to remain in the business to continue growth. What financial considerations are most important in succession planning? Weed: If a sale of a company is desired, an owner should assess what a buyer will use to generate a valuation — such as how much annual cash flow the business will produce for the new owner. Additionally, the owner will need to determine how much of the business to sell. An approach that seems to appeal to many business owners is selling part of the business and working alongside a buyer to formulate a growth and succession plan for the next five to 10 years. This approach gives an owner liquidity now, but also allows them to stay involved and can result in additional proceeds commonly known as a “second bite of the apple” if the company is sold again. In the case of a pure leadership transition — the financial considerations usually relate to compensation design to properly retain and motivate new or existing team members. Mabley: When we work with business owners, we start by running a financial plan that includes different business valuation scenarios. If they are considering a third-party sale or an employee stock ownership
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plan (ESOP), we try to determine the minimum target that will achieve their financial goals. If they are instead considering a family ownership transfer, we work through options for selling or gifting shares of the business over time. In the case of an ESOP, we need to know if employees have the financial means to purchase the shares, while in a family ownership transfer we determine which portion should be gifted and which should be sold. When selling a business, you generally need to account for a significant taxable gain. The vast majority of tax planning or
tax savings techniques are charitable, and all of that planning must be done prior to signing a letter of intent. Gray: In family-owned businesses, it is important to think about the family members who are going to be actively involved in the business versus those family members who are going to be passively involved. How do you motivate those family members who are ready to take on the responsibility of running the business? Compensation of the active family members versus compensation of the non-active members must be clearly addressed. What role can private equity play in succession planning? Mabley: Selling to a private equity firm can be a great strategy in the event that a founder’s family isn’t interested in or capable of running the business. Generally private equity will buy a majority or “controlling” stake in a company and require that the owner/operator stay on to help run and grow the business. This allows the founder to partially monetize their business while still participating in the day-to-day operations, with potential for a lucrative future valuation at the eventual sale of the company. This can be very beneficial to an owner from a financial perspective, but it’s critical that they have the interest and the drive to help scale the business. Weed: Private equity firms frequently look for companies that they can partner with existing owners and teams and continue to grow. This can be compelling for an owner because it provides liquidity from an exit but allows an owner to maintain a level of ownership and involvement that are agreed upon with the private equity partner. A private equity firm will even use their contacts to help an owner find a successor if there isn’t one inside the company. A private equity transaction can serve as an alternative
5/26/22 9:23 AM
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ABOUT THE PANELISTS to selling a company to a competitor within the same industry, which can be a less desirable option for an owner. It’s important to find a firm that has the same values as the owner. Gray: Private equity investment provides liquidity for family-owned businesses while also allowing family members who want to stay involved and participate in the future growth of the business an option through rollover equity. Aligning with the right private equity firm can expose the company to growth opportunities for the business and access to experienced management talent. Private equity can also offer transition opportunities to family members but retain economic upside for the family by bringing in new management. What questions should a business owner ask a potential investor if they are contemplating outside capital? Weed: Bringing in outside capital is a major decision for a business owner and requires significant due diligence. The most desirable outside investors tend to have experience and a strong track record of results. For most companies, the goal should be to find outside investors that are valueadded and understand the nuances of a company and segment. Some questions to ask about these qualities include: How is this investor going to create value for my company or are they just a capital source? Do they have relevant investment experience and understand my company and industry? What is their investment track record and investment returns? It is also important to gauge the fit of a working relationship and to talk to other business owners who have previously partnered with
