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COVID STORIES: Local leaders affected by the virus share what they learned. PAGE 6

CHICAGO COMES BACK: The power of telling the truth. PAGE 4

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Holding out for a comeback

Does the GOP still want Kinzinger? Anti-Trump stand clouds a rising star’s future Republican U.S. Rep. Adam Kinzinger has all the makings of a contender for statewide office: He’s a military veteran, a gifted communicator and a proven winner with six straight victories in congressional races. Political watchers say he’d make a strong GOP nominee against Illinois Gov. J.B. Pritzker or U.S. Sen. Tammy Duckworth in 2022. But Kinzinger also stands out

in ways that cloud his chances of winning any future GOP nomination, including for his own congressional seat in northern Illinois. The 42-year-old was one of only 10 House Republicans to vote for Donald Trump’s impeachment, and he’s been one of the former president’s most visible GOP critics. Kinzinger’s future prospects depend largely on Trump’s continuing role in Republican politics. If the party remains in thrall to the

BY DANNY ECKER ALAMY

BY A.D. QUIG

Vulture investors are circling the local hotel industry— but they’re not finding many deals. Here’s why.

Rep. Adam Kinzinger former president at every level, Kinzinger’s perceived betrayal makes political survival, let alone advancement, uncertain. What does Kinzinger want to

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See KINZINGER on Page 23

For every call Hans Detlefsen gets from a hotel owner or lender looking to sell their cash-hemorrhaging property 10 months into the COVID-19 pandemic, he gets more than a dozen from prospective buyers. “You’d think being in the middle of a recession and pandemic that it would be a buyer’s market

with lots of desperate sellers and buyers making lowball offers,” says Detlefsen, president of Chicago-based Hotel Appraisers & Advisors. “But it hasn’t happened in our experience.” Not that hotels are thriving, nor will they trade for a premium amid the worst crisis in modern hospitality history. On the See HOTELS on Page 8

GREG HINZ

JOE CAHILL

With a new president in the White House, everybody’s got a wish list. PAGE 2

Requiring hospitals to disclose what they charge insurers will help bring down prices. PAGE 4

1/22/21 4:26 PM

2 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

Dear Joe, all I want is ...

That’s civility, bringing a new tone to Washington so lawmakers actually can get things done for a change. That doesn’t mean abolishing freedom of speech. People on both sides of the aisle are still free to say what they want and otherwise make idiots of themselves. It does mean lowering the volume on the rhetoric in the name of doing more than playing to your base. It’s hard to cut a deal with a lawmaker of the other party if you’re spitting in their face. As U.S. ChamTHE TOP ITEM ON MY WISH LIST ber of Commerce Executive President Neil Bradley AND EVERYONE ELSE’S IS CIVILITY. Vice put it in a conference call with reporters, “We’ve set a bad pattern in Washington, that and cities like Chicago was to people only want to be defined by preach about how no one would what they’re against.” Amen. want to live in such a dangerous Job 2: Tame the pandemic. Get place, Biden can make amends. the vaccines out of the refrigerators Big time. And lest my Republican and factories and storage compartfriends think it’s all about shoring ments and into people’s arms. And up Democratic fiefdoms, it’s not. in the meantime, make it the law Let’s start with the top item on that, in public settings, if you insist my wish list and everyone else’s. ike a Rorschach test of sorts, all of us tend see in a new president what they want to see, good and bad. Joe Biden is no exception, as mayors and governors like Lori Lightfoot and J.B. Pritzker lick their lips at what’s to come even as Fox TV commentators rip up not only Biden and his family and friends but his choice of inaugural entertainers. Still, after a president whose idea of helping the industrial Midwest

on going maskless, I and the cop next to me can insist you leave. Right now, it’s truly the wild west out there as COVID-19 vaccines begin to become available to those of us north of age 65. The city says one thing, the state another. City Hall says physicians have been instructed on who to immunize, but my physician says he’s received absolutely no guidance. Meanwhile, the folks in DuPage County say the number of doses they received weekly this month has gyrated from 10,000 to 24,000 to back to 10,000, all without explanation. All of those problems at least will improve with a consistent, focused federal response and supply. Biden has promised just that, and his initial proposal seems solid. But for this voter, the proof will be in the product. Biden has to deliver. Next is infrastructure: money to rebuild crumbling roads and bridges, expand public transit, beef up the electric grid to handle clear energy technologies and more. If

GREG HINZ ON POLITICS

adults who have proven their worth but yet are being treated as human flies, is truly disgusting. Give them a permanent home, now, then come up with a rational plan for others that doesn’t make the Statue of Liberty weep. One last item on my short list: National voting-rules reforms, standards, something that helps us avoid a repeat of this year’s chaos. Maybe some states went too far in allowing remote voting, but all but outlawing absentee voting amid a pandemic went too far the other way. Good heavens, if we can’t agree on how to conduct an election, what can we agree on? There’s my list. Get busy, Washington!

there’s a subject I hear from almost every lawmaker in both parties, it’s this one, because they all know it means jobs and more efficient production. Yes, there’s a question of how to pay for it. But if there ever was a time for smart investment, investment that will pay off tomorrow, this is it. Chicago exists because it’s a transportation and trade center. Those assets are diminished if they’re old and outmoded. This also is the time to finally move on comprehensive immigration reform, truly an issue that has haunted America for decades. I don’t have the space to discuss at length everyone’s view. But what we’ve done to the Dreamer kids, hundreds of thousands of young

The time for bold change in government has come

fter one of the most turbulent periods in recent history, it was audacious inaugural poet Amanda Gorman who laid out our challenge: “We will not march back to what was, but move to what shall be, a country that is bruised, but whole, benevolent, but bold, fierce and free.” We have a new administration in Washington, D.C., and in Springfield, we have new Illinois House Speaker Chris Welch, and relatively new Illinois Senate President Don Harmon. Yet, we remain a people divided, torn asunder by a politics that has become horribly hyperpartisan. How did we get here, and how do we move toward the new dawn Gorman compelled us to create? More people believe it will take some systemic, bold change. U.S. Senate Democrats, for instance, just joined their House counterparts, making their first bill one that broadens voting access and requires states to adopt independent redistricting for congressional districts. Gerrymandering absolutely contributes to our extreme polarization. When partisans draw districts to benefit one political party or the other, one of the toxic outcomes is electing politicians who only ever worry about primary competition, about being taken out by someone on the wing of their party. This tends to drive politicians of both parties to take extreme positions. As my friend and former colleague Solomon Lieberman recently posted on Facebook, “Insiders claim that many Republicans couldn’t vote their conscience on impeachment because they are scared stiff of Trumpers retaliating against them in their next primary.” Lieberman is the president of Venn Innovations and the executive director of the Institute for Political Innovation, a cross-partisan, not-for-profit working to achieve change in American politics. Both

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Venn and the institute were founded by Katherine Gehl, a former food company CEO, entrepreneur and co-author of “The Politics Industry” with Harvard Business School Professor Michael Porter. Gehl tells anyone who will listen that our politics isn’t broken—it’s fixed. Gehl and her crew believe party primaries are a huge problem, as are our elections, in which the candidate with the most votes wins. As we all know, in a multicandidate race, someone with the most votes might not have majority support. We also all know few people participate in primaries. Fewer of us feel connected to one major party or the other. In Illinois and many other states, many of us are turned off by primaries because we’re required to ask for a Democrat or a Republican ballot and can only vote in one party’s elections. Those primaries, then, are decided by a small number of the most partisan voters who elect candidates beholden to people on the edges of their respective parties. Gehl, Lieberman and others believe a key solution to these problems is a two-step innovation they call “Final Five Voting.” In a nutshell, states would need to end party primaries and adopt open ones, allowing the top five candidates of either party to advance to the general election. Then, a form of ranked-choice voting would kick in. In general elections, voters pick their favorite, as always, but they also would have the option to rank the remaining candidates. If a candidate doesn’t win an outright majority, then the last-place candidate is dropped and those who ranked that candidate first would have their second choices counted, and so on. This sort of series of instant runoffs would result in winners who have more support from more voters. The theory is that opening up primaries and allowing ranking

incentivizes politicians to appeal to a broader base of voters, stay away from campaign muck and govern from that broader base because they are always hoping to be a voter’s second or third choice, if not their first. “It’s a reform to fuel cross-partisanship and a healthy democracy,” Lieberman says. “If you fix the primary, then the general election really matters.” Changing both at the same time transforms the incentives in politics by boosting competition, Gehl says. It’s a sort of “free-market politics that delivers innovation, results and accountability.”

MADELEINE DOUBEK ON GOVERNMENT

The Final Five concept was adopted in Alaska in November, and more states are considering opening up primaries or adopting some form of ranked-choice voting. If we remove partisanship from the districts that form the foundation of our democracy and inject more competition and broader voter support into our elections,

perhaps we’ll move toward that bold, fierce and free nation poet Gorman sees. Surely the time is now to experiment in order to strengthen our democracy. Madeleine Doubek is executive director of Change Illinois, a nonpartisan nonprofit that advocates for ethical and efficient government.

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1/22/21 1:58 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 25, 2021 3

Allstate throttles back auto insurance rates Changing course in a bid to capture market share in a heated race BY STEVE DANIELS

JOHN R. BOEHM

Tracy Baim is president and co-publisher of the Chicago Reader, which is in the midst of becoming a nonprofit.

TAKING PROFIT OUT OF THE EQUATION The Hyde Park Herald joins a growing number of legacy news organizations making the switch to nonprofit status BY ALLY MAROTTI LATE LAST YEAR, the Hyde Park Herald put out a call to its readers: Subscribe or donate. Like other newspapers, the almost 139-yearold Herald depended largely on advertising dollars—a model that has been failing news organizations for more than a decade. The pandemic dried up advertising revenue further, forcing many to realize what Bruce Sagan, the 91-year-old owner of the Herald, says he already knew: Advertising dollars are gone, and they aren’t coming back.

Besides asking readers to sign up for digital and print subscriptions, the Herald plans to join a growing number of legacy media companies seeking nonprofit status. Nonprofit news organizations have become increasingly prevalent since the Great Recession, which decimated legacy newsrooms. A dozen or more nonprofit news outlets have launched each year since 2008, according to the Los See NONPROFIT on Page 22

“THERE’S A PERCEPTION AMONG SOME THAT SHIFTING TO NONPROFIT STATUS IS A PANACEA. . . .THIS IS NOT A VACCINE AGAINST INSOLVENCY.” Tim Franklin, senior associate dean, Medill School of Journalism

Allstate is cutting auto insurance rates in numerous large states, including Illinois, joining State Farm and other big rivals in responding to the pandemic with lower prices. The Northbrook-based insurance giant last year resisted following the rate-cutting crowd. But Tom Wilson has chosen 2021 as the year in which Allstate for the first time in his 14-year tenure as CEO will begin capturing market share in the fiercely competitive auto insurance business. Allstate will reduce auto rates in its home state of Illinois by 5 percent on average, beginning Feb. 18, according to filings with the Illinois Department of Insurance. Other states where Allstate is instituting 5 percent rate cuts include Wisconsin and Pennsylvania, according to filings in those states. In Georgia, most drivers insured by Allstate will see an 8 percent reduction. The rest will get 5 percent, according to a filing. In its filings, Allstate said driving levels have rebounded since the early stages of the pandemic last spring. But miles driven still are 10 to 15 percent below where they were before COVID. That’s led to higher profits for Allstate and other car insurers, which are paying less in claims than they would under normal conditions. To date, Allstate has been more cautious than rivals on whether today’s driving habits represent a See ALLSTATE on Page 21

Billionaires back low-profile trading technology firm Money from Zell and Zuckerberg gives Enfusion a billion-plus valuation BY JOHN PLETZ You might not have heard of Enfusion, but Mark Zuckerberg and Sam Zell have. The Facebook founder and the Chicago real estate mogul are among the billionaire backers of a venture-capital firm that recently pumped $150 million into the Chicago-based financial software company. Announced Jan. 7, the invest-

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ment by San Francisco-based Iconiq values Enfusion at $1.5 billion, making it one of the few privately held, venture-backed companies in Chicago with a 10-figure valuation. The deal also demonstrates the important but often overlooked role that Chicago’s financial markets play in the city’s technology sector. Enfusion is the latest in a line of successful companies stretching

back to digital-trading pioneer Archipelago Holdings, founded here in the mid-1990s. On Jan. 21, Chicago-based online options-trading company Tastytrade said it would be acquired for $1 billion in cash and stock. Founded by Citadel alums, Enfusion quietly became a top provider of hedge fund software over the past 15 years. About 500 customers use the company’s “hedge fund in a box” soft-

ware package, which includes all the applications needed to run a hedge fund. Revenue is estimated to have grown at an annual pace of about 40 percent during the past several years to $100 million. Headcount nearly doubled last year to 500, including 150 in Chicago. “They fly under the radar,” says Jeremie Bacon, who led a Chicago-based tech company that sold software to hedge See ENFUSION on Page 21

Thomas Kim is CEO of Enfusion.

