Crain's Chicago Business by crainschicago

TECH TAKEAWAY: He went skydiving to overcome a fear of heights. Did it work? PAGE 6

NOTABLES: Meet 51 of the area’s top general counsels. PAGE 13

CHICAGOBUSINESS.COM | JUNE 7, 2021 | $3.50

HOUSING HITS A SWEET SPOT A market that’s not too hot, not too cold—but how long will the good times last? BY DENNIS RODKIN

SUNIL AND SANGITA KUMAR had been figuring on downsizing out of their longtime home in Hoffman Estates sometime around 2023. Instead, they’re now looking into replacing their kitchen’s dated countertops with quartz and doing some other cosmetic fixes so they can put the four-bedroom house on Chippendale Road up for sale soon. “The market is so good, we’re thinking very seriously that we should take advantage of it,” Sunil Kumar says. Linda Dressler, a Re/Max Suburban agent based in Schaumburg and the president of the Mainstreet Organization of Realtors, says the Kumars are among a series of homeowners who this spring have come to her on fact-finding missions because they’ve seen their friends’ and neighbors’ homes sell for tantalizingly high prices. ZAC OSGOOD

See HOUSING on Page 7

No happy ending in sight at Tribune

The roster of local biz banks shrinks

BY ALLY MAROTTI With full control of Tribune Publishing, Alden Global Capital is scrambling to squeeze out a return on its $600 million investment in the struggling Chicago-based newspaper company. Alden’s formula for profiting from a distressed newspaper industry is widely known: cut millions in costs by slashing newsroom staff. It’s a strategy that appears to leave little hope of a

good outcome for Tribune Publishing’s 11 daily newspapers. Alden began deploying its tactics as soon as it became the company’s largest shareholder in late 2019. Since then, it has slashed costs enough to generate a profit and positive cash flows. Revenue sank 15.9 percent in the first quarter of 2021 compared with the year-earlier period, as advertising and subscription sales dropped. But expenses fell more than twice

JOHN R. BOEHM

New owner races to cut costs faster than revenues fall

as fast at 39.2 percent, as Alden cut employees, newsprint and ink costs, delivery expenses and more. As a result, Tribune Publishing swung to an $8.4 million profit in the first quarter from a $65.1 million loss a year earlier. See TRIBUNE on Page 31

Borrowers’ hometown options narrow as First Midwest vanishes BY STEVE DANIELS

And then there was one. First Midwest’s surprise move to merge with Evansville, Ind.based Old National Bancorp leaves only Wintrust Financial carrying the banner—once not uncommon here—of a significant locally based commercial bank for Chicago, the third-largest market in the country.

Chicago-based First Midwest and Old National pitched the $6.5 billion, all-stock deal as a merger of equals with two headquarters, one in the third-largest city in the nation and the other in the third-largest city in Indiana. But Old National CEO Jim Ryan will run the show, and the holding company, the bank and he will be based in Evansville. This is an acquisition, and First Midwest isn’t the purchaser. The sales of Bank One and LaSalle Bank in the first decade of the century were thought at the See FIRST MIDWEST on Page 28

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JOE CAHILL

PROPERTY TAXES

Smart CEOs will have learned this work-at-home lesson. PAGE 4

County treasurer’s report lists parcels’ share of government borrowing. PAGE 3

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2 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

How much clout do unions have lately?

ne of the better underlying stories in the just concluded General Assembly session is how organized labor flexed some serious muscle with lawmakers eyeing re-election, and with a governor who rarely crosses them. At the same time, though, you perhaps saw something else. Perhaps. That’s the emergence of some limits on that muscle—even in Illinois. I got first wind of what was up when the usually low-key Chicagoland Chamber of Commerce joined with the Illinois Chamber of Commerce in late May to start screaming about a pending measure they assert is so bad it could kneecap the booming data-center business, a rare Illinois success story. As it turns out, the provision, which dealt with hiring, was only the latest in a string of provisions that got nicer and nicer for labor, moving from the arguably reasonable to the downright greedy. The first was added to a bill in 2019 allowing the legal sale of rec-

reational marijuana at a specified number of licensed dispensaries. The licenses are pretty much pure gold, in very hot demand. So what the labor guys did is add a provision saying that among factors the state must consider in selecting license winners is whether an applicant had signed a “labor peace agreement.” An LPA was defined as a deal in which the applicant agreed to stay out of union organizing efforts at a dispensary in exchange for a promise of no picket lines or strikes. The bill passed. It set a pattern, a growing pattern. This year, when a bill was introduced dealing with state tax incentives for in the chemical and oil refining business, an amendment was quickly added requiring that a growing percentage of workers in “high risk” jobs be graduates of an apprenticeship program. Almost all apprenticeship programs are run by unions. The bill passed the Senate and is awaiting final action in the House.

A little later, Rep. Bob Rita, D-Chicago, introduced a bill tweaking the state’s laws on casinos. Included was a clause requiring the Illinois Gaming Board to consider whether license applicants had signed an LPA covering not only technical positions such as building engineers but “gaming” and “hospitality” workers. In other words, pretty much anyone. And exactly what that LPA would require—other than the union’s nod—was left a little vague. Then came an amendment to an otherwise routine measure tweaking Pritzker’s data-center tax credit program, which the governor says has pulled in $5 billion of investment here. Sponsored by Rep. Mark Walker, D-Arlington Heights, it would require all qualifying data centers—existing and proposed—to have an LPA covering water-management and other engineering jobs within 180 days. Walker failed to return my calls. According to the chambers, the language in the bill suggested that

GREG HINZ ON POLITICS

companies not only would have to hire members of the appropriate union, in this case International Union of Operating Engineers Local 399, but specific job candidates sent to them. In other words, a company no longer would select its workforce, even for highly technical slots. News of the Walker amendment created an uproar. And not only among state economic-development officials but among labor itself, with members of one building-trades union upset about the potential loss of construction jobs at suddenly disappearing data centers. IUOE hasn’t called me back. Illinois AFL-CIO President Tim Drea did. Labor’s intent here is not necessarily to mandate use of union hiring halls but to ensure that, in

exchange for taxpayer incentives, companies can’t get in the way of unionization efforts, he says. “No one is required to take an incentive.” After talking to Pritzker personally about this too, it’s obvious that neither he nor Drea wants to see the data-center boom fizzle out because one union wants to pick up a few dozen jobs. So, the data center bill has been held for negotiation this summer, to seek a compromise. And the LPA language was stripped out of the gambling bill. But keep your eye peeled. If unions that lose most organizing votes can get lawmakers to effectively unionize workers for them, they will. And I’m sure they’ll thank lawmakers with big campaign donations.

Not a lot to celebrate in latest stab at ‘reform’

f course it was going to turn out this way. In the wake of perhaps the most ambitious federal corruption investigation in Illinois history, the stage seemed set for powerful ethics reforms. And a first-term governor and new leadership in both houses of the Legislature seemed to augur well for cleaner, more accountable government. But then, this was Illinois. In a case of optimism triumphing over experience, the forces of reform kept pushing for the best. But the case for sweeping reforms never stood a chance. Lawmakers called their ethics bill “a good first step” toward bigger reforms. But the measure on its way to Gov. J.B. Pritzker’s desk for signature merely nibbles around the edges of reform. Former lawmakers now must wait six months—a full half-year!— before they can lobby their former colleagues. The legislative inspector general can launch investigations of lawmakers. Economic disclosure forms require more, um, disclosure. Sounds good at first. The trouble is, there is always a “but” attached to each reform that sucks away its impact. The new “cooling off” period before former lawmakers can become lobbyists is a first for Illinois. But 36 states require ex-lawmakers to wait a year before lobbying, and 12 states require two years. The ethics bill erases a “Mother May I?” provision that required the legislative inspector general to get approval from the state’s Legislative Ethics Commission merely to launch an investigation. But the IG still lacks subpoena power. And the commission’s approval is needed before the IG can publish any findings, too. That won’t eliminate the kind