members and C-suite executives is critical to understanding how they are going to treat you as a partner. Diligence is a two-way street. How do potential tax rate or interest rate changes impact succession or liquidity options for private companies? Weed: When tax rates are anticipated to rise, there tends to be a heightened interest in exiting a business though an outright sale. This occurred during the second half of 2021, in advance of potential tax changes on both ordinary income and capital gains. A record number of business owners exited their companies during this period to avoid what could have been a very large tax hit. Interest rate changes tend to have less of an impact, but rising rates do generally slightly slow down merger and acquisition activity. Another consideration for many business owners is where they are going to invest the proceeds from the sale of their company. Record low interest rates mean fewer attractive yield generating investment alternatives and can cause some sellers to delay exit. In this situation, rising interest rates can help by providing a seller with more compelling yield options for sale proceeds. Mabley: The current tax proposals around capital gains could significantly impact the proceeds a business owner nets from the sale of their business. One proposal would increase the capital gains rate on sales above $1 million from 23.8% to 43.4% federal. For example, a business owner who sells for $25 million could see their tax bill go up by $4.9 million if this is passed. There is discussion around eliminating the
“FOR MOST COMPANIES, THE GOAL SHOULD BE TO FIND OUTSIDE INVESTORS THAT ARE VALUE-ADDED AND UNDERSTAND THE NUANCES OF A COMPANY AND SEGMENT.” — ALAN WEED, ARBOR INVESTMENTS that investor. Finally, and maybe most importantly, an owner should make sure they personally would enjoy interacting with the potential investor on an ongoing basis. Gray: Conducting thorough due diligence on the potential investor starts with discussing their current and past investments. What motivated their investments? In the case of past investments, what motivated their exit? What are the baseline metrics they use to evaluate the performance of their investments? Another important point of diligence is talking to family members and C-suite executives of the investor’s current and past companies. Understanding how the investor approaches rollover family
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step up in cost basis at the death of an owner, which would have a lot of implications from an estate tax perspective. The current estate tax exemption is $11.8 million, which is set to sunset at the end of 2025. The tax proposed change would move it to an inflation-adjusted $3.5 million (about $5 million). In anticipation of this, some business owners are accelerating some family gifts to take advantage of the current exemptions. The rise in interest rates and increasing cost of capital could negatively impact the sale price of businesses and create a barrier to entry for potential buyers.
MICHAEL GRAY, a member of Neal Gerber Eisenberg’s Executive Committee, leads its Private Equity, Venture Capital & Growth Companies practice and Fund Formation & Investment Management practice. Gray concentrates on transactional and corporate governance matters, including mergers, acquisitions, private equity and venture capital investments. He represents private equity sponsors, venture capitalists, hedge funds, private equity and venture-backed companies, investors in private ventures, executive teams and family offices in their investments. He has extensive experience with fund counseling, including representing general and limited partnerships in fund formation. MELISSA MABLEY is an experienced financial planner and wealth advisor with Bartlett Wealth Management. She is a Certified Financial Planner (CFP®) and Chartered Divorce Financial Analyst (CDFA®) and holds an MBA. Her diverse skills make her especially well-suited to serve Bartlett clients who are experiencing major life events and transitions. Mabley has served in various planning and leadership capacities with companies such as Kovitz Investment Group, RMB Capital Management, US Trust and LaSalle Bank Corporation. Mabley is on the board of Tuesday’s Child, an organization that helps families address behavioral issues of children through individualized training.
ALAN WEED is a partner with Arbor Investments, a specialized private equity firm focused on acquiring companies in the food, beverage and related industries. He joined the firm in 2003 and has almost 20 years of experience investing in and working with privately held businesses. Weed serves on the board of directors of select Arbor portfolio companies including Rubix Foods, Dr. G’s Creations, Fontaine Santé, Concord Foods and DPI Specialty Foods. He holds a master’s degree in business administration from the University of Chicago Booth School of Business.
many private equity firms, flush with capital, are paying premiums for businesses. Attractive multiples are leading to an increase in the number
of exits from private companies. Will the debt markets to fund the private equity-led deals at these high multiples dry up? Will interest rate
hikes drive down the high multiples? The next few months should give an indication of what lies ahead for private companies in 2023.