1/22/21 4:21 PM

4 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

JOE CAHILL

CHICAGO COMES BACK

ON BUSINESS

Medicare for various services. Private insurers and hospitals hash out prices in confidential negotiations. As with any negotiation, bargaining power plays a big role in the outcome. Hospitals generally enjoy strong bargaining power, partly because there aren’t many of them in any given area. As hospitals continue consolidating, they gain even more leverage. Studies have linked hospital mergers to higher prices. Insurers can get bargaining power with hospitals if they have a lot of customers. In most industries, a buyer who delivers greater volumes has more leverage in price negotiations. But it’s hard to square hospital prices with fundamental market economics. In a well-functioning market, prices for all customers tend to converge into a range that generates a worthwhile return for suppliers based on their fixed and variable costs. Some buyers might pay a little more, some a little less, depending on volume or their individual requirements. In the hospital market, however, some custompay far more than PRICE TRANSPARENCY GENERALLY ers others for the same MAKES MARKETS MORE EFFICIENT. service. So it appears that hospitals make a much bigger profit on some same insurer pay different prichip surgeries than others. Why es at the same hospital. should that be? It’s the same Eye-opening as they are, the operation, and surely the cost of disclosures also deepen the operating on a patient insured mystery around hospital prices. by Blue Cross isn’t greater than Why do some Cigna plans pay 78 the cost of operating on one percent more than another for a insured by Cigna. lung transplant at Amita Health Overall health spending St. Joseph in Chicago? Why does would decline—perhaps Health Alliance pay 75 percent significantly—if all private more than Blue Cross for hip insurers got prices closer to the replacement surgery at Northlowest rates some get. The price western Memorial Hospital? disclosure requirement unlocks Hospitals aren’t keen to information that will help them answer such questions. Still, negotiate for those lower prices. the price disclosures shed some Yes, requiring hospitals to long-overdue light on a key disclose privately negotiated driver of health care costs that prices is a government intrusion now consume 17.7 percent of that would be hard to justify U.S. GDP. That percentage is up elsewhere. But it’s a lot less by more than a third since 1999 intrusive than price regulation or and far exceeds the average 11 an outright government takeover percent of GDP that other develof health care. oped countries devote to health What’s more, price transparcare spending. ency generally makes private Many of those countries markets more efficient. Greater manage costs through governefficiency tends to drive down ment-run health care systems. In prices, a development that would the U.S., we leave large segments help millions of Americans who of medical care to the marketcan’t afford medical care. place. Private insurers pay for Besides, hospitals get plenty 40 percent of hospital services, of government favors. Many making them the largest single of the largest—including local source of revenue for hospitals, heavyweights Advocate Auroaccording to the federal Centers ra, Northwestern and Northfor Medicare & Medicaid SerShore—are nonprofits exempt vices. Data from the Health Cost from federal income taxes and Institute shows private insurers other governmental levies. Price also are more lucrative for hostransparency is a small thing to pitals, paying anywhere from 51 ask in return. percent to 122 percent more than Controlling health care costs is one of the most confounding economic challenges of our time, in part because prices for many services are cloaked in mystery. That’s particularly true when it comes to the rates hospitals charge private insurers. Hospitals guard that information like the nuclear codes. So they fought hard against a Trump administration rule requiring them to disclose the prices they negotiate with private insurers. The requirement took effect Jan. 1, and newly inaugurated President Joe Biden has given no indication that he intends to reverse it, as he has done with other Trump actions. As my colleague Stephanie Goldberg reported last week, some of the largest Chicago-area hospital chains are starting to make their first grudging disclosures under the rule. The filings reveal wide price variations, not only among hospitals, but between different insurers at the same hospital. In some cases, different plans from the

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A welcome spotlight on medical costs

The power of telling the truth

Leaders who have a vision for what’s coming—and communicate that honestly, optimistically and realistically—will be doing their teams a great service BY EMILY DRAKE AND TODD CONNOR Chicago Comes Back is a weekly series on ChicagoBusiness.com providing leadership insights to help your business move forward, written by leadership consultants Emily Drake and Todd Connor. Drake and Connor facilitate Crain’s Leadership Academy. Drake is a licensed therapist, owner of the Collective Academy and a leadership coach. Connor is the founder of Bunker Labs and the Collective Academy and is also a leadership consultant. Check out previous installments at ChicagoBusiness.com/comesback. EMILY DRAKE: So we are into the new year, and yet it seems we can’t yet get a break from the domination of national events in our inboxes, our dinner table conversations, our psyches and our social feeds. If one prediction after November was that we might return to some place of normalcy around not being consumed by the national political picture, that has not proven to be true. TODD CONNOR: Well, at least not yet, though it’s early, so let’s not give up hope. I do think so much of what we talked about last year, and we will need to continue to talk about, is boundary setting for our brains: How do we toggle between working from home (if the luxury allows) to helping kids with their remote schooling? How do we tend to support our own mental and physical needs, while leading and supporting our teammates’ needs? How do we go from taking in what we see unfolding nationally, while also fitting in more quotidian tasks that have real-world implications, like doing the laundry? ED: This balance, indeed, will continue to challenge us and I think define how we approach the year personally. I think there are leadership lessons in this. We talked in the past about the elevated obligations leaders might have to nurture workplaces where we acknowledge the political landscape without politicizing the office, honor mental and social-emotional needs without losing sight of workplace demands,

and now finding this balance between optimism and realism. It’s on this last point that I think there are real, and perhaps less obvious, leadership implications. TC: On that last point, the Stockdale Paradox, a concept popularized by Jim Collins in his seminal organizational leadership book “Good to Great,” comes to mind. Vice Adm. James Stockdale—a former vice presidential candidate, Vietnam War POW for seven years and Abingdon, Ill., native—presented his thinking on the blended need for optimism and realism. In his own words: “You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.” I fret, and I think we are seeing play out, that people have confused leadership with telling your followers simply that which they want to hear, giving them simplistic messaging that ignores reality. ED: Others have said that leadership is the art of disappointing people at the rate they can stand. I might preface this by calling this “responsible” leadership—or at least, a leadership that does not confuse expanded followers or popularity with the responsibility to be a steward to the people you lead. Short-term optimism that ignores the facts on the ground can feel good and even win you the accolades of your peers or the people you lead, but it ignores

the long-term implications and ultimately does your followers a disservice by deferring disappointment. If Q2 is going to be painful, you have a responsibility to your team to prepare them. Often, as a therapist, I’m confronted with helping people prepare for pain in their lives, and one of the tenets is that you have to respect people enough to trust that they have the capacity to hear the truth. Leaders who don’t tell the truth to their teams fundamentally signal they don’t respect their teams or believe they have the capacity to know the truth. TC: Telling the truth emerges again in 2021 as a defining principle for leadership. For leaders who don’t know the truth, I think it’s an act of service, and also vulnerability, to tell your team what you do know. One of the most powerful discussion prompts that I know we’ve used with leadership teams is simply to ask people, “What’s giving you anxiety?” This question alone can unlock insights, normalize what other people have been feeling but not saying and ultimately advance the process for problem-solving. ED: Alas, here we are in 2021, and while I know many folks are ready to turn the page and start fresh, this work of leadership requires us to embrace the long haul, and to acknowledge the past and the present, while defining and building the future. Leaders who have a story arc or vision as to what is unfolding— and communicate that honestly, optimistically, but also realistically—will be doing great service to their teams. Followers in the moment may not recognize it, preferring instead an optimistic and simplistic balm that says, “It’s all great and nothing to think about.” But in three months, and six months, and six years, those people will say: “She told me the truth, even when it was hard. I trust her. I’ll follow her.”

1/22/21 1:57 PM

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6 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

HOW COVID REWROTE THE RULES FOR THESE LEADERS One year after the Chicago area logged its first case, Crain’s asks local business leaders and decision-makers who battled the virus how the experience is influencing their approach to work and leadership | BY STEPHANIE GOLDBERG, A.D. QUIG AND ALLY MAROTTI The Chicago area logged its first official case of the novel coronavirus on Jan. 24, 2020. A year later, Illinois is entering the second phase of its vaccination campaign—an effort unlike any other in history. Inoculating essential workers and older adults will bring the state one step closer to slowing the spread of COVID-19, which has killed nearly 20,000 and sickened more than 1 million here. Even as the vaccine rollout progresses— more than half a million shots have been

administered—health officials are expecting a new, more infectious strain of the virus to take hold. Meanwhile, an increasing number of survivors are reporting lingering symptoms like brain fog and fatigue. They’re now known as “long-haulers,” the latest addition to a pandemic lexicon that made phrases like “social distancing” and “community spread” and “flattening the curve” part of everyday conversation over the past 12 months. For many, this past year—marred by job loss, isolation and virtual funerals—has tak-

en an unthinkable toll. The social, economic and psychological consequences will remain long after all 12.7 million Illinoisans are fully vaccinated against the virus. The pandemic has fundamentally altered the way people live and work. It has normalized face masks, e-learning, workplace flexibility and plexiglass partitions at checkout counters. And its disproportionate impact on communities of color has fueled a growing demand for racial and health equity among governments and businesses.

But as Chicagoans look forward to resuming normal activities, and to the economic recovery they hope will follow, they’ll have to decide which new ways of life to bring into the post-pandemic world—and which to leave behind. Crain’s asked local business leaders and decision-makers who have been personally affected by the virus how the experience is influencing their approach to work and leadership. Here’s what they said. (Interviews have been edited for length and clarity.)

JOSE SANCHEZ CEO | Norwegian American Hospital

got it in October. I kind of let my guard down. I felt comfortable and I started going out again and having dinner and lunch at restaurants. I was out for the whole month. I had two hospitalizations—one at a local hospital in the area and, after that, I was hospitalized in the ICU at Norwegian for three days. They couldn’t control my blood pressure or my heart rate. I’m still on a lot of medication to control my blood pressure. I forgot about things like market share, financial issues, pa-

STEPHEN J. SERIO

tient volumes. For me, that became irrelevant. What became relevant was protecting people—staff, patients, people in the hospital. You don’t know something until you personally experience it. It was pretty scary. There were times I felt that I was not going

to make it. There were days that I was at home and I couldn’t even get up from the bed because I had no energy. And if I did walk a few steps, I would be tired. Then there’s a sense of isolation. You’re distanced from everyone. One thing I’ll do if we face something like this again will be focusing more on the psychological impact it has on the people who are providing care side-byside with patients. Think about it, you get up in the morning every day and you come into a place that is high risk. You finish work and you go home to your family. The question everyone had was, “Am I going to bring this into my home?”

J.P. GALLAGHER CEO | NorthShore University HealthSystem

allagher was diagnosed early in the crisis—on March 19, just a day before Gov. J.B. Pritzker announced a statewide stay-at-home order.

KWAME RAOUL Illinois attorney general

cancer survivor, he was infected in early June, and has recovered with a bigger focus on his personal health. He was elected in 2018. One of the things COVID and the pandemic allowed all of us to home in on was the inequities, right? I was infected shortly after the George Floyd murder. I had a lot of time for reflection. Even in my past advocacy, I felt I was not fully honest about sharing my personal experiences. One of the things I confronted—partially being infected, partially being isolated—was I don’t feel like I embraced my anger. During the 2018 campaign, I was characterized as having a bad temperament, and because I was the only African American male candidate in the crowded eight-way primary, my campaign advisers were like, you’ve got to be careful. You can’t have the same tone as everybody

P006_CCB_20210125.indd 6

else for fear that you’ll be characterized as the angry Black man. Admittedly, I was always cautious about that. So finally, I realized it’s OK to embrace that anger. There’s a lot to be angry about. In a way, tiptoeing around it forces you to suppress it, and ignore some things, and not communicate some things. I ended up drafting a letter to my staff, where I talked about being angry. I talked about personal experiences at the hand of law enforcement when I was younger. I got a lot of feedback. It was refreshing because I’d always been fearful about expressing myself on those topics as honestly as I did. Thereafter, I felt like I was free to do so, and freed up to call upon my staff to reflect, really examine what we’re not doing well enough, how we may be operating in silos too much, and how we can cross in terms of our disciplines and deliver more effective results.

ERIC LANGSHUR Co-founder and managing partner Abundant Venture Partners

learned firsthand the lesson that you really don’t want to get this thing. That was an anchoring point for how we navigated this entire period. The focus was taking care of everybody and keeping everybody safe. At work, we built in daily huddles so everyone could Zoom in and feel connected to each other and feel connected to the business and—importantly— feel connected to our clients. And once a week we have a huddle that’s purely social and fun. We’ve worked hard to make sure people felt connected and supported. When one gets really sick, it does cause more introspection. I think one of the goofy things about our species is that we forget about our mortality and the impermanence of our existence.

Everybody has been juggling some pretty significant worklife responsibilities. For me, it has really reinforced the importance of understanding and realizing we needed to do whatever we could to make sure our people felt like we were making the right decisions and putting their interests first. One of my takeaways is the importance of staying connected during a crisis. There are cer-

tain jobs I don’t believe can be done remotely. Certainly caring for patients is one of those. As leaders, we’re making sure we’re connected to our physicians, nurses and other team members to understand what’s on their minds, what questions they have, what concerns. I want to be able to read peoples’ body language and understand how they’re feeling. You just can’t do that over Zoom. There is a dimension of this that has accelerated remote working, but I’d say the importance of staying connected has reaffirmed my desire to do all that in person.

JOHN R. BOEHM

1/22/21 4:19 PM

CRAINâ&#x20AC;&#x2122;S CHICAGO BUSINESS â&#x20AC;˘ JANUARY 25, 2021 7

GINA LAMAR EVANS

SCOTT WEINER

Founder and CEO | Nefuse

Co-owner | Fifty/50 Restaurant Group

When I was first diagnosed, I had to make sure I didnâ&#x20AC;&#x2122;t panic and freak out my patients. I had to think of everyone I had been around and make sure they got tested. They werenâ&#x20AC;&#x2122;t even allowing testing for everyone then, even though people with HIV are a highly vulnerable population. Pretty much whatâ&#x20AC;&#x2122;s happening with contact tracing and COVID is exactly what weâ&#x20AC;&#x2122;ve been doing in the world of HIV for the last 25 years. I think this experience has shown everyone the real discrepancies in our society. So many times people say, â&#x20AC;&#x153;Just do it via teleconference.â&#x20AC;? Our patients donâ&#x20AC;&#x2122;t have iPhones. They have government phones with minutes so they canâ&#x20AC;&#x2122;t even stay on the phone that long. There are quite a few things that have come up that weâ&#x20AC;&#x2122;re going to have to look at differently moving forward.

We let the entire company know. One of my other chefs got it. We ended up closing the restaurant that I spent the most time at, as well as where the chef was. We tested all the staff. It was nerve-wracking. We had to cancel a couple hundred reservations and we knew that was going to be one of our last strong weekends. The experience made me realize just how fragile the industry is.

BEVERLY KIM

STEPHEN J. SERIO

einer reckons he caught COVID at the end of October, just two weeks before his baby was born on Nov. 7, a period in which he says he had already planned to quarantine.

JOHN R. BOEHM

vans was diagnosed in early March while working for Cook County Healthâ&#x20AC;&#x2122;s HIV program. She left her job to launch Nefuse, an HIV services company, while recovering from COVID herself.

A lot of people have realized that. We arenâ&#x20AC;&#x2122;t necessarily changing the world, but we are adding happiness into peopleâ&#x20AC;&#x2122;s lives and that is more in focus than it has been.

Co-owner | Parachute

im lost her 99-year-old grandmother to COVID-19 in May. The experience made her reset priorities. She launched a nonprofit and has been donating meals to health care workers and Korean seniors, like her grandmother. Iâ&#x20AC;&#x2122;m using this time, the forced pause on restaurants, to talk to restaurant owners about how we can reset the industry template. The industry template was somewhat broken. Itâ&#x20AC;&#x2122;s not equitable for a lot of people. Why is

there such a minority of women chefs and leaders and owners? Why do we have this culture thatâ&#x20AC;&#x2122;s so toxic just to be yourself? We have to ask the question right now before we rush into business as usual. COVID has helped. Itâ&#x20AC;&#x2122;s been devastating for the restaurant industry, but in a weird way thereâ&#x20AC;&#x2122;s always a positive side to it. I donâ&#x20AC;&#x2122;t think weâ&#x20AC;&#x2122;d be focused on all these issues. I donâ&#x20AC;&#x2122;t think people were caring about what was happening behind the scenes, what restaurant workers go through.