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of problems identified by former interim Inspector General Julie Porter. In testimony last year, Porter asserted that one investigation of wrongdoing and one referral to the state attorney general were quashed by the Legislative Ethics Commission, which itself is made up of lawmakers. Then there is the question of disclosures of economic interest. Old hands in Springfield derisively refer to the existing economic disclosure forms as “N/A N/A Forms.” That’s because many lawmakers fill them out, top to bottom, by responding “Not Applicable” to questions about potential conflicts of interest. The new forms have more stringent disclosure requirements. But, as Alisa Kaplan of advocacy group Reform for Illinois noted in April testimony, a lawmaker earning $1,200 from a client may have a manageable conflict, while one earning $1 million from such a company likely will not. The conflicts should be differentiated, as Chicago and many states require, so the public can draw conclusions about their potential to corrupt. In addition to half-measures of reform, the ethics bill fails by ignoring some major issues altogether. There are no specific, enforceable rules requiring lawmakers to disclose conflicts of interest on matters before the Legislature. There also is no requirement for recusal from voting in cases where a lawmaker has a conflict of interest. The Illinois attorney general should be empowered to form statewide grand juries, but isn’t under the new bill. New limitations on lawmakers lobbying local governments across the state are welcome. But an outright ban on lawmaker-lobbyists would be far better.

Then there’s the end to a deplorable tradition. The new bill would ban lawmakers from holding fundraisers in Springfield on the night before the legislative session. Well, duh. Some conflicts are so obvious, it’s amazing they weren’t illegal before this. Now, finally, the legislative equivalent of a wedding “money dance” will finally come to an end—eliminating a crass reminder each year that too much of government in Illinois still is up for sale. Be careful of the lawmakers’ claims that the ethics bill that passed the Senate was a good “first

DAVID GREISING ON GOVERNMENT

step.” We learned this year that no one in the Legislature—not in leadership, not in the rank and file—is determined to pursue material reform. Pritzker himself told Crain’s he’s disappointed by the ethics bill, but he declined to say what he would add and seems likely to sign it anyway. Unless more vigorous and com-

mitted leadership emerges, the “first step” from this legislative session may lead only to another cul-de-sac on the path toward reform. Crain’s contributor David Greising is president of the investigative watchdog Better Government Association.

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6/4/21 1:47 PM

CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 3

Public debt weighs heavily

Anil D’Souza, CEO of Tolmar Pharmaceuticals

Pappas report shows each Cook property’s share of government borrowing BY A.D. QUIG

and AbbVie—and we were the only ones that controlled our own supply chain,” says D’Souza, who estimates the market is worth nearly $400 million. D’Souza says Eligard now accounts for about two-thirds of sales at Tolmar, which also makes a hormone therapy for early puberty and more than a dozen generic dermatology drugs. Founded in 2006, the company employs more than 750 at its headquarters and two Colorado plants. Privately held Tolmar won’t disclose sales figures. The specialty drug manufacturer started increasing production of Eligard in January 2020 as part of an

“I THINK A SPECIALTY PHARMACEUTICAL COMPANY THAT’S FOCUSED CAN TAKE ON A BIG HEALTH CARE PHARMACEUTICAL COMPANY ON AN OLDER MEDICINE.”

If you think a mortgage is the only debt your property carries, think again. Your house or commercial building is also on the hook for local government borrowing and pension obligations in years to come, a reality illuminated by a new report provided exclusively to Crain’s by Cook County Treasurer Maria Pappas. The report provides the first-ever breakdown of government debt in Cook County by individual property. In other words, it allocates the to- Maria Pappas tal debt owed by municipalities to individual properties based on their share of the overall property tax burden. For Willis Tower, the allocated, or “attributed,” share of debt is $289 million, or 41.5 percent of the downtown landmark’s market value of $697 million, according to the treasurer’s analysis. For River Oaks Shopping Center in Calumet City, valued at roughly $26 million, the attributed share is roughly $10 million—or 38 percent of its value. In south suburban Riverdale, a house worth $66,970 has an attributed local government debt share of $31,800—equal to 48 percent of the home’s value. It’s important to note that each property isn’t necessarily obligated to repay the total debt attributed

See TOLMAR on Page 30

Anil D’Souza, CEO, Tolmar

See PAPPAS on Page 29

BOOST SMALL PHARMA COMPANY Tolmar has the drug prostate cancer patients need SHORTAGES OF A POPULAR PROSTATE CANCER therapy are giving a small drugmaker in Buffalo Grove an edge over giant north suburban rival AbbVie. Tolmar Pharmaceuticals’ Eligard has long been up against Lupron, sold by North Chicago-based AbbVie and manufactured by Takeda. But when problems at a Japanese plant last year forced Takeda to temporarily stop producing the drug, Tolmar suddenly had the U.S. market for prostate cancer hormone therapy to itself. With Lupron on ice, Eligard’s share of the market more than doubled to 65 percent at one point last year, according to Tolmar CEO Anil D’Souza. “Really all the capacity in the (U.S.) market was us

BY STEPHANIE GOLDBERG

JOHN R. BOEHM

BARE SHELVES AT ABBVIE

An affordable housing solution developers like A tax credit could become a carrot for a sector that’s been grousing about sticks Residential developers grumbled when the City Council approved a tougher affordable housing ordinance in April. They’re happier with the Illinois General Assembly, which has just given them something they like: tax breaks. On May 31, the last day of the spring legislative session, state lawmakers passed a sweeping housing bill with property tax incentives for developers that set aside some units in their projects

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for low- to moderate-income residents. One Chicago builder, Related Midwest, already is pushing to break ground this summer on a 43-story apartment tower in the Fulton Market District that could receive tax relief under the bill. Developers, housing advocates and lawmakers hope the tax provisions will address a persistent shortage of affordable housing— about 120,000 units in Chicago, by one count—and encourage the construction of it in expensive neighborhoods like Fulton Mar-

ket. Developers would receive a reduction in their property tax assessments and lower taxes as a result, if they agree to set aside a certain percentage of units in their buildings to tenants that earn 60 percent or less of the median income in that area. In Chicago, that’s $55,920 for a family of four. “Affordable housing is all about tools to close the gap between buildable and nonbuildable—to get a financeable, buildable project,” says Related Midwest CEO See AFFORDABLE on Page 31

RELATED MIDWEST

BY ALBY GALLUN

A rendering of 900 W. Randolph St., where Related Midwest plans to build 300 apartments.

