Crain's Chicago Business, June 12, 2023

PULLMAN’S PROGRESS HOLDS LESSONS

Neighboring Far South Side communities are eager to replicate the historic area’s success.

Sterling Bay asks teachers to save Lincoln Yards

The North Side megaproject is just one nancial pain point for the high- ying real estate developer

BY DANNY ECKER

Sterling Bay is trying to strike a deal with the Chicago Teachers’ Pension Fund to bail out Lincoln Yards, a move that could help jump-start the stalled North Side megadevelopment, in ict hefty losses on the original backers of the ambitious $6 billion project and o er the developer a lifeline amid anancial storm that threatens its control over major pieces of its high-pro le local portfolio.

With the real estate rm under growing pressure to raise money to recapitalize the 53-acre mixed-use campus planned along the Chicago River between Lincoln Park and Bucktown, the pension fund’s investment committee voted during a May 23 meeting to investigate an opportunity to become Sterling Bay’s primary nancial partner on the development, according to a video of the public meeting and investor documents obtained by Crain’s.

e pitch to the $12.1 billion

fund, as laid out during the meeting by Sterling Bay CEO Andy Gloor: Buy into Lincoln Yards at between $100 and $150 per square foot — potentially a more than $300 million commitment — to replace the project’s existing nancial backers at steep discounts and help inject life into a stagnant development that could generate billions of dollars in new tax revenue for the city over the next couple of decades. e fundraising push comes as Sterling Bay grapples with

McDonald’s franchisees push for more power

A group representing about half of McDonald’s restaurant owners squares o over new performance standards, franchise renewals and spending mandates

BY ALLY MAROTTI

McDonald’s franchisees are making an unprecedented bid to alter the balance of power in their relationship with the Chicagobased hamburger giant.

Leading the push is the National Owners Association, an independent franchisee advocacy group that launched about ve years ago and represents roughly 1,000

of McDonald’s 2,000 franchisees. Advised by a well-known franchise lawyer, NOA is backing state legislation that gives franchisees more protection and is working to get the Federal Trade Commission to rewrite franchise rules in their favor.

McDonald’s and its franchisees have always had their ups and downs, but experts say the latest faceo  goes deeper than familiar debates over new product of-

ferings and store upgrades. is time, franchisees are trying to gain more control in a partnership long dominated by the company.

“It’s not just a menu or restaurant format topic,” said RJ Hottovy, head of analytical research at location analytics company Placer.ai. “ is is a little bit more personal.”

ONE CITY | 50 WARDS

Ex-Chicago Inspector General Joe Ferguson explains the benefits of a city charter. PAGE 4

Marc Brooks on what sparked his entrepreneurial spirit. PAGE 6

Kip Brown is among the Roseland residents wanting to see stepped-up investments in the Far South Side community.

Sterling Bay CEO Andy Gloor speaks during a May 2 Crain’s Power Breakfast event.

See STERLING BAY on Page 22

Bears’ maneuvers leave mayor open for a Hail Mary

Only a good therapist — or someone skilled in the dark art of arbitrage — may be able to gure out exactly what the Chicago Bears are up to in the latest chapter of their Odyssey-like search for a new home.

In rst playing Arlington Heights o against Chicago, and now Naperville and other towns yet to be named against Arlington Heights, the team certainly is giving us insight into the tough life of wealthy NFL owners whose desire to become even wealthier just isn’t appreciated by mere mortals.

e heavy betting line says the Bears still are headed to the burbs sometime in the next few years, someplace they can own their own play palace and lots of surrounding turf for bars, restaurants and more. My sources say not only Naperville but multiple locations in DuPage and Lake counties are being eyed, given the reluctance of school districts in and around Arlington Heights to cough up

su cient tax breaks.

Still, in moving to jilt Arlington Heights, the Bears have given an opening to newly installed Chicago Mayor Brandon Johnson. It will be fascinating to see how he responds, if already-begun talks are just a public relations show or if Johnson somehow can summon the immense resources and creativity needed to make a real play for team. ere appear to be two options. Option One is to try to get the team again interested in Soldier Field, their current but horridly outmoded home.

Former Mayor Lori Lightfoot, working with One Central developer Bob Dunn, pitched the team on a total rehab of Soldier Field, literally capped by a dome. e idea came late and was doomed from the beginning by poor relations between Lightfoot and the team, and by the fact that the size of Soldier Field is smallish by NFL standards.

Beyond that, Lightfoot o ered

absolutely no clue as to how the city would raise the needed $2.2 billion.

On the other hand, there was some merit to the argument that, with lots of infrastructure in place, rebuilding Soldier Field would be hundreds of millions of dollars cheaper than building a new stadium elsewhere. ere also was an appreciation that, at core, professional football is entertainment, and there’s a lot more glitz playing in the heart of a major city than on the edge of town.

If Johnson wants to pitch Option One — right now, he says he’s listening — he’ll have to somehow come up with the money without o ending his progressive base, which is expecting other things from him. He’ll also have to deliver on one other critical thing: to better connect Soldier Field to the rest of the city and its public transportation network, so people aren’t having to trudge a mile or two through biting cold to get from

GREG HINZ

ON POLITICS

the eld to the train.

e transit solution isn’t necessarily Dunn’s proposal for a heavily subsidized transportation center just west of Soldier Field. But Dunn has correctly identi ed the problem: e South Side lakefront, the heart of Black Chicago, will never have more than a small fraction of the wealth of Lincoln Park and the rest of the North Side lakefront unless it has the same fast and reliable public transit that serves, for instance, Wrigley Field. ink catalyst.

Does Team Johnson have the bandwidth to roll out a plan that does all of the above? If he wants to get the team to seriously consider staying at Soldier Field, he’s going to have to do so.

Option Two is to o er a new site for a brand new facility, but again in Chicago. at will mean going probably not to the out-of-the-way South Works site on the Southeast Side, but clearing land — lots of it — somewhere west or south of the Loop.

Would doing so generate unending squawks from current residents, even in largely depopulated areas? Absolutely. Would it provide a basis for transformation of long-neglected neighborhoods — neighborhoods that generally are located right near Chicago Transit Authority and Metra lines? Absolutely.

To paraphrase famed city builder Daniel Burnham, make no little plans. Over to you, Mr. Mayor.

How the PGA learned to stop worrying and love the cash

If you watch golf on television, you won’t see commercials for miracle products that promise to restore hair, ght toe fungus or guard your home against bizarrely masked intruders.

Nope, golf is a high-end game that draws a high-end audience of appealing targets for such high-end concerns as United Airlines, Charles Schwab and CDW.

And now, in the wake of the PGA Tour’s stunning capitulation to the Saudi-backed LIV Golf sports wash, those high-end concerns will be in open, critics-be-damned relationships with one of the most repressive, unsavory regimes on Earth.

What’s the big deal? Many of these rms already do business in Saudi Arabia and have for years.

But now there’s no concealing the money-grubbing alliances — each weekend’s afternoon golf broadcasts will serve as a reminder.

Do they care? Only to the extent that it a ects business, and that’s not likely. Saudi money is readily condemned as blood money, but it’s known, accepted and plentiful the world over.

After a year or so of acrimonious bickering, the PGA on June 6 announced that it and LIV are now in this together, this being the shameless pursuit of obscene amounts of money, which has a way of making even the noblest of principles disappear.

e new arrangement is being politely described as a merger, though it sure looks like a money-talks takeover. e Saudis’ Public Investment Fund, which bankrolled LIV, is the only shareholder, and Yasir Al-Ramayan, the Public Investment Fund’s governor, will be chairman of the new organization’s board of directors.

But thanks, Rory McIlroy, for the vigorous and articulate attempts to stand for the right things. Some of your fellow Touristas were similarly adamant and high-minded in con-

demning the LIV incursion.

Where did it get you? Phil Mickelson, Brooks Koepka, Dustin Johnson and the other soulless mercenaries will be joining you on the tee in a matter of weeks.

Suggest a money game. You’re not hurting, but they’ve got lots more than you do after blithely feeding at the LIV trough.

As to the entire consortium of Tour players who had no idea this was coming? Well, heh-heh, we’re sorry we pulled one over on you, but you’ll get over it once the really big money starts rolling in, trust us.

Trust? Poor choice of words.

A year ago, PGA Tour Commissioner Jay Monahan was suggesting that the big-name Tour pros LIV was recruiting might have second thoughts about defecting and taking LIV money if they had lost anyone close to them in the 9/11 terror attacks, as Monahan had. Fifteen of the 19 hijackers were Saudi, as was their bankroll, Osama bin Laden, which has always raised suspicions of Saudi complicity.

By last week those concerns had gone the way of hickory shafts as Monahan got cozy with his supposed adversary in an astonishing display of hypocrisy.

“We’ve recognized that together, we can have a far greater impact on this game than we can have working apart,” Monahan said. “ e game of golf is better for what we did today.”

Good Lord, that was a more abrupt and stunning about-face than Linda Blair’s Regan in “ e Exorcist.” 9/11 Families United took notice.

“Our entire 9/11 community has been betrayed by Commissioner Monahan and the PGA as it appears their concern for our loved ones was merely window dressing in their quest for money,” the group said in a statement.

Saudi money and American

sports — what took so long? You can almost hear Jerry Jones and Roger Goodell asking each other why they didn’t think of that.

“Games in Riyadh? Why not? How about a team? Can you imagine what those crazy-rich oil sheikhs would spend for a luxury suite?”

“Khashoggi Who?”

e Saudi in uence is all over horse racing. Soccer’s last World Cup went to Qatar, another dim light in human rights, where facilities were constructed in conditions that called to mind Simon Legree.

But the event made money.

To a committed capitalist, the fear of losing money is as strong a driver

as the desire to make it. Maybe Monahan and his minions were warned that LIV’s restraint-of-trade lawsuit had merit, that it could cost the Tour many millions more than it had already spent in legal fees.

Maybe that explains the capitulation, the recidivism to golf’s bad old days of extensive exclusion and haughty privilege.

ere has to be something, other

than the old adage about following the money. Or maybe not. In sports these days, it always comes down to money. And the Saudis have more money than God.

Crain’s contributor Dan McGrath is president of Leo High School in Chicago and a former Chicago Tribune sports editor.

NASCAR to shut down LSD for nearly a week

The city’s plans could snarl tra c for miles in all directions

As the city begins to close streets in preparation for next month’s downtown NASCAR race, the biggest shutdown of all is only beginning to sink in for local motorists, and it’s a whopper that could snarl trafc for miles in all directions.

e closure is DuSable Lake Shore Drive, which — despite being a major highway used by 129,000 vehicles a day, according to the Illinois Department of Transportation — will be shut southbound for nearly a week, and potentially longer.

Under the latest plan announced by the city and con rmed by NASCAR, southbound lanes on the

Business pushing back on ComEd’s proposed hikes

Entities ranging from Walmart to the CTA are speaking out against power cost increases that they warn could dampen the local economy

BY STEVE DANIELS

Businesses say they will see steeper increases than households under Commonwealth Edison’s proposed $1.5 billion, four-year delivery rate hike.

At the end of the four years beginning in 2024, many companies would see their electricity delivery rates increase by more than 60%, according to an analysis performed for BOMA/ Chicago by former Illinois Power Agency Director Mark Pruitt, now an energy consultant. For consumers, the increases would be more like 40%.

ComEd takes issue with Pruitt’s calculations but won’t yet say what’s wrong with them or what more accurate gures would be.

I BY GREG HINZ

drive, those that will be used for races scheduled for July 1 and 2, will be closed to non-NASCAR vehicles the evening of June 28 from Randolph to McFetridge Drive. at will allow installation of concrete barriers and other race construction.

e lanes are expected to reopen by July 4, according to the city’s O ce of Emergency Management & Communications. However, if it rains on either July 1 and 2 and the racing is put back a day, so will reopening, OEMC says, making the closure a full week.

From manufacturers to commercial property owners to public entities like transit agencies, non-residential power users are voicing their unhappiness, in ways that many haven’t with previous ComEd rate hikes.

Downtown o ce landlords, already struggling with the aftere ects of the pandemic, say they can’t handle the power cost increases. Electricity and natural gas are big cost items for o ce building owners and their tenants.

With vacancy rates increasing, building owners will have to choose between paying the higher utility costs that would have

been paid by tenants or passing them along to the remaining tenants, according to testimony submitted May 22 to the Illinois Commerce Commission by BOMA/Chicago, the association representing most downtown Chicago landlords.

AT THE END OF THE FOUR YEARS BEGINNING IN 2024, MANY COMPANIES WOULD SEE THEIR ELECTRICITY DELIVERY RATES INCREASE BY MORE THAN 60%.

“ ese challenges will lead and already are leading to reduced valuations for buildings in downtown Chicago,” wrote T.J. Brookover, regional manager at AmTrust Realty, which operates six buildings in downtown Chicago totaling 5 million square feet.

“As building valuations decline, so will property tax revenues in the Central Business District. is could ultimately threaten the city’s revenues, requiring cuts to services or re-allocation of lost tax revenue to other taxpayers, such as homeowners.”

e rate categories downtown buildings often fall into —

See COMED on Page 9

Developer pulls plan to turn Baxter HQ into industrial park

Bridge’s withdrawal could become a cautionary tale for rms targeting empty or highly vacant corporate campuses as redevelopment opportunities

BY DANNY ECKER

e developer that proposed turning Baxter International’s Deer eld headquarters campus into an industrial park has withdrawn its petition for the project, likely killing an e ort that drew a wave of opposition from nearby residents.

Bridge Industrial noti ed the village of Deer eld on June 7 that it has pulled its proposal for the 101-acre site between Saunders Road and Interstate 94/294 north of Lake Cook Road, according to a village email to residents. Bridge lobbied the village

to annex the corporate campus, which the developer would then raze and transform with a pair of warehouses totaling more than 1.1 million square feet and a recreational sports complex.

e move came one day before Bridge was set to come under re at a village plan commission meeting from homeowners in a residential subdivision across the street from the Baxter campus — but located in the neighboring suburb of Riverwoods — that has fought the plan in recent months.

e meeting has been canceled, the village announced.

It’s unclear what prompted

the withdrawal and whether the move ends Bridge’s e ort entirely. Bridge could pursue the project without Deer eld annexing the property, which is located in unincorporated Lake County.

But sources familiar with the de-

veloper’s plan said Bridge is likely to abandon the project entirely after public o cials indicated they will not support it. If the project is no longer viable, it would also likely crush Bridge’s agreement to buy the campus from Baxter for what

sources said was between $90 million and $100 million.