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8 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

Hotel owners holding out for a post-COVID comeback HOTELS from Page 1 contrary, the financial carnage has been severe: Nearly $25 billion worth of hotel loans nationwide became distressed in 2020, twice the dollar amount of all hotel sales for the year, according to research firm Real Capital Analytics. In the Chicago area, more than half of the $1.7 billion in hotel loans that have been sold off to bondholders—a small but indicative slice of the broader market—were delinquent as of Dec. 1, according to New York-based research firm Trepp. But private-equity funds and real estate firms that built war chests since March to pounce on an expected tsunami of properties hitting the discount rack have found few willing sellers so far. Only a handful of downtown Chicago hotels have changed hands since March, all of which were showing signs of distress before the pandemic. One reason for the lack of fire sales: Hoteliers and lenders are betting a travel boom is coming when the pandemic subsides, mo-

“It’s a poker game right now,” says Bob Habeeb, CEO of Chicago-based hotel developer Maverick Hotels & Restaurants. “These buyers are lying in wait with the idea that when the dam breaks, they’ll be scooping stuff up. But if the dam never breaks, they’ll have to step back and deploy (their money) elsewhere.”

SMALL SHARE

Despite an overwhelming number of hotel owners falling months behind on their loans, distressed hotels accounted for less than 6 percent of the relatively small volume of hotel sales nationwide in 2020—only slightly higher than the share each of the past few years, according to RCA. Buyers expecting steep discounts so far have found mostly the opposite: RCA’s hotel price index rose by 1.1 percent during the fourth quarter compared with the same period in 2019. Normally lenders would look to seize properties whose owners default on their loans and sell them on the cheap to recover as much of their investment as possible. But the middle “AT THE START OF THE PANDEMIC THERE WAS in of a crisis so JUST A LOT MORE UNCERTAINTY. . . . WE CAN d e v a s t a t i n g that many hoSEE THE LIGHT AT THE END OF THE TUNNEL.” tels are losing less money by David Levy, Keen-Summit Capital Partners shutting their doors than activating them to brush off blown cepting guests, most lenders ardeadlines for mortgage payments. en’t interested in taking control And while industry experts warn a of properties until things turn wave of loan defaults and foreclo- around, industry experts say. Banks have also held off on foresures could still be on the horizon, the early signals are that demand closure lawsuits or other remedies from buyers will outweigh the sup- because the federal government ply of distressed hotels—meaning bought them time. The initial vulture investors might not get the CARES Act provided relief from the normal regulatory requiresevere discounts they hoped for.

w WHERE ARE ALL THE DEALS? Nearly $25 billion worth of hotel loans nationwide became distressed in 2020, but so far that hasn’t translated into a flood of fire sales. DISTRESSED HOTEL SALES AND PERCENTAGE OF TOTAL SALES Distressed hotel sales Percentage of total sales $5.0 billion 100% $4.0 80% $3.0 60% $2.0 40% $1.0 20% $0 0%

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Source: Real Capital Analytics

ment that they reserve a certain amount of capital to back up troubled loans. That measure was recently extended through the end of 2021. In the meantime, many lenders are so bullish about vaccine distribution and pent-up demand for travel that they think they’ll fare better waiting for the recovery instead of trying to get a hotel off their books at a huge loss, says David Levy, who brokers distressed asset sales and leads the Chicago office of New York-based Keen-Summit Capital Partners. “At the start of the pandemic there was just a lot more uncertainty than we have now. We’re at the point now where we can see the light at the end of the tunnel,” he says. “I think there’s a general perception that banks just punt on this stuff. And they don’t.” Even if weary lenders eventually enact a financial reckoning on bad loans, discounts may not be as drastic because of the deep pool of buyers. Private real estate funds targeting opportunistic and distressed assets were sitting on nearly $125 billion ready to be deployed at the end of December, 50 percent more than the dry powder

available at the end of 2010 coming out of the financial crisis, according to financial data tracker Preqin. Those buyers and potential sellers agree travel will come back with a vengeance, but they’re not on the same page as to when or how bad their losses would be in the interim. That’s leaving a sizable gap between what either thinks hotels are worth today, says Jim Costello, senior vice president at RCA. “If I’m an owner knowing that six months from now we may be back to normal . . . unless I’m forced to, I don’t want to throw the keys at the lender,” he says, noting that after the previous downturn, “there was no signal that there was hope on the horizon.”

DIFFERENT TYPES

Some types of hotels are more likely than others to eventually trade at big discounts, says Bart Johnson, who leads the commercial real estate group of Rosemont-based lender Wintrust Financial. Leisure demand, for example, is expected to bounce back much sooner than business travel. That props up values of hotels that don’t rely on group business:

RCA’s price index for limited-service hotels rose by more than 7 percent in 2020 while the index for full-service properties fell by 14 percent. “Three years ago, if someone asked would you rather have a hotel located in the heart of the West Loop or a property off of (the interstate) in Bloomington, Ill., people would take the urban asset all day,” Johnson says. “But in today’s market, those (downtown hotels) are the assets that are suffering the most.” Buyers may also find their way into potentially lucrative hotel deals without waiting for banks to seize and shop them. By providing fresh equity to hotel owners trying to tread water, investors may get the first proceeds from the hotel’s operations once demand comes back. In November, Chicago-based developer Akara Partners kept a stake in its 206-room Home2 Suites in River North by recapitalizing the property with an undisclosed investment from Harrisburg, Pa.based Hersha Hospitality Management, according to sources familiar with the deal. Hersha assumed a $57 million loan Akara took out on the property a year earlier.

Another big payday for the Thinkorswim team BY JOHN PLETZ British online-trading firm IG Group’s $1 billion bid for Tastytrade is the second big payday for Chicago options trader Tom Sosnoff. Sosnoff is co-CEO—with Kristi Ross—of Tastytrade, a DIY options-trading platform. Sosnoff, 63, previously founded online options company Thinkorswim Group, which was acquired by TD Ameritrade in 2009 for $606 million. Ross, 52, was the company’s chief financial officer. The deal comes at a time when money is flooding into online investing platforms, which have surged amid a stock market that’s roared back from a steep COVID-19 pullback last spring to new highs last week. The volatility is crucial for options investors that are Tastytrade’s core audience.

P008_CCB_20210125.indd 8

Investors have flocked to online financial platforms, such as Robinhood, as well as Chicago-based M1 Finance, which raised $78 million in two rounds last year and saw its assets under management grow from $1 billion to $3 billion in the past year. Exact terms of the IG Group deal were not disclosed. Since Tastytrade is not public, the executives’ stakes—and what they stand to make from the purchase—are not known.

KNOWN FOR BROADCASTS

Ross and Sosnoff spent the past decade building Tastytrade, best known for its online broadcasts about trading. It also includes a trading platform and brokerage called Tastyworks, which grew out of Dough, a mobile platform for options trading and education, that was backed by Light-

bank, the venture capital fund started by Groupon co-founders Eric Lefkofsky and Brad Keywell. Online brokerages such as IG thrive on volume, and Tastytrade attracted 900,000 registered users. Tastytrade, headquartered in the West Loop, has about 145 employees. Sosnoff, Ross and Linwood “Woody” Ma, chief technology officer, will continue to run the company. “We don’t expect management on either side to change, and IG intends to keep the TT strong brand,” Ross says. The company raised $45 million from TCV, a venture-capital firm in Silicon Valley that previously backed Thinkorswim. IG is paying about $300 million in cash and the rest in stock to acquire Tastytrade. “Early on we knew Tastytrade was a very special company,” Sos-

MANUEL MARTINEZ

A $1 billion buyout offer for Tastytrade, led by co-CEO Tom Sosnoff, comes as money is flooding into online investing platforms

Tastytrade execs Linwood “Woody” Ma, left, Kristi Ross and Tom Sosnoff will stay with the firm. noff says in a statement. “While our long-term goal has always been to go global, we waited almost 10 years until we found the right partner and perfect match.

Together we will focus on empowering the self-directed investor and change the way people perceive and engage with financial markets.”

1/22/21 4:23 PM

Give Today to Build a Stronger Tomorrow. This year has challenged us in ways we could not have imagined, but at United Way of Metro Chicago we are energized to do things differently as we transition from immediate COVID response to recovery. Our goal is not to return to normal, because normal didnâ&#x20AC;&#x2122;t provide opportunities for all our neighbors. Our goal is to create a vibrant Chicago region where all families have access to the resources they need to thrive. Whether you donate to our longterm regional recovery plan, provide a holiday meal for families in need, or give virtually of your time, you can make a difference.

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You can be part of building back a stronger tomorrow, today.

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10 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

Let’s get it together on vaccines, folks THE ENTIRE REGION NEEDS A CLEAR, COMPREHENSIVE AND COORDINATED PLAN TO GET VACCINES INTO RESIDENTS’ ARMS AS QUICKLY, EFFICIENTLY AND FAIRLY AS POSSIBLE.

BLOOMBERG

here’s now hope for a more coordinated response to the COVID crisis from the federal government on down. The Trump administration helped foster the rapid development of a multitude of vaccines now in the pipeline. The incoming Biden administration is making the rollout of those vaccines nationwide its No. 1 priority. On his first full day in office, President Joe Biden announced a series of executive actions aimed at overhauling the federal response to the coronavirus outbreak, which has already claimed more than 400,000 lives in the United States. Those actions include stabilizing the supply chain for critical medical supplies and boosting the federal government’s ability to provide rapid and equitable vaccine distribution. Biden said one order would provide schools and child care centers with “clear guidance and resources” to reopen—something, no doubt, teachers and administrators at Chicago Public Schools would welcome, especially since reopening schools has become a flashpoint for yet another round of tension between the Chicago Teachers Union and the district. While we can all be encouraged by the promise of a more coherent federal COVID plan, it will come to nothing here in the Chicago area if City Hall, county governments and Springfield don’t do a better job of communicating with one

another—and with the public. To be sure, there have been press conferences galore—Crain’s listens in on every one of them and dutifully reports news when it arises—but a barrage of data isn’t equivalent to clear communication. As Crain’s columnist Greg Hinz puts it

in this week’s issue, “Right now, it’s truly the wild west out there as COVID-19 vaccines begin to become available to those of us north of age 65. The city says one thing, the state another. City Hall says physicians have been instructed on who to immunize, but my physician says he’s

received absolutely no guidance. Meanwhile the folks in DuPage County say the number of doses they received weekly this month has gyrated from 10,000 to 24,000 to back to 10,000, all without explanation.” We’ve seen similar disconnects between the Lightfoot administration and state public health officials, often providing contradictory assessments of how much vaccine is available, who is eligible to get it, and when. This crisis is rapidly shifting from one of containment and treatment to one of vaccination and, hopefully, eventual recovery. In order for all of us to get our lives back—and to get back to business—the entire region needs a clear, comprehensive and coordinated plan to get vaccines into residents’ arms as quickly, efficiently and fairly as possible, all with an eye toward protecting the most vulnerable and then those who are most needed to kick our economy back into gear: health care workers, teachers and first responders; food workers; transit operators; and so on. With better federal guidance now in place, local leaders can no longer blame the higher-ups for an inadequate response. Public health officials in the city, the suburbs, the counties and the state must hammer out a regional plan and speak with one voice about how we will proceed on the path to vaccinating as many Illinoisans as possible. Anything less, at this point, is unacceptable.

YOUR VIEW

What to watch for as firms halt political giving

these freezes will be, but there n the days since Donald will undoubtedly be some imTrump supporters laid siege mediate fallout. to the Capitol, millions of The point of these sanctions Americans have been reis to demonstrate to Repubflecting on what the appropriate licans that there are conseaction should be not only for quences for their actions. Time the rioters but for those who enwill tell if cutting off the camcouraged their rage. paign finance spigot deters ReCorporate America is republicans from continually insponding by halting or limiting flaming the worst within their PAC contributions. This is a very ranks. reasonable approach that will Nick J. Daggers is a The two Illinois Congress hopefully bring partisans on partner in 1833 both sides back to a more ratio- Group, a Democratic members who voted against certification, Mike Bost and nal approach to governing. fundraising orgaMary Miller, raised a combined Many corporations, including nization based in $700,000 from corporate PACs those with strong presences in Naperville. in the 2020 cycle. While both Illinois, such as State Farm, Blue Cross/Blue Shield, AT&T, ADM, JPMorgan handily won in November, that kind of Chase, McDonald’s and Commerce Bank, fundraising hit could make their re-election are some of the dozens of companies that campaigns just a little bit more difficult. A freeze on corporate PAC contributions have halted PAC contributions. Some refuse to support the 147 Republican mem- will hurt Democrats less. First, Democrats bers of the House and eight senators who did not participate in this despicable asvoted against certifying the Electoral Col- sault on our democracy. Republicans have lege vote. Others are suspending all PAC grown much more reliant on corporate money in their campaigns than Democontributions indefinitely. No one knows how long or how effective crats. And many freshman and sopho-

more Democrats have voluntarily sworn porate lobbyists may kick the ask up the off corporate PAC money. Secondly, the ladder to their trade association or other more senior members can raise millions of corporate allies. Corporate America is taking a stand for dollars from corporate PACs trying to win favor with members atop the committee sanity and our democracy by cutting off funding to Congress members that led structure. In the 2020 cycle, Illinois U.S. Reps. Bob- a bounty against the body in which they by Rush and Rodney Davis saw nearly 70 serve. I hope corporations and their leadpercent of their contributions from corpo- ership will take this seriously without exrate PACs. In contrast, freshman legislators ception and limit the inevitable loopholes. So long as a conservative Supreme Court Sean Casten and Lauren Underwood both had less than 10 percent of their totals from corporate NO ONE KNOWS HOW LONG OR HOW EFFECTIVE PACs. It will not take long for THESE FREEZES WILL BE, BUT THERE WILL both parties to look for ways around these freez- UNDOUBTEDLY BE SOME IMMEDIATE FALLOUT. es, as the next election is always just around the corner. The most is going to declare that corporations are likely loophole that is going to exist will people and have the right to free speech, be for direct contributions from lobby- corporations should consider the conseists and executives. Just because the cor- quences of their speech. They should use it porate PAC is halting donations doesn’t responsibly to help those that will defend mean those who fund the PAC can no our democracy from those that want to destroy it. This is an excellent first step, but longer give. We should also watch and see how trade they must commit to sticking with it and associations react to their members cut- not running through the many apparent ting off candidates. In many cases, cor- loopholes.