6/4/21 4:39 PM

4 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

ON BUSINESS

Smart CEOs will learn from the work-at-home era the office, setting off a cascade of monkey-see-monkey-do behavior all the way down the org chart. Yes, gathering workers in one place has advantages. Physical proximity can generate energy, creativity and esprit de corps. That doesn’t mean every worker needs to be in the office every day. I’ll also acknowledge that employers are entitled to expect maximum productivity from employees. And they have the right to set the terms of employment. If they want employees to work in the office every day or most days, they can require it. That doesn’t make it a good idea. Companies that rescind or sharply curtail remote work policies risk undermining morale, wasting shareholders’ money and handing an advantage to competitors in the all-important battle for top-tier talent. Some employees, including yours truly, are ready for a full or partial return to offices. But others prefer to keep working remotely. As long as they’re equally productive at home, there’s no good reason to drag them back to the office. Companies that overtly CEOS DON’T WANT BALANCE; or implicitly favor workers THEY WANT TO BE TOP PRIORITY. who spend more time in the office will divide their workforce into first– and secford University, the University of ond-class citizens. Stigmatizing Chicago and Mexico’s Instituto employees who prefer to work Tecnológico Autónomo reached from home breeds resentment, the opposite conclusion, finding potentially fueling turnover. remote work 5 percent more Bloomberg reports that some productive. workers forced to return to offices This isn’t about productivity. are quitting. Younger employees It’s about reasserting control. are most likely to bolt rather than CEOs are control freaks, and commute. A survey by Morning they feel a loss of control when Consult for Bloomberg found employees work from home. that 49 percent of millennial and Corralling workers in offices Gen Z respondents would conrestores that sense of control. sider leaving a job that doesn’t What CEOs fear most is losing offer work from home options. their grip on employees’ prioriThese are the tech-savvy “digital ties. Work-from-home arrangenatives” so many companies are ments have enabled people to trying desperately to attract. achieve something closer to the Those coveted workers will “work-life balance” companies make ripe poaching targets for have long paid lip service to but employers offering remote work. rarely supported in meaningful Maybe that’s why companies like ways. Requiring employees to Twitter and Facebook say they’ll work in the office forces them allow employees to work from to focus almost exclusively on home permanently. company matters for 8 to 12 Companies with liberal workhours a day, if not longer. Family from-home policies save money, matters must wait until the end too. Financial giant HSBC expects of the workday. to cut office space by 40 percent CEOs don’t want balance; after giving employees the option they want to be priority No. 1. So to work from home. companies are calling workers The drive to bring workers back to the office. Sure, they’re back is a new manifestation of doing it in phases and offering an old syndrome. Firms have vaguely defined “hybrid arrangements.” At the same time, the boss long overemphasized “face time” in evaluating and rewarding is signaling that employees who workers. The shift to remote work choose to continue remote work during the pandemic showed arrangements are endangering performance isn’t necessarily their careers. You can bet CEOs linked to location. Smart CEOs will reinforce that message by will take that lesson to heart. spending their own workdays in As COVID-19 recedes, CEOs are sending a clear message to workers who want to continue the work-from-home arrangements their companies adopted during the pandemic: You’re slackers. Working from home “doesn’t work for those who want to hustle,” JPMorgan Chase CEO Jamie Dimon said at a conference last month. WeWork CEO Sandeep Mathrani told another conference that “those who are least engaged are very comfortable working from home. The “uberly engaged,” he said, want to be in the office “at least” two-thirds of the time. Mathrani’s in the business of leasing office space, so his remarks reflect more than a little self-interest. CEOs say they worry about maintaining company culture, fostering collaboration and initiating new employees. Some have also suggested productivity declines when employees work from home. JPMorgan last fall noted a drop in output among remote workers, but provided few details. A study of 30,000 U.S. workers by researchers at Stan-

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This always online lifestyle is exhausting Amid the current urgency to return, don’t forget to cut yourself a little bit of slack— lowercase ‘s’ —as we move through the virtual-to-real-life transition 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. TODD CONNOR: I have never left a happy hour as fast as I’ve left them while we’ve been sheltering in place. The memes, GIFs and TikToks about hasty exits from Zoom meetings are hilarious. It turns out no one wants to be the last person in a Zoom room— including the host. That level of efficiency, if you want to call it that, is seductive but potentially also overwhelming and causes a sense of whiplash for moving between different virtual worlds. For some of us it means we can then log onto a spring benefit for a nonprofit or a book reading with our favorite author. We’re optimized, in a sense, but potentially exhausted. If we were optimized and exhausted pre-pandemic in-person, we managed to find ourselves exhausted and optimized virtually. I wonder how, as the bridge phase is underway, we’ll manage to create space for ourselves? EMILY DRAKE: You are speaking to me, yes. A radical thought is we need more slack and more space, now more than ever. Shane Parrish, founder of Farnam Street Media, wrote about it this month on his blog in “Efficiency is the Enemy.” Our aspiration is always to optimize, to carpe diem—and the energy there is achievement-based and makes total sense. It’s cultural. It’s capitalism. And it’s not wrong, per se, but consider the energy of the questions: How do I make sure every moment matters? Every meeting counts? Every conversation is valuable? There’s a lot of control in that, and a lot of energy, so Shane’s take on it—total efficiency being a myth—feels like another way. That the story we tell, that I can wring every drop of time from the day, isn’t only false, it’s not effective. And it’s exhausting. TC: It does feel countercultural. I can’t say that I’m actually “winning” when I’ve packed a day to the brim. I notice in myself and others that it can leave us feeling stressed, overwhelmed and, worse, like we’re still living life on autopilot, or that someone or something else—colleagues, team members, management— is running our life. But making

GETTY IMAGES

JOE CAHILL

CHICAGO COMES BACK

WE DID A LOT OF SHORTTERM, URGENT, CRISIS THINKING IN THE LAST YEAR, BUT WE ALSO CONTEMPLATED A LOT, TOO, ESPECIALLY THIS SPRING, OF HOW WE WANT TO COME BACK. a shift to having more space will also have us wondering what to “do” with that time and energy. Shane references management consultant Tom DeMarco’s book “Slack” and his definition of the term: “the degree of freedom required to effect change . . . slack represents the operational capacity sacrificed in the interest of long-term health.” We did a lot of short-term, urgent, crisis thinking in the last year, but we also contemplated a lot, too, especially this spring, of how we want to come back. Feels like there could be a seasonal element to this: Sometimes fast and full? Sometimes slow and spacious? ED: For sure. I also see our goal, in this column and as leaders in general, as being to introduce our peers to other ways of being and doing in order to then, ultimately, make individual decisions about what works for them and their organization. Until it’s

time to re-evaluate again. For example, I hear a lot of entrepreneurs struggle with the question of whether or how to scale. More revenue, more team members, more clients is the path of least resistance—in terms of finding role models and rubrics. But in my organization, I’ve been thinking more about how to grow deeper, or even slower, to have something run my life other than Outlook. For me and for us as a community, I’d like to have the conversation about nourishment versus empty calories, marathon versus sprint or sustainability versus burnout, like we talked about last week. TC: I know there’s a lot of urgency right now to return, to get people eager to commute and collaborate in person, and you and I are right in the mix of that. But if your pandemic experience created space for you to slow down and re-evaluate, I think the invitation is to bring a little bit of that with you as you head into the Loop and have meetings at a boardroom table again. Space we created, initiated and inhabited over time gets us fit and ready for change, surprises and crises as they come. We’re nimble. Alongside words like “return,” we’re also rebuilding, reinventing, revisiting, reuniting. To do all of that from a place aligned with our values—which have been illuminated in the last year, whether we liked it or not—is a responsibility for all of us.

6/4/21 1:44 PM

CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 5

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6 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

THE TECH TAKEAWAY

Steven Beauchamp Beauchamp, 49, is CEO of Paylocity, a Schaumburg-based firm that provides online payroll and HR services. Several million people in 25,000 companies across the country ultimately rely on him to deliver their paychecks. He lives in Mundelein with his wife, their four children, three dogs and a continuous stream of foster pets. By Laura Bianchi

> How would you describe your home life? Chaos. For 10 years my wife has been fostering litters of three to five puppies for six to eight weeks, and then it’s on to the next batch. I worried at first that we would end up with all of them.

We heard you’re French Canadian, eh? I’m a native of North Bay, Ontario. My mother made sure all of us had French schooling through eighth grade. Even on the playground we had to speak French.

> What is your favorite piece of tech? My Apple AirPods. I’m a big fan of podcasts in the car, walking, exercising.

You ture Defin You g it, bu

UNDER

CRAIN’S CHICAGO BUSINESS 2021

2021 NOMINATIONS OPEN: ChicagoBusiness.com/40snoms

What piece of tech do you dream of? How we are going to see virtual reality in our daily lives. I have played some of the 3D games with my kids, and I can’t imagine where it takes us. But it’s fascinating to experience.

You or someone you know could be in the next Crain’s 40 Under 40 class

FORTY

Your favorite sources? From the tech perspective I like “Land of the Giants,” “Deep Background With Noah Feldman,” which also addresses global issues, and “How I Built This,” an entrepreneurial podcast with Guy Raz of NPR. I get news from New York Times’ “The Daily” and the Wall Street Journal.

The biggest hurdle you have overcome at work? I arrived at Paylocity in 2007, right before the 2008 recession. I came from a good job on a promising track with a much bigger organization. I had four kids 6 and under. It was a huge risk. When the economy struggles there are fewer paychecks, which affected our income. But we survived it.

> Any hair-raising experiences besides that? In my early 20s I decided that the best way to overcome my fear of heights was to go parachuting. The parachute was supposed to open automatically, but when I jumped out of the plane, it didn’t.