Spokesmen for the village, Bridge and Baxter did not respond to requests for comment.

A rendering of Bridge Industrial’s proposed redevelopment of the Baxter International campus.

See NASCAR on Page 8

AP

How a charter would help Chicago, and how to get one

Former city Inspector General Joe Ferguson explains that a municipal constitution would set clear limits on mayoral powers and allow ordinary citizens to enforce those limits I

Chicago’s lack of a city charter is a striking feature of its government, both because nearly every peer city has a charter — akin to a city constitution — and because a charter could support other reforms. Joe Ferguson, a former Chicago inspector general and now executive director of charter advocacy group (re)Chicago, explains how a charter could help Chicago and outlines the road map to adoption. is transcript has been edited for length and clarity.

CRAIN’S: How would Chicago bene t from a charter?

FERGUSON: A charter is constitutional, which means it is a higher law that has to be obeyed. Without a charter, a city like Chicago conducts its business according to a municipal code. e problem with a municipal code is that in many respects it’s unenforceable — especially in the absence of a city council with coequal powers that provide for checks and balances on the mayor. ere’s almost no capacity for an individual citizen to le some form of action to enforce an obligation that the city has under the municipal code, which means that elected o cials can ignore certain provisions or simply change them on the y to meet the whims of the political moment or to achieve short-term transactional objectives.

A charter changes how business is conducted by providing a kind of daily procedural and cultural enforcement mechanism. Mayors know they can only go so far in interpreting and applying their powers,

because if they go any further, they’re crossing into at best ambiguous, and at worst violative, territory. If the City Council drifts into a place of transactional compliance with a mayor, a member of the public can le a lawsuit saying, “You guys can’t do this because the constitution says you can’t.”

What’s an example of a charter provision that would promote better government in Chicago?

For Chicago, the foundation for charter-based reform rests rst with the balancing of the power between the mayor and the City Council. As one example, a charter could give the City Council a right and entitlement to all information possessed by the executive branch. at’s a game-changer right there, because it means council members can do their own analysis with all the requisite information needed to make properly vetted and accountable decisions on budgets, policy and programs. at changes the power and the e cacy of the work of committees of the City Council.

BY STEVE HENDERSHOT

What are the steps required to create and adopt a charter?

ere’s three ways. One is a Chicago voter referendum on the charging and creation of a charter commission. at’s a very long process. e second is for the mayor and City Council to authorize the creation of a charter commission — unlikely, because they would be entering into an exercise that might result in a diminution and redistribution of certain powers, including those of the mayor. e third way is legislation in Spring eld that creates a charter commission and amends the Cities & Villages Act by sunsetting certain provisions that apply to Chicago, to be replaced with referendum-approved recommendations of the charter commission.

In some ways, routing this through Spring eld seems the most likely way forward — but dealing with the statehouse also has doomed past charter e orts such as the one in 1907. What’s di erent now?

In 1907, it was almost entirely an issue of redistribution of the dynam-

ics between Spring eld and the city, most notably with respect to taxing and borrowing authority. at is not the case here. It is a matter of the form of government. And so it is Spring eld saying, “Look, we need Chicago to be viable and sustainable for the interests of the state. We need Chicago to be the economic engine for the state overall, and we recognize that that needs to be tied to standards and processes that result in good policy design, decision-making and implementation, and in accordance with well-settled principles, standards and processes of good governance.”

How soon might we see that sort of legislation introduced, and what would that mean for the timeline of a charter commission?

A lot of work needs to be done over the balance of the year. But if that work is done, it sets us up for some form of introduction of legislation at the beginning of the spring session of 2024 — ideally with a lot of co-sponsors that span the partisan divide. If passed during the spring session, the work of a commission could start as early as mid2024. And that prospect is real, in part because, based on my conversations with community, institutional, business and political leaders, there is a broad recognition that absent some significant changes to our very governance structure, the city is in danger of losing some of its competitive advantages.

Kinzie Capital chief a rare example in the private-equity world

Suzanne Yoon began her nancial career at LaSalle Bank. Now her PE rm has completed its maiden institutional fund, a $150 million buyout pool.

BY STEVE DANIELS

Kinzie Capital Partners, the rare example of a woman-owned private-equity rm, has closed its rst institutional fund, a $150 million stockpile for buyouts of businesses at the lower end of the middle market.

For Suzanne Yoon, 47, founder and managing partner, this day has been six years in the making. e Chicago native, who cut her nancial teeth at the old LaSalle Bank in the early 2000s and went on to a private-equity career on the East Coast before returning home, launched Kinzie in 2017.

Since then, the rm has invested millions from individuals like former LaSalle Bank CEO Norm Bobins, one of Yoon’s mentors and a member of Kinzie Capital’s advisory board.

Buyouts from that earlier fund include Colony Display, a Bartlettbased company that builds and installs customized retail displays, particularly for homeimprovement centers; New York-

based Chelsea Lighting, which customizes lighting for business spaces, and Vista, Calif.-based GT Golf Supply, a supplier to pro shops and other golf outlets.

But the new $150 million fund is Kinzie’s rst seeded by institutional investors, which include $95 billion-asset Massachusetts Pension Reserves Investment Management and the Illinois Growth & Innovation Fund, a $1 billion pool of money overseen by Illinois Treasurer Michael Frerichs.

“ is is a highly competitive industry, and we’re ghting for every dollar of commitment,” she said. “We’re not going to grow unless we do great work and outperform the market.”

Kinzie looks to acquire manufacturing and business services rms and makers and distributors of consumer staples. Platform investment targets generate earnings before interest, taxes, depreciation and amortization — a proxy for cash ow — of $3 million to $15 million. Revenues

don’t exceed $250 million.

Yoon sees that category as target-rich, populated by companies that are insulated from business cycles. But the companies she’s focusing on also struggle to build scale, often constrained by technology and automation costs.

at’s where her partner, David Namkung, comes in. e founder of Chicago consultancy Clarity Partners, Namkung is doubling as partner with Kinzie Capital.

His role is to help Kinzie’s portfolio companies solve their technology challenges, which helps make them more e cient and pro table. Most of those companies are too small to have an executive solely dedicated to information technology, Yoon said.

Like Yoon, Namkung is KoreanAmerican. Yoon’s parents immigrated from South Korea. Namkung’s parents immigrated when he was 2. Namkung isn’t a household name, but he and Clarity have played instrumental

roles in visible public-sector improvements like transforming Chicago’s vehicle-sticker program from a once-a-year cattle call to a rolling schedule where drivers can get their stickers online or through the mail.

Kinzie Capital’s success comes as another minority-owned local private-equity rm, Red Arts Capital, raised its rst institutional fund, a $275 million pool, just a month ago. Co-founders Chad Strader and Nicholas Antoine are Black.

Kinzie Capital and Red Arts Capital represent signi cant breakthroughs in a business still overwhelmingly dominated by white males. But there likely will be followers as more institutional investors like the Massachusetts pension fund backing Kinzie Capital launch “emerging manager” programs aimed in part at diversifying the business.

Yoon said she built Kinzie Capital to be successful in all kinds of

economic environments. Helping in that regard is her banking experience.

At LaSalle — and later in her career — one of her primary focuses was on “special assets,” loans that are headed for default unless the bank intervenes to change the terms and the borrower restructures operations.

In the private-equity world, rms are contending with interest rates that are far higher than they’ve been in 20 years. Strategies relying on juicing returns by loading acquisitions with cheap debt and selling them in a few years at a modestly higher price aren’t a winner these days.

“A lot of people look really smart in a declining interest rate environment,” Yoon said. “Our model is not that.”

“Value creation really comes from operations,” she said. “We’re motivated to make good companies great.”

Kinzie Capital’s investments will be funded with equity ranging from 40% to 60%, signi cantly higher than many private-equity rms — at least before the Federal Reserve began raising interest rates rapidly more than a year ago.

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

Joe Ferguson

Suzanne Yoon

Brooks is founder, president and CEO of Chicago’s Hyde Park Hospitality, whose services range from airport concessions to commercial food services and facilities management. The rm, which made last year’s Crain’s Fast 50 list of Chicago’s fastest-growing companies, counts among its clients Meta and Aramark. On the drawing boards this year: the rst Chick- l-A at O’Hare Airport, opening by the end of the year, and the projected doubling of the rm’s 600-strong workforce. Brooks lives with his wife in Chicago, and they own a second home in Los Angeles. Their daughter is 20 months old, and Brooks also has two older daughters, 22 and 20. I By Laura

Bianchi

What is driving Hyde Park Hospitality’s growth?

We are opening several Chase Sapphire airport lounges, and we are picking up new dining accounts with Aramark.

A pivotal career moment?

When my father died in 1999. He was my mentor, con dant and business adviser, someone who would lecture me, but was always there. Reality kicked in when I realized I needed to fend for myself.

What sparked your entrepreneurial spirit?

Growing up in Hyde Park, I was surrounded by strong, African American leaders, educators and entrepreneurs, including my father (Frank Brooks). He built Brooks Sausage from scratch, one of the largest minority suppliers to McDonald’s. After he sold it, he launched Brooks Foods, which grew to more than $100 million in annual revenue. That set the tone and tempo.

Why didn’t you take the reins at his company?

The timing was wrong. I had started a venture a few years before his passing, and then my stepmother ran his company and eventually it was sold.

Your greatest hurdle?

There are countless hurdles for people of color, whether that’s access to capital or talent, having a seat at the table when deals are cut up, or receiving positive media coverage. My major goal is to provide jobs, mainly for people of color. Seventy- ve percent of my leadership is made up of women and minorities.

The downside of the hospitality business?

Staying in shape! I’m always tasting, smelling and seeing food. To battle the bulge, I do cardio, light weightlifting, boxing and yoga stretch. After 10 years of working with a boxing coach, I can tell you it’s one of the most rigorous cardio and mental workouts you’ll get.

An embarrassing moment?

Inadvertently walking into the women’s restroom at a client’s business. I was focused on my phone and didn’t realize my mistake until I saw some ladies at the sinks. They really cracked up when they saw the look on my face.

What do you collect?

African American and contemporary art.

One of your favorite artists?

Kehinde Wiley from New York. He’s known for his naturalistic paintings of Black people.

A favorite charity?

Hugs No Slugs, founded by Aleta Clark. She promotes nonviolence in underprivileged Chicago neighborhoods and helps feed those without homes. I underwrote her food program for 35 people this year.

Downtown apartment market not too hot, not too cold

Even though rent growth slowed further in the rst quarter of this year, apartments remain a bright spot amid overall su

BY ALBY GALLUN

e downtown apartment market may be having a Goldilocks moment.

After slipping into a deep freeze during the pandemic in 2020 and running hot in 2021, the market is cooling somewhere in the range of “just right.” e downtown occupancy rate remains high — 94.4% in the rst quarter, versus 94.5% a year earlier — but rent growth is slowing, according to the Chicago o ce of Integra Realty Resources, an appraisal and consulting rm.

Downtown is “maybe moving back to a more normal market,” said Integra Senior Managing Director Ron DeVries.

Apartments have been a bright spot in downtown Chicago, which has su ered as fewer professionals come into the o ce, pushing up vacancies at o ce and retail properties. e Integra numbers show that people want to live downtown even if they don’t want to work there.

Many want to live in the Fulton Market District, where apartment developers like Tom Roszak have been busy building luxury high-rises. Roszak’s rm, Moceri + Roszak, recently completed Fulbrix, a 27-story, 375-unit tower at the corner of Randolph and Elizabeth streets. e

building’s leasing o ce opened in early February and residents started moving in at the beginning of April. It’s already 55% leased — ahead of schedule, Roszak said.

“It’s going pretty well,” Roszak said.

Downtown rents are still high, but rent growth is slowing. e net rent at top-tier, or Class A, apartment buildings was $3.61 per square foot in the rst quarter, up 1.7% from a year earlier, according to Integra. Net rent includes concessions like free rent.

at’s the smallest annual increase in two years and below the average annual increase of about 3.8% in the decade before the pandemic, according to Integra.

DeVries expects Class A downtown rents to climb about 2% to 4% this year — still below the current rate of in ation.

at’s an acceptable increase for many renters, especially considering the big hikes that landlords pushed through in 2021, when the market came roaring back from its precipitous plunge in the rst year of the pandemic.

At less-expensive Class B downtown buildings, the net rent rose to a record $3.05 per square foot in the rst quarter, up 4.5% from a year earlier, according to Integra.

e market’s future direction will depend on the job market, historically the most important driver of demand for apartments. A lot of renters at Fulbrix are professionals who work downtown; some are outof-towners moving to Chicago for jobs, Roszak said.

Apartments at the building are renting for a higher-than-expected $4.10 to $4.50 per square foot, he said. Moceri + Roszak opened the building at a good time: at the beginning of the spring leasing market, when demand for apartments tends to be especially high.

Fulbrix also includes 75 apartments set aside as a ordable for renters with low to moderate incomes, a requirement under a city a ordable housing ordinance. Demand for the low-cost apartments was especially strong, said Roszak, who estimated that the building was only able to accommodate about half the people who applied for the units.

SUPPLY DRIVES DIRECTION

e direction of the downtown market will also depend on the supply of new apartments. Rising interest rates and a tighter lending climate have made it harder for developers to secure construction nancing for new projects, limit-

Of the major auto insurers in Illinois, Geico might be the biggest loser

It has lost nearly a quarter of its policyholders in Illinois since the pandemic

BY STEVE DANIELS

Geico appears to be the big pandemic-era loser in terms of auto-insurance market share in Illinois.

Since November 2019, the company has seen its number of auto policies here decline by more than 23%, to 308,427 as of last month from 403,136, according to filings with the Illinois Department of Insurance.

Geico was the fourth-largest car insurer in Illinois by premiums before the pandemic. Figures for 2022 aren’t yet available.

Both Bloomington-based State Farm, the state’s largest insurer of vehicles, and Ohiobased Progressive have boosted the number of auto policies here in that time frame.

Northbrook-based Allstate, the second-largest auto insurer in the state, has seen policy declines in the single digits during that period, according to filings.

For more than two decades, Geico was the fastest-growing car insurer in Illinois and elsewhere in the country. Its ubiquitous and distinctive advertisements, promising to save you “30% or more on car insurance” if you called, were effective.

And a low-cost structure — Geico didn’t pay a nationwide army of agents like

ering

Geico was the fourth-largest car insurer in Illinois by premiums before the pandemic.