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

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1/22/21 1:52 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 25, 2021 11

LETTERS TO THE EDITOR

Governor, this bill will harm health care workers. Veto it. During the COVID-19 pandemic, health care providers have worked tirelessly to save countless lives. But after a brutal year, 2021 began with the passage of a bill that will harm the very health care heroes we have been celebrating. Around 3 a.m. on Jan. 13, the Illinois Trial Lawyers Association pushed a measure ratcheting up prejudgment interest “from the date the defendant has notice of the injury from the incident.” Claims will start accruing a whopping 9 percent rate of interest, potentially for years before a plaintiff even decides to file a case, essentially turning our justice system into a financial game. This bill will hurt every business facing a

personal injury case—and it will drive employers out of Illinois. But the hardest hit will be health care providers, including hospitals, which can’t exit the state. Illinois will become an even greater outlier in American health care, without damage caps or other reasonable limits on plaintiff lawyers, but with punitive interest rates to further line their pockets and take needed funds away from patient care. Gov. J.B. Pritzker should veto this bill, and the state should open the door to a transparent discussion about health care reform in Illinois, not a surprise gambit at 3 a.m. CARL BERGETZ General counsel, Rush University Medical Center

Location is not the issue

VICTOR STLAWRENCE via Facebook

book example of why people like myself do not trust the government of Illinois to get anything right (“Putting out a pension fire with gasoline,” Crain’s editorial, Jan 15). If you do this sort of thing in the private sector, you will be lucky if you only lose your job. More likely, you’ll be sued up one side and down the other and jeopardize your company’s very existence. But in the public sector it’s just business as usual. Those who make the mess are rarely ever tasked with cleaning it up, and those who dare speak of it usually run into a union-funded, left-backed political wall, oblivious to the damage their selfishness is ultimately causing.

This sort of irresponsible legislation is a text-

JON O’BRIEN via Facebook

Nine whole blocks of the riverwalk were completed and the majority of that space occupied, while the space in Trump Tower remains unleasable (“With Cushman out, who wants to try to lease this Trump space now?” Jan. 13). I highly doubt it has anything to do with proximity to North Michigan Avenue. RPM on the river, which is several blocks west, has been successful.

Business as usual

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1/22/21 1:52 PM

BRAND ENGAGEMENT

Freeosk, Chicago As brands and retailers look to contactless ways of getting product samples in consumers’ hands in a pandemicaltered shopping landscape, Freeosk, the leading omni-channel shopper engagement platform, is poised for growth. The Chicago-based company named Matt Bouyea chief revenue officer, where he’ll lead sales and marketing efforts across retail channels. Bouyea’s background is in sales and marketing and business development for omni-channel retail platforms. matt.bouyea@thefreeosk.com

CONSTRUCTION

PEOPLE ON THE MOVE

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

CONSTRUCTION

FINANCIAL SERVICES

LAW

NON-PROFIT

Skender, Chicago

Aaron Wealth Advisors, Chicago

Levin Schreder & Carey, Chicago

USA Midwest Jesuits, Chicago

Skender, one of the nation’s top building contractors, congratulates Brian Simons on his promotion to Vice President. Brian joined Skender in 2007 and has over 16 years of experience in the construction industry. In his expanded leadership role, Brian will oversee Skender’s satellite Indianapolis office, which was awarded a significant IU Health project in 2020, while continuing executive oversight of healthcare teams in Chicago.

Aaron Wealth Advisors announced the firm has added veteran industry leader Jennifer Barry. She joins as Investment Advisor, Managing Director in Chicago responsible for providing comprehensive wealth management services to individuals, families, and related institutions for Aaron Wealth Advisors. Ms. Barry, CFA, joins Aaron Wealth from a 26-year career at Citigroup where she was a Regional Sales Manager/ Managing Director, Institutional Equity Sales in Chicago.

Levin Schreder & Carey welcomes Peter B. Allport as a new partner. Peter is joining the firm’s five partner Trust and Estate Controversy Resolution Group and focuses his practice on representing clients in trust, estate and closely-held business disputes, as well as other types of fiduciary litigation. Peter received his J.D. from Northwestern University School of Law (2008), and his M.A. (2004) and B.A. (2003) from Tulane University.

Thomas Drexler has been named as a major gift officer for the USA Midwest Jesuits. Drexler comes to the Jesuits from the Ignatian Spirituality Project, where he served as executive director. Additionally, Drexler has previously served as executive director of Jesuit Volunteer Corps International; assistant vice president at DePaul University; director of ILAC semester abroad for Creighton University, and as a high school and university educator.

Skender, Chicago Skender, one of the nation’s top building contractors, congratulates Brian Bukowski on his promotion to Vice President. Brian joined Skender in 2007 and has over 17 years of experience in the construction industry. He will co-lead the Interiors group in his expanded leadership role, focusing on driving financial success, efficient operations and the team’s vision.

CONSTRUCTION

Skender, Chicago Skender, one of the nation’s top building contractors, congratulates Andy Halik on his promotion to Vice President. Andy joined Skender in 2011 and has 15 years of experience in the construction industry. In his expanded leadership role, Andy will co-lead Skender’s award-winning Interiors group, focusing on market strategy, client service and continued growth.

Advertising Section

FINANCIAL SERVICES

Renovo Financial, Chicago CONSUMER PRODUCTS

Chamberlain Group, Oak Brook Chamberlain Group, a global leader in access control solutions, is pleased to announce the promotions of two leaders on its global HR team. Lisa Fitterer Fitterer has been promoted to Vice President, Talent Management and Organizational Effectiveness, and Gina Francis has been promoted to Vice President, Francis Total Rewards and HR Services. Fitterer leads the design and implementation of talent management and culture strategies that align with the organization’s values, vision, mission and goals. Francis leads the HR Services team and the strategic design and implementation of the company’s total rewards plans and programs.

CONSTRUCTION

Tiffany Taylor joins Renovo Financial as the Program Director of Chicago Community Capital (“C3”), the community development financial institution arm of the organization. C3 was certified as a CDFI in 2017 to fill the gap in community development by providing access to capital in low to moderate income census tracts. In her role, Tiffany will lead strategic planning and capital raising for C3Fund to revitalize quality affordable housing in historically disinvested communities.

LAW

Nixon Peabody LLP, Chicago Jacalyn Smith joins Nixon Peabody as an attorney in the firm’s Project Finance & Public Finance practice where she represents a wide variety of Smith clients on financing transactions for health systems, charter schools, colleges and universities, cultural institutions, and other nonprofit entities. The firm has been named Schwebke by U.S. News – Best Lawyers® 2021 as “Law Firm of the Year” in Public Finance Law. Nixon Peabody is also pleased to welcome back Emily Schwebke, who rejoins the firm as an associate in the Affordable Housing & Real Estate practice. Emily focuses on counseling and representing clients in a wide spectrum of commercial real estate transactions.

LAW

Skender, Chicago

EDUCATION

Skender congratulates Clay Edwards on his appointment to lead Self-Perform and Construction Technology, a business unit that optimizes value for clients through offerings such as demolition, rough carpentry, BIM, 3D laser scanning, HD surveying and drone mapping. Clay joined Skender in 2006 and has 20 years of experience. With extensive interior construction expertise, Clay will also continue to provide executive-level counsel and client services for tenants and end-users.

Josephinum Academy of the Sacred Heart, Chicago Josephinum Academy of the Sacred Heart has named Richard (Rich) McMenamin as President of the school. McMenamin has supported Josephinum, Chicago’s legacy all-girls Catholic high school, for more than 15 years and has served as chairman of the Board since 2018. He is a business leader with more than 40 years of executive experience in several industries, most recently in venture capital. In addition, he has been actively engaged in Chicago’s civic and Catholic communities throughout his career.

Eimer Stahl LLP, Chicago Eimer Stahl LLP is pleased to announce that Barack Echols has joined the firm’s Chicago office as Of Counsel. Previously a partner at Kirkland & Ellis LLP, Barack will focus his practice on antitrust and complex litigation matters. With over 20 years’ experience, Barack has represented major corporations, from a variety of industries, in direct and indirect purchaser price-fixing class actions, merger litigation, Chapter 11 proceedings, consumer fraud matters, and contract disputes.

NON-PROFIT

Israel Cancer Research Fund, Chicago / New York David Abramson, of Chicago, has been named President of Israel Cancer Research Fund (ICRF), the largest non-profit dedicated to funding the most promising cancer investigations in Israel. ICRF has awarded more than 2,500 grants, totaling over $75 million, for groundbreaking research. Abramson is Chairman of Rapid Displays, a leading marketing and point-of-purchase display firm. He holds an MBA from Northwestern’s Kellogg School of Business and a BBA from the University of Michigan.

PHARMACEUTICAL

Orphazyme, Chicago Molly Painter joined Orphazyme as president of the company’s U.S. business to build and run the team preparing to launch the company’s first rare disease treatment. She has more than 20 years of healthcare industry experience, and earned a bachelor’s degree at Miami University and an MBA from Northwestern’s Kellogg School of Management. Orphazyme is a late-stage biopharmaceutical company based in Copenhagen, Denmark. The company recently opened its U.S. headquarters in Chicago.

TECHNOLOGY

Smart Plastic, Chicago Smart Plastic Technologies, an innovative developer of game-changing polymer solutions, is pleased to announce Jay Tapp has been named President and COO. Under Jay’s leadership, the company had its most profitable year in 2020 and is on track for an ambitious 2021. Smart Plastic enhances the benefits of plastic while dramatically reducing its environmental impact. With Jay’s lifetime of experience in the printing and packaging industry, the company is set to revolutionize the plastic industry.

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

CRAIN’S CHICAGO BUSINESS • JANUARY 25, 2021 13

DIVING IN: Freshwater researcher investigates what lurks in the lakes. PAGE 15 AN URGENCY: New administration must address water resiliency. PAGE 17

LAKE MICHIGAN

ALONG THE RIVER: Communities on the Calumet deserve clean water, too. PAGE 20

TROUBLED

WATERS Stressors on Lake Michigan are complicating life for the Chicago region. BY CASSANDRA WEST

Lake Michigan appears much as it has for millennia, a vast expanse of life-sustaining water stretching beyond the horizon. The source of an unlimited natural resource—fresh water—for people and industry, the lake gave rise to Chicago’s geographical and global prominence, indeed the ability to generate so much wealth and prosperity. What’s not so obvious to most of us is that the lake is changing. Constantly. Lake Michigan is cleaner than it was 50 years ago, before the Clean Water Act was passed and constant sewage overflows and unregulated discharges of industrial pollution contaminated its water. But the lake is struggling under stressors mostly unseen to the naked eye.

The three biggest ones facing the lake are invasive species, agricultural pollution and crumbling infrastructure, says Joel Brammeier, president and CEO of the Alliance for the Great Lakes. On top of all those and making things worse is the impact of global climate change on the Great Lakes, leading to higher water levels and shore erosion. “While we don’t think about climate change as something that we can directly fix from the Lake Michigan basin, it does have the effect of making all those challenges harder, expensive and worse for the ecology of the lakes and the health of the people around them,” Brammeier says. See WATERS on Page 14

SPONSORS

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MORE FORUM ONLINE See Crain’s in-depth stories, interactives and guest columns on Lake Michigan and these previous topics:

 Work-Life  Freight  Regional Planning  Health Care  Education  Police Reform  Transportation  COVID-19  Racial Gaps

 Economic Development  Taxes  Jobs & Wages  Cannabis  Water  Gun Violence  Housing  Pensions

ChicagoBusiness.com/CrainsForum

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14 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

WATERS

Continued from Page 13

And for the Chicago area and other major Great Lakes cities, the water infrastructure simply isn’t up to the task anymore. Chicago has more lead service lines than any city in the nation. In September, Mayor Lori Lightfoot’s administration launched its long-awaited but “voluntary” Lead Service Line Replacement Program. Immediately the program was criticized for being too modest in scope. Only up to 800 of 400,000 lines are expected to be replaced in the first year. The mayor estimated the program could cost about $8.5 billion while the city continues to look for ways to finance the miles of lead service lines beneath Chicago homes. In and around Chicago, water highlights economic and racial inequities that are evident in the burden of COVID-19, lack of access to clean drinking water and

urban flooding in mostly south city neighborhoods, as reported in a 2020 study by the Little Village Environmental Justice Organization and the Center for Neighborhood Technology. And then there’s erosion that prompted some residents to form the South Side Lakefront Erosion Task Force a year ago to tackle the lake’s clobbering effect on homes in that part of the city. Those are the problems that must be solved. The cost for all of this is staggering. Maybe too staggering for those in decision-making roles to fully contemplate and address. But inertia serves no one as the waters pound lakefront shores. “We have to solve them to make sure Lake Michigan is healthy and can help the people who rely on it survive and thrive into the future,” Brammeier says.

“EVERY OTHER PART OF CHICAGO THAT’S ON THE LAKE IS ABLE TO CAPITALIZE OFF OF BEING ON THE LAKE. FOR BLACK PEOPLE, IT SEEMS TO COST US.” Mila Marshall, clean water advocate, Illinois Sierra Club

WATER WORKS—AND WRECKAGE INFRASTRUCTURE Water service infrastructure has three components: drinking water, wastewater and stormwater. Most U.S. drinking water pipes were laid in the early to mid-20th century with a lifespan of 75 to 100 years. The Environmental Protection Agency estimates that $271 billion is needed for wastewater infrastructure over the next 25 years.

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URBAN FLOODING In Chicago, most flooding is urban flooding, which happens when the local sewer system cannot manage the volume of rain from a storm. Between 2007 and 2016, nearly three-fourths of flood damage claims paid in Chicago occurred in 13 ZIP codes. Most of those were communities of color.

WATER SHUT-OFFS The rise in water bills leads to many being unable to pay, which leads to shut-offs. The problem is huge in Chicago, but residents in towns like Maywood and Naperville also have fallen behind. A 2017 study found that water bills were unaffordable for 12 percent of U.S. households; if water charges increase as projected, nearly 36 percent would be unable to afford their water bills by 2022.

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LEAD Water itself does not naturally contain lead. Lead can enter drinking water when old service pipes or fixtures (either owned by the utility or the private property owner) corrode. The south suburb of Hazel Crest, like Chicago, is beginning to replace lead service lines.

AFFORDABILITY From 2010 to 2019, the price of water service increased by 57 percent in 30 major U.S. cities. Affordability challenges affect not only households unable to pay their water bills but the financial integrity of the entire water system. In the northeastern Illinois region from 2008 to 2018, the average residential water rate grew from about $4 per 1,000 gallons to over $7, after adjusting for inflation.