> Yikes! I was tumbling to the ground, in full panic mode, trying to decide whether to pull the emergency cord myself. But the chute opened just as I finally got my hands on the cord. I’m not sure it cured my fear of heights.

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CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 7

HOUSING from Page 1 “When I give them an estimate” of what their home might sell for and how fast it might move, Dressler says, “they say, ‘Are you kidding me?’ ” Both Dressler and Kumar decline to divulge what the estimate is on Chippendale Road, but Kumar says, “prices look very good now.” Prices do look good if you’re selling or considering it. After years of sluggish growth in home values that barely lifted homeowners’ equity stake, the twin sparks of low interest rates and the pandemic lit a fuse for the current market boom. The S&P CoreLogic Case-Shiller Indices reported that in March, Chicago-area home values were up 9 percent from a year before, the biggest increase in since spring 2014 and six times the increase of a year earlier. In another lens, the eye of the homebuyer, that same 9 percent increase may seem intimidating, like a red flag signaling that homes are becoming less affordable. That’s true, but relative to supercharged housing markets like Phoenix, where prices were up 20 percent in March, and San Diego, up 19.1 percent, Chicago is mellow. Affordability may be declining, but it’s not hurtling downhill. Homes routinely sell for more

than the asking price this spring, but for the most part they’re just a few percentage points higher, incrementally above comparable sales. Chicago isn’t Washington, D.C., where a house in Chevy Chase Village recently sold for $1 million over the asking price, a premium of 23 percent.

SWEET SPOT

Chicago prices are rising fast enough to pull sellers into the market but not so fast that they scare all the buyers out of the market. The combination puts our housing market in a sweet spot: no longer too cold and not too hot. In Chicago real estate, it’s as close to a Goldilocks moment as it’s been in many years. According to First American Financial’s Real House Price Index for March, home affordability was down less than half as much in Chicago than nationwide compared to a year earlier. In Kansas City and Phoenix, affordability dropped at more than 10 times the rate in Chicago. The index compared Chicago’s house price growth of about 10.6 percent for the year to its 9.2 percent growth in household buying power, which is a measure of both income growth and interest rates. The difference, 1.4 percentage points, shows prices sightly outpaced buying power. Nationwide,

the gap was 3.1 percentage points. In Kansas City, it was 16.2 percent, and in Phoenix, 16 percent. Those two cities’ figures alone should give Chicago homebuyers some comfort, but comfort doesn’t pay for that North Mayfair bungalow. As Odeta Kushi, deputy chief economist at Santa Ana, Calif.-based First American Financial, notes, “All real estate is local. Chicago buyers are paying attention to what’s going on in the Chicago market.” Kushi acknowledges that while buyers here lost ground, “it’s not extreme,” and that at the same time, “homeowners are in a good spot because they’re sitting on a lot more equity than they were.” If they’re selling, that equity can be put to good use on buying the next home. If they’re not selling, the boost to their household wealth “is certainly good news,” Kushi says. Rising home prices can also comfort buyers “if it looks like it’s going to be the pattern,” says Luis Lopez, assistant professor in the Stuart Handler department of real estate at the University of Illinois at Chicago.

CHANGING VIEWS

During the Chicago real estate market’s long slog back from the depths of the 2006-07 housing bust, homeownership didn’t look

ZAC OSGOOD

A Goldilocks moment for Chicago-area real estate: Not too cold, not too hot

Prices here are rising fast enough to pull sellers into the market but not so fast that they scare buyers out. as financially fruitful as it had for previous generations. Many millennials opted to rent housing and invest in other realms, Lopez says. When interest rates made buying a house super-cheap and the pandemic made having a big backyard desirable, “homeownership looked good,” Lopez says. The question, he says, will be whether it works for them long term, whether “they can see there will be future equity growth and a profit from homeownership.” Factors that will figure into that

equation include the city’s ongoing population drain, which gradually reduces the buyer pool for homes, and the strength or weakness of the rental market. “If rents begin to decrease, existing renters will have little incentive to become homeowners,” Lopez says. “They’d be better off just renting and putting what would have been a down payment into a diversified portfolio” instead of watching an investment in a home creep upward as it did for so many years before the real estate market exploded.

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8 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

Good times back for downtown apartment landlords? BY ALBY GALLUN Downtown apartment landlords may get a V-shaped recovery after all. After taking a precipitous plunge last year, the downtown multifamily market is on a steep ascent amid a flurry of leasing activity in the first quarter. Many tenants pounced on irresistible deals landlords offered during the winter to fill up buildings that lost droves of tenants over the summer. With COVID-19 vaccinations still on the rise, government pandemic restrictions loosening quickly and companies calling employees back to their downtown offices, the tenants’ market may soon be over, if it isn’t already. In one sign of the market’s stunning recovery, absorption, or the change in the number of occupied apartments downtown, jumped to 2,667 units in the first quarter, according to the Chicago office of Integra Realty Resources, a consulting and appraisal firm. That’s a record for a single quarter and a halfway decent figure for an entire year’s worth of leasing. “People were probably feeling that they’re going to be going back to work downtown in the near future, and these fire sales aren’t going to last forever, so let’s go get an apartment,” says Integra Senior Managing Director Ron DeVries. After dropping as low as 86.5 percent at the end of 2020, the downtown occupancy rate rebounded to 91.1 percent in the first quarter, according to Integra. That’s still a few percentage points below 2019 levels, but you won’t

hear many landlords complaining. Including concessions such as free rent, effective rents at the most expensive Class A downtown buildings rose to $2.98 per square foot in the first quarter, up nearly 18 percent from $2.53 in third-quarter 2020, when they bottomed out, according to Integra. Class A rents are still well below their all-time high of $3.31 per square foot in second-quarter 2019, so the downtown market’s recovery is not complete.

‘WORSE THAN ANY RECESSION’

Last summer, the market was in free fall after companies halted hiring and shut down their offices because of the pandemic. Able to work from any location, some downtown residents moved out to the suburbs or out of state. The protests and looting over the police killings of George Floyd and other African Americans made matters worse. A study from the Federal Reserve Bank of Cleveland found that residents moved out of urban neighborhoods across the country at higher rates than normal last year, and not enough people moved in to replace them. “The pandemic was worse than any recession I have seen in 43 years,” says Jonathan Holtzman, founder, chairman and CEO of City Club Apartments, a Farmington Hills, Mich.-based firm that owns three apartment properties in downtown Chicago. City Club’s Chicago occupancy rate fell into the low 80 percent range last year, but it already has bounced back to the low 90s, Holtzman says. The firm recently began leasing an 81-unit addition to City

Club MDA Apartments, a building at Lake Street and Wabash Avenue, a block from Millennium Park. The new building is about 75 percent leased already. Holtzman expects to hit 95 percent by July. Many downtown landlords have filled up their buildings by discounting—offering two, three or even four months of free rent to tenants, Holtzman says. He’s not ready to say a fullfledged recovery has arrived. “We need all of the office workers to come back to work,” Holtzman says. “Then the restaurants and the retail come back to life, the retail comes back to life, the theaters, the museums—everything comes back to life.” But the market is bouncing back much faster than many expected. Earlier this year, DeVries predicted that downtown rents wouldn’t return to pre-pandemic levels until spring 2023. “I think we’re going to get darn close” to that mark this year, he says. The Integra data covers more than 36,000 Class A properties— downtown apartment buildings typically developed after 1990 with high-end amenities and in-unit washers and dryers—and more than 11,000 Class B properties— pre-1990 buildings with fewer amenities. Class B effective rents rose to $2.46 per square foot in the first quarter, up from a pandemic low of $2.07 in second-quarter 2020 but still below their all-time high of $2.76 in mid-2019.

TURNAROUND

Rents tumbled last year as the market shifted in reverse, with absorption totaling minus 238 units,

YOCHICAGO

The market hasn’t fully recovered from a brutal 2020, but landlords had a stunningly strong first quarter. Those irresistible deals being offered to tenants may be ending.