State Farm and Allstate did to sell insurance — helped Geico make good on that promise.

But once driving levels picked up following the shutdown year of 2020 and inflation hit, Geico hiked auto rates like it never had before. A 17% increase on average for most customers last year came after 12% in combined hikes in 2021.

Now Geico is increasing rates by another 4.5% on average, effective in August for existing customers, according to a May 30 filing with the Illinois Insurance Department.

For a majority of policyholders, the average increase will be

about $92 annually, or nearly $8 a month.

Of course, the other big auto insurers have hiked their rates, too, in response to claims-cost inflation that have rendered Allstate and State Farm unprofitable on an underwriting basis.

But perhaps it’s not surprising that customers would be quicker to bolt from Geico than its rivals. For years, Geico’s sole sales message has been that it’s cheaper than they are. Allstate and State Farm tend to emphasize service and hassle-free claims payments.

Allstate and State Farm have their own legion of agents to help keep customers in the fold when rates rise.

Progressive sells over the internet and phone, but also sells through independent agents and enjoys a good relationship with many of them.

A Geico spokeswoman didn’t respond to a request for comment.

Illinois isn’t the only state where Geico is struggling to retain customers. Its auto policies nationwide dropped by 2.4 million, or 13%, in the year that ended March 31, according to a U.S. Securities & Exchange Commission filing by Omaha, Neb.based parent Berkshire Hathaway.

ing the number of apartments the market will gain over the next 12 to 24 months.

DeVries forecasts that developers will complete 2,900 apartments in downtown Chicago this year and 3,700 in 2024, down from an earlier prediction of 5,600 units for 2024.

at’s good news for landlords who might have worried about overbuilding, which could force them to cut rents.

But if there’s one place where developers could go overboard, it’s in the West Loop. Developers will complete nearly 1,100 apartments in the neighborhood this year, ac-

cording to Integra. Projects opening this year include the Row Fulton Market, a 300-unit high-rise at Randolph and Peoria streets built by Related Midwest, and a 282unit tower at 160 N. Morgan St. developed by Sterling Bay.

e West Loop supply will surge in 2024, when developers complete more than 2,300 units in the neighborhood. Is a glut coming? DeVries isn’t worried yet.

“Whenever you see a lot of supply added into one submarket, it certainly puts a lot of pressure on rents,” he said. “But we don’t see any cracks in the armor.”

GEICO

Apartments have been a bright spot in downtown Chicago, which has su ered as fewer professionals come into the o ce, pushing up vacancies at o ce and retail properties.

On brink of foreclosure, developers of failed River North tower seek refuge in bankruptcy

Add two Chapter 11 lings to a legal mess that’s now well into its fth year

BY ALBY GALLUN

The developers of a failed high-rise project in River North have gone to bankruptcy court to block their lenders from foreclosing on their development site, another turn in a complicated legal melodrama that stretches from Chicago to China, Bahrain and Hawaii.

Two ventures with interests in the property at Wabash Avenue and Superior Street filed for Chapter 11 protection on May 31, thwarting a sheriff’s sale of the parcel scheduled for the next day. It’s a last-minute legal maneuver that could give the developers a little more time to figure out their next move in a four-year court battle with their lenders.

The developer duo — a New York intellectual property attorney named Jeffrey Laytin and a little-known Chicago investor, Jason Wei Ding — had ambitious plans for the property back in 2017, when they unveiled a proposal for a 60-story condominium-and-hotel tower there.

But city officials rejected that idea, and all the pair have produced so far is a tall stack of legal bills. After clashing in court with dozens of Chinese investors who backed the proposed high-rise, the developers agreed in 2020 to return $27.5 million of the group’s money. The investors are still waiting to be paid.

Now, through bankruptcy court, the developers are opening up a new front in the legal ght with their lenders. In a foreclosure suit led in 2019,

the lenders — ventures led by New York-based Madison Realty Capital and Arena Investors, also based in New York — said the development venture that owns the property had defaulted on more than $22 million in debt.

e case has moved slowly, but a judge in March approved a plan to sell the site through a sheri ’s sale scheduled for June 1, with an opening bid of $9 million, according to the Cook County Sheri ’s O ce website. Typically, a sheri ’s sale is a legal formality that merely allows a lender to take possession of a property.

LEGAL MANEUVER

A bankruptcy petition can stop a foreclosure suit in its tracks, even if it’s filed just hours before a sheriff’s sale. Some delinquent real estate borrowers will use bankruptcy as a last resort — a way to buy more time so they can negotiate a deal with their lenders or find a white-knight investor.

The two filings by the Ding and Laytin ventures are a delaying tactic, said Doug Litowitz, a Deerfield-based attorney who represents Chinese investors in their class-action case against the developers.

“These filings are an illegitimate use of Chapter 11 which is meant for reorganizing viable businesses,” he wrote in an email. “Chapter 11 is not meant for companies who have no assets except underwater real estate. This strikes me as an abuse of the bankruptcy laws to block a legitimate foreclosure.”

Laxmi Sarathy, an attorney based in Oakbrook Terrace who represents the two ventures that filed for bankruptcy protection, did not respond to requests for comment. Representatives of Madison Realty Capital and Arena also did not respond to requests for comment. An attorney for Madison, Jamie Burns at Chicago-based

Levenfeld Pearlstein, declined to comment.

MISSING MONEY

Ding and Laytin raised about $50 million from 90 Chinese investors for the project through the EB-5 program, a controversial federal initiative that grants U.S. residency to overseas citizens who invest in qualified projects. It’s not clear where the Chinese money went; Ding and Laytin have insisted they did nothing wrong and are making a sincere effort to repay about 50 of the investors who signed a $27.5 million settlement agreement in 2020.

They haven’t come up with the money yet. In 2021, the developers said they would pay off the 50 investors with proceeds from a $250 million construc-

tion loan from a lender in Bahrain. But the loan never came through, and Litowitz alleged that the financing was just a made-up story to delay payment.

In April, a U.S. magistrate judge concluded that the developers and their Chicago attorney, Daniel Hildebrand, did not knowingly misrepresent their pursuit of the loan. But the magistrate judge did say that Hildebrand fell short in his legal duties to investigate “many red flags” suggesting the loan was not legitimate. The U.S. District Court judge overseeing the case, Charles Kocoras, recently ordered Hildebrand to explain why he should not be sanctioned for his handling of the matter.

In an email, Hildebrand says

he “disagrees with the magistrate’s report and recommendation and contends that there is no basis for sanctions.” He said he “was transparent with the Court that he performed no investigation of the loan or other documents from the lender, and he also obtained a sworn declaration from the lender’s U.S. agent attesting to the authenticity of the documentation. Nothing more was required.”

Ding and Laytin also face a similar lawsuit from another group of Chinese investors who backed a proposed resort development in Hawaii backed by the developers. But the developers, who raised $24 million from the investors, never started that project either. That case has moved out of the courts and into arbitration.

DuSable Lake Shore Drive closure could back up traffic for miles in all directions

Northbound lanes on the same area of the drive also will be closed, but for a much shorter period of time, from 4 a.m. on race day, July 1, until the evening of July 2, weather permitting.

O cials at one point considered temporarily running two lanes of tra c each way on what normally are northbound lanes, but they ruled that out for safety reasons.

City and NASCAR o cials say they’ve been diligently warning people for months of the coming closures.

For instance, NASCAR spokesman Dennis Culloton says the group has distributed more

than 45,000 detailed brochures, posted a fact- lled website and participated in more than 150 meetings with local businesses, organizations and residents.

“We’ve been messaging since April 10,” says Acting OEMC Director Jose Tirado, and they will soon amplify that messaging with radio and TV spots.

But though word has gotten through to many of those who live or work downtown — tenants in Prudential Plaza, where Crain’s is based, received a detailed memo on closures several days ago from building management — that word has been slow to spread. And many people who just travel through the central

area rather than stopping there may not know at all.

“I had no idea this was going to happen until about a week and a half ago,” says state Rep. Kam Buckner, D-Chicago, whose district includes much of the central area of the city. “It’s going to be a mess,” he predicts, “Lollapalooza times 10.”

ALTERNATIVE ROUTES

Ald. Brian Hopkins, 2nd, says he was aware and praised NASCAR and city o cials for keeping him apprised. But it wasn’t until he suggested it that the city and state transportation departments were formally asked to suspend any downtown roadwork through the

NASCAR period, lest tra c woes be compounded, he said.

If people get the message not to drive to or through downtown, “ e event could come o with minimal inconvenience,” Hopkins said. But with the city having “delegated” much planning to NASCAR, problems are possible.

To avoid trouble, the city is urging those who want to drive from the North Side to the South Side during NASCAR week to use the Kennedy Expressway (now in the middle of a major construction project), the Dan Ryan, or north/south thoroughfares such as State Street, Wells Street, LaSalle Street and Wacker Drive.

At potentially the worst choke

point, Randolph at the drive, motorists will be instructed via signs and other devices to reroute onto Lower Wacker Drive. OEMC ofcials say they’ll also be urging motorists to exit the drive further north to avoid woes and will have extra tra c management personnel on hand to direct tra c. Motorists should not try to use Michigan Avenue as an alternate. Portions of it will be closed beginning June 29.

Hopkins says he’s been assured of the most important thing, that “No local resident will be denied access to their home at any time.”

Meanwhile, deadpans one ofcial, “We’re excited for the challenge.”

NASCAR from Page 3

River North rowhouses at Superior Street and Wabash Avenue.

JOHN R. BOEHM

Businesses facing steep increases offer rare rebuke of proposed ComEd rate hikes

COMED from Page 3

medium and large commercial — are slated for 62% and 63% rate hikes, respectively, over the coming four years, according to Pruitt’s analysis for BOMA.

A ComEd spokeswoman said in an email that BOMA’s numbers aren’t accurate but refused to provide alternative gures. e utility will give more detail when it les its responses to outside testimony later this month.

“ e numbers are wrong, and their methodology is wrong,” spokesman Shannon Breymaier wrote. She declined to say whether ComEd would o er gures set out similarly, by rate class, when it responds. She also said the utility doesn’t see a “dramatic di erence” between the rate impact to households and businesses, but wouldn’t provide detail.

“We’re still analyzing aspects of BOMA Chicago’s testimony, but we disagree with their overall assessment of our multi-year plans,” Breymaier wrote. “ e proposed investments in these plans will ensure ComEd maintains a highly reliable grid with fewer and shorter power outages, which will continue to create savings for commercial, industrial and residential customers.

… As extreme weather events, transportation and building electri cation and other customer demands increase, the need to invest in the reliability of the system only grows.”

One thing that’s not in dispute: Businesses will bear the bulk of the separate costs ComEd will impose on ratepayers to provide more juice for electric vehicles, particularly those driven by eet operators like transit agencies. ComEd plans to spend $231 million on “bene cial electri cation” over the next three years. Business customers will foot most of that bill.

e $1.5 billion plan also doesn’t include two separate rate hikes for next year, a $247 million request to recover more due from ratepayers on past spending under previous law and a $119 million increase for energy e ciency programs. Businesses absorb about 70% of the cost of energy e ciency programs.

All the spending — the electrication, e ciency and $247 million plan — are authorized under the 2021 Climate & Equitable Jobs Act. Likewise, CEJA permitted ComEd to put forth the four-year rate plan totaling $1.5 billion.

e ICC already has ruled on electri cation and must decide on ComEd’s other requests by December.

POTENTIAL BACKLASH

e alleged outsize e ect on business raises questions about whether the substantially higher electricity costs necessary to fund all the programs envisioned in CEJA is being passed along to commercial customers in a bid to shield consumers from rate shock.

at could lead to political backlash against programs that otherwise enjoy majority support because they’re aimed at addressing climate change.

Manufacturers, which in the past have supported ComEd rate hikes as necessary to upgrade the grid, now are rmly in the opposition camp. e Illinois Manufacturers’ Association opposed CEJA as too costly in 2021, and CEO Mark Denzler has warned repeatedly that Illinois is at risk of losing one of the few economic advantages it has over nearby states: reasonably priced electricity.

Hillside-based Builders Asphalt, a family-owned business with four asphalt manufacturing plants in northern Illinois as well as a paving operation, warns that it may have to reduce capacity to cope with the higher power costs. Elec-

Baxter HQ redevelopment petition is dropped

e withdrawal stands to make Bridge’s e ort a cautionary tale for industrial rms targeting empty or highly vacant corporate campuses as redevelopment opportunities. Several proposals like it have emerged across the suburbs as remote work has weakened ofce demand and retailers crave warehouse space to store and distribute goods bought online. Such plans are forcing public o cials in suburban municipalities to weigh the impact large-scale warehouse developments would have on their communities.

ose in favor see them as effective ways to reinvigorate white elephant o ce properties with new jobs and local tax revenue. Opponents push back against what they say would be an onslaught of trucks creating pollution, noise and tra c congestion that may come with new warehouse development.

MIXED OPINIONS

Industrial developers have won support in some pockets of the suburbs, most notably at the former Allstate campus that was annexed by Glenview and in Rolling Meadows, where a large o ce complex was recently sold to an industrial developer that plans to demolish it and build warehouses. O cials in Naperville and Lincolnshire, meanwhile, have taken steps to formally outlaw similar projects on properties historically

designated for o ce use.

In the Baxter-Bridge case, residents in the 300-plus home Riverwoods subdivision of orngate — which would likely be most impacted by truck tra c from the Bridge project — staged a strong opposition e ort through an online petition and rallying large crowds at a pair of public hearings on the matter.

Amid jeering from a crowd at a May 11 hearing at Deer eld High School at which Bridge formally presented its plan, Bridge Partner Jon Pozerycki told Deer eld planning o cials that the developer aims “to be, hopefully, partners and part of the community. is is the beginning of that process.”

A tra c consultant hired by Bridge said during the meeting that the project would see an average of 300 trucks coming in and out of the property each day. And a property tax projection prepared by another consultant and included in Bridge’s application estimated the Deer eld property’s annual tax bill would likely increase to nearly $3.2 million in 2027 from around $584,000 in 2021 if Bridge’s project is completed.

Bridge o cials during the meeting also highlighted the severely outdated state of the Baxter buildings, noting they are unlikely to draw new tenants and would require heavy investment from a new owner to become competitive o ce buildings.

orngate, whose attorney vowed during the May 11 meet-

tricity accounts for about 10% of plant costs, said Ryan Gandy, company president.