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Gray: It’s important to evaluate the business and its value in terms of now versus later. At this time,
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Ford plant in Canada to build first Explorer EVs FORD from Page 1 the Torrence location will keep cranking out conventional gasoline-powered vehicles for years, they could be doomed if they aren’t converted to the new technology. Torrence has a strong chance to be converted eventually, analysts say, but it won’t be on the leading edge. Contributing to anxiety over the future of Torrence are Ford’s EV investments at other U.S. sites. Last year, the automaker announced an $11.4 billion outlay for new plants in Tennessee and Kentucky to produce the electric F-Series trucks and future Ford and Lincoln vehicles, as well as advanced batteries. Investment is slated to expand production of the electric F-150 Lightning pickup in Dearborn, Mich. A loss of Torrence would devastate the South Side, says David Doig, president of the nonprofit Chicago Neighborhood Initiatives, which is working to revitalize the Pullman neighborhood and other South Side communities hurt by decades of disinvestment. The largest manufacturer in the city, Torrence Avenue provides about 6,500 jobs at the assembly facility and nearby stamping plant, plus 1,500 to 2,000 at an adjacent supplier park. “It’s a major economic engine, employing local residents and contributing to the tax base and local economy,” Doig says. Ford announced in 2020 that it would invest $1.35 billion to transform its Oakville Assembly Complex in Ontario to produce EVs but didn’t specify which models. However, current plans call for the first electric Explorers and Aviators to be built in Canada starting in 2024, according to Sam Fiorani, vice president of global vehicle forecasting at AutoForecast Solutions, citing Ford suppliers with direct knowledge of the preparations. Similarly, Katelyn Drake, senior analyst at LMC Automotive, says her company’s supplier sources anticipate initial annual production of 100,000 electric SUVs in Oakville, out of a projected 200,000 vehicle capacity at the retooled Canadian plant. Facilities in Ohio and Michigan also could be retooled for the electric SUVs, she says. “(Automakers) are shuffling products around and figuring where they fit the best,” Drake says. She says Ford is investing in some of its most outdated plants for EV and is likely to convert the Chicago facility down the road when the market has fully embraced electrics. Crain’s sister publication Automotive News Canada also reported that Ford would likely produce electric Explorers in Oakville. A spokesman for the city of Chicago deferred to economic development agency World Business Chicago, where a spokesman declined comment. A spokesperson for Ford said the company wouldn’t “comment on speculation.” The Illinois governor’s office didn’t respond to emails requesting comment.
GOING ELECTRIC Ford has designated eight plants to supply and assemble electric vehicles, with production ramping up through 2025. Notably missing: Ford’s Torrence Avenue plant on Chicago’s South Side. 1. Ypsilanti, Mich. 2. Sterling Heights, Mich. 3. Dearborn, Mich. 4. Oakville, Ontario 5. Kansas City (Claycomo), Mo. 6. Glendale, Ky. 7. Stanton, Tenn. 8. Cuautitlan, Mexico
3
?
5
4
2
1 6 7
8 Source: Crain’s research
Chicagoland Chamber of Commerce CEO Jack Lavin said that representatives of the mayor’s and governor’s offices have spoken with Ford, but that deeper discussions are needed to determine the company’s needs. Ford has made critical investments in the past to modernize the Torrence plant. After then-Gov. Pat Quinn and then-Mayor Rahm Emanuel struck an incentives deal in 2011, Ford spent $400 million to launch the Explorer at Torrence, boosting employment by 50%. The plant received a $1 billion upgrade in 2019 to expand capacity and add worker amenities. It has a rated capacity of 250,000 vehicles but produced more than 300,000 in 2018, Drake says, adding, “Chicago is more updated than other plants—it has that lifeline going for it.” The United Auto Workers union is likely to have a say in the future of Torrence when it begins negotiations for a new contract. The current agreement expires in September 2023. “When a plant’s future comes into question, that’s the moment when things can change,” Drake says. “I don’t think the UAW would give up Chicago.” With billions invested over decades, it’s hard to picture Ford walking away from Chicago, where it has an experienced workforce, as well as access to transportation and reliable electric power. A 2020 Ford press release touted a Boston Consulting Group study spotlighting Ford’s “longstanding commitment to building vehicles in Chicago and its contributions to the Illinois economy, including $6.8 billion to the state GDP and more than 60,000 direct and indirect jobs.”
FORD HAS OPTIONS
Still, the plant’s future will hinge on the automaker’s assessment of the relative costs and benefits of converting Torrence to produce EVs, building a new EV plant in Illinois or expanding elsewhere. Whether Ford decides to build a new assembly plant or seeks to
build a battery plant to support a retooled Torrence facility, there’s no shortage of land. Vacant acreage includes the 430-acre site of the former USX South Works site as well as locations in the south suburbs. But there are challenges that could give the automaker pause about reinvesting in Illinois. “At nearly a century old, Ford could decide (the Torrence plant’s) bones are too old,” Fiorani says. High property taxes could be a deterrent, experts say. And companies want to be confident that an investment in new capacity will receive the regulatory permits needed as long as they are in compliance. They point to the city’s rejection of a permit to enable Reserve Management Group to open a metal scrapper on the Southeast Side after the company spent $80 million to relocate the plant from Lincoln Park. “We must take care of the environment, but we also need to make sure that the rules are clear,” Lavin says, adding “you can’t keep moving the goal posts and you can’t keep saying no.” Electricity costs, a major expense for manufacturers, are in flux following last year’s passage of the Climate & Equitable Jobs Act, or CEJA, potentially jeopardizing Illinois’ historic energy cost advantage over neighboring states. And the state’s Reimagining Electric Vehicles in Illinois Act, passed by the General Assembly last year, focuses on the creation of new jobs but not so much on retention, Lavin says, adding, “perhaps there’s an amendment to the REV Act to provide incentives for retaining jobs.” Ald. Anthony Beale, 9th, whose ward is near the plant, says the mayor and governor should do whatever is necessary to retain Ford. “They’ve been an integral part of the South Side,” Beale says. “We the know the cost of doing business is higher than in other states and cities. That’s where we have to level the playing field.”