Leasing was slated to begin over the weekend at the 735-apartment One Chicago project. the first year of negative absorption in downtown Chicago since 2005, according to Integra. After such a strong first quarter, Integra now forecasts that downtown absorption will jump to 5,400 units this year, the most absorbed on an annual basis since at least 1999. But tenants won’t be able to find the tantalizing deals that were available just months ago. “I think rising pricing (rents) is going to slow absorption a little bit, but if you were sitting on the fence, now is the time to move,” DeVries says. Demand for apartments is surging as supply growth is slowing—a good combination for landlords. Many developers pulled back during the uncertainty of the pandemic amid a reluctance among lenders and investors to finance new projects. After completing 3,200 downtown apartments in 2020, developers will add 3,000 units to the downtown market this year—mostly in projects

begun before the pandemic, according to Integra. But Integra forecasts they’ll finish just 1,300 units in 2022, far short of the 2,500 units absorbed. The market is turning around at the right time for Chicago-based JDL Development, which was to begin leasing over the weekend at One Chicago, a two-tower project with 735 apartments it’s wrapping up in River North. Rents will exceed $4 per square foot, and JDL CEO Jim Letchinger doesn’t initially plan to offer any free rent to tenants, a strategy many developers use to fill up new buildings. The development’s first residents should move in by October. “The timing worked out well. We’re seeing tremendous demand,” Letchinger says. “By the time every office says, ‘This fall you’ve got to be in the office,’ it will be the perfect time to have all those units available.”

A $15M condo listing hints at faith in a downtown revival BY DENNIS RODKIN The latest addition to the upper end pool of homes for sale is a 55th-floor condo in the Gold Coast offered at $15 million. Scott and Elyssa Saldana put their four-bedroom, 6,400-squarefoot condo at the Waldorf Astoria on Walton Street on the market at that price last week. Their listing follows by less than a week the Lincoln Park mansion that hit the market at $15 million. A condo on Elm Street went up for sale at $12.9 million in early May. In late April, a Streeterville penthouse that was taken off the market in late 2019 came back on, its asking price unchanged at a little under $15.2 million. The three condo listings may reflect sellers’ belief that the highend market will lean back toward downtown units as both the pandemic shutdowns and the looting episodes recede into memory. The shift away from downtown penthouses was swift in 2020. In 2019, nine of the 10 highest-priced

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Chicago-area home sales were downtown condos, but the next year only two made that list. One source of the optimism is a Lake Shore Drive penthouse priced at $13.5 million since 2019 that went under contract in early May. The sale has not closed, so the purchase price is not yet known. Another is the $6.85 million Gold Coast condo buy by the Bears’ Khalil Mack in April. Through their listing agent, Susan Miner of Premier Relocations, the Saldanas decline to comment. Miner says they plan to move out of state. The full-floor condominium has views in four directions and terraces on three sides. The layout of the main rooms, Miner says, “is open, and with the 12-foot ceilings and big picture windows, it feels voluminous in there.” Photos in the listing show beamed ceilings and wide-plank hardwood floors in the main rooms. The kitchen has glossy wood cabinetry, marble countertops and four wine refrigerators.

The Saldanas bought the condo for a little under $6.3 million in 2010, through a legal entity that shares the name of Scott Saldana’s trading firm, SKTY Trading. Miner says they upgraded the interior from what the tower’s developer delivered, but she declines to say what they spent doing it. The 60-story Waldorf Astoria, built in 2009, has the hotel on its lower floors. Condominium owners’ monthly assessments get them access to the hotel’s amenities, including in-room dining, the pool and the spa. The highest-priced sale on record in the building is $16 million, paid for a 46th-floor unit in 2016. A castle-like penthouse atop a vintage Lake Shore Drive building is asking $17 million, the city’s top list price for a condo or co-op unit. It came on the market in October. At the extreme upper end, priced more than twice as much as any home for sale in the Chicago area, is a Lincoln Park mansion listed at $45 million. It’s been on the market since 2016.

VHT STUDIOS PHOTOS

Several sellers seem optimistic that the penthouse market will rise again

6/4/21 1:58 PM

CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 9

Pandemic pummels downtown’s biggest parking garage BY ALBY GALLUN A global pandemic hurts a lot when you own the biggest parking garage downtown. As office workers and tourists stopped driving downtown last year, the venture that controls the garages under Millennium, Maggie Daley and Grant parks suffered a 53 percent drop in revenue from 2019 and lost $15.3 million, according to an annual report filed with the city. The cavernous subterranean structure, which encompasses 3.8 million square feet and 9,176 parking spaces, is the largest underground parking system in North America. Controlled by an international joint venture, Millennium Garages, it’s among the many downtown businesses walloped by the coronavirus pandemic as office buildings emptied out, tourist attractions shut down and downtown events were canceled. To shore up the property’s balance sheet, the investors in the venture—Toronto-based Northleaf Capital Partners and AMP Capital of Sydney—injected $8.7 million in the property last year,

followed by another $8 million cash infusion in March, according to the report. But the business is bouncing back, says Millennium Garages CEO Rick West. Parking volume plunged almost as low as 1,000 cars per day in the early days of the pandemic but rebounded to as many as 3,500 in the summer and fall, he says. It dropped again to about 2,500 over the winter but rose to almost 5,500 over the Memorial Day weekend, he says. With downtown professionals returning to their offices and summer events like Lollapalooza resuming, West is optimistic. “We’re coming back I believe faster than the market’s coming back,” he says.

AN ISSUE OF SPACE

Filling the garages was a challenge even before the pandemic. With more people using ride-hailing services like Uber to get around town, demand for parking was slipping. To diversify Millennium Garages’ revenue and absorb used space, West has been working on plans to convert some of the space, just 20,000 square feet, into a small data cen-

ter and a bigger section, about 200,000 square feet, into an underground self-storage facility. Local auto dealerships already rent hundreds of parking spaces in one of the garages, where they store new and used cars. The Northleaf-AMP joint venture controls the property through a concession with the city, which owns the garages. The venture paid $370 million for the rights in 2016, about three years after the concession’s prior owner defaulted on $403 million in debt. The property, which is encumbered by about $208 million in debt today, is not facing a loan crisis right now, even after a brutal 2020. The garages’ revenue fell to $16.2 million last year, down 53 percent from $34.8 million in 2019, according to the report filed with the city. The property lost $15.3 million last year, versus a $350,000 loss in 2019. The ownership venture has made all of its debt payments but violated terms of its loan agreement, according to the report. Its lenders agreed to waive the loan requirements through next March, the report says.

STEPHEN J. SERIO

Revenue at the facilities under Millennium, Maggie Daley and Grant parks plunged 53 percent last year, but business is bouncing back, says the executive in charge

Parking at Millennium Lakeside Garage was already in waning demand before the pandemic.

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10 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

EDITORIAL

t’s a rare day when activists calling attention to a problem and business people in a position to do something about it can come together and agree on a solution, but that’s what’s happening as the dust settles on a tumultuous legislative session that came to a close over the Memorial Day weekend in Springfield. As Crain’s Alby Gallun reports in this week’s issue, state lawmakers passed a sweeping bill designed to address a persistent shortage of affordable housing in Chicago and beyond. In the city alone, there’s a need for 120,000 or more units. The surprise is that housing advocates, landlords, lawmakers and real estate developers alike seem actually to be pleased with the provisions in this new bill. In politically polarized times like these, the happiness being expressed within the development community might be cause for skepticism that the legislation will actually fix what’s broken, but the community groups involved in hammering out this compromise tell Crain’s they’re satisfied with the outcome. Here’s how it would work: Real estate developers could receive a 30-year reduction in their property tax assessments and lower taxes as a result, if they agree to set aside 20 percent of units in their buildings to tenants who earn 60 percent or less of the median income in the area. The bill also includes tax breaks designed to spark construction or preservation of affordable housing in less expensive neighborhoods and in areas that are gentrifying.

fer as many as 20 percent of their units at prices or rents affordable to low- or moderate-income residents. Developers argue that such requirements are counterproductive, reducing the financial feasibility of many projects and thereby exacerbating the affordable supply problem. Curt Bailey of Related Midwest, one of the most prominent developers in the region, argues that the city and state approaches could work in concert: Yes, he

STATE LAWMAKERS PASSED A SWEEPING BILL DESIGNED TO ADDRESS A PERSISTENT SHORTAGE OF AFFORDABLE HOUSING IN CHICAGO AND BEYOND.