REDUCED OPERATIONS

Executives already are mulling reducing plant operations to eight hours a day from 12, he said in an interview. at would enable the company to avoid peak-demand parts of the day when electricity costs are higher.

“It’s a conversation we’ve had more in the past year than we ever had,” he said.

Over the past three years, the company, which generates more than $100 million in annual revenue, has averaged $1.1 million in annual electricity costs. About $700,000 of that total was delivery charges to ComEd. at portion is set to rise based on the pending rate proceedings.

“It’s bad,” Gandy said. “It’s scary. We have no control over it. at’s the rst thing.”

One thing the company does control is how much and when to operate. If the company does curtail capacity, that will a ect the livelihoods of hundreds of hourly workers.

It’s not just business poised to be hit. Public transit agencies and schools, too, are bracing for big increases.

“ e CTA faces a 50% increase in the Railroad Class traction power delivery costs over the four years and a similar increase in charges for electricity delivery at the CTA garages,” wrote Kate Tomford, senior analyst at the Chicago Transit Authority, in May 22 ICC testimony.

She noted the environmental bene ts of public transit — something ComEd says its investments will promote.

Also intervening at the ICC is Walmart, which operates 184 stores and seven distribution centers in Illinois and employs about 57,000 in the state. Ninety- ve of those stores and three distribution centers are in ComEd’s service territory.

In testimony led with the commission, Alex Kronauer, Walmart’s senior manager for energy services, wrote that ComEd’s requested return on equity should be sharply reduced to 9.14% from the 10.5% the utility wants. at difference would mean hundreds of millions less in revenue to ComEd.

ing to “put on a very vigorous case against this proposal,” was set to counter the Bridge details with its own tra c study estimating that the Bridge buildings would generate “4 times more daily tra c, and 6 to 8 times more tra c in the peak hours” than Bridge’s consultant projected, according to documents posted on the village’s website in advance of the scheduled June 8 meeting.

TRACK RECORD

Bridge has been one of the most active industrial developers in the Chicago area, with large warehouse properties developed over the past few years in Itasca, Downers Grove, Franklin Park and Mundelein, among other locations. e rm has developed more than 21.5 million square feet of industrial properties in the Chicago area, according to its website. As of early last year, Bridge had acquired or developed 230 buildings totaling $12.1 billion in value.

Baxter said earlier this year it planned to relocate its headquarters if it completed its campus sale to Bridge and that it intends to “stay in the general area.”

Baxter commissioned the development of its campus in the early 1970s, and the company moved to the Deer eld property in 1975. Part of the 10-building headquarters, which includes buildings totaling 646,000 square feet, was designed by renowned Sears Tower and John Hancock Center architect Fazlur Khan.

BAXTER from Page 3

How the Bears and the mayor could win big

We won’t beat around the bush. e Chicago Bears should stay in the city of Chicago.

Yeah, we said it.

And we’ll continue to say it until this indecision by the storied NFL franchise nally fades.

We say it because a new mayor who has yet to show he holds grudges has opened the door, if only slightly, to a real conversation.

We say it because suburban options have all sorts of challenges, no o ense to Naperville, Arlington Heights or any other locale. And while you might argue the same for the city — like, for starters, where to put a new stadium — a Chicago setting o ers the best long-term chance for success for the Bears, far beyond the playing eld.

Don’t ask us.

Call Tom Ricketts.

Eerily like the Bears situation, there was a time when the head of the family group that owns the Chicago Cubs was thwarted in his e orts to convince state and local o cials for a handout to invest the millions of dollars to upgrade the hallowed ground called Wrigley Field.

Frustrated but determined, and against all odds, Ricketts got just enough of the right breakthroughs to privately nance one of the best long-term bets a sports franchise could make. In the end, Ricketts got a lesson in politics but learned that when you step back and

compromise, you can get what you need — even if it’s not everything you want.

A World Series win later, along with big concert summers, restaurants, taverns and a cool greenway connecting the team better with its surrounding community in a way no previous owner cared to try, Ricketts is winning — even when his team is not.

And last we checked, the Cubs are still lling seats.

You might say there’s one big di erence in this whole scenario: e Ricketts family owns its facility and the Bears do not. On top of it, they don’t have an ornery landlord in the Chicago Park District.

And we agree. If the Bears are serious about nancing their own future on any serious level, then they must cut ties with the Park District, which has demonstrated for decades not to be a good business

partner with the Bears. We’d be foolish to even consider suggesting that the entity that controls Soldier Field ever would be.

What the Bears need is enough land to build an entertainment complex that can generate su cient revenue year-round to help the NFL franchise really move to the next level. (See L.A.’s SoFi Stadium for a tutorial.) Building something beyond just a cold stadium that sits idle most days is essential today to compete.

e stadium must connect to the community. It needs to be something where those without a ticket can linger, something all visitors can enjoy in multiple ways.

Doing so will drive all sorts of revenue opportunities for the Bears. e city’s vast transportation network, its hotels and its vibe make it the natural place.

e big hurdle, of course, is where. Developers suggest that at a minimum you need 100-200 acres of uncomplicated space.

Now is the time for the city and the Bears to sit down and think through thoughtfully some kind of viable option — preferably one that connects to and helps the neighborhoods that need a big plan to unleash real opportunity for revitalization.

Compromise, and the Bears might get what they need, if not what they really want.

e team needs an option. A new mayor could use an early win.

Bear down, Chicago.

Changes at D.C. airports would hurt Chicago

Acoalition of organizations in Western states has come together to move convention and travel business from Midwest markets, most prominently Chicago, to their far West and West Coast markets. is e ort is using the federal government to change air travel in and out of one of the most important feeder markets to Chicago: Washington, D.C. A bill has already been introduced into committee.

Congress oversees how the two D.C. airports operate, and one of those — Ronald Reagan Washington National Airport — sends hundreds of ights each day to the Midwest, or within the “perimeter” which encompasses the eastern half of the U.S. is is how it was designed by Congress. e “Perimeter Rule” designated Washington-National as the “local” hub and Washington Dulles International Airport as the long-haul facility that serves cities outside that perimeter.

is was the arrangement until Western U.S. congressmen ipped 20 of the local Washington-National slots to long-haul. Midwest markets lost direct ights to D.C. while markets like Los Angeles and Phoenix gained ights. No matter that WashingtonNational isn’t built for the larger jets that serve long-haul ights and the more intense tra c that comes with them, and that the airport built for long-haul ights — Dulles — is underutilized.

Today a newer batch of congressional members from the Western U.S. would like to switch over even more gates. ey are supported by a group called the Capital Alliance whose members are primarily in the travel, tourism and conference industries. Flipping Washington-National gates to long-haul is viewed as a boost to those markets’ conference business, while negatively impacting Chicago.

Originally, Western states wanted the

perimeter rule in order to protect Dulles and guarantee its vitality. Now, they want Dulles and whatever they are able to wrangle out of Washington-National.

Switching gates at Washington-National makes no logistical sense. is is about marketing conference facilities in Los Angeles, Las Vegas, Phoenix, Austin and other cities at the expense of Chicago. is is about making Western markets easier to get to, and Chicago a more di cult trip to book. is is a tool in major conference bidding process.

Chicago and its convention and tourism industry are guaranteed to be harmed by slot changes at WashingtonNational. Travel between Chicago and D.C. will be considerably more di cult including those coming for the coveted meetings and conference business. Western markets with new, direct service to WashingtonNational will bene t and prosper.

I’ve spent my life working in transportation, and while I’ve outlined the motivation for the proposed change, the operational costs are far more dire. And not

just for Chicago, but for all airports inside the perimeter. is proposed next batch of slot changes will cause havoc with the airlines that followed Congress’ original guidance on how the D.C. airports were to operate and used that directive to build ight networks, purchase billions of dollars in aircraft and invest mightily in operations in dozens of cities.

It is unfathomable to ask airlines that service within the perimeter to now undo decades of investments so that Western markets can enjoy a new advantage in attracting business.

Any changes to DCA’s slot and perimeter rules jeopardize that national network and should not be enacted. Congress must block all further attempts to fix what is not broken. And use the two airports in the manner they were conceived.

James E. Coston is executive chairman of Corridor Rail Development Corp. in Chicago.

ANY CHANGES TO DCA’S SLOT AND PERIMETER RULES JEOPARDIZE THE NATIONAL NETWORK AND SHOULD NOT BE ENACTED.

ALAMY

Who’d lose bigger if the Bears leave Chicago? e team and the owners.

We should stop promoting the idea that Chicago would losenancially if the Bears organization decides to leave the con nes of a stadium lled with loyal fans and a history marked by many great moments (“Bears’ Naperville talks open the door to a fresh o er from Chicago,” June 5, online). It is, in fact, the Bears and the McCaskey clan who would lose a great deal more.

Apparently that’s something they’re very comfortable with, because, win or lose, Bears fans have cheered them on season after losing season. It’s time for

President/CEO KC Crain

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G.D. Crain Jr. Founder (1885-1973)

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Chicago’s leaders to consider the possibilities and bene ts of forming a new relationship with a team that is focused on winning instead of whining.

A new football team in Chicago would be welcomed with open arms by a solid fan base — one that has become tired of the constant drama surrounding the Bears organization and their fumbling leadership. It’s time to say goodbye to the Bears and move on to a new era in Chicago sports.

Let us consider their departure as a necessary change for growth and learn

from the lessons of our past. We can certainly do better.

B. SCHANDELMEIER Chicago

The CTA seems lost, and that’s devastating for Chicago

Thank you for the column “Greg Hinz: The CTA is overdue for an overhaul” (June 5). As a frequent CTA rider, I wholeheartedly agree with the agency’s problems and the lack of progress

toward solutions. Hinz succinctly described what I see on a daily basis.

It’s a strange scenario: I genuinely believe the crime/ridership/frequency of service/cleanliness/etc. statistics cited by the CTA are accurate, but they just don’t reflect reality. The agency seems lost and it’s devastating for the city.

Hopefully we will see some positive changes soon.

ADAM MARRERO Chicago

PEOPLE ON THE MOVE

ARCHITECTURE / DESIGN

Lamar Johnson Collaborative, Chicago

Lamar Johnson Collaborative Elevates

Shannon Riddle to Senior Principal and Todd Emeott to Principal. Shannon is the Of ce Director of the Chicago Of ce and has 23 years of experience working on community, corporate and commercial, higher education, and mission-critical projects. In addition to managing complex projects, she holds a Master of Architecture and a Bachelor of Science from the University of Illinois.

Todd has over 18 years of experience designing corporate and commercial, higher education, and residential projects. He has extensive experience in design and leads the interiors group with innovative design thinking and processes. Todd holds a Bachelor of Fine Arts in Interior Design from Kendall College of Art and Design.

FINANCIAL SERVICES

Wintrust Financial Corporation, Rosemont

Wintrust Financial Corp., a nancial services holding company based in Rosemont, Illinois, with 175 locations across Illinois, Indiana, and Wisconsin, is pleased to announce the promotion of Jeff Hahnfeld. Jeff was promoted to Executive Vice President-Controller and Chief Accounting Of cer of Wintrust Financial Corporation. Jeff will celebrate 20 years with Wintrust in March.

INFORMATION / DATA TECH

Wavicle Data Solutions, Oak Brook

Ali S. Sajanlal brings nearly 30 years of data and analytics experience to Wavicle Data Solutions as Practice Area Lead for alliances. In his role, Sajanlal will build strategic partnerships that bene t customers with innovative solutions and maximum ROI. He joins from Accenture, where he earned recognition for leading their Snow ake practice.

Sajanlal Osland

Matthew Osland joins as Director of Alliances, forging relationships with cloud partners and driving innovation and collaboration for clients. He specializes in scaling partnerships by bringing cloud data platforms to market for consulting organizations. Osland built the alliances Center of Excellence for Clarity Insights and was awarded Partner of the Year ve times at Clarity and Accenture.

LEGAL

G2, Chicago

Eunice Buhler was promoted to General Counsel at G2, the world’s largest and most trusted software marketplace, where she will continue to build and lead a world-class legal team and contribute to the growth of the business. This is a new role at G2, marking the company’s rst-ever General Counsel.

PHARMACEUTICAL

Fishawack Health, New York / Chicago

Ryan Mason has been promoted to Chief Marketing and Creative Of cer and will unite creative, brand and engagement strategy and media and analytics teams. He has held the roles of Chief Creative Of cer, Chief Strategy Of cer and Chief Digital Of cer previously. A testament to Mason’s abilities was being recognized with a Cannes Pharma Lion award.

Mason Erb

BANKING

Byline Bank, Chicago

Byline Bank welcomes Michael Chin as Senior Vice President, Commercial Banking. Chin’s commercial banking career spans 30+ years working for multiple regional nancial institutions. At Byline, Chin will report to Brogan Ptacin and work with a diverse landscape of small to midsize businesses throughout Chicagoland. He is currently Board Treasurer for the FBI Chicago Citizens Academy Alumni Association and a Board member for the Japanese American Service Committee Housing Corporation.

FINANCIAL SERVICES

Wintrust Financial Corporation, Rosemont

Wintrust Financial Corp., a nancial services holding company based in Rosemont, Illinois, with 175 locations across Illinois, Indiana, and Wisconsin, is pleased to announce the promotion of Joel Macholan. Joel was promoted to Executive Vice President-Treasurer of Wintrust Financial Corporation with primary responsibilities for liquidity and capital management, interest rate risk, the investment portfolio and wholesale funding. He will celebrate 13 years at Wintrust in September.

LAW

Epstein Becker Green, Chicago

Epstein Becker Green welcomed prominent trial attorney Johner T. “J.T.” Wilson III as a Member of the Firm in its Chicago of ce. J.T. represents companies across a wide range of labor and employment matters nationally.  He is a Chicago Fellows Alumni Co-City Lead of the Leadership Council on Legal Diversity, member of the Economic Club of Chicago and has been honored by Crain’s Chicago Business as a Notable Minority in Accounting, Consulting & Law.

NON-PROFIT

City Year Chicago, Chicago

Eric D. Wilkerson joins City Year Chicago as Managing Director of Development. Eric D. Wilkerson has more than 15 years of fundraising experience leading dynamic and comprehensive development programs and staff for established and respected nonpro t organizations. “Our city’s youth are our world’s future and it is our responsibility to create a more equitable runway for their paths forward. City Year Chicago plays a critical role in eliminating barriers for younger generations.”