Lake Michigan erosion claims a beach house in January 2020 in White River Township, north of Muskegon, Mich. LAKESHORE EROSION Rain-heavy storms have raised lake levels that cause erosion. In Chicago, residents in Rogers Park and South Shore feel the effects as Lake Michigan comes increasingly close to their doorsteps.

INVASIVE SPECIES Aquatic invasive species like zebra mussels and round gobies cost Great Lakes governments and industries tens of billions of dollars. Illinois and the federal government have joined in the battle to keep the invasive Asian carp out of Lake Michigan, where it would devastate the lake’s ecosystem.

Sources: Metropolitan Planning Council, Center for Neighborhood Technology, Little Village Environmental Justice Organization

JIM KIRK PUBLISHER • ANN DWYER EDITOR • CASSANDRA WEST FORUM EDITOR • THOMAS J. LINDEN CREATIVE DIRECTOR • JASON McGREGOR DIGITAL DESIGN DIRECTOR • KAREN FREESE ZANE ART DIRECTOR • SCOTT WILLIAMS COPY CHIEF

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CRAIN’S CHICAGO BUSINESS • January 25, 2021 15

Stressors on Lake Michigan flow mostly from human activity BY CASSANDRA WEST Ryan Newton is an assistant professor at the University of Wisconsin-Milwaukee School of Freshwater Sciences. He runs the Newton Lab, which investigates the microbial communities of sewage and sewer systems.

Ryan Newton

CRAIN’S: Midwesterners are particularly fortunate to live near one of the world’s largest freshwater sources. But we seem pretty lax in appreciating its value. Why is that?

JOHN R. BOEHM

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JOHN R. BOEHM

NEWTON: It’s sort what you know, what you’ve always known, you sort of take for granted. On a daily basis, most people don’t think about where their water comes from, or once you use water, where it goes afterward. Those are huge issues that have always plagued societies. A big part of the reason we have such, in general, healthy civilization these days, outside of pandemics, is we have access to clean water, and we have the ability to remediate that water and quickly run it back into the environment. The other thing, too, is overall water costs are relatively low compared to some other utilities, so maybe we don’t appreciate how valuable it is.

“THINK ABOUT IT. IF YOU HAVE HAD NO RUNNING WATER FOR A YEAR, THAT MEANS YOU HAVE NO PLUMBING, NO RUNNING WATER IN YOUR HOUSE—FROM THE TOILETS TO THE SINKS. IMAGINE THAT TURNED OFF FOR A YEAR OR MORE.” Cheryl Johnson, executive director, People for a Community Recovery

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concern, especially in the urban areas or where you have large agricultural runoff.

Stressors and threats to the Great Lakes take many forms. Can you rank in order the most pressing?

Agricultural pollution coming into the Green Bay area also gets into the lake. Talk a bit about that.

It’s a combination of invasive species into the lakes, particularly a series of invasions by small mussels, which have changed the ecosystem on a major scale. It’s nothing at all like it was 15-20 years ago. Climate change is another big thing. The Great Lakes are warming fairly rapidly, so you may see shifts in nutrient cycles, interaction with the atmosphere and the fish populations in the lakes. More locally, aging infrastructure, especially our aging wastewater systems. A lot of the pipes were placed, both in Milwaukee and Chicago, up to over 100 years ago. Those are well past their life, and they leak pretty heavily. There’s a huge infrastructure investment in wastewater that is needed over the next 10 or 15 years. Civil engineers have been pointing this out for quite some time. There’s fecal pollution, which carries human pathogens, but also emerging things would be microplastics, or what are called nanomaterials. PFAS (man-made chemicals) are an emerging concern. There are modern, new chemicals that we don’t really understand their interaction with biology in the lake. Our wastewater systems aren’t necessarily designed to remove them at this point. Local pollution is always a

The Fox River, which flows through Green Bay, the city, flows into the Green Bay itself. That’s one of the larger agricultural areas in Wisconsin in that watershed, so there’s runoff that’s coming from confined animal feeding operations and large farms flowing into the bay and causing some issues. There are problems in Green Bay with hypoxia (dead zones), where in the summertime, they get pockets of water that have no oxygen. It’s the same thing that has happened with the Gulf of Mexico on a different sort of scale. In Wisconsin in that region, there is also a big problem with the groundwater. A combination of animal farms and potentially septic systems as people sprawl out into the countryside. Your lab investigates microbial communities of sewage and sewer systems. Is that a real concern? This is something we are still working out, whether what we see in the sewer system is of major concern or not. Our lab has worked on and shown in conjunction with (School of Freshwater Sciences professor) Sandra McLellan and her laboratory there’s a resident community that is colonized or switched conveyance system to the pipes.

And that community harbors a unique set of organisms that we don’t find together anywhere else as far as we know on earth, sort of a new ecosystem for microbes. Some of those organisms could be of the type that could be called opportunistic pathogens that cause infections and things occasionally. That’s probably not the biggest concern. What’s probably a larger concern is antibiotic resistance because these pipe systems are a real mixing ground for all the bacteria that come off of us. All of those bacteria and microbes that go into the sewer systems are carrying antibiotic resistance. It’s quite possible it’s a breeding down or acceleration of resistance transfer. We haven’t shown that, but it’s certainly something to look for. Have we created a new system that is transferring around genes in ways that we hadn’t previously talked about? What can governments do better to protect our fresh water? They need to invest in water infrastructure. It’s not always something that’s easy to convince the public to invest in. Our infrastructure is old and starting to fall apart. We need a creative way on how we make good choices on those solutions. Another thing for keeping surface water in Lake Michigan healthy is investing in green infrastructure around cities, places that hold water on the land so that it can filter into the ground, instead of just running straight into the lake.

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16 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

FUTURE SECURITY

Let’s invest wisely in water systems S

ture becomes overwhelmed, waince Jean Baptiste Point du ter enters buildings through winSable situated his farm along dows, doors, pipes, drains and the banks of the Chicago any other opening it can find. River, the city of Chicago’s history Because there are no maps that has been inextricably linked to show areas of urban flooding, water, and the health and comit is often unpredictable, so you merce benefits of this natural redon’t know a property is suscepsource helped catapult our city’s tible until water is flooding your growth. But as we experience basement or filling your street. the effects of climate change, our Nationwide, flood losses are relationship with water must also Darren Olson averaging nearly $10 billion per change. is vice president year, and annual reported flood We tend not to think about and assistant losses in the Chicago area reach Chicago’s aging water infrastrucWater Resources hundreds of millions of dollars, ture until catastrophic failures Department head while many more flood losses go like flooding or water main at Christopher B. unreported. Worse yet, research breaks occur. In 2018, the Illinois Burke Engineering has shown that socioeconomicalSection of the American Society in Rosemont. He is ly vulnerable populations are at a of Civil Engineers gave our state’s also vice chair of higher risk for urban flooding. water infrastructure a grade of C-, the Committee on On top of aged infrastructure, meaning that our infrastructure America’s Infrawe are facing increased rainfall. needs immediate attention. structure at the In each of the past three years, We need to make smart and American Society Chicago has set a new rainfall sustainable investments in our of Civil Engineers. record for the month of May— water infrastructure that allow us foreshadowing a wetter climate to improve its safety and efficientrend, as spring precipitation in Illinois is excy while ensuring it is resilient enough to pected to increase 10 to 20 percent by 2050. withstand future hazards. And we need to This confluence of outdated stormwater do it now. infrastructure and increased rainfall has put Chicago in the crosshairs of climate URBAN FLOODING SOLUTIONS change-induced flooding, which has cost Chicago and older surrounding commuthe U.S. an estimated $75 billion over the nities have learned the hard way that 19thpast three decades. and 20th-century stormwater infrastructure To address these threats going forward, is no match for 21st-century storm events, we need innovative gray infrastructure and the resulting urban flooding can devas(storm sewer) projects paired with green tate homes and businesses. infrastructure. Of course, all of this costs When centuries-old drainage infrastruc-

money, and Chicago and surrounding communities have limited resources to battle the rainfall we have seen in recent years. Federal funding is scarce and extremely competitive, so state and local agencies have stepped up to close this funding gap. The Metropolitan Water Reclamation District and Lake County Stormwater Management Commission are leading by example by awarding millions of dollars in grants to fight flooding. The governor’s Rebuild Illinois capital budget has reinvigorated grant programs that target water-based projects. Some communities have built flood-control projects through a stormwater utility fee, a critical funding mechanism for municipalities to maintain and improve their stormwater systems. But while these investments are essential, they are only responding to past rainfall rates and making up for years of underinvestment. We need to adapt and make proactive investments to ensure our region’s stormwater infrastructure can handle the increased rainfall rates we are projected to see over the next few decades.

LEAD SERVICE LINE REPLACEMENT

Over the past decade, Chicago has been diligently replacing underperforming, leaky water mains, some of which were more than 100 years old. And made of wood. Nevertheless, there is still progress to be made on the water distribution system, and

attention has urgently shifted to replacing lead service lines that take water to our homes, which can cause significant health risks like brain and kidney damage. Illinois has the dubious distinction of having the highest number of lead service lines (roughly 700,000) in the country. And, like urban flooding, a recent report from the Metropolitan Planning Council found that lead service lines disproportionately affect disadvantaged communities. Chicago has nearly 400,000 of these lead service lines and, at roughly $20,000 per replacement, the price tag quickly becomes billions of dollars. City leaders should be commended for their phased plan to replace these lines, which prioritizes lower-income households. But this is only a start, and full replacement of Chicago’s lead lines will take significantly more funding and decades to complete. To make sure Chicago’s drinking water is safe and clean for all residents, now and for decades to come, we need legislators in Springfield and Washington, D.C., to help secure funding and federal loans. Though it’s underground, our water infrastructure cannot be “out of sight, out of mind.” Our city’s future is tied to water just as tightly as our past was. Now is the time to make smart and sustainable investments to ensure that our infrastructure can operate safely and is resilient to meet the challenges we will face in the next century.

NATURAL INFRASTRUCTURE

Make Chicago famous again for water work T models suggest that shifting he reversal of the Chicago ranges and other climate threats River saved our region from to birds threaten 389 of the 604 a possible environmental bird species in North America disaster. Now our city, once famous with extinction if we do not act for its innovation in mastering the now. Chicago has lost breeding movement of water, has another populations of iconic wetland looming water crisis. birds such as black tern, king rail It’s a slow-unfolding crisis that and black crowned-night heron easily gets lost in today’s hectic from its once impressive and rich news cycle, but its impact on the wetlands within the city. people and wildlife in Chicago and Nat Miller is Chicago and other Midwest the Great Lakes region is rapidly director of conserpicking up steam. vation for Audubon cities have dabbled with water solutions like permeable conAging gray infrastructure that in- Great Lakes and crete, rain gardens and wetland cludes miles and miles of toxic lead the Upper Missisbioswales, but no city has invested pipes, suburban sprawl covering sippi Flyway. in this important work at the scale more and more soil with concrete, and with the level of coordinated and unpredictable and intense planning necessary to overhaul our deeply weather patterns brought on by climate embedded water storage and purification change have led to contaminated drinking water, more flooding in basements and neigh- systems. The Deep Tunnel, which was at one time the nation’s largest municipal water polborhoods including underserved communilution-control project, is necessary to manage ties on Chicago’s South Side, eroded beaches urban flooding and water pollution. However, and a massive decline in biodiversity. it was never intended to handle our largest Climate change and habitat loss are taxing rain events. The project was envisioned before our wildlife to a point never seen in human climate change began delivering its massive history. In North America, we have 3 billion punch of huge storms and dramatic and fewer birds than we did in 1970. New climate

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uncertain fluctuations of Lake Michigan water levels. Now a new plan is needed. Winston Churchill said it best: You never let a good crisis go to waste. With a new administration committed to the environment and climate change, an increase in funding for the Great Lakes Restoration Initiative, coupled with Chicago’s big shoulders and innovation history, the city has an opportunity to again be a leader in U.S. infrastructure and water management. Cities and urban areas across the world are embracing the use of the Earth’s natural systems of water absorption and purification to help store and clean water while providing habitat for birds and wildlife. Wetland restoration is a critical step to ensure a healthy natural environment. Recreating wetlands and placing them strategically—oftentimes where they once naturally occurred—at a massive scale will not only allow the Deep Tunnel to fully do its job, but it will also provide access for recreational green space and habitable space for our region’s wildlife. While wetlands do not remove lead, they do dramatically reduce the nutrients and pollutants entering our waterways and Lake Michigan.

Large-scale natural infrastructure can be expensive work, but we are not talking about reversing the flow of the Chicago River again. We can make change with strategic investments in reconnected waterways and wetlands under the guidance of hydrological engineers. Supporting our underserved South Side communities by redirecting water that currently floods their streets and homes into wetlands is not just smart, it is morally just. This summer ground will break and Audubon Great Lakes and partners will work to restore 100 acres at Powderhorn Forest Preserve on the South Side. The project will reconnect Powderhorn Lake to Lake Michigan, reducing flooding in Hegewisch and creating over 100 acres of new wetland habitat. And while the project is complex and the cost of $1 million sounds lofty, the recent signing of the Great Lakes Restoration Initiative Act into law will provide funding and support for conservation projects like this one across the region—a win for people, birds and the economy. There is funding, methodology and growing momentum to take on this work. The question is, will Chicago once again take up the mantle?