GETTY IMAGES

A rare win on affordable housing

Another benefit of the state bill: It creates an incentive for developers to include all the affordable units on-site, running counter to the common practice of building a chunk of affordable units at an off-site location or, worse, paying a fee to a city housing fund in lieu of building any affordable units at all. To advocates who want to see afford-

able housing built in prime areas close to jobs and transit, that’s a win. The state legislation takes a carrot approach to the affordable housing problem, while the city of Chicago has wielded a stick, in April strengthening the Affordable Requirements Ordinance, or ARO. That rule requires developers who seek a zoning change from the city to of-

argues, the city’s ARO cuts the rents developers can charge on some units, but the state legislation will balance out that effect by reducing a key cost, property taxes. If these programs operate as designed, the end result could be more diverse neighborhoods that provide better access to all the amenities a world-class city like Chicago can and should offer to all its residents and the creation of housing that’s worth a lot more than what was there before the incentives were put in place. Gov. J.B. Pritzker is expected to sign the bill when it hits his desk—and with all sides cheering for it, who can blame him?

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YOUR VIEW

Chicago pols must choose small business over politics

on a sign in a different ward? s local businesses and Imagine facing this requireneighborhoods claw their ment as a business owner. The way back from the panmayor’s office indicates that demic, there has never been a it may take a small business more important time to elim150 days—approximately five inate needless bureaucratic months—to obtain a sign or hurdles that stifle the success of other public way use permit. small businesses. Chicago’s poliAll for the permission to let ticians have an important role to customers know that this storeplay in this. front is a boutique or pizzeria or Mayor Lori Lightfoot has filed Elliot Richardson florist. Signs mean so much to a legislative package with sever- is president entrepreneurs; is this ridiculous al much-needed provisions to and co-founder cut this red tape. of the Small Busi- and unreasonable requirement really needed? It should be First, it would eliminate the ness Advocacy eliminated now. need for each member of Chi- Council. Lightfoot’s proposal would cago’s City Council to vote on a sign permit. Currently, an ordinance must also legalize sidewalk signs when safely be passed by the full council before any placed outside a storefront, a long-overdue small-business owner can display a sim- reform. The daily special or deal touted on ple sign. It is hard to imagine a more un- that sidewalk sign can drive new patrons necessary regulation. Why should alder- into an establishment still reeling from the men miles from a storefront need to vote pandemic.

And the mayor’s package would create bureaucracy to help small business in an expedited food licensing process to their wards. Unfortunately, turf battles help fill empty spaces with new restau- prevented good policies from moving rants. This can accelerate the opening of forward. This gamesmanship has cost new restaurants in commercial corridors small businesses customers, time and money. throughout the city. Small businesses and local commuThere is a great deal to digest in the Chi Biz Strong legislative package. Indeed, nities should not be caught in a power there are parts of the legislation which will struggle at a time when they are fighting likely need to be modified or removed. There will certainly SMALL BUSINESSES AND LOCAL COMMUNITIES need to be dialogue and compromise given the breadth SHOULD NOT BE CAUGHT IN A POWER of the proposal. However, reforms cutting red tape for STRUGGLE AT A TIME WHEN THEY ARE small businesses should not FIGHTING TO RECOVER FROM THE PANDEMIC. be controversial or delayed any further. This is not the first time small-busi- to recover from the pandemic. Thriving ness advocates have fought to cut red small businesses will be essential to the tape. And this is not the only time Chi- recovery of Chicago’s economy. Politicago policymakers, including aldermen, cians must choose small businesses over have attempted to eliminate needless politics.

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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LETTERS TO THE EDITOR

City’s Mercy Hospital deal sets horrible precedent

e are very disappointed that the city chose to move forward with the sale of Bronzeville’s Mercy Hospital to Insight, with absolutely no due diligence, no financials nor plan of operation (“Chicago clears the way for new Mercy Hospital owner,” May 31). Insight refused to provide either. This would never happen on the North Side. We begged the city and state to pause this agreement until proper vetting had been done. Mercy was not a typical safety-net hospital, which is why the Illinois Health Facilities Service Board denied Trinity, the parent company of Mercy, the ability to close a once-vibrant Mercy Hospital. In fact, Trinity was handed Mercy from the

Sisters of Mercy in great financial condition. At the time, Trinity recorded it as “a great bargain.” They were given Mercy with $140 million in assets. Their announcement to close Mercy Hospital in the middle of a pandemic was not only inhumane, but it effectively killed the hospital and their family health care center. They dismantled the hospital and family health care center and replaced it with a diagnostics center—a cash station. To add insult to injury, the city is now attempting to override the powers of the City Council by terminating a redevelopment agreement that protects Mercy Hospital and the community while allowing Trinity, a billion-dollar company, off the hook. Insight

and Trinity asked the city to break covenants put in place to protect the community. This sets horrible precedent. It is common practice for community benefits in a redevelopment agreement to be passed along from one buyer to the next. Why were they illegally terminated? Why are Trinity and Insight being treated differently? We demand answers and accountability, and so should you. ALD. SOPHIA KING 4th Ward ILLINOIS REP. LAMONT ROBINSON D-Chicago ILLINOIS SEN. MATTIE HUNTER D-Chicago

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To our clients, partners, consultants, and the many LJC individuals who helped us achieve this success. We are humbled to be recognized for three awards at the 2021 Greater Chicago Food Depository’s Commercial Real Estate Awards.

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PEOPLE ON THE MOVE

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

ACCOUNTING / CONSULTING

CONSTRUCTION

LAW

PHARMACEUTICAL

RSM US LLP, Chicago

Executive Construction, Chicago

Chapman Spingola, Chicago

King & Spalding LLP, Chicago

Jaguar Gene Therapy, Lake Forest

RSM US LLP is pleased to announce that Brett Williams has joined the firm as a business development director in the risk consulting practice. Brett brings a strong background of consulting and business development across many risk management disciplines. Brett’s talent for helping companies sharpen their focus on business and technology risks resulted from his time at Arthur Andersen, Protiviti, and PwC, and contributed to his successful transition as a business development leader at RSM.

Executive Construction is proud to announce the addition of Reed Gallagher to lead the firm’s Virtual Design & Construction (VDC) services. As VDC Director, he supports clients, external design partners, and project teams to strategically integrate technology throughout the lifecycle of capital projects. His expertise enhances collaborations from early involvement in laser scanning existing conditions for design partners; to clash detection, virtual site visits, and digital as-built creation.

Chapman Spingola is proud to announce that James C. Paschall and Mary Jo Boldingh have joined the firm’s IP/tech practice groups. With over 50 years of combined technical and Paschall legal experience, Jim and Mary Jo, registered patent attorneys with technical backgrounds, will help service Chapman Spingola’s clients in all technical matters relating to the United States Patent Boldingh and Trademark Office, including patent counseling and strategy, patent drafting, IP portfolio management and disputed matters.

Timothy Hoffmann has joined King & Spalding’s Chicago office as a partner in the Corporate, Finance and Investments practice group. His practice focuses primarily on bankruptcy and insolvency-related matters. He has represented debtors, lenders, strategic investors, and various other parties in financially distressed situations, including both in-court and out-of-court restructurings.

Jaguar Gene Therapy is pleased to announce Joseph W. McIntosh, M.D. as Chief Medical Officer. He will be responsible for Medical and Regulatory functions. He has more than 16 years of drug development experience in the biopharmaceutical industry, with a focus on developing gene therapies. With his expertise in genetic diseases, he will lead efforts to advance a robust pipeline of novel AAV9-based gene therapies targeting severe genetic diseases in patient populations with large unmet need.