NON-PROFIT

Midtown Educational Foundation, Chicago

Jeffrey D. Erb has been chosen to serve as Chief Media Of cer. Erb is charged with growing the company’s media and analytics capabilities to expand specialized tools and resources in house.  He has a track record of driving transformational change within the pharmaceutical media industry. Erb is a recognized thought leader and the recipient of numerous industry awards.

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

HEALTH CARE

VNA Health Care, Aurora

LEGAL

REAL ESTATE

Newcastle Limited, Chicago Newcastle Limited is proud to announce the promotion of Gunner Schnowske to Managing Director, Asset Management. As the head of Newcastle’s Asset Management function, Schnowske has played a key role in overseeing the rm’s investment portfolio and has been instrumental in driving the company’s business strategy as it continues to expand its portfolio. Newcastle is proud to have him as a member of its executive team and looks forward to his continued contributions to the company’s success.

Koch Marten

VNA Health Care, a community health center (CHC) serving more patients in the Chicago suburbs than any other CHC, welcomes Dave Koch back to VNA as Chief Operating Of cer and Vice President of Operations. He brings 35 years of healthcare experience to the role, including previously holding leadership positions at VNA from 2004 to 2015. He will be responsible for oversight of all services and operations across VNA’s 16 locations.

Sylvia Marten is joining VNA as Vice President of Marketing and Communications. She has nearly 20 years of marketing, strategy, and partnership development expertise in the healthcare industry, and will oversee the promotion and branding of all VNA’s services and resources.

Benesch, Chicago

Amakie Amattey has joined Benesch as an Associate in the rm’s Litigation Practice Group. Amakie has experience conducting legal research and facilitating the resolution of legal matters in commercial, business, real estate transactions, premises liability, and other general litigation matters. She has also drafted motions and pleadings, and prepared legal memoranda to resolve legal issues further.

Amattey Hoover

Andrea Hoover has joined Benesch as an Associate in the rm’s Litigation Practice Group. Andrea has experience drafting and responding to dispositive motions, drafting answers to complaints and discovery, appearing for case management conferences and codefendant depositions, and conducting legal research to draft memorandums.

Midtown Educational Foundation (MEF), the city of Chicago’s acclaimed non-pro t organization guiding low-income urban youth along pathways of success, has named veteran marketing and business operations professional Vince Meno as its new Executive Director. Prior to his promotion, Meno previously held the title of Director of Community Outreach & Marketing. Meno will now oversee the day-to-day operations at MEF, along with its two academic centers that annually serve over 500+ Chicago youth.

REAL ESTATE

SVN Chicago Commercial, Chicago

PlayMonster, Beloit, WI / Chicago

PlayMonster Group LLC, a leading international toy and game company, recently announced the appointment of Bryan Margner to the position of Chief Financial Of cer. With extensive experience in retail, manufacturing, and consumer goods, he brings a strong track record of delivering shareholder value to global organizations. Margner is responsible for implementing nancial and growth strategies during the company’s exciting transformation and he will also lead future mergers and acquisitions.

The SVN Chicago Commercial - Suburban Next Level Team has enlisted Sharon O’Leary to join Olivia Czyzynski & Jennifer Hopkins. The all-woman team specializes in the sales and leasing of of ce/medical, industrial, retail and land sales in the suburban Chicago markets. With over 17 years of Commercial Real Estate experience, O’Leary has successfully completed several hundreds of transactions on both the Landlord and Tenant side. Prior to SVN, O’Leary was with Murray Commercial.

RETAIL

Riddle Emeott

STARTING POINT: Homeownership holds the key to attracting investments. PAGE 14

PRIME PARTNER: Chicago State prepared to participate in area’s transformation. PAGE 15

PULLMAN’S PROGRESS HOLDS LESSONS

Kip Brown, a longtime resident of Chicago’s Roseland neighborhood, looks at the development boom in nearby Pullman and hopes that investment will start owing west across Cottage Grove Avenue to revitalize battered South Michigan Avenue and the surrounding Far South Side community.

“People say, ‘Look at all that’s going on over there,’ ” says the retired IRS budget analyst. “Why can’t we have some of that over here?”

READY IN ROSELAND: Far South Side community wants slice of the investment pie. PAGE 17

e Far South Side, like other parts of the city’s South and West sides, has su ered decades of neglect following the collapse of heavy industry that supplied thousands of jobs. e area lost 60,000 people over the past 30 years, U.S. Census data shows, as residents ed to the suburbs or out of state.

Yet the historic Pullman area has bene ted from a decadelong surge in investment that brought a Walmart, a Whole Foods distribution center, a soap producer and

SOUTH SIDE ASPIRATIONS SPONSORS

a greenhouse to an industrial park o the Bishop Ford Expressway at 111th Street. Investor Andre Garner is planning a 101room Hampton by Hilton hotel at the south end of the site that anticipates demand by visitors participating in sports tournaments at the Pullman Community Center.

e renaissance stemmed the community’s population decline, created nearly 2,000 jobs, helped boost home prices and reduced the number of people living in

| BY JUDITH CROWN

poverty, according to nonpro t developer Chicago Neighborhood Initiatives, or CNI, which quarterbacked the Pullman revival.

Can the economic development approach used in Pullman be replicated to revitalize Roseland and other economically depressed South and West side communities? ere are similar principles that can be applied, says CNI President David Doig.

See PULLMAN on Page 16

Roseland residents are eager to replicate the historic community’s success. Can they make it happen?

Kip Brown is among the Roseland residents wanting to see stepped-up investments in the Far South Side community.

SOUTH SIDE ASPIRATIONS

Each neighborhood must leverage its own key resources

The Pullman neighborhood is a notable example of successful efforts to bring long overdue investment to a challenged neighborhood. Impressive strides have been made over the last decade to develop housing, retail and industrial uses, resulting in improved home values, population growth and increased employment.

Can Pullman’s success be replicated in other neighborhoods?

Each Chicago neighborhood has unique challenges and strengths, and there is no “cookie cutter” approach to neighborhood revitalization. Pullman bene ted from the investment of the federal Neighborhood Stabilization Program and National Attorneys General Foreclosure Settlement funds. Pullman was also able to leverage substantial amounts of vacant land for development and secured National Park status.  ese key resources — not readily available to all neighborhoods — helped propel successful e orts.

ere are important lessons to learn from the Pullman experience, which can be used as a model in other areas. Notably, community development nancial institutions, or CDFIs, helped lead e orts, there was a focused concentration of resources in the neighborhood, and there was an early focus on housing, speci cally homeownership, which functioned as a catalytic investment.

ese elements combined can lead to success in any neighborhood.

RESOURCES

Revitalization e orts in Pullman began with Chicago Neighborhood Initiatives rehabilitating vacant homes, which attracted other focused development in the neighborhood.

Homeownership was the catalytic investment and is an essential part of any community development strategy. Homeownership builds family wealth, promotes community connections, creates jobs and increases the rooftops that support local businesses. Homeownership is also an a ordable housing option for many families. A mortgage is a more stable housing cost over time than the ever-rising cost of rent, and a family will pay about the same in rent for an “a ordable” three-bedroom tax-credit apartment as they will for the mortgage on a three-bedroom home worth up to $250,000, from which that same family would be able to build equity.

Two critical homeownership components should be part of any e ective neighborhood investment strategy:

w Flexible purchase subsidies for owner-occupant buyers of homes, including two- to four- ats, which provide both homeownership opportunities and a ordable rental options.Creative and exible nancing tools for local CDFIs to support access to more equitable and a ordable mortgages for potential homebuyers.

w Promoting income diversity and building

a thriving middle class is critical to developing thriving neighborhoods. Rising interest rates, home values and construction costs have made homeownership harder to access for many, especially in historically redlined communities. Government, corporate and philanthropic partners must commit to providing the subsidies necessary to make homeownership achievable. As we continue to heavily subsidize critical a ordable rental units, we must apply the same thinking and resources to subsidizing a ordable homeownership.

Unfortunately, traditional lenders have not equitably provided the mortgages needed to expand homeownership in many disinvested communities. Home Mortgage Disclosure Act data shows a persistent disparity in the ability of people of color to obtain mortgages to buy homes. HMDA data shows applicants of color are denied loans as much as two to three times more than white applicants, regardless of home price, down payment amount or credit pro le.

Neighborhood Housing Services of Chi-

cago, on the other hand, is a nonpro t housing provider and CDFI that focuses on providing mortgages and nancial education, including foreclosure prevention community programming and resident engagement for low- to moderate-income borrowers. We have deep connections and longstanding commitments to the communities we serve. We also have decades of experience necessary to drive revitalization e orts, expand homeownership, repopulate disinvested communities and help build thriving, mixed-income neighborhoods of choice. But CDFIs need investment capital and creative nancing tools to leverage private capital and expand mortgage access. By committing key resources and strengthening partnerships between government, nancial institutions, corporations, nonpro ts and CDFIs, just like in Pullman, we can promote a more equitable city and help more people access the wealth-building power of homeownership as we revitalize communities throughout the city.

Southland region makes moves that deserve attention

While the COVID-19 pandemic emergency declaration has ended, let’s not forget the spotlight it shined on the challenges and disparities our Black and Brown communities face not only in accessing health care but also the economic disparities based on lack of investments. These inequities existed in Cook County and across the country long before the pandemic hit us, making it crucial that we continue to work at all levels of government and in partnership with the private sector to invest in the areas most in need.

at must continue if we are to build back better.

e South and Southwest suburbs were hit hard by the pandemic. As a Cook County commissioner representing that region, I have advocated for critical resources to build the Southland. Investments made in the Far South Side of Chicago and the south suburbs will not only lift up these communities but will lift up the entire region.

Among the tools the county uses to spur economic development are property tax incentives.

I introduced an amendment to our Property Tax Incentive Ordinance to create a new property tax incentive to attract and retain grocery stores in food deserts in Cook County. e Cook County Board approved this legislation, which will create healthier communities and improve quality of life in our county. e board also approved allocating millions of dollars in Motor Fuel Tax funds and Invest in Cook grants to repair and/or replace our County Highway Jurisdiction roads and intermodal projects in the Southland.

Extension of the CTA Red Line will greatly improve the connectivity between the city of Chicago and the Southland. e Southland is home to a skilled workforce, but workers must travel farther to their job sites than anyone else in the county. Investing in public infrastructure such as the Red Line extension coupled with the already robust

road and highway transportation linkages would spur more equitable economic opportunities for the South Side and south suburbs.

anks to federal pandemic funding such as the American Rescue Plan Act, we are investing resources to increase water and energy e ciency and expanding broadband to increase digital equity in communities in need. Additionally, the Infrastructure and Investment Jobs Act and In ation Reduction Act created multiple federal funding sources to further spur equitable investment.

Last November, I co-sponsored the Justice40 resolution that passed last year, a rming Cook County’s commitment to furthering the principles of the federal Justice40 Initiative and seeking all available resources to do so. Justice40 is a whole-of-government e ort to ensure that federal agencies work with states and localities to deliver at least 40% of the overall bene ts from federal investments in climate and clean energy to disadvantaged communities.

Earlier this month, the United Way of Metro Chicago and Cook County’s “Transform-

ing Places” Partnership, with support from the Nicor Gas Foundation, announced the expansion of the Neighborhood Network Initiative in Ford Heights/Chicago Heights, Harvey and Park Forest/Richton Park, plus an increased investment in the existing Blue Island/Robbins Neighborhood Network.

Over the next three years, the Neighborhood Network coalitions will develop and implement visions to improve the quality of life for residents that have faced systemic disinvestment in their communities. ese are just some of the ways we are investing in the South Side and south suburbs. e private sector has taken notice with over $1 billion in investments coming into the region over the last few years. at creates career opportunities for our residents.

e Southland is ripe for opportunity, with our combination of land, infrastructure and skilled workforce, as well as the many nature and leisure activities on public lands like the Forest Preserves of Cook County. Our Southland region deserves the investments that will make it an even more ideal destination for businesses and families alike.

Anthony E. Simpkins is president and chief executive of Neighborhood Housing Services of Chicago.

Donna Miller is Cook County commissioner for the Sixth District.

NEIGHBORHOOD HOUSING SERVICES OF CHICAGO

Chicago State is a Roseland anchor ripe for partnerships

Chicago State University is a proud anchor institution for the South Side of Chicago, sitting on 161 acres of land in the Roseland neighborhood, and is the largest employer in the community. CSU is also an anchor for the state, generating $1.6 billion in income for Illinois annually. With the Red Line extension, the coming transformation of the 95th Street Metra Station and development of additional community amenities, the best is yet to come for the South Side, especially if the public, private, and philanthropic sectors meaningfully leverage CSU. e Brookings Institution, an economic development think tank, recommends deep investment in regional public universities like CSU as anchors that can transform a region through workforce development, addressing social determinants of health and generating investment in real estate and community assets. CSU is a leader in diversifying our workforce. e university is in the top 2% nationwide for graduating Black students with baccalaureate degrees in physics and top in the Midwest in graduating underrepresented students with doctoral degrees in pharmacy. CSU further

advances degree attainment. CSU graduates earn $843,000 more over the course of their careers than those who do not secure a baccalaureate degree.

CSU’s impact is much broader than its 3,000 students. It’s creating a college-going culture in our neighborhood by hosting summer camps that expose our youth to careers. With early college classes increasing youth’s likelihood of attending college, CSU is providing free college courses to high school students at schools with declining college attendance rates. is work is urgent. Black student enrollment in Illinois colleges declined 37% since 2013. As Illinois’ only four-year U.S. Department of Education-designated Predominantly Black Institution, CSU is acting with purpose so the economy does not continue missing out on the talent of our Black residents.

CSU is further transforming the landscape of opportunity in Roseland through our Institute for Solutions of Urban Popula-

tions, which is addressing the social determinants of health. e ISUP is expanding broadband internet access and improving digital literacy through navigators conducting community trainings through a $3.25 million grant. CSU is continually supporting emerging challenges. During the pandemic, for example, CSU held public workshops with leaders like the Chicago Urban League to dispel misconceptions and served as a mass vaccination site that administered over 10,000 shots.