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CRAIN’S CHICAGO BUSINESS • JANUARY 25, 2021 17

AN URGENT MOMENT

funding alone doesn’t solve all s the country welcomes the pressing problems facing a new team to the White the lakes today. We need a House, many are also comprehensive approach that welcoming opportunities for a assures everyone can benefit renewed focus on combating clifrom the waters we share. mate change and addressing enviFirst, we have to make sure ronmental injustice. These should that every community that certainly be top priorities, and a relies on the lakes has access fresh look at Great Lakes policy to safe and affordable drinking can help meet both challenges. Additionally, and most pressJoel Brammeier is water. This starts with keeping, the global pandemic has president and CEO ing the lakes protected from pollution and ends when every shown that hand-washing can be of the Alliance for person knows the tap water in lifesaving. Ensuring access to safe the Great Lakes their homes is safe every day. and clean water for all must be and a leading And it means that no family is at the top of the list for President voice on invasive forced into an economic tradeJoe Biden, Vice President Kamala species and water off that results in their water Harris and the 117th Congress. protection issues being shut off. Because the Great Lakes across the Great Second, we have to rebuild provide 20 percent of the world’s Lakes region. the Great Lakes region’s water surface freshwater supply, there infrastructure, which will have the added is much at stake. Nearly all Great Lakes bonus of revitalizing the job market and members of Congress have supported local economies. Great Lakes water runs funding for the Great Lakes Restoration through rivers and lakes, pipes and ditchInitiative over the years, and they capped es. It’s all connected, and so is the pollu2020 by reauthorizing and increasing fundtion that fouls our water. Two-thirds of the ing to $475 million over five years. That’s original 2005 $20 billion price tag to restore worthy of applause. the lakes was for water infrastructure. But a thriving Great Lakes also means Today we know that’s an underestimate by building back crumbling water infrastrucan order of magnitude. ture, ensuring access to clean drinking Third, we must stop the threats we water, enforcing environmental regulacan see coming. The past year ended tions, and addressing the disproportionate with Illinois Gov. J.B. Pritzker signing an pollution burden experienced in Black, agreement to move forward on design and Brown and low-income communities. construction of protections to stop invasive To be clear: It’s not enough to just supAsian carp at Brandon Road Lock & Dam port funding for the GLRI, because that

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Biden, Congress must prioritize Great Lakes A

in order to keep them out of Lake Michigan. The Biden administration can fund this work right away and prevent invasive species from severely damaging the Great Lakes ecosystem, including a fishing and boating economy worth more than $20 billion annually. The Biden team can also withdraw the misguided U.S. EPA rule put forward in October that would loosen protections against invasive species in the ballast water of ships. Finally, let’s refresh the GLRI itself. It’s been more than 15 years since the original plan, which led to a wildly successful $3 billion investment that pays money back into our economies at a ratio of 3-to-1. Water equity ought to be a core value for realizing a restored and healthy Great Lakes. So should adapting the lakes to the obvious climate crisis washing up on our shores. With the growth in program fund-

ing, it’s now time to reconvene and set new goals for policies and programs to address these burdens on the Great Lakes region. We’ve made incredible progress restoring the Great Lakes since 2010, thanks to decades of planning and organizing that came before. But we don’t have decades to wait to solve the urgent water problems in front of us. We need elected leaders to stand up for everyone’s right to clean water, to curb agricultural pollution and to support our experts in federal agencies to use the basic tools of science and policy to protect people and water. We call on the Biden administration and Congress to rise to meet the urgency of the moment. Water is top of mind for the Midwest. Keep the Great Lakes top of mind as you fight climate change and advance environmental justice in the months and years to come.

UNTAPPED STRATEGIES

Federal support needed for green infrastructure

The MWRD, like most public s a native South Sider, I utilities, faces myriad challengpersonally experienced es—from climate change to aging flooding in the childhood infrastructure to maintaining home I grew up in. Our home affordable and equitable rates. flooded nearly every time it As reported, Chicago experirained. My family became fairly enced the wettest May on record accustomed to shoveling sludge in 2020. Concurrently, federal infrom our basement that ruined vestments in local water systems some belongings while displacdecreased significantly over the ing others. I later learned that last 30 years, resulting in local Chicago experiences what’s com- Kimberly Du utilities and cities having to bear monly called “urban flooding.” Buclet is a 95 percent of the costs used to By definition, urban flooding commissioner of manage urban water infrastruchappens in developed areas the Metropolitan ture nationwide. This decline where rainwater doesn’t have Water Reclamain federal support has led to a place to go when it falls from tion District of increased water usage rates and the sky. As a result, the rain and Greater Chicago. deferred capital investments, stormwater ends up in basements like mine or in the streets we maneu- all of which have been exacerbated by the COVID-19 pandemic. The National Assover. Urban flooding occurs disproportionciation of Clean Water Agencies conservaately in communities of color. It is one of tively estimates that the financial impact to the many systemic problems that exist as a clean-water utilities nationwide due to the result of decades of disinvestment in water COVID-19 pandemic is $12.5 billion. infrastructure and economic development. Now is the time for a return to the federal I bring these unfortunate life experiences government investing in water infrastructure. to my role on the Board of Commissioners There is precedent for this approach in times of the Metropolitan Water Reclamation District of Greater Chicago. The MWRD proof crisis. During the Great Recession in 2009, vides wastewater treatment and stormwater we saw a spike in federal support, with about $6 billion in appropriations for the State management for about 5 million people Revolving Fund program and the creation of throughout Cook County.

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the Green Project Reserve, which set aside funding for green water projects. I propose that new federal support take a similar approach. This will allow for investments not only in conventional infrastructure but also to expand options that would include spending for local green infrastructure projects as well as other on-site water management solutions. Green strategies and projects have extraordinary, yet untapped, potential to address water quality, flooding and environmental contamination challenges. When decentralized solutions that are designed to capture rainwater and floodwater on-site (like bioswales, rain gardens, green roofs and rainwater harvesting systems) are implemented at scale, they have the ability to supplement, extend and serve the same functions as our more conventional, centralized infrastructure. And that results in managing wastewater and stormwater more efficiently. Green and localized strategies can also provide lasting economic benefits for the community, including green jobs and economic growth. A sustainable jobs calculator by Earth Economics and WaterNow Alliance estimates investments in rainwater harvesting systems installed on properties across Illinois could create 73 percent more jobs than the same investment in deep tunnel systems (a more conventional approach to stormwater

management). These would be skilled positions with good earning potential. Localized water management strategies could also address equity and environmental justice issues around access to clean water and affordable rates. Additional benefits include improved air quality, increased energy efficiency, and an overall improvement in public health. The MWRD is currently developing five stormwater master plan studies to identify solutions to flooding and basement backups and to evaluate potential green solutions. We are prioritizing areas that experience increased flooding and working to incorporate a racial equity assessment to develop solutions, all in partnerships with local communities. Our Green Infrastructure Partnership Opportunity Program increases the acceptance and investment of green infrastructure by partnering with other public agencies. MWRD’s investment in these programs is critical, but we need federal funding to realize the full potential that localized water strategies hold. As the country navigates the pandemic crisis, harnessing 21st-century solutions like green infrastructure to solve 21st-century problems should be an essential part of our communities’ economic recovery. To achieve this, we need renewed federal support for local public water utilities’ sustainable water investments.

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18 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

LOCAL RELIEF

To solve hidden water crisis, we need federal intervention

expenses. The agencies that treat allgames, concerts, our sewage are expected to lose wedding receptions— $16.8 billion. COVID-19 has canceled These COVID-related losses gatherings at so many of our will further hamper water agenfavorite venues. While we can cies’ ability to address urgent clearly see how those closures issues, like leaking water mains hurt businesses and workers, that seep millions of dollars there is a hidden impact that or lead service lines to homes costs us all. that imperil the health of our Those events—and indeed, our families. daily lives—are possible beElizabeth Cisar The water sector is particularly cause of the people and systems is co-director of vulnerable because it has been that provide water for drinking, the Joyce Foundaunderfunded for a long time. Big cooking and cleaning up. For tion’s environment water utilities, the loss of revenue program. The Joyce reductions in federal funding over the last 40-plus years have from the closures combined Foundation is a taken a serious toll. The federal with increased costs during the sponsor of Crain’s government spends 10 times pandemic is causing a critical Forum. more on highways than it does funding crisis that demands on water systems federal intervention. One of the most visible examples of Without it, our water and wastewater harm from putting off needed investment systems are in jeopardy, as is the ability of is the increasing frequency of water main many households to afford their water bills. breaks. In 2019, a water main broke about Our mostly invisible water systems have every two minutes. Those breaks and other long been neglected. The pandemic has service disruptions cost us $2 billion a year. exacerbated the problem and heightened Because water infrastructure built decades the urgency in coming together as a region ago is reaching the end of its useful life, the to push for federal recovery funding to keep U.S. Water Alliance projects that costs will our water flowing and safe. rise to $14 billion by 2039 as our systems The relief package passed by Congress in age and service interruptions become more December included $638 million to help frequent. customers who fell behind on their water Then there’s the local toll on our neighbills during the pandemic. But that’s just a bors, our environment and our economic fraction of the losses. COVID-19 is expected future. Water rates have risen more than to cost drinking water utilities $13.9 billion 30 percent in the last decade as local from lost revenue and higher operational

water utilities try to keep pace with costs. While our biggest sports venues can afford those increases—at least once the crowds return—residents in the neighborhoods around them on Chicago’s South and West sides cannot. Even with rate increases, local utilities by themselves can’t keep up with costs with-

out more federal support. The good news is that investing in water infrastructure has a big economic payback. Every $1 million invested in the water sector creates 15 to 18 jobs. The Metropolitan Planning Council estimates that a $1 billion investment in water infrastructure in Chicago would create 9,900 jobs and $1.44

A LEADERSHIP OPPORTUNITY

Chicago needs tougher drinking water standards

The new rule is both a missed he EPA’s recently revised opportunity and a roadblock Lead and Copper Rule that will not be easily undone. It weakens federal drinking cements the weak standards by water standards and creates a delaying lead pipe replacement colossal obstacle for cities like for decades, reducing monitoring Chicago that have lead pipes that requirements, failing to ban the bring water to most homes. dangerous practice of partial lead The Trump administration’s enservice line replacements, and vironmental policy change will set ultimately leaving many homes, up yet another generation to suffer schools and day cares vulnerable with contaminated drinking water Jeremy Orr is a to lead in drinking water. by allowing lead pipes to stay in senior attorney The Flint, Mich., water crisis has the ground for another 30 years. with the Natural changed the way most Americans For Chicago, which has the most Resources Defense think about the water coming out lead service water lines of any city Council’s Safe Waof their taps. An entire city was in the nation, this is particularly ter Initiative. poisoned by brain-damaging neudisastrous. rotoxins, and after years of fighting, residents This latest change was the opposite of what continue to hold agencies and officials acclean drinking water advocates like myself countable to their commitment to rip out and were pushing for. Furthermore, the Trump replace those lead service lines. The trauma EPA’s weak standards and avoidance of their and damage done to the residents of Flint is legal mandate to hold public hearings before something that may never truly be remedied. issuing the rule violated the federal Safe While Flint residents fought for something Drinking Water Act. This is why we at the that should be a human right—clean and Natural Resources Defense Council filed a affordable water—in Chicago and almost lawsuit on Jan. 15 to strike down the Trump every other city across the country, nothing administration’s new rule.

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has really changed. Unlike most major cities, Chicago recently launched a pilot program to study the replacement of lead pipes in some communities of color. The COVID-19 pandemic has provided more urgency to find a solution and has given us yet another reason why clean drinking water is absolutely vital for the health of communities. With this change from the final days of the Trump EPA, cities like Chicago will lose precious time to appropriately address this drinking water health crisis because of the lowered standards. Even though Chicago sits next to one of the largest freshwater lakes in the world, our city, state and country lack the strong drinking water standards that will ensure that water is safe. Chicago, along with the rest of the country, desperately needs new, strengthened drinking water standards that will replace lead pipes as soon as possible. Where the Trump administration went wrong, our state and city leaders can do the right thing. Despite this giant step backward by the Trump administration, local leaders

can find solutions. Lead contamination in our drinking water doesn’t impact all communities the same. Neighborhoods in Chicago that are most burdened with other forms of pollution, as well as other health and socioeconomic burdens, don’t have access to filters or bottled water. With the irreversible harm that results from lead, we need a standard that protects vulnerable communities but specifically pregnant women and children who are most susceptible. These communities are also the ones facing the highest number of coronavirus rates in Illinois. As long as cumulative burdens are not addressed, Black and Latino neighborhoods will undoubtedly continue to bear the worst effects of lead-contaminated drinking water in Chicago. City leaders must work with state and federal agencies and officials to secure funding for the replacement of lead pipes. The city has a responsibility to communities hardest hit by the pandemic to secure for them clean drinking water. Further, Chicago must move beyond the current modest pilot program for lead service

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END COMPLACENCY

Illinois must take a stronger hand in water planning

T billion in additional economic activity. The investment also can generate public health and environmental benefits. Case in point: The lifelong impacts of lead on children’s health are well known, but lead also contributes to heart disease in adults. One analysis found that for every lead pipe that is replaced, we reap $22,000 in

societal benefits from decreasing cardiovascular disease. The COVID crisis undermines so much but also presents us with an opportunity to shift gears and get things right. The longer we wait to address our hidden water crisis, the more it will drain our economy, and the more it will cost to fix.

line replacement to a bolder plan of action. That starts with reducing or eliminating the fees associated with permits, creating financing mechanisms for property owners and finding cost-reducing strategies for doing replacements while water and gas pipes are being worked on in a given city block. Gov. J.B. Pritzker’s administration also has an important role to play in securing state funding for replacing lead pipes as soon as

possible. The governor must not allow this priority to fall through the cracks and ensure that water infrastructure is part of this year’s legislative agenda. We need to change the way we address health issues with equity in mind, and that should be the first lesson we take from this pandemic. Clean drinking water is absolutely a human right, and no community should have to wait another 30 years for it.