CONSTRUCTION Executive Construction, Chicago

ARCHITECTURE / DESIGN Lamar Johnson Collaborative, Chicago Lamar Johnson Collaborative (LJC) welcomes Elias Vavaroutsos as a Principal. Elias brings over 20 years of design leadership on a multitude of project types, including commercial, hospitality, health care, education, science and mixed-use. He joins LJC from Goettsch Partners, where he served as design leader for several notable international commissions, including Al Maryah Tower Abu Dhabi, Rosewood Sanya Resort and Economic Forum, and the Financial Street Shanghai Railway Station Development.

BUSINESS ORGANIZATIONS Calumet Area Industrial Commission, Chicago The CAIC congratulates Grace Garcia on her recent promotion to COO. Garcia brings leadership experience from manufacturing & the non-profit sector as well as serving in elective office on the Village of Burnham’s town council. A native of Mexico, she earned a B.A. from Chicago State University while raising her family, serving the community, and holding down fulltime employment in the Calumet Area. She continues to mentor women in manufacturing careers.

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

Executive Construction is proud to announce the promotion of Rebecca Hosek to Controller. Supporting the CFO, and leading the accounting team, Rebecca serves as a key contact to outside financial partners, and offers day-to-day support to project management teams. In her career, she’s collaborated on projects while managing Chicago Office accountants, and championed initiatives such as the firm’s trade partner prequalification program. Her contribution supports Executive Construction’s growth. CONSTRUCTION LafargeHolcim in the US, Chicago LafargeHolcim in the US, headquartered in Chicago, appointed Toufic Tabbara as CEO of US Cement operations. Tabbara joined LafargeHolcim, the world’s largest building materials company, in 1998 in the gypsum division. His career continued in ready mix, asphalt and construction operations in the US and Canada. In 2012, he became Country CEO for Jordan, Lebanon & Cyprus and most recently served as Country CEO for Algeria. CONSTRUCTION W.E. O’Neil Construction, Chicago W.E. O’Neil Construction is pleased to promote two senior leaders within the company, Brian Barry and Richard Davey, to Project Executives. Barry, who has been with the Barry company for 16 years, has excelled in every aspect of the business and has cultivated key client accounts to drive the firm’s tactical and strategic pursuits. Davey, a 24-year veteran of the company, leverages his nationwide construction Davey experience to thoughtfully approach team building and project delivery. Both Barry and Davey are currently overseeing several of W.E. O’Neil’s largest projects; their leadership will continue to propel the firm forward in both the short and long term.

LAW Reyes Kurson, Ltd., Chicago

LAW King & Spalding LLP, Chicago James McMullin has joined King & Spalding’s Chicago office as counsel in the Corporate, Finance and Investments practice group. He has more than 20 years of experience representing issuers, underwriters and private equity sponsors on all aspects of securities offerings, including high yield and investment grade debt offerings, exchange offers, initial public offerings, follow-on equity offerings and market-linked products offerings.

Reyes Kurson, Ltd. (“RK”) is pleased to announce the addition of Edward Olivieri as a Partner. Eddie will lead the firm’s Diversity, Equity & Inclusion (DEI) practice. The DEI practice group will advise clients on attracting and retaining diverse staff, board members, and suppliers. Eddie will also practice in government relations; public affairs; and state and local lobbying. Eddie comes to RK from Cook County Government where he served as Director of Contract Compliance.

REAL ESTATE Neighborhoods.com, Chicago Neighborhoods.com, a leading operator of specialized online real estate marketplaces, is pleased to welcome Ted Ellis as CTO. With more than 16 years of experience, Ellis is a well-rounded technology leader who brings a new perspective and fresh ideas to the growing real estate company. He will be primarily responsible for growing the company’s technical vision while ensuring technological resources are being used efficiently, profitably, and securely.

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CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 13

2021

These 51 general counsels hailing from multinationals, real estate firms, nonprofits and universities have had a full plate. They led their organization’s legal response to the pandemic: navigating work-from-home rules, developing safety protocols and negotiating special arrangements with financial institutions, suppliers and customers. With the heightened national recognition of systemic inequality, many became involved in stepped-up diversity and inclusion initiatives. They strived to make sure that their teams, as well as outside counsel, included attorneys from diverse backgrounds. Some top

in-house attorneys explored how to incorporate ESG—environmental, social and corporate governance— principles. Many managed funding for COVID relief and special donations for Black and other underserved communities. They did all this while they oversaw departments handling the usual docket of legal concerns, including M&A, intellectual property, contracts, corporate governance, taxes, financing and real estate. Yet they adapted to a remarkably changed landscape. By Judith Crown and Lisa Bertagnoli

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METHODOLOGY: The honorees did not pay to be included. Their profiles were drawn from the nomination materials. This list features only individuals for whom nominations were submitted and accepted after a review by our editorial team. To qualify for the list, nominees must be based in the Chicago area and working as a full-time general counsel and as a member of the top management team. They must have demonstrated a leadership role in their organization, be active in professional groups and/or assumed a leadership position outside their organization, and have contributed pro bono work toward civic and community initiatives.

AYESHA AHMED

PRASANTH AKKAPEDDI

SALMAN AZAM

DOUGLAS C. BARNARD

KARYN L. BASS EHLER

General counsel and vice president of human resources Nexus Pharmaceuticals

General counsel-U.S. Zone Kraft Heinz

General counsel and chief compliance officer Dialysis Care Center

Senior vice president, general counsel and secretary CF Industries

General counsel Illinois Department of Public Health

Salman Azam is general counsel for Dialysis Care Center, a physician-owned health care provider headquartered in Homer Glen with more than 40 locations in seven states. He manages all legal personnel and legal matters, including complex acquisitions, health care regulatory affairs, corporate compliance and labor and employment issues, as well as corporate and transactional matters. Before joining Dialysis Care Center, he was the managing partner of Azam Chandran & Gilani, a boutique firm in Chicago that handles health care and hospitality matters for small businesses. He is a two-time recipient of the Federation of Indian Associations’ annual Chicago Community Service Award, does pro bono legal work at the Downtown Islamic Center and co-founded the South Asian Bar Association Chicago Foundation.

Douglas C. Barnard is senior vice president, general counsel and secretary at Deerfield-based CF Industries, a producer of ammonia and other derivative fertilizer products. He leads the legal department, providing corporate, commercial and litigation services for operations in the U.S., Canada and the U.K. He is a member of the senior leadership team, oversees the compliance and ethics programs and is involved in efforts to decarbonize CF Industries’ network. Before

Karyn L. Bass Ehler manages and oversees all Illinois Department of Public Health legal functions, including advising on litigation, procurement, regulatory matters, enforcement, legislation and public health guidance. Since starting as general counsel in August, she has assisted the IDPH team through a range of COVID-19 pandemic issues, from contracts to the legal aspects of mass vaccination. Before joining IDPH, she led the civil rights practice group at Grant & Eisenhofer; before that, she was chief of the Illinois attorney general’s Civil Rights Bureau. Bass Ehler is a 2018 Fellow of Leadership Greater Chicago, vice president of the Jewish Council of Urban Affairs and a member of the DePaul Law Dean’s Advisory Council. She helped found the DePaul Center for Public Interest Law in 2006.

Ayesha Ahmed is general counsel at Lincolnshire-based Nexus Pharmaceuticals, a womenand minority-owned health care company specializing in difficult-to-manufacture specialty and generic drugs. She focuses on compliance, labor law, intellectual property, litigation management and corporate matters. Ahmed, who joined Nexus in 2011, also manages human resources. Nexus is in rapid-growth mode, hiring more than 50 people (most of them virtually) over the past 18 months. Ahmed began her legal career in 2006 at a boutique law firm, and in 2008 she clerked for Cook County Circuit Judge Moshe Jacobius. She is on the advisory council of the Pro Bono Network, the board of directors of UMMA Center in Waukegan, the board of directors of the Kenosha Area Business Alliance and the alumni board of Chicago Kent Law School.