Finally, CSU is developing community resources. is summer, CSU is releasing a strategic economic development plan for the 95th Street Corridor, which was funded by e Chicago Community Trust and conducted in partnership with the Chicago Department of Planning and hundreds of residents. CSU is committed to creating a university village with resources and programming that meets the needs of our campus community and surrounding residents.

is commitment includes the university’s land to Metra in support of the redevelopment of the 95th Street station stop.

e Brookings Institution found that regional public universities enable employment growth, higher per capita income, drive in-migration and support college degree attainment. CSU is making signi cant strides on these dimensions and more, yet our impact could transform the region with deeper partnerships from the public, private, and philanthropic sectors. We call on stakeholders to join us in revitalizing the region by:

w Education Access: Fund scholarships and wraparound supports to allow more students to secure an early college experience or attend Rise Academy, our freshmen student success and free tuition program.

w University Village: CSU can serve as a center for academic innovation, cultural programming and a top source for future diverse scientists, educators, and health care professionals, with investment in our current and future facilities.

w Career Pathways: CSU is striving for all our students to have experiential learning opportunities early and throughout their studies to enhance their career readiness. We call on our leaders to partner with CSU. Together, we can strengthen the area’s workforce, retain and draw residents to Roseland and create an epicenter for Black and Latinx excellence in Chicago.

Zaldwaynaka Scott is president of Chicago State University.

THE BROOKINGS INSTITUTION RECOMMENDS DEEP INVESTMENT IN REGIONAL PUBLIC UNIVERSITIES.

SOUTH SIDE ASPIRATIONS

Continued from Page 13

is includes launching projects at a large scale to make a difference, generating buy-in from community residents and demonstrating continued progress to convert skeptics. Pullman enjoyed consistent leadership under Doig, 9th Ward Ald. Anthony Beale and top brass at U.S. Bank. From his years in city government, Doig is skilled in the tools of economic development, including tax credits, tax increment nancing and other city revenue sources that can be applied across neighborhoods.

But Pullman had one exceptional advantage that set it apart from surrounding neighborhoods. It had investment from U.S. Bank valued at more than $100 million, including 180 acres of undeveloped land, tax credits and charitable contributions, which yielded $400 million in developments.

“You won’t be able to replicate what we did in Pullman because we had the land,” Beale says. “ at was a unique situation we were able to capitalize on.”

Development in Roseland and other communities involves raising capital from scratch and assembling land, one parcel at a time.

Another di erence: Pullman didn’t have to compete with other South and West side communities for resources, says Abraham Lacy, president of the Far South Community Development Corp. Black and Brown developers working on the South and West sides “scavenge for dollars and attention.”

While large tracts of undeveloped land are hard to come by, communities can begin redevelopment by identifying and capitalizing on their assets, Doig says. In Pullman, the strategy was focused on economic development, adding jobs and retail, he says. Roseland’s strengths include the planned extension of the Chicago Transit Authority’s Red Line, a edgling medical district and a commercial corridor ripe for a turnaround — the strategy is to build homes, adding the population density that should attract retailers and other amenities.

A DECADE OF DEVELOPMENT

Pullman is notable as the 19th-century industrial planned community that manufactured the luxury Pullman Palace railroad cars. Founder George Pullman built brick rowhouses for his workers and provided access to schools and parks, although not everyone was fond of the paternalistic approach. Workers protesting wage cuts in an 1894 strike drew national sympathy, and the company was later ordered by a court to divest its residential property.

e company phased out its sleeping cars in the late 1960s but continued to manufacture other railcars into the 1980s amid numerous corporate divestitures, acquisitions and reorganizations.

Nearby Roseland thrived during the manufacturing heyday and

was a shopping mecca. Gatelys Peoples Store for a time held the title of the biggest store on Michigan Avenue. “Gatelys was the place to go — like Marshall Field’s. It was on that level,” Roseland resident Brown recalls.

But the end of manufacturing at the company George Pullman built and the closing of area steel and automotive plants was devastating. Families left for better opportunities or struggled to nd jobs. In 2000, 28% of Pullman’s shrinking population lived below the poverty line.

“ is neighborhood was hit hard by predatory lending,” says Andrea Reed, executive director of the Greater Roseland Chamber of Commerce. “A lot of people lost their homes.”

When Reed started her position in 2009, she researched where South Michigan Avenue shop owners were living and found they commuted from a uent suburbs such as South Barrington and Winnetka. Yet they allowed their buildings to fall into disrepair and tolerated drug dealers on the street.

Just as Reed was starting her new job during the global nancial crisis, U.S. Bank was guring out what to do with a 180-acre brown eld site at 111th Street o the Bishop Ford Expressway in Pullman that it inherited through an acquisition. It resolved to continue the redevelopment work started by a Pullman-based unit of the bank it acquired, First Bank

David Doig is president of Chicago Neighborhood Initiatives, a nonpro t developer.

of Oak Park, which had collapsed during the crisis. at unit was reborn as CNI.

Over the next decade, CNI led a series of development deals at the site, starting with a 149,000-squarefoot Walmart that opened in 2013.

en came Method, a producer of green personal and household cleaning products that teamed with New York-based Gotham Greens for a hydroponic roof farm.

SC Johnson opened its own warehouse after it acquired Method in 2017. A Whole Foods distribution facility, the Pullman Community Center and a second Gotham Greens greenhouse ll out the site.

CNI teamed with a Minneapolis developer to build a ful llment center for Amazon at 105th Street and South Woodlawn Avenue, which was sold to an investor in 2021 for $65 million, or more than $450 per square foot —considered at the time the highest price paid for a Chicago-area industrial building of more than 100,000 square feet. Nearby Culver’s and Potbelly restaurants draw in workers from the plants at lunchtime.

e developments may have added jobs, but big-box stores and large industrial facilities don’t necessarily revitalize a neighborhood, says Stacey Sutton, a professor at the University of Illinois Chicago’s Department of Urban Planning & Policy. Indeed, the complex o the Bishop Ford Expressway functions as an industrial park rather than a residential neighborhood.

Further west, Pullman hopes its residential neighborhood south of 111th Street will bene t from its designation late last year as Pullman National Historical Park, an upgrade from its earlier national monument status. e stateowned Hotel Florence at 111th Place and South St. Lawrence Avenue is in line for a restoration.

e Pullman Artspace Lofts, a renovation of two historic buildings developed by CNI and two other nonpro ts, opened two years ago on Langley Avenue north of 112th Street and was the rst residential development in 60 years.

“Momentum is building,” says Michael Davidson, senior director of community impact at e Chicago Community Trust, which has helped fund the Historic Pullman Foundation. “With the national park (status), there’s a promise of walkability, especially around the historic Market Square.

While Pullman is still a work in progress, there’s no doubt that the community has bene ted. e number of people living in poverty was cut by nearly one-third between 2010 and 2020, according to CNI. e number of vacant housing units was reduced by nearly 35% between 2016 and 2020. And the median sale price of all types of homes has risen by 50% since 2020, CNI says.

‘YOU CAN SEE THE POSSIBILITIES’ CNI’s development prowess will be tested as it expands beyond Pullman. In addition to its work in Roseland, the organization has teamed with the Lawndale Christian Devel-

SEEKING TO CURB POPULATION

opment Corp. to build a ordable homes on vacant lots in Lawndale.

CNI also is part of a group redeveloping the former Michael Reese Hospital site in Bronzeville.

In Roseland, CNI is focusing on building homes, teaming with the Rev. James Meeks’ Hope Center Foundation to ll vacant lots around the former Salem Baptist Church building. e venture aims to build 100 houses, including lots owned by Salem, the city and the Cook County Land Bank Authority. “It’s a more traditional path of creating rooftops and hoping the retail follows,” CNI’s Doig says. “We think homeownership remains the best path for wealth creation.”

ere is demand for housing in Roseland, says Lacy of the Far South Community Development Corp. “When we renovate a home, it goes under contract in 48 hours.”

Far South CDC renovates homes (separately from CNI) and also teams with a modular company to construct the prefabricated homes on vacant lots. It’s a neighborhood that’s a ordable and where people can have a backyard, he says.

Locals are hoping for the development of outpatient medical facilities near the nancially struggling Roseland Community Hospital. e Illinois General Assembly established the Roseland Community Medical District in 2011 and set aside $25 million, mostly to acquire land. e city funded a master plan that was adopted by the Chicago Plan Commission late last year.

Lacy’s team at Far South Community Development Corp. is serving as sta of the medical district until it gains critical mass.

e community needs services for expectant mothers, mental health services and a trauma center. Too many people use the hospital’s emergency room for their primary care, Lacy says. “If you’re shot in Roseland, you have to be transferred to a trauma center, and you could die on the way.”

It will be a challenge to attract a hospital or medical group to open a facility in a neighborhood with a high number of Medicaid recipients. “We’re reaching out to Rush, Northwestern and the University of Chicago to see if they would partner with us to bring resources to the Far South Side to address

the health desert that we’re dealing with,” 9th Ward Ald. Beale says. Another prong of development is underway along South Michigan Avenue under former Mayor Lori Lightfoot’s Invest South/West program. Five teams are competing to develop plans for three locations: the vacant site of the former Gatelys Peoples Store, the historic Roseland eater building, and land adjacent to a planned CTA Red Line station at South Michigan Avenue and 115th Street. Doig and Lacy lead teams that are developing plans for all three spots. Proposals are due at the end of July, and the city is expected to initially award work for only one of the three locations but also name winners for the other two locations to be tackled later.

e Red Line extension will change the nature of the South Michigan Avenue corridor between 111th and 115th streets, attracting new businesses and forcing out the ri ra , Reed of the Greater Roseland Chamber of Commerce predicts. Residents are optimistic.

“I’m happy to see some movement on the Far South Side,” says Gloria Cosey, a longtime resident and president of the Rosemoor Community Association. “You can see the possibilities.”

Yet the quest for capital is a slog, Lacy says. e city’s $2 billion Invest South/West program is spread across 10 districts and 30 neighborhoods. Compare that to Related Midwest’s e 78 project on the South Branch of the Chicago River, valued at $7 billion for a single geographic area. While banks pledged billions in community development after the murder of George Floyd in 2020, all the funding either hasn’t come through or is spread too thin to make an impact, Lacy says. He concludes that initial development dollars must come through City Hall — only then will other backers materialize.

Chicago developer A.J. Patton, who has projects in South Chicago, West Humboldt Park and North Lawndale, agrees the disparities are discouraging. Black and Brown developers often are asked to sign personal guarantees that put them at risk of bankruptcy if their projects fail, he says. Yet established developers working downtown or on the North Side can often get a large loan without such guarantees. “Why do I need to be a multimillionaire in order to do a development in my community?” he says.

Still, Patton is encouraged that the South and West sides are getting attention. “When was the last time there was a $30 million-plus development in South Chicago?” he says.

“You have to start somewhere.”

One of the lessons of Pullman that can be applied broadly is patience and persistence. “It took 10 years, but there were a thousand small wins along the way that gave people hope,” says Davidson of e Chicago Community Trust.

“It could take 20 years or 30 years to build the kind of wealth that you see in a uent communities.”

Roseland ready to get its own slice of city’s Invest South/West pie

BY JUDITH CROWN

Call it Invest South/West 2.0.

When it came time to solicit proposals for projects in Far South Side Roseland last year, the Chicago Department of Planning & Development pivoted from its earlier approach to the community development initiative.

Rather than solicit outright proposals, Commissioner Maurice Cox invited developers and architects to submit their quali cations. Teams that quali ed paired up in a kind of speed-dating process, and each is receiving $25,000 stipends through e Chicago Community Trust to defray their upfront costs.

Now ve teams are formulating plans to develop three sites along South Michigan Avenue —two of the groups are working on all three sites. ey are the vacant site of the former Gatelys Peoples Store, the historic Roseland eater building and land adjacent to a planned CTA Red Line station at Michigan Avenue and 115th Street. Proposals are due at the end of July.

e city initially plans to award work for only one of the three locations, Cox said in an interview. But it also expects to name winners for the other two locations.

“ at way we have a pipeline, the second and third projects are teed up,” he says. at’s a change from the previous approach, which identi ed only a single project in a neighborhood.

Launched in fall 2019, Invest South/West is a signature program of former Mayor Lori Lightfoot that uses city resources to leverage private investment and philanthropy. Undertakings in nine disenfranchised communities were selected in a competitive process, and it’s hoped they will serve as catalysts to further invigorate the surrounding commercial corridors. e city says it has aligned more than $2.2 billion in public and private investment.

rankled developers who invested resources only to be passed over. “We got feedback about how di cult it was for them to nd architects who were willing to put in the time pro bono to get a commission, and what a long shot it was,” Cox said. “How could we level the playing eld?”

e previous process discouraged Evanston-based Brinshore Development because of the effort and costs, says co-founder and principal Richard Sciortino. “With this recent change, we decided to throw our hat in the ring.”

Brinshore and its partners are developing proposals for all three Michigan Avenue sites, as is Roseland Rising, a collaboration of Chicago Neighborhood Initiatives, the Far South Community Development Corp. and others. But the reformulated process has brought in new developers and architects, including minority- and womenowned rms. For example, P3 Markets and Brook Architecture, both minority-owned, joined with more-established developer Michaels Organization and renowned architecture rm Studio Gang to develop a proposal for the Red Line site at 115th Street and Michigan Avenue. “An emerging developer wouldn’t normally have access to that level of talent,” Cox says.

Johnson said in an email, “As we continue to evaluate existing proposals and processes, it remains a priority to ensure that minority-owned developers and architects have adequate opportunities and the full resources necessary to do business with the City of Chicago.”

INVEST SOUTH/WEST HAS DRAWN CRITICISM FOR SLOW PROGRESS AND RED TAPE.

It’s possible Mayor Brandon Johnson will pause the action or reformulate the process. But the mayor has said he supports the program and plans to dedicate an additional $500 million to the initiative. In responding to a Crain’s survey before the mayoral runo , Johnson said he would create new performance measurements to make sure resources are e ectively supporting the neighborhoods.

Invest South/West has drawn criticism for slow progress and red tape. e process that had been used to select projects

e city applied a similar approach for initiatives in Woodlawn and East Gar eld Park, which aren’t under the Invest South/West umbrella. For these neighborhoods, the city named winners to kick o development but identi ed nalists to develop other sites over ve to seven years.

In East Gar eld Park, the city in March awarded a $47.2 million transit-oriented development mixed-use project named Hub 32 to a partnership of Michaels, KMW Communities and TruDelta. In May, a $48.4 million a ordable housing project in Woodlawn was awarded to a team of POAH and KMW.

CHICAGO'S HIGHEST-PAID CEOS CRAIN'S LIST

Ranked by total 2022 compensation; includes executives from public companies only.