5/27/22 3:08 PM
CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 29
The 2020s have been lousy for Chicago’s downtown condominium market CONDOS from Page 1 They started out higher, at almost $1.4 million, but that was in June 2020, the early days of the pandemic, when most offices, cultural venues and retailers were shut down tight. In the two years since, the situation downtown has deteriorated, with frequent news of smash-and-grab thefts, shootings, rowdy crowds, store closings and COVID surges that have slowed the return to in-office work. “We got slammed,” Zugerman says. “From COVID to crime, everything that could go against us has gone against us. I hate to see it, because Chicago is such a great city.” The Zugermans are not alone. The 2020s have been lousy for most of the downtown condo market. Except for the white-hot West Loop, downtown neighborhoods have
do. “Seeing news reports about people getting pick-pocketed, carjackings, gangs of kids messing with people who are just walking down the street—that absolutely has started to impact home prices.”
IMAGE
Here’s what else it impacts: the image of downtown Chicago as a paragon of urban living, one of the city’s finest showpieces. If interest in living there declines, along with the interest of visitors to focus their stay there, it’s not only a loss of luster but a diminishing of the pipeline of investment—in new residential buildings, restaurants, cultural amenities and more—that has kept the city looking fresh as other, smaller Midwest cities fade. Supercharged demand for homes has been a signal characteristic of the pandemic era, with high-rising prices the re“WE GOT SLAMMED. FROM COVID TO sult. The median of homes CRIME, EVERYTHING THAT COULD GO price sold in Chicago rose about 39% AGAINST US HAS GONE AGAINST US.” between January Gail Zugerman, owner of a downtown condo 2020, prior to any that’s on the market pandemic impact on the housing lagged behind a boom in hous- market, and April 2022, the lating markets across the city and est data available on Redfin, the suburbs. The perception that online real estate marketplace. crime is rampant is a major fac- For condominiums only, the intor, agents and others say, but crease is about 22%. Figures for the downtown there are others, all inter-related, including the slow return to neighborhoods show a stark difdowntown offices, the decline ference from the rest of the city. The median price of condos of retail and the rise in property sold in the Gold Coast in that taxes. “It’s decimated demand,” same 28-month period went says Dan Straus, the Dream down 1%. They’re up, but weakTown Realty agent represent- ly compared with the city overing the Zugermans’ three-bed- all, in Streeterville (up 8.4%), room, 2,880-square-foot con- River North (3.8%) and the
South Loop (up 7.8%). Data for the Loop shows the median sale price rising 13.3%, a figure that is likely skewed upward by multimillion-dollar closings at the new St. Regis tower in Lakeshore East. Compare those figures to Hyde Park (median condo sale price up 58% in the period), Edgewater (30%) the West Loop (24%) and Lincoln Square (23%). “It’s sad to see,” says Kristine Farra, who heads Gold Coast Exclusive Real Estate. “You’re seeing double-digit appreciation in the suburbs, and good for them, but downtown it’s completely different.”