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cess and affordability are highly he vital role water plays variable across Illinois. in our lives has literally The water shut-off story also been at hand since the tells of a lack of urgency on the start of the pandemic, when part of the state to tackle its we were all reminded about many water-related challenges. the importance of hand-washPerhaps it is that Illinois’ abuning in stopping the spread of dance of water—we are a Great disease. In one of the earliLakes state with thousands of est actions taken to protect miles of rivers and other fresh Illinoisans from COVID-19, water—has bred complacency. on March 18, 2020, Gov. J.B. Josh Ellis is vice Yet for those whose water is Pritzker and the Illinois Compresident of the shut off, or whose child has lead merce Commission ordered Metropolitan poisoning, or whose basement ICC-regulated private water Planning Council. is flooded yet again—and for all utilities to stop disconnecting of us who pay the societal costs of those water service and suspend late fees for problems—the urgency is clear. customers who missed payment on their One of the biggest problems is that the water bills. buck stops with no one. No one state agenThe order, however, merely requested cy is responsible for setting policy on the that public water utilities—from which the water needs of Illinois residents and busisubstantial majority of Illinoisans receive nesses. The last time the state did a water their water—voluntarily take the same plan was in the mid-1990s. A long-overdue actions. While a number of public water update is underway, but the state hasn’t utilities initially obliged, some have since sufficiently resourced the plan to make it reverted to water shut-offs. The financial a priority for the agencies involved. Lack pressures on water utilities are mounting of leadership also contributes to lack of as the pandemic continues—but the paninformation. demic is continuing. Students are at home, When no one is asking critical questions workers are at home, and they need water. about our state’s water challenges, the The town you live in and the fiscal conrequired data needed to address problems straints of that utility should not dictate as they arise is often missing. Using water whether you have drinking water during shut-offs as an example, no comprehenthis pandemic. Yet while at least seven sive dataset is available showing which other U.S. states have passed comprehenpublic water utilities have shut off which sive protections against water shut-offs customers’ service. We do not know who by public and private utilities until the does and does not have water. We can pandemic abates, Illinois has yet to act. only rely on sporadic news coverage that This story should alarm you—not only Village X has resumed shut-offs. We must because too many of our neighbors are do better. going without clean, safe water during a Illinois cannot afford to squander the global pandemic, but because this example indicates numerous problems underly- water advantages we have, nor can we ignore the water justice issues facing too ing water issues in Illinois. many Illinois residents. The state of Illinois At the top of the list is that access to must play a stronger role in setting water clean, affordable water is not a given for all priorities and implementing solutions that Illinois residents. Low-income residents of will prevent health, environmental and color are more likely to experience water economic problems. Many of these solushut-offs; they’re also more vulnerable to tions—such as replacing the more than wealth-draining urban flooding, exposure 686,000 lead service lines that exist across to toxic lead in our drinking water due to the state—also can contribute to job crelead pipes, and spiking water rates. These ation, post-pandemic economic recovery urgent public health and environmental and wealth building in communities that justice issues come with steep price tags have long been in harm’s way. It’s time for for the affected households and socithe state of Illinois to proactively plan for ety as a whole. But with hundreds upon a secure and equitable water future for hundreds of municipalities and utilities everyone. making decisions about water issues, ac-

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20 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

Water access dries up for those unable to pay bills BY WENDELL HUTSON Sylvia Taylor has been without running water in her apartment since last summer. The building she moved into in 2020 hasn’t had water service since 2011. “I didn’t plan on this happening,” says Taylor, 68, a retired Cook County employee who uses bottled water for cleaning and bathing. But after a fire last year damaged her Bronzeville home, she moved to the two-story apartment building in Englewood. It had been her childhood home, left to her after her father died in 2006. She expected the move to be temporary until repairs on her Bronzeville home were completed. Taylor says she had the water turned off in the basement to prevent flooding. “And since the building was vacant, I figured water was not needed,” Taylor says. “But somehow the city was under the assumption that the building was occupied even though there’s no water meter at the building. Before I knew it, the city sent me a water bill for $24,700.32.” Though Taylor lives only a few miles from the country’s most plentiful source of fresh water, Lake Michigan, she is one of thousands of Chicago residents living without access to clean running water because of unpaid bills. The problem is so widespread, especially among lower-income, mostly South Side residents, that in 2019, shortly after taking office, Mayor Lori Lightfoot

issued a moratorium on water shutoffs. Water affordability is a growing concern, not just in Chicago but in other northeastern Illinois municipalities. The region’s average water rate increased more than 80 percent in the last decade, according to a report by the Metropolitan Planning Council, Elevate Energy and the Illinois-Indiana Sea Grant that looked at water inequity. Water infrastructure built over a century ago that needs repair and replacement is part of the reason for rising water service bills. Other contributors are resource depletion, pollution, population growth/ decline and decreased or no longer existing subsidies and grants from federal and state governments. A 2019 investigation by WBEZFM/91.5 found that since 2007, the city had issued nearly 150,000 water shut-off notices. Five of the poorest ZIP codes on the South and West sides accounted for nearly 40 percent of those notices. Lightfoot’s administration in April 2020 launched the income-based Utility Relief Billing program to help residents get their water service restored. On Jan. 14 the city announced it would forgive $8.9 million for 8,539 eligible homeowners enrolled in the program. “Access to clean, safe drinking water is the right of all Chicago’s residents,” Lightfoot said in a statement. Annual water rates are determined by adjusting rates upward

ZAC OSGOOD

South Side communities struggle with high rate of shut-offs

The Black Chicago Water Council hosts weekly water distributions for South Side residents. by applying the previous year’s rate of inflation. Increases are calculated based on the Consumer Price Index, according to Megan Vidis, a spokeswoman for the city’s Department of Water Management. Water rates are uniform, a flat $4.08 per 1,000 gallons, Vidis says. The average monthly bill for a single-family house, including sewer is $46.64. As for Taylor, the city eventually cut her bill to $2,000. “But I can’t afford to pay that amount, either,” Taylor says. For many low-income homeowners, the inability to hire a plumber keeps them from having water restored. Blacks in Green and Elevate Energy, two environmental nonprofits, helped Taylor find a plumber, who told her she needed about $16,000 in pipe repairs. “Of course, I can’t

afford that either,” she says. “It would be great if the city provided a plumber for situations like Ms. Taylor, but they don’t and that has caused hardships for so many families mainly on the South and West sides,” says Naomi Davis, founder and executive director of Blacks in Green, which convenes the Black Chicago Water Council. The council meets monthly to discuss water-related ideas and solutions that residents can steward themselves. To alleviate some of the water shut-off woes, Elevate Energy and the council last year began distributing bottled water to residents mostly on the South and West sides. To date, the distributions have served 48,000 individuals. Elevate CEO Anne Evens notes the historical disinvestments in minority communities that have led to

a deteriorated water infrastructure. On the Far Southeast Side community of Riverdale, water purification has been an ongoing problem for residents, says Cheryl Johnson, executive director of People for Community Recovery. “Water quality has always been a concern if you live out this way,” Johnson says. “A lot of manufacturing facilities are located near us, and the fumes from these factories pollute the air and water,” says Johnson of an area term the “toxic donut” by her late mother, Hazel Johnson, known as “The Mother of Environmental Justice.” “The city has not been a good player when it comes to making sure public housing residents have clean drinking water.” The risks are high for getting sick if you drink water from pipes that were not inspected after water service is restored, said Jeremy Orr, an attorney in the Chicago office of the Natural Resources Defense Council. “The water could be contaminated with all types of toxics, most notably lead and that could be deadly,” he says. Beyond Chicago, south suburban towns have issued moratoriums on water shut-offs. “It’s tough times for everyone right now, and we are not doing any (water) shut-offs at this time,” says Tyrone Ward, mayor of Robbins, which gets its water from Chicago. Ward knows the moratorium will create a greater financial burden for his village, whose population is just over 5,000. But “it is something we must do to ensure we all get through this pandemic,” he says.

START WITH FUNDAMENTALS

Calumet River communities seek a clean water future

I desire a future that is rooted he vision of a thriving, clean in equity and enriched by the Calumet River and vibrant communities that are part of and healthy community on building it. The city of Chicago the Southeast Side continues to be can start with several fundamenfar from what we receive from the tal changes. city. First, at the mouth of the Years of environmentally racist Calumet River lies an Army Corps policies are illustrated in the differof Engineers confined disposal ences in pollution impacts to our facility for dredged material from river and the neighborhoods along the Calumet River. It was schedtheir banks. When I visit the North Olga Bautista, uled to be closed and converted Side, I smell and taste a different community planto parkland by 2022. Now the air. I see green spaces and riverning manager at proposed plan is to keep it open, walks. I don’t see factories spewing the Alliance for the build higher and delay yet again chemicals next to schools, homes, Great Lakes, was a a healthier lakefront for the parks and waterways. leading organizer community. The culprit? A policy The city’s inequitable planning of the Southeast that requires the corps to use the practices continue to create a deep Side Coalition to cheapest alternative instead of economic divide, segregation and Ban Petcoke. finding a balanced solution that’s lower life expectancy for commubest for the community and businesses that nities of color. It’s time to leave the polluted depend on the Calumet River. past of my neighborhood behind and look Second, engagement strategies are needed ahead to bold new possibilities, just like the ones other Chicago neighborhoods are realiz- that help communities decide their own direction. ing. Part of this is ensuring the Calumet River, Mayor Lori Lightfoot’s campaign gave one of the city’s frequently forgotten rivers, is us hope that the community would have a safe, clean and accessible for everyone. seat at the table in a way that bettered past As a Southeast Sider, mother and activist,

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administrations. Clean water and environmental equity were centerpieces of transition recommendations from dozens of front-line community and environmental groups. We had high expectations for the new administration. But with the relocation of General Iron from Lincoln Park to the Calumet River industrial corridor, the city is moving a polluting industry from one of Chicago’s rivers to another. The lack of transparency, rushed permits and glitchy virtual meetings that leave out Spanish speakers is what we saw culminate in December at the city of Chicago’s public hearing on the RMG/General Iron relocation. A rush job means families are expected to become experts in zoning, health and environmental regulations, with just two weeks to review a 1,000-page permit application. Lastly, we need research designed and implemented by residents, and a city that values them as experts in their own lived experiences. From closing down riverfront coal power plants in Little Village to getting dirty petcoke and manganese bulk storage under control on the Calumet River near Lake Michigan, Chicago residents have been on the front lines of forcing the city to enact new water and

public health protections. The Alliance for the Great Lakes has tried to pick up the reins. In 2019, the alliance partnered with the community and researchers to review the environmental and health impacts of industrial development in the Calumet River industrial corridor. The project, to be released in February, looks at the activities on the Calumet River—Chicago’s only river that is always connected to Lake Michigan—through a public health lens. It pairs quantitative and qualitative data to get a fuller picture of what Southeast Siders are experiencing. The results are sobering, detailing negative health impacts, underinvestment in health care, and ongoing water and air pollution problems. Yet this is an opportunity for the Chicago Department of Planning & Development to set a solid foundation for future policies. It should use the Industrial Corridor Modernization Initiative, slated to start this year, to improve health outcomes for communities along the Calumet River. Whether this time it will be different remains to be seen. One thing is for sure, Southeast Siders will remain vigilant like our lives depend on it—because they do.

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After spurning the price-trimming trend, the Good Hands people change course new normal. “Consumers have moved shopping to online platforms,” Allstate said in its Illinois filing. “Individuals continue to opt for less leisure travel. School districts are utilizing entirely virtual or a hybrid of virtual and in-person learning. Commuting is reduced due to both unemployment as well as remote working. We expect these conditions to persist during the pandemic. Once the pandemic recedes, we expect these conditions to abate although it is possible the pandemic has led to some long-term changes in behavior.” A spokesman didn’t respond to a request for comment. Allstate’s three primary competitors—Bloomington-based State Farm, Mayfield Village, Ohio-based Progressive and Chevy Chase, Md.based Geico—all are reducing rates, too, to one level or another.

has notched up higher,” says Paul Newsome, analyst with Piper Sandler in Chicago. So far, though, he says he doesn’t foresee insurers sacrificing profits excessively. Wilson has reassured investors that these rate cuts won’t come at the expense of profitability. He laid off nearly 4,000, or 8 percent of Allstate’s workforce, late last year to ensure this year’s cuts don’t eat into profits. Allstate wouldn’t say how much in annual cost savings the job cuts would provide.

w STOP SIGN AHEAD On a national basis, Allstate hasn’t reduced auto insurance rates in years. That may be about to change thanks to the pandemic. AUTO INSURANCE RATE CHANGES NATIONALLY BY QUARTER 1.0% 0.8 0.6 0.4

DEEP ENOUGH?

A key question is whether a 5 percent cut will be deep enough to enable Allstate to win new customers from competitors, or simply is meant to stave off customer defections. With an expensive army of agents on which Allstate and State Farm have relied in the past, the two often aren’t able to compete on price with Geico and Progressive, whose greater online sales make for lower costs. ILLINOIS HAS EMERGED AS ONE OF State Farm is the largest insurer, THE MORE HOTLY CONTESTED STATES but isU.S.on auto course to be overtaken in the next IN THE PRICE CONTEST. few years by Geico. State For the industry, this has the mak- Farm chopped its rates by double ings of the first full-fledged price digits nationwide beginning last war in two decades. summer in large part to fend off That battle ended badly for both that challenge. It’s too soon to asState Farm and Allstate. Allstate sess the results of that. responded by repeatedly raising But Georgia—the state where prices, harming its price compet- Allstate just moved to cut rates itiveness. Executives vowed at the more deeply than any other so time they would never repeat that far—could be instructive as to the mistake. limitations of price-cutting. State “I think competition in general Farm filed in June for a 12.5 per-

0.2 0 BLOOMBERG

ALLSTATE from Page 3

0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 ‘18 ‘18 ‘19 ‘19 ‘19 ‘19 ‘20 ‘20 ‘20

Source: Allstate investor disclosures

Allstate CEO Tom Wilson says the rate cuts won’t come at the expense of profitability. cent rate reduction in Georgia. By early November, when State Farm filed for changes to the rate structure that didn’t affect total premiums collected, the company’s auto policies in the state had fallen 4 percent in just those five months. Responds a State Farm spokeswoman in an email, “Since implementing auto rate cuts in Georgia, State Farm has grown policies in that state. The Georgia auto rate cut went into effect at the end of August, and it would be more accurate to look at State Farm data from that time frame for your story.” That suggests policies plummeted from June to the end of August and then recovered some after that. State Farm didn’t say

how much policies have increased since late August. It will take many more months to determine how much COVID and the change in American driving habits are upending the car insurance business. It seems clear, though, that the pandemic is one of those pivotal moments for the industry. More Americans are questioning what they’re paying for when they’re not driving as much. More may be open to payby-mile approaches that before they wouldn’t have considered. Geico, the second largest U.S. auto insurer, is offering pay-bythe-mile insurance in a growing number of states, including Illinois, emulating Progressive and Allstate, which have a substantial head start.

Illinois has emerged as one of the more hotly contested states in the price contest. Geico established a new business unit in Illinois last summer to serve as its primary vehicle for winning customers from competitors. Next month, that unit will cut rates on average by more than 4 percent for existing customers, just a half year after its creation. Already, as of December, it had amassed nearly 21,000 policies, according to a filing with the Illinois Department of Insurance. Compare that with Allstate from July 2019 until January 2021. Its three main business units insuring Illinois drivers added a little over 6,000 policies in those nearly 18 months, according to filings.

‘Hedge fund in a box’ catches the eye of venture fund backed by billionaires ENFUSION from Page 3 funds. “They’re in part of a market that no one knows about unless you’re in the industry. They’re the leader in their space.” Enfusion was founded in 2006 by two Citadel veterans, Tarek Hammoud and Stephen Malherbe, and Scott Werner, who worked at Lislebased Ritchie Capital Management. It started with portfolio-management software but kept adding functions, from general accounting to trade execution and order management. Enfusion built the software as a cloud offering, designed to run on remote computers instead of the customers’ hardware. “Enfusion really decided to be a new technology provider, front to

to build their own software, but smaller hedge funds buy it. Enfusion says it’s the only company offering such a comprehensive software product that’s also cloud-based in a fragmented market of individual software products. It also offers outsourced back-office services.