DataprovidedbyS&PGlobalMarketIntelligence,withadditionalresearchbySophieRodgers(sophie.rodgers@crain.com). |IncludesexecutivesandformerexecutivesofpubliccompaniesbasedinCook,DuPage,Kane, Lake(Ill.),Lake(Ind.),McHenryandWillcounties,aswellasselectpubliccompaniesoutsidetheseven-countyareathatareincludedduetotheirsize.SalaryratiosarebasedonaCEO’stotalcompensationandthecompany’smedianemployeesalary.

“Changeinpensionvalue”alsoincludesnonquali eddeferredcompensation.NR:Notranked.Figuresinthe2022rankcolumngobeyond25astheyincluderankingsfromthefullExcelversionofthelist.NOTES:

1. Mr.CraneservedasCEOuntilDecember 2022.

2. Mr.GustafssonservedasCEOuntilMarch1,2023,andcurrentlyservesasexecutivechair.

3. OakStreetHealthwasacquiredbyWoonsocket,R.I.-basedCVSHealthinFebruary2023.

4. Mr.Satriano'semploymentasCEOwasterminatedinMay 2022.

CHICAGO'S HIGHEST-PAID NON-CEOS CRAIN'S LIST

CHICAGO'S HIGHEST-PAID NON-CEOS CRAIN'S LIST

Ranked by total 2022 compensation; includes executives from public companies only.

Ranked by total 2022 compensation; includes executives from public companies only. DataprovidedbyS&PGlobalMarketIntelligence,withadditionalresearchbySophieRodgers(sophie.rodgers@crain.com).

DataprovidedbyS&PGlobalMarketIntelligence,withadditionalresearchbySophieRodgers(sophie.rodgers@crain.com). |IncludesexecutivesandformerexecutivesofpubliccompaniesbasedinCook,DuPage,Kane, Lake(Ill.),Lake(Ind.),McHenryandWillcounties,aswellasselectpubliccompaniesoutsidetheseven-countyareathatareincludedduetotheirsize.“Changeinpensionvalue”alsoincludesnonquali

|IncludesexecutivesandformerexecutivesofpubliccompaniesbasedinCook,DuPage,Kane, Lake(Ill.),Lake(Ind.),McHenryandWillcounties,aswellasselectpubliccompaniesoutsidetheseven-countyareathatareincludedduetotheirsize.“Changeinpensionvalue”alsoincludesnonquali eddeferredcompensation.NR:Notranked.Figures in the 2022 rank column go beyond 25 as they include rankings from the full Excel version of the list.

McDonald’s franchisees make rare bid for power

In a sign of how divisive the battle has become, e Wall Street Journal reported last month that McDonald’s U.S. president, Joe Erlinger, said in a call with franchisees that those supporting legislation were dividing the company. “You see attacks happening, and those attacks are coming from within,” the Journal quotes Erlinger as saying.

Franchisees feel threatened by corporate moves to tighten franchise terms and get tough on renewals. ey also resent edicts requiring them to spend more money as in ation squeezes their margins.

e fortunes of McDonald’s and its operators have diverged recently — franchisees say their cash ow has shrunk while same-store sales increases boost corporate pro ts and McDonald’s stock price.

Tensions are rising as McDonald’s looks to accelerate growth by stepping up new-store openings, an initiative that needs support from franchisees, who operate about 95% of McDonald’s 13,400 U.S. restaurants. Experts warn that a rift between McDonalds and its restaurant operators could alter or slow the chain’s growth plans.

“It’s usually not a good business practice to piss o your core stakeholders,” said Sean Dunlop, an analyst at Morningstar.

e NOA has given some franchisees the courage to push back on McDonald’s in ways they haven’t before, said Robert Zarco, a franchise lawyer the group hired as counsel earlier this year.

“In the past, they were very concerned about retaliation, intimidation and threats,” said Zarco, speaking on behalf of NOA. “Now, because there is strength in unity, they feel more protected by each other.”

RAISING THE BAR

Last summer, McDonald’s raised the bar for renewal of franchisee agreements and implemented a stricter performance review process for restaurant owners. It also changed criteria for franchisees to pass their businesses to spouses or children, saying it would evaluate all potential new franchisees the same way.

Erlinger said at the time that the changes to the renewal process were “in keeping with the principle that receiving a new franchise term

is earned, not given.” As for nextgeneration owners, Erlinger said that adopting a uniform approach to evaluating new franchisees “regardless of the pathway” would provide “a consistent process.”

A new law in Arkansas touches on both topics. e National Owners Association supported the bill, which Gov. Sarah Huckabee Sanders signed into law in April.

‘POSITION OF STRENGTH’

e law says a franchisor’s approval is not required to transfer ownership to a spouse, child or heir. Another change in the law bars franchisors from terminating franchisees without cause “as determined under objective standards.”

Some McDonald’s restaurant owners also supported an Arizona bill that protects franchisees. e bill failed to pass during the most recent legislative session, but the sponsor, state Rep. Stacey Travers, D, said she plans to introduce it again next session.

Additionally, NOA is encouraging members to submit comments to the FTC, which is soliciting information about franchisee and franchisor relationships. Of the rst 100 comments submitted, more than a dozen were from McDonald’s franchisees. ey raised concerns about noncompete clauses, increasing costs and the changes the company made to its store inspections.

“Although I believe that McDonald’s has the right to insure (sic) their standards are met, I do not believe that the level of intrusions by this franchisor is reasonable,” wrote William Brown, a franchisee from Pennsylvania.

In a letter to members in February, NOA’s board said franchisee cash ow dropped by about $100,000 per restaurant in 2022 and was expected to fall again this year.

“ e gap in operating revenue performance is not sustainable,” said the letter, which Kalinowski Equity Research published in a report. “We should not, and can no longer, be accepting the burden of the entire impact of in ation.”

rowing new standards at franchisees while they’re dealing with in ationary pressures is a recipe for pushback, experts say.

“We’ve had two years of doubledigit cost in ation . . . things are just tough, particularly in the quickservice restaurant world,” said John A. Gordon, principal at consulting

rm Paci c Management Consulting Group. “Where there have been strained relationships for a long period of time, the relationships haven’t gotten any better.”

McDonald’s told Crain’s that it has made concessions for franchisees as it has rolled out recent changes. It adjusted the new performance review program based on franchisee feedback, and implemented it after a pilot period, so franchisees could get used to new standards before they took e ect.

CEO Chris Kempczinski said during McDonald’s April earnings call that U.S. franchisees returned to positive cash ows in the rst quarter. McDonald’s sales and pro t exceeded Wall Street expectations, with quarterly net income rising 63% to $1.8 billion in the U.S. Sales at U.S. restaurants open at least a year — a key metric that tracks store-level growth — jumped 12.9%.

At about $285 on May 31, McDonald’s stock was up almost 8% yearto-date, compared with a more than 9% rise for the S&P 500.

“We’re operating from a position of strength,” McDonald’s said in a statement to Crain’s. “We remain focused on driving momentum and making the right decisions for the future of the business.”

Not all McDonald’s franchisees are at odds with the company. McDonald’s provided a statement that a group of 10 franchisees put out last month that said, “We are disappointed that a small but vocal group is pushing this counterproductive agenda, which threatens our business model and the livelihoods of future generations of franchisees.”

Additionally, the chair of the National Franchisee Leadership Alliance, a company-backed franchisee group, said in a statement provided by McDonald’s that the group has had “several productive meetings” with company leadership this year and “we are clearly moving in the right direction.”

It will be hard for franchisees to wrestle control away from McDonald’s, said Mark Kalinowski, CEO of Kalinowski Equity Research, which has been publishing franchisee surveys for two decades. Unlike many other franchisors, McDonald’s also serves as a landlord to many of its franchisees.

“ at gives McDonald’s a lot of leverage,” he said.

McDONALD’S from Page 1

How businesses can get front and center at historic NASCAR Chicago Street Race

By Ashley Zlatopolsky

It’s not too late to plan a premium business outing at one of the most anticipated sporting events of the year - or to become a valued event partner.

On July 1-2, NASCAR drivers will twist and turn through downtown Chicago for the inaugural NASCAR Chicago Street Race, a monumental moment in sports history that marks the rst time NASCAR will race through city streets. It’s the sport giant’s boldest move to date in its 75 years, making the historic weekend one not to be missed by Chicago VIPs and their guests.

With an electric, festival-like atmosphere that includes two races and performances by e Chainsmokers, Miranda Lambert, e Black Crowes, Charley Crockett and JC Brooks Band, there are plenty of opportunities for business leaders to treat clients and hardworking employees to an unforgettable experience that spotlights the best that Chicago has to o er.

“As you walk through the entire event footprint, it’ll be very authentic Chicago,” said Julie Giese, president of NASCAR Chicago Street Race. is includes local food vendors, merchants, artists and more that guests can interact with, in addition to networking with founding partners

of; the most prestigious reserved ticketing option is the President’s Paddock Club. is sweeping, bi-level club o ers 360-degree panoramic views of downtown Chicago, including the iconic skyline, Lake Michigan waterfront and landmarks like Buckingham Fountain.

For a ticket price of $3,377 per person, this elevated experience includes a VIP concert viewing area to enjoy the performances, dedicated VIP entrance lanes to the event, a shaded open-air deck, premium bathrooms, comfortable lounge seating and large screens with a live race feed.

Sightlines also give guests a direct view into the pit boxes and most of the 12-turn, 2.2-mile course on Chicago streets. at’s why there’s no better way to enjoy the weekend in style than at the Paddock Club, Giese said. “NASCAR is known for its atmosphere and accessibility to the drivers and racing action,” she explained. “ e President’s Paddock Club further elevates that.”

of thousands of guests with an event partnership. Alongside founding partners are numerous opportunities for local and national businesses to become an event partner. Each package is customizable and NASCAR

or attending your rst-ever race — like an estimated 70% of attendees — there are plenty of ways to get involved for a unique and premium experience.

Richards, vice president of partner management at QuintEvents, which is managing the Chicago experiences for NASCAR. “To guarantee fans choose the perfect experience, they should research the available options and identify individual preferences,” he said.

Community Impact

like McDonald’s, X nity and Blue Cross and Blue Shield of Illinois.

Whether you’re looking for an adrenaline-pumping weekend out with colleagues or you want to thank valued clients for their business, NASCAR Chicago Street Race has something for all interests and needs. Here are the best ways to get you or your business involved in the action.

Premium Hospitality

NASCAR is o ering a variety of premium hospitality experiences for Chicago VIPs to take advantage

Yet premium experiences don’t end there. Other hospitality options perfect for business outings or corporate events include the Congress Suites, which o er an enclosed, climate-controlled level with a panoramic view of the start/ nish line and Pit Road close to the action. ere is also the Garden Suites, which place guests at ground level in an open-air, cabana style experience across from Pit Road along the front stretch. ese private suites each accommodate up to 22 guests and include a xed premium menu.

Finally, the Pit Road Terrace is an open-air premium deck experience located on either side of the President’s Paddock Club that includes food and beverage, along with great race views facing Buckingham Fountain. For pricing or more details on these premium suite experiences, click here to schedule a call with NASCAR.

Sponsorship Options

In addition to hospitality suites, you can get your brand directly in front

will work closely with you on your needs.

“Every single package is going to be vastly di erent,” said NASCAR chief sales o cer Je Wohlschlaeger.

“We build them from the ground-up based on what our partners’ goals and objectives are.” Yet one thing remains the same for all partnerships: brands will have national visibility on a grand scale that includes media presence from leading TV, print and radio outlets.

It’s a once-in-a-lifetime chance, Wohlschlaeger describes, for businesses to be a part of a major weekend in sports history. To learn more about sponsorship or event partner opportunities, contact Chicago Street Race’s head of partnership sales Ryan Mosher at rmosher@nascar.com.

Fan Experiences

At the end of the day, it’s the fan experience that makes the historic weekend one to remember. Whether you’re an avid NASCAR enthusiast

e Chicago Street Race has partnered with Chicago-based restaurant group Lettuce Entertain You Restaurants as the event’s o cial food and beverage partner. Lettuce will showcase a variety of signature items throughout the Chicago Street Course including RPM Restaurants, Bub City, Sushi-san, Cafe Ba-Ba-Reeba!, Summer House, Hub 51, e Oakville Grill & Cellar, and Tallboy Taco.

NASCAR Chicago Experiences is o ering various VIP ticket packages that start at $799. Experiences include a pit road walk to witness the adrenaline of tire changes and fuel lls — a perfect option for clients or employees who love the thrill of racing. ere are also guided track or garage area tours, premium photo opportunities, podium celebration access and behind-the-scenes glimpses of the NASCAR world and legacy.

With so many opportunities to choose from, it can be tough to identify the right choice, but a hospitality venue breakdown and an experiences comparison chart help ensure the best t for all parties, said Brock

e impact of NASCAR Chicago Street Race goes beyond putting Chicago at the center of American sports for the holiday weekend. e event is expected to generate more than $113 million in economic impact and more than $3 million in tax revenue for Chicago in 2023 alone. NASCAR is also partnering with Chicago Public Schools on racing-themed learning experiences and curriculum for more than 22,000 students, as well as supporting local art museums.

“We expect the NASCAR Chicago Street Race Weekend to pay incredible dividends for Chicagoans across every neighborhood in the city,” Giese said. “As we look to our long-term commitment to the Chicagoland community, we will continue to work with local business, civic and nonpro t leaders to support and showcase all that makes this city so special.”

To learn more about NASCAR Chicago Street Race on July 1-2 and how your business can get involved in the action, visit nascarchicago.com.

”As we look to our long-term commitment to the Chicagoland community, we will continue to work with local business, civic and nonpro t leaders to support and showcase all that makes this city so special.”

– Julie Giese, President, NASCAR Chicago Street Race

Premium hospitality suites, event partnerships and VIP fan experiences are just some of many options.

Bubba Wallace—who competes for the 23XI Racing team co-owned by Michael Jordan—will be one of the NASCAR drivers participating in the Chicago Street Race in July.