CRIME
Crime is the biggest culprit, say Farra, Straus and other agents. While there’s crime all over the region, and the country, it’s been more sensational in and around downtown, with roiling crowds at North Avenue Beach and Millennium Park in recent weeks, a Loop shooting that caused producers to cancel a performance in a theater on Randolph Street, and fatal shootings in Millennium Park and outside a Near North Side McDonald’s. Because of all this, “buyers are still worried about living downtown,” says Susan Miner of Premier Relocation & Real Estate Sources, a downtown firm, “especially those empty nesters who would normally be coming downtown at this time in their lives.” Restaurateurs say they’re feeling the impact of declining interest in living downtown. “Some customers in Streeterville have commented that they don’t feel comfortable coming out at night and walking to
WEAKNESS IN THE DOWNTOWN CONDO MARKETS Prices of condos have been growing slowly in most downtown markets, compared with some of the city’s other neighborhoods that are dense with condominiums. Except for the popular West Loop, the downtown neighborhoods have lagged behind citywide price growth. GROWTH IN THE MEDIAN CONDO PRICE
January 2020 vs. April 2022 (latest data available)
-1% Gold Coast 8.4%
Streeterville River North South Loop Loop
3.8% 7.8% 13.3% 58%
Hyde Park 30%
Edgewater West Loop
24%
Lincoln Square
23%
Citywide
23%
Source: Redfin
a restaurant,” says Jack Weiss, whose two Coco Pazzo restaurants are on Hubbard Street in River North and Ohio Street in Streeterville. “It’s just not the sense of comfort and safety that they had years ago,” Weiss said. With retail vacancies and crime, it’s lost some of the patina it had.” None of this is to say that the downtown condo market is dead. There have been big marquee sales this year like the $20 million Trump penthouse, a $17 million sale at No. 9 Walton Street and three St. Regis condos at $8 million or more and four more the developer has marked as pending sales. Inventory is low compared to
the worst part of the pandemic: condos for sale in the downtown neighborhoods would fuel about five months of sales, although even that healthy figure is nearly twice the citywide figure of 2.6 months. Gwen Hughes, a Berkshire Hathaway HomeServices Chicago agent, says some buyers see opportunity in the slow-growing prices downtown. In Water Tower Place, for example, the sellers of a 71st-floor condo are asking just under $1.1 million, about 21% off the $1.4 million that they paid for it in 2005. “If you’re a long-term fan of the city, you know it’s going to come back, and you buy now for the long term,” Hughes says.
Top execs buy shares with their own money over First Midwest merger doubts have consistently told analysts and investors that integration of the two banks is going well. Fears that rival banks in Chicago will poach First Midwest’s most productive lenders—a frequent result when out-oftown companies buy hometown banks—haven’t come to pass so far. So they’ve decided to put their money where their mouths are. Scudder earlier this month spent more than $125,000 to buy 8,170 shares of Old National stock, according to a Securities & Exchange Commission filing. He hardly needed more shares. He now controls nearly 600,000. Mark Sander, former First Midwest president and now president of Old National, laid out more than $107,000 for 7,000 shares. Old National CEO Jim Ryan spent nearly $100,000 to acquire 6,550 shares. “We know transformational
P029_CCB_20220530.indd 29
mergers take time to recover the discount inherent in the uncertainty of any combination,” Ryan said in an email. “Still, we have more tailwind than most and a strong track record of successful executions. I am very excited and optimistic about our future—and my money is on us.”
BUSINESS EROSION
Part of what may be spooking investors is the erosion in Chicago for Cincinnati-based Fifth Third following its 2019 acquisition of Chicago’s MB Financial. Even three years after that deal closed, Fifth Third continues to experience sizable declines in business loans in Illinois. In the year that ended March 31, commercial loans fell 11%. Total loan exposure, which includes credit lines not tapped, dropped 22% year over year, according to SEC filings. This was while loans and loan exposure grew modestly across Fifth Third’s multistate footprint. For now, First Midwest’s famil-
JOHN R. BOEHM
FIRST MIDWEST from Page 3
iar name in Chicago still adorns branches here, and local advertising—prevalent on television—
continues to feature the First Midwest brand. But Old National plans this summer to slap its own
name on 82 full-service Illinois branches, and the First Midwest name will go away.
5/27/22 3:06 PM
30 MAY 30, 2022 • CRAIN’S CHICAGO BUSINESS
COMED from Page 3 later will have to charge customers to make up the difference. That’s because ComEd determined the value of Constellation’s credit based on what futures show energy prices will be over the next year-plus. But futures are a snapshot, and energy prices are particularly volatile right now. The price adjustment wouldn’t be allowed until August 2023 under the tariff ComEd filed with the ICC. If the difference is significant—say, $20 per megawatt-hour—that would mean hundreds of millions of dollars ComEd would have to eat for a year and then pass along to customers, with interest that would add tens of millions to the tab. An unusually timed bid process conducted by the Illinois Power Agency, which manages power procurement for utility customers statewide, set peak prices for the summer at nearly five times what they were in 2021, according to IPA reports. The May 16 solicitation was the second time in a month that the agency had sought to secure prices for ComEd customers in the summer, when power consumption typically is high. The first time, in late April, the IPA wasn’t able to strike deals with
any power generators for the summer, likely because the offers were higher than the IPA’s process allowed for. The process was so chaotic, and the results worrying enough to ComEd, that the utility reached out to the ICC a day before its vote to advise against locking in the high prices, according to a filing by the ICC staff. ComEd’s ICC filing was made under seal, and the utility didn’t elaborate much on its reasons. “Given the uncertainties, we thought it was important to give the ICC our view of the benefits and risks of acquiring additional energy supply for our customers for the summer months, as we all share the goals of keeping supply reliable while also keeping customers’ monthly bills as low as possible,” ComEd spokesman Paul Elsberg said in an email.