COMPETITION

Enfusion competes in the same market as Eze Software and Charles River, both in the Boston area, and smaller firms such as Nirvana Systems. But Enfusion CEO Thomas Kim says “there’s no one offering a cloud-native, integrated framework that hasn’t been Frankensteined together from other solutions.” Enfusion says its software can cut operating costs for tasks such as trade “WE WANT TO GROW OUR PRESENCE execution by half and AROUND THE WORLD EXPONENTIALLY.” can be deployed much faster than older techThomas Kim, CEO, Enfusion nology. “COVID-19 has been a big eye-openback, selling against incumbents er for the capital markets and aswith new capabilities,” says Chris set-management community in Pedone, a director in New York at terms of how it deals with disruption investment-banking firm Houlihan and how their technology is incapaLokey. “They’re more mature than ble of handling that kind of disrupthe upstarts but not quite the in- tion and pace of change,” Kim says. cumbents.” As Enfusion has signed up more Hedge funds and other asset clients in the U.S., it has also moved managers have become more de- aggressively overseas. The company pendent on data. Large firms like had triple-digit growth in Asia last Chicago-based giant Citadel tend year. Overall, the number of new

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clients rose 30 percent in the third quarter from a year earlier. “We want to grow our presence around the world exponentially,” says Kim, predicting hiring will accelerate this year. Kim joined Enfusion as CEO last year from financial tech firm Tassat, succeeding Hammoud, who became executive chairman. Kim previously was a senior executive at Bridgewater Associates, one of the world’s largest hedge funds, and has worked in trading technology for more than two decades. “He’s had the 360 view of what customers want, working for hedge funds and vendors,” says Julie Menacho, a financial-tech veteran who worked with Kim at Chicago-based RealTick, which was acquired by Lehman Bros. in the mid-2000s. The industry is hot, and it’s undergone a wave of acquisitions. Eze Software had $280 million in revenue and 1,000 employees when it was acquired two years ago by SS&C Technologies for about $1.5 billion. State Street bought Charles River, which had more than $300 million in revenue, for $2.6 billion in 2018. Iconiq, which led a $125 million investment in Chicago-based software maker Relativity six years ago, is known as a source of patient, founder-friendly capital. The firm declines to comment on its investment in Enfusion. “Enfusion has a broad platform,”

Pedone says. “How do they grow from here? I’d expect them to be active on the acquisition front.” Kim says the company is profitable and

“an IPO is a thing we’re thinking about. It’s something that’s available to us as a path. Our priority is to our clients and growing our business.”

COMPANIES ON THE MOVE

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22 JANUARY 25, 2021 • CRAIN’S CHICAGO BUSINESS

Growing number of legacy news organizations making the switch to nonprofit NONPROFIT from Page 3 Angeles-based Institute for Nonprofit News, which has about 250 members. Operating in Chicago are Chalkbeat, covering education; ProPublica, focusing on investigative reporting; Block Club Chicago, delivering hyperlocal news; and others. Such organizations’ survival rate—at 93 percent—is encouraging, says Jonathan Kealing, chief network officer at the institute. “Once they get to launch, they don’t just survive, they thrive.” A new trend has emerged, encouraged by the success of nonprofit startups. Legacy news organizations, such as the Herald, are seeking nonprofit status. The Salt Lake Tribune in Utah became the first major daily to make the switch in late 2019, setting the leading example. It was one of two news organizations approved to transition that year, Kealing said. In 2020, that number jumped to six— half of which are in Chicago. Those include the Evanston RoundTable and Growing Community Media, a nonprofit that includes Wednesday Journal of Oak Park and River Forest, the Austin Weekly News, Forest Park Review and Riverside-Brookfield Landmark. Additionally, the Chicago Reader is in the midst of its transition,

and The Record North Shore recently launched as a nonprofit out of the ashes of the closed 22nd Century Media. Kealing says he expects more will follow. “It’s clearly on people’s minds about whether this might be a viable path,” he says. “When things start to bounce Bruce Sagan back, and things are just a little more stable, organizations that may have survived but barely will look for those other paths.” Becoming a nonprofit means additional revenue streams from philanthropic dollars, grants and private donors incentivized to give tax-free, plus reduced dependence on ad revenue. Experts say making the switch is not easy and is not for every newsroom. The IRS must grant the designation after a months-long application process. That takes capital, which some might not have after such a volatile year.

NO PANACEA

After the transition, the organization still must break even and remain viable long term, says Tim Franklin, senior associate dean at Northwestern University’s Medill School of Journalism. “There’s a perception among some that shifting to nonprofit sta-

tus is a panacea, that it’s going to solve all the problems, that you flip a switch and suddenly you go from struggling to viable, and that’s not what this is,” he says. “This is not a vaccine against insolvency.” But given the state of local news, publications must do something to survive, he says. U.S. newsroom employment dropped 23 percent between 2008 and 2019, according to a Pew Research Center analysis of Bureau of Labor Statistics data. Job increases in certain news sectors, like online outlets, helped offset some newspaper losses. But the data in the April analysis predated the rounds of layoffs, pay cuts and furloughs the pandemic caused. Pew studied six publicly traded companies (including Chicago-based Tribune Publishing) that collectively own more than 300 daily papers. It found their advertising revenue fell by a median of 42 percent year over year in the second quarter of 2020. While the pandemic did boost subscriptions and readership for some organizations, in many cases it has not been enough to compensate for the lost ad revenue. “Local news is in full-blown crisis. The business model has col-

lapsed. That has been accelerated by the pandemic,” Franklin says. “News organizations are scrambling to reinvent themselves and looking for alternatives.”

TAKING MORE CONTROL

There’s no one model that’s going to save journalism, says Tracy Baim, president and co-publisher of the Chicago Reader. But for the Reader, which turns 50 this year, becoming a nonprofit means taking more control of its future. “Once the nonprofit became a reality, I think there was a sense of relief that this was more our game to win or lose,” Baim says. Like many Chicago news outlets, the Reader has had ownership ups and downs. The most recent majority owners bought the publication from the Chicago Sun-Times for $1 in 2018, saving it from potential closure. They have since invested more than $2 million, Baim says. The Reader applied for nonprofit status in February 2020 and received IRS approval last fall, Baim says. The paper hasn’t totally switched over yet: The entity that received IRS approval, the new Reader Institute for Community Journalism, is expected to take ownership of the Reader in 2021. The transition has been reassuring to staffers who have watched other news organizations be shut

down on owners’ whims. “For us we said, ‘This is the best path because we knew we didn’t want to try to find a new owner again and again,’ ” Baim says. Management at the South Side Weekly has been discussing becoming a nonprofit for years, says Managing Director Jason Schumer. It makes sense financially for the publication to diversify revenue streams, he says. It also makes sense, from a mission standpoint, to view the work as a public service. Sagan, owner of the Herald, says he feels similarly about the work being done at his publication. He bought the paper in 1953 and hopes that once it becomes a nonprofit he can remain active on the board. The Herald has covered Hyde Park since before the neighborhood was part of Chicago. It once published regular columns by thenstate Sen. Barack Obama. The South Side Weekly is partnering with the Herald to consolidate back-office work, share an office and move together toward increasing reader support and nonprofit status. Schumer, who is also the Herald’s publisher, says the transition will be made easier in part because the Salt Lake Tribune, Chicago Reader and others have paved the way. “Now is the time,” he says. “There’s this path forward.”

2021

RESIDENTIAL REAL ESTATE BROKERS

NOMINATE NOW! Deadline is Feb. 12

Calling residential real estate experts Crain’s 2021 Notable Residential Real Estate Brokers feature will highlight an impressive cross section of the region’s residential real estate community and its top producers.

Nominate at ChicagoBusiness.com/noterealestate Nomination deadline is Friday, Feb. 12. Section publishes Apr. 5. To view Crain’s Notable Executives nomination programs, visit chicagobusiness.com/notablenoms.

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CRAIN’S CHICAGO BUSINESS • JANUARY 25, 2021 23

KINZINGER from Page 1 do in 2022? “I don’t know,” he says. “Do I have an interest in a statewide run? I would say, a few months ago I was certainly going to look at it, and it’s still not something I’m going to rule out. I also look at it and go, who knows what the new districts look like? Who knows if I belong in the party in two years?” Kinzinger spoke to Crain’s from an “undisclosed sunny location in the United States” two days after he voted to impeach Trump. “I need a break, and nobody knows where I am, so it’s a little safer.” He says he has received tweets referencing the gallows and threats to publicize details of his schedule and his wife’s. “I’m taking precautions,” he says. “I’m always armed.” He brought his gun into the Capitol complex the day rioters stormed the building, having predicted a week earlier that violence would break out on Jan. 6. Back in August, he’d called for those in power to counter the bizarre conspiracy theories circulating on QAnon-related forums. “If you actually believe satanist pedophiles run the government, it’s not an irrational reaction to then go do this,” he says of the Capitol violence. From his office in the nearby Rayburn House Office Building, Kinzinger heard the Capitol’s security alarm sound. He tweet-

minish, and “people will come back,” he predicts. “But we have to provide a vision to people for a different version of Republicanism. . . .I’m going to fight like hell for it.” But if Trump continues to dominate GOP politics, “I certainly will feel homeless here as a Republican,” Kinzinger admits. Some conservatives want Kinzinger to face consequences. The Winnebago County Republican Party is considering censuring him for his impeachment vote. State Sen. Darren Bailey called for the Illinois Republican Party to sanction him, and former Cook County GOP Chair Aaron Del Mar has predicted Kinzinger would not survive a primary. Politico reports he already has a challenger: Gene Koprowski, a former official at the Heartland Institute think tank. “I think that people are not over what (Trump) stood for at all. In fact, they’re more spun up about that than ever,” says Richard Porter, a member of the Republican National Committee and a potential Illinois gubernatorial candidate.

REMAP AHEAD

A primary opponent isn’t Kinzinger’s only worry. His congressional district will soon be redrawn in a process controlled by Springfield Democrats. But some traditional Republicans see Kinzinger as the party’s future. Kinzinger’s friend Tom Rooney, a former Republican congressman “WE HAVE TO PROVIDE A VISION TO from Florida who quit part over frustration PEOPLE FOR A DIFFERENT VERSION in with “the MAGA crowd,” OF REPUBLICANISM. . . .I’M GOING says, “The big question is, do we snap back, and TO FIGHT LIKE HELL FOR IT.” when? Do people like Adam Kinzinger get to Rep. Adam Kinzinger be leaders in our party and our country, and ed that he was watching a “coup rightfully so? Or do we have to attempt.” wait until Trump’s kingmaking Kinzinger acknowledges that ability is no longer relevant?” his impeachment vote could Kinzinger served in the Air “easily” be seen as a career ender. Force during the wars in Iraq and Yet he says, “I believe that in five Afghanistan and still flies roumonths it’s going to be seen as tinely for the Air National Guard. the right vote.” Pre-Trump, he was one of the Without a bully pulpit, Trump’s party’s leading voices on foreign influence over the party will di- policy, Rooney says. But “at some

BLOOMBERG

Kinzinger’s future in the GOP looked bright—until he defied Trump

Rep. Adam Kinzinger acknowledges that his impeachment vote could “easily” be seen as a career ender. point, just everything turned to Trump and what Trump was going to do. Traditional things like having a point person to talk about taxes, or health care, or social issues. . . .Now none of that stuff mattered anymore. It was just reacting to the latest tweet.” Although Kinzinger didn’t vote for Trump in 2016 (he wrote in a name but won’t say who), he voted with the former president in Congress 90.2 percent of the time, according to FiveThirtyEight. What did he agree with? Major tax cuts, policies on Russia (though Trump’s “words were atrocious”), “awakening to the competition” with China, strengthening Middle Eastern and Israeli relationships, and “getting rid of overregulation” at home. Kinzinger says those achievements have been undermined by events during the former president’s last month in office. He also faults Trump’s NATO policies, his “shameful” abandonment of Kurds and his “total disinterest” in Syria and Libya. “We’ve removed ourselves as

the go-to country to solve world problems, and that’s an embarrassment,” he says.

EARLY INTEREST

Kinzinger traces his interest in politics to his early childhood in Florida, where campaign signs for a local mayoral race intrigued him. By age 12, he had moved to the downstate Bloomington area and become a Republican. He recalls “putting signs together” for former Gov. Jim Edgar at a local GOP headquarters. But he cast his first presidential ballot for independent Ross Perot in 1996, during what he calls a “rebellious” period. He enrolled at Illinois State University, but got kicked out after his freshman year. He had joined a fraternity and was drinking too much, he says, ending up with a 0.8 GPA his second semester. “The math on that is 4 D’s and an F.” He found work managing the furniture department in a local store. “During that time, I kind of realized that I gotta get serious. I got accepted back to ISU and got all A’s. I started doing politics

again, and somebody had jokingly said to me that I should run for the (McLean) County Board.” He did, defeating a Democratic incumbent. His platform emphasized holding board meetings in the evenings, when constituents could attend, and his ideas for how the county should spend a budget surplus. “He’d just turned 20 when we were elected together,” recalls Democrat Tari Renner, the current mayor of Bloomington, and a political science professor at Illinois Wesleyan University. They collaborated on good government issues, he says, such as simplifying Freedom of Information Act requests and facilitating public comment on issues before the board. Renner says he’d endorse Kinzinger today, calling his former colleague principled and trustworthy. “If he could get into a general election statewide, I think he’d be a formidable opponent for governor or senator,” Renner says, adding “he may be the only hope Republicans have of electing someone statewide.”

w THE KINZINGER CONUNDRUM U.S. Rep. Adam Kinzinger was a rising GOP star—before he voted to impeach Donald Trump.

1998: Wins a seat as a Republican on the McLean County Board, defeating a 12-year incumbent Democrat with 52% of the vote. He was a 20-year-old student at Illinois State University at the time.

2001: Joins the U.S. Air Force. He is currently a lieutenant colonel in the Air National Guard.

2003: Resigns from the McLean County Board to pursue military service.

2000: Graduates from ISU with a bachelor’s degree in political science.

2007: Receives the U.S. Air Force Airman’s Medal for saving a young woman from a late-night knife attack in Milwaukee.

Source: Crain’s reporting

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2010: After winning the primary with 63% of the vote, he defeats Democratic Rep. Debbie Halvorson 57%-43% in the 11th District, which the GOP lost by 24 points two years earlier.

2012: After being redistricted into Illinois’ 16th District, Kinzinger wins a primary race against Donald Manzullo, 54%46%, and wins the general 62%-38%.

2016: Kinzinger runs unopposed in the primary and general elections. He does not support Donald Trump, who goes on to win his district by 17 points.

2020: Kinzinger marries Sofia Boza-Holman, a press secretary at the U.S. Department of Homeland Security who worked previous stints for former Vice President Mike Pence and former House Speaker John Boehner. 2021: Kinzinger votes to impeach Trump, one of only 10 Republicans to do so.

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