Julie Giese

Sterling Bay seeks bailout to jump-start stalled Lincoln Yards megadevelopment

nancing issues not only at Lincoln Yards, but also at a series of properties it has amassed en route to becoming one of the city’s most prominent real estate rms. Slides that Crain’s obtained from part of an April 26 presentation Sterling Bay made to investors reveal its lender could force a sale of the Groupon headquarters building along the Chicago River, and a loan challenge lies ahead for the two-tower Prudential Plaza complex overlooking Millennium Park.

e documents also reveal the developer’s e ort to “consolidate” ownership of the sprawling Lincoln Yards site by nding a new primary capital partner and working out a resolution with a lender that holds a $126 million mortgage — which is set to mature on June 20 — tied to a large portion of the site, according to the presentation. It adds up to the most serious challenge faced to date for Sterling Bay, which rose to prominence since the Great Recession from an upstart development rm with a knack for modernizing vintage West Loop o ce buildings into a far larger company with trophy o ce properties and national expansion aspirations. At stake in the turbulence is the fate of one of the most ambitious planned developments in the city’s history: Lincoln Yards, a 14.5-

million-square-foot project meant to reshape a swath of the city’s North Side with high-rises and generate thousands of new jobs.

Sterling Bay’s pitch to the Chicago Teachers’ Pension Fund also tees up the possibility of an unlikely bedfellow on the project. e CTPF invests on behalf of and is highly inuenced by the Chicago Teachers Union, whose members have been among the most vocal opponents of Lincoln Yards and a city-approved deal to reimburse Sterling Bay for up to $1.3 billion in new infrastructure tied to the project using taxincrement nancing money.

“It’s an unbelievable, generational opportunity to invest in the city,” Gloor told members of the CTPF investment committee during the May 23 meeting, where he called Lincoln Yards “the most important deal we’ve ever done with Sterling Bay.” Gloor presented alongside a locally based executive for Toronto-based Manulife Investment Management, revealed during the meeting to be a new development partner with Sterling Bay on Lincoln Yards.

CTPF Chief Investment O cer Fernando Vinzons said in a statement to Crain’s that the discussions around Lincoln Yards are only “conceptual at this point” and that the investment committee would still need to recommend the Lincoln Yards deal to its board of trustees, which would ultimately have to sign

o on any funding commitment, a process that could take months.

In the meantime, Sterling Bay is trying to tap its own investors for more money. A question-andanswer portion of the April presentation shows the developer is seeking $25 million in new equity for an “annex fund” from existing investors in Lincoln Yards, which would supplement the investment it would get from CTPF or another capital partner.

FINANCIAL STRESS

e nancial crunch for Lincoln Yards and other high-pro le Chicago properties discussed in the presentation isn’t unique to Sterling Bay. Many commercial property owners across the city — particularly those in the o ce sector — are reeling from a remote work movement that has hammered demand for workspace and whittled foot tra c in Chicago’s urban core. High interest rates, meanwhile, have driven down property values and made it di cult for owners to re nance buildings, forcing many to scramble for new equity partners and prompting a growing number to surrender properties to their lenders or face foreclosure lawsuits.

But the presentation shows such nancial stress on a big scale locally for Sterling Bay, lifting the hood on the developer’s Sterling Bay Capital Partners II fund. A “signi cant por-

tion” of that fund’s equity and future returns are tied to Lincoln Yards, the presentation says.

e fund, which nished raising money in 2016, has investments in a series of Chicago properties including several Lincoln Yards parcels; Groupon’s HQ building, at 600 W. Chicago Ave.; Prudential Plaza; and o ce buildings at 333 and 360 N. Green St. and 311 W. Monroe St., the documents show. e presentation also shows the fund backs the mixed-use apartment and hotel tower Sterling Bay completed last year at 300 N. Michigan Ave. and an apartment building under construction at 160 N. Morgan St. in the Fulton Market District.

Questions and answers in the document — which came in response to a presentation during the virtual meeting with investors in April — paint a picture of a fund grappling with nancial strain while Sterling Bay seeks ways to generate liquidity to avoid defaulting on loans, maintain condence of its existing investors and convince them to double down on properties moving forward.

Challenges appear steepest at Lincoln Yards, the project that signaled Sterling Bay’s bold growth plans when the developer unveiled its vision for the campus in July 2018. e proposal, supported by then-Mayor Rahm Emanuel, would include a mix of o ces, residential units, retail

and other uses, as well as towers rising as high as 595 feet. Sterling Bay estimated at the time that it would generate 24,000 permanent jobs and a massive tax boon to a city battling scal woes. Just before Emanuel left o ce in 2019, the City Council signed o on the project, as well as the controversial plan to create a new tax-increment nancing district to support it: Property tax gains generated by the project in the future are slated to help repay Sterling Bay for infrastructure costs.

Sterling Bay spent more than $250 million between 2015 and 2017 acquiring the largest pieces of a once-bustling riverfront industrial corridor to make room for the megaproject, according to Cook County property records. Along with the Sterling Bay fund, which holds a relatively small equity piece of the properties, two primary nancial partners originally backed the developer on the proposed campus: New York-based J.P. Morgan Asset Management on the southern portion, and Dallas-based Lone Star Funds on the northern portion.

But since winning City Council approval for the project in 2019, Sterling Bay has built just one building on the southern portion of the site — an empty life sciences lab property at 1229 W. Concord Place — and has yet to begin major infrastructure work needed to kick-start other development there. In the presenta-

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tion, Sterling Bay cited “market conditions” for holding back the project and also pointed to city o cials as an obstacle. “ ere was a signi cant degree of uncertainty relative to approvals from the city of Chicago that could in uence our ability to execute a business plan,” one response to an investor question said.

Gloor has publicly blamed former Mayor Lori Lightfoot for setting back the project by delaying permits and other city approvals needed to nance new roads and other infrastructure. He reiterated that gripe to the CTPF, saying the infrastructure “needed collaboration (from City Hall) to start . . . . and we just couldn’t get in lock-step.”

Regardless of what has slowed progress, the presentation shows Lincoln Yards becoming a nancial quandary for Sterling Bay with no clear end in sight, and with its control of the project’s future potentially in question. Sources familiar with the matter say Lone Star and J.P. Morgan are prepared to sell their stakes at a substantial discount, signaling their waning patience with the development’s path forward. Lone Star declined to comment, and J.P. Morgan didn’t address questions about the project.

Adding to the nancial pressure: ere are “no further extensions available” on the $126 million loan from Little Rock Ark.-based lender Bank OZK tied to a large chunk of the property’s northern portion slated to mature this month, according to an investor document. A chart in the presentation notes Sterling Bay aims to get Bank OZK to “participate” in the consolidation of Lincoln Yards ownership by nding a new capital partner to back its Lone Star buyout, then “recast” the loan under that new venture, likely meaning it would start a new clock on the mortgage’s maturity date.

LOSING CONTROL

If Sterling Bay can’t pull o such a deal, Bank OZK could be in position to seize control of the property. It’s unclear how the lender might proceed with Sterling Bay, a development partner it has backed on other prominent Chicago projects including 300 N. Michigan and 360 N. Green. Bank OZK didn’t address questions about Lincoln Yards.

Sterling Bay will need to convince the CTPF or another new capital partner to not only assume the cost of carrying the land, but potentially commit to helping nance infrastructure and future buildings on the site. at could prove di cult amid economic uncertainty and many investors wary of taking on a massive commercial project in Chicago.

ere’s little clarity on when or if the project will begin to see more activity and what role new Mayor Brandon Johnson —a former Chicago Public Schools teacher and paid CTU organizer — will play in helping Sterling Bay forge ahead. Gloor told the CTPF that his group has “been in regular communication with Mayor Johnson’s administration.... ey’re enthusiastically in favor of the development. ey understand the economic bene ts to the entire city of Chicago and the jobs. We didn’t

have that type of communication (with Lightfoot), but we do now. So we do not anticipate any delays.”

Jason Lee, a senior advisor to Johnson, con rmed that the administration has had “several conversations” with Sterling Bay and Gloor, saying open dialogue is the “philosophy of our administration.”

Lee said the conversations were not about Lincoln Yards speci cally, but rather the “challenges that large development projects have in the city and some ideas to align on goals to create more equitable development and a ordable housing opportunities through small and large developments.”

Sterling Bay is playing up the local angle in its bid for fresh capital.

In a statement, the rm says “(a) Chicago-based investor is the right partner to help us bring all these opportunities, and more, to life at Lincoln Yards. As Mayor Johnson stated in his inaugural address, ‘Together, we can build a better, stronger, safer Chicago,’ and we believe that developments like Lincoln Yards, which stand ready to build a brighter future for our city, are how we win together as Chicagoans.”

e presentation shows additional loan deadlines are looming for the fund on smaller Lincoln Yards parcels. Properties at 1907 N. Mendell St. and at the intersection of Elston Avenue and Cortland Street — near the Metra station where Sterling Bay aims to eventually develop a multi-modal transit hub for Lincoln Yards — each have relatively small mortgages from Signature Bank that were due to mature in May but were recently extended to Nov. 2, according to the presentation.

New York-based Signature Bank, which failed in March and subsequently had its deposits assumed by New York Community Bancorp, “is willing to extend” the maturity beyond November, the presentation said. A chart in the document said Sterling Bay’s plans for the parcels would be to pursue a “3rd party sale if possible or potentially sell to the (Lincoln Yards) consolidated venture.” NYC Bancorp didn’t address questions.

Sterling Bay also disclosed in the documents that, while it expects the fund to be involved in several development projects at Lincoln

Yards, some parcels “will likely be sold to third-party developers” to construct buildings.

Sterling Bay frames its push to raise money for Lincoln Yards as a great opportunity to buy in at remarkably low values and, therefore, get higher returns if the developer can execute its vision for the project. at sales pitch, however, acknowledges the dramatic loss of value in properties owned by the fund.

“ e reduced basis in each of these investments present very compelling return pro les that are appealing to prospective investors,” Sterling Bay wrote in a response to a question in the document. “(Sterling Bay) believes we can overcome concerns surrounding investment in Chicago o ce property given the attractive basis and compelling economics.”

Sterling Bay’s investor documents also show the developer expects it will need far more time to return the money to its fund investors than it initially anticipated.

e fund’s initial term was 10 years with two one-year extension options that would push its expiration to Feb. 2028, according to the presentation, but the developer projects the life of the fund “may need to be extended through Q3 2031 for nal disposition of all investments.”

e size of the fund is not clear, but a Sterling Bay spokeswoman previously said the developer had raised between $90 million and $200 million for the fund.

In the meantime, Sterling Bay is doing what it can to shore up the fund. e developer’s partners recently put up $3.5 million “to maintain compliance with certain ongoing debt covenants,” the document said. Sterling Bay also deferred its asset management fee at the fund “to provide liquidity,” according to the presentation.

Another big revelation in the presentation involves the riverfront o ce property at 600 W. Chicago Ave, the Groupon-anchored, 1.6 million-square-foot building. A joint venture of Sterling Bay and J.P. Morgan bought the former Montgomery Ward catalog building in 2018 for $510 million.

e venture nanced that acquisition with a nearly $428 million debt package that matured in March,

could mean a future call for more money to help renovate the property and stabilize its tenant roster.

Meanwhile, the Sterling Bay document also shows the developer plans to sell o ce buildings at 333 N. Green and 311 W. Monroe, but only after it re-leases space currently occupied by meeting space and co-working company Convene. e New York-based rm signed leases in 2019 to occupy roughly 185,000 square feet combined in the two buildings and still operates the locations today, though terms of the leases are not clear. Convene declined to comment.

according to the presentation. e debt includes a $374 million senior loan from Morgan Stanley, with the remainder provided as mezzanine debt from TIAA-CREF, according to research rm MSCI Real Assets.

Severely weakened demand for workspace, high interest rates and a reluctance among banks to provide new loans on o ce properties have likely prevented Sterling Bay from being able to re nance the building. As of the April 26 presentation, the developer was “working on approval for extension” of the loan through 2023, which would include “placing the property deed in escrow for bene t of the lenders.” e lender group, the documents said, could require that the building goes up for sale, but the Sterling Bay fund would “seek to buy back the property at a discount.”

Speaking to Crain’s June 6 about the investor document, Gloor said he expects Morgan Stanley to go through “pricing discovery” but not formally market it to buyers. “ ey’re trying to understand what the real value is.”

Morgan Stanley declined to comment.

Struggling online-deal company Groupon recently disclosed it would pay $9.6 million to terminate its nearly 300,000-square-foot lease in January, two years earlier than its deal was scheduled to expire. e building is 96% leased today, according to real estate information company CoStar Group, but losing Groupon stands to push occupancy below 80%.

MORE TROUBLES

e fund faces another looming loan challenge at Prudential Plaza, where it is a minority investor in a venture led by Wanxiang America Real Estate that acquired the property in 2018 for $680 million.

Wanxiang said in a statement it will seek an extension of a $389 million mortgage tied to the buildings that doesn’t mature until August 2025 to “better position ownership, and the asset, for the future.”

Ownership “intends to invest signi cant capital over the next several years to secure existing and new tenants while also improving the building’s amenities and common areas,” the statement said. For Sterling Bay fund investors, that

Sterling Bay hired brokers to sell the Green Street building last year, but the property never traded. Gloor said prospective buyers put little value in space leased to a meeting space operator, and “we’re trying to limit our exposure as much as possible so we can increase the value” of the properties.

Sterling Bay also said during the CTPF presentation that it plans to move its own headquarters out of 333 N. Green to the rst o ce building developed at Lincoln Yards. e developer occupies just more than 31,000 square feet in the 19-story Green Street building, according to CoStar.

e presentation shows Sterling Bay’s $155.7 million outstanding loan balance on 311 W. Monroe includes a $10 million guaranty that the fund is on the hook to pay if there is an event of default or if the building is sold for less than the balance of the loan.

Sterling Bay also intends to sell the residential portion of 300 N. Michigan by the end of this year, according to the presentation. e rm in October sold the 10-story CitizenM hotel in the building for $74 million to the Dutch hotel brand itself under a deal that was pre-negotiated when the $250 million, 47-story tower was being built.

e presentation shows the developer has $120.5 million in outstanding debt on the Michigan Avenue property. Bank OZK is the senior lender on the mortgage, which is due to mature in July 2024.

Sterling Bay has still pulled o some victories amid the nancial challenges. It de ed the workspace-shedding woes brought on during the COVID-19 pandemic by notching leasing wins at its projects in the Fulton Market District, which it helped transform during the past decade from a meatpacking neighborhood into a trendy destination for major o ce users including Google and McDonald’s.

Most recently, the developer has been in advanced talks to sign a 90,000-square-foot lease with law rm Greenberg Traurig at the building under construction at 360 N. Green. at deal would add to an anchor tenant lease Sterling Bay previously signed with Boston Consulting Group and would bring the building to more than two-thirds leased before it’s even completed.

Justin Laurence contributed.

An architect’s rendering of the Lincoln Yards project STERLING BAY/GENSLER