RAISING CONCERNS
Commissioners chided ComEd for the 11th-hour intervention in their meeting May 20 and voted to finalize the deals. Saying ComEd had ample time to raise concerns with the regulators, ICC Chair Carrie Zalewski described the last-second filing as showing “lack of good faith.” A winner from the state’s decision appears to be Constellation, formerly the power-generation
GETTY IMAGES
If energy prices fall during the summer, ComEd customers may pay more later
An unusually timed bid process conducted by the Illinois Power Agency, which manages power procurement for utility customers statewide, set peak prices for the summer at nearly five times what they were in 2021. arm of ComEd parent Exelon, which was spun off this year into a separate, publicly traded company. Constellation, the largest power generator in Illinois, was one of seven winning bidders in the sales process the IPA just conducted. That has Constellation benefiting from the locked-in nosebleed prices while positioned to pay a significantly lower credit
to ComEd customers if wholesale prices fall over the summer. The benefit may be somewhat limited, though, because Constellation’s nuclear plants for many years have sold their output ahead of time. Most of that output was likely spoken for. But clearly not all. A Constellation spokesman declines to comment. The nuclear deal in last year’s
landmark energy law doesn’t apply to downstate customers of Ameren Illinois. So, after the most recent IPA procurement, their electricity costs will skyrocket beginning June 1. A household in central and southern Illinois using 900 kilowatt-hours during the summer— pretty normal for a single-family home—will pay about $45 more a month than last summer.
INSIDER RESEARCH Turn market trends into market share FULL-SERVICE RESEARCH CRITICAL INSIGHTS UNRIVALED AUDIENCE
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CRAIN’S CHICAGO BUSINESS • MAY 30, 2022 31
This Gold Coast condo basks in the view in all four directions You can enjoy the view of the water, the skyline or the surrounding handsome vintage buildings. Take a photo tour. I BY DENNIS RODKIN
A
HOW TO CONTACT CRAIN’S CHICAGO BUSINESS EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200 CUSTOMER SERVICE. . . . . . . . . . . . . . . . . . 877-812-1590 ADVERTISING . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5492
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VHT STUDIOS PHOTOS
view out over Lake Michigan is, of course, magical, but those who’ve lived with one know well that at night, it goes black. When that happens, Pam and John Rhoades have alternatives. Their 16th-floor Astor Street condo has views in four directions, so they can bask in the view of the water, the skyline or the handsome vintage buildings that surround theirs. It’s not just the view that is on all sides. “It’s really a walking neighborhood,” said Pam Rhoades. From their building, at Astor and Goethe, they can walk a few blocks to Oak Street Beach or Lincoln Park, restaurants and shopping. The only thing missing is the couple’s children and grandchild, who’ve moved to another state. Planning to follow them, the couple, who are both retired, put their four-bedroom, 2,400-squarefoot condo on the market this month, listed with Linda Breedlove of Berkshire Hathaway HomeServices Chicago. The asking price, a little more than $1.01 million, includes an indoor parking space. The condominium is a combination of two former units, a two-bedroom that the couple bought in 2011 and a one-bedroom that they bought in 2019, in Astor Tower, a onetime hotel designed by noted architect Bertrand Goldberg and completed in 1963.
Vol. 45, No. 22 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the first week of July and the last week of December, at 130 E. Randolph St., Suite 3200, Chicago, IL 60601. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2022 by Crain Communications Inc. All rights reserved.
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HELP US MEET THE ONGOING HUNGER CRISIS. The need for food remains high. Food od insecurity is still gether, we can help the surpassing pre-pandemic levels. Together, families who need us. And we can take on the root causes of hunger, investing in local partners, rs, providing job training, and bringing food, dignity and hope pe to our neighbors.
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