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Prasanth Akkapeddi is general counsel for Kraft Heinz’s U.S. Zone, leading its U.S. legal team. In 2020, he led the company’s global COVID task force, implementing the crisis management framework that he created and protecting essential factory workers as well as Kraft Heinz’s food supply role in the country’s critical infrastructure. He also serves on the company’s U.S. leadership team and is the executive sponsor of the Asian Pacific American business resource group, working to foster diversity. Prior to joining Kraft Heinz in 2018, Akkapeddi was associate general counsel at S&P Global and McGraw-Hill for 11 years. Before that, he was in private practice and was an associate attorney in the litigation department at law firm Gibson Dunn & Crutcher.

joining the company in 2004, Barnard was general counsel at Bcom3 Group; he also was a partner at Kirkland & Ellis. He co-authored “Mergers, Acquisitions, and Buyouts” with Martin Ginsburg and Jack Levin at Kirkland & Ellis. He was a lecturer at the University of Chicago Law School in 2012-15 and is a member of the MIT Corporation Development Committee.

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14 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

CARL BERGETZ

KATHLEEN BOEGE

DOROTHY CAPERS

STEVE CARSON

KIMBERLY CHMURA

General counsel Rush University Medical Center Chief legal officer Rush University System for Health

Executive vice president, general counsel and corporate secretary Wintrust Financial

Executive vice president and global general counsel National Express Group

Vice president, general counsel and secretary Fellowes Brands

General counsel and vice president-administration St. Anthony Hospital

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Kathleen Boege manages all legal affairs at Wintrust Financial, a $46 billion-asset, publicly held financial holding company headquartered in Rosemont. Responsibilities include corporate governance, mergers and acquisitions, and litigation. She is on Wintrust’s executive and operating committees and is an executive sponsor of the Wintrust Women’s Network. Before joining Wintrust, she was

Dorothy Capers leads the legal, risk management, real estate, employment, labor, contracts, compliance and environmental functions at National Express Group, a U.K.-based public transport operator in Europe, North Africa, North America and the Middle East. During the pandemic, she led the North American team through the creation of a robust diversity and inclusion initiative. Before joining National Express, she was chief litigation and bankruptcy counsel at US Foods, was a Cook County prosecutor and was a senior counsel at law firm Greene & Letts. She volunteers at Just Roots farm, an organic farm that provides food to local shelters and food banks; is secretary at the Illinois Equal Justice Foundation; and serves on the finance committee of Children’s Home & Aid.

Steve Carson is general counsel at Itasca-based Fellowes Brands. A member of the executive team, he is responsible for the global legal function, product safety, data security and regulatory compliance. His career began as an associate at Chapman & Cutler until becoming general counsel at Wallace Computer Services (now part of R.R. Donnelley). His Fellowes career began with the successful defense of a hostile takeover attempt; he then prevailed in two Illinois Trade Commission actions; and in 2010, he led the legal response to a factory takeover by a Chinese partner. In August 2019, Carson completed the acquisition of Holland, Mich.-based Trendway. He is a member of the Private Company General Counsel Group and is a volunteer firefighter in Long Beach, Ind.

Kimberly Chmura provides legal, risk and compliance services and advises on a range of operational matters at St. Anthony Hospital, an acute-care community hospital serving Chicago’s West and Southwest sides. She oversees human resources, security, transport, telecom and employee health. She managed the hospital’s legal response to a 2019 malware attack that completely shut down its services and then pivoted to handling its COVID response, sourcing medical supplies, implementing new regulations and advising on a communitywide vaccine rollout. Before joining St. Anthony, Chmura worked at Northwest Community Healthcare, Advocate and University of Chicago Medical Center, executing health care mergers and acquisitions and navigating regulatory reviews. She also is the assistant corporate secretary to St. Anthony Hospital’s board and is responsible for all its governance functions.

Carl Bergetz manages all legal services for Rush University System for Health, directing the work of 20 staff members in the Office of Legal Affairs and the Office of Risk & Claims Management. He also manages outside counsel relationships. Before joining Rush, Bergetz served as chief of the Special Litigation Bureau for the Illinois attorney general,

supervising complex investigations and litigation. Before that, he practiced law in Illinois and California, beginning his career with McDermott Will & Emery. He developed a bioethics and health law course and continuing legal education classes on public health emergency law for the University of Illinois College of Law.

general counsel at FreightCar America and Bally Total Fitness and was associate general counsel at the Chicago Stock Exchange. She is a member of the board of directors of the Chicago Public Library Foundation and City Year Chicago and is on the Keystone board of the Shirley Ryan AbilityLab.

Rush University System for Health congratulates

Carl Bergetz Chief Legal Officer for Rush University System for Health, General Counsel for Rush University Medical Center, and Senior Vice President of Legal Affairs

on his well-deserved recognition being named a Notable General Counsel Executive by Crain’s Chicago Business.

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KELLEYE CHUBE

NICK CHULOS

KAMAU COAR

KRISTIN COLEMAN

ANNE-MARIE D’ANGELO

General counsel Illinois Human Rights Commission

Executive vice president, general counsel and corporate secretary First Midwest

Chief legal officer and chief inclusion officer Heidrick & Struggles International

Executive vice president and general counsel US Foods

Executive vice president, general counsel and corporate secretary NiSource

Nick Chulos is responsible for the overall direction of legal and government-relations functions, legal regulatory affairs, corporate governance and corporate insurance programs at Chicago-based First Midwest, one of the largest independent bank holding companies in the region. He led the $1.1 billion acquisition of Milwaukee-based Park Bank during height of the pandemic with completion, integration

Kamau Coar is chief legal officer and chief inclusion officer at Chicago-based Heidrick & Struggles, a global leadership consultancy offering executive search, leadership assessment and development, organization and team acceleration services. His legal team is responsible for governance, global risk management, compliance and business partnership advice to C-suite and board clientele. In 2020, Heidrick & Struggles launched a diversity and inclusion practice, and Coar assumed additional responsibilities this year as chief inclusion officer. He is a leader of Heidrick & Struggles’ Director Institute and also serves as a Johns Hopkins Leadership Fellow; volunteers with My City, My Block, My Hood; and is active with his alma maters, Johns Hopkins University and Duke University School of Law (class of 2001).

In February 2017, Kristin Coleman joined Rosemont-based US Foods, a 28,000-employee distributor serving 300,000 restaurants and food service operators. She handles all legal support for board work, corporate governance, litigation, labor and employment, commercial contracts, and mergers and acquisitions. In 2020, she supported a $1 billion debt financing and $500 million convertible preferred stock private placement with KKR as well as the $1 billion acquisition of Smart Foodservice. Previously, she was general counsel at Sears Holdings and Brunswick as well as a corporate attorney at Sidley Austin. Over the past 13 months, she and a small “SWAT team” organized clinics to vaccinate 2,300-plus employees and led the rollout of “Respectful Workplace” training for 4,000 company leaders. Coleman is a former board member of Boys & Girls Club of Chicago and a board member emeritus of the Center for Enriched Living.

Anne-Marie D’Angelo is general counsel at Merrillville, Ind.based NiSource, one of the largest fully regulated utility companies in the U.S. As transmission centers are specific targets for domestic terrorists, she partnered with various business functions to establish protocols to safeguard crews and customers. She also has restructured NiSource’s legal department by reducing silos and realigned its relationships with service providers. Prior to joining NiSource, D’Angelo was general counsel at Global Brass & Copper Holdings in Schaumburg; before that, she held a number of roles at McDonald’s for 13 years, including assistant U.S. general counsel. She has conducted pro bono work for the National Immigrant Justice Center, served as a member of the Catholic Charities legal advisory board since 2012, and was a member of the Association of Corporate Counsel.

Kelleye Chube joined the Illinois Human Rights Commission (a quasi-judicial body for resolving discrimination complaints) in January 2019, when major legal changes reconstituted the agency. In less than a year, she helped eliminate a backlog of 2,000-plus sufficiency-of-investigation cases and various complex legal matters, transitioned lay commissioners from part time to full time, instituted free continuing legal education events and promulgated emergency rules to enable proceedings to continue through the pandemic. She refocused the commission on domestic violence victims and people with disabilities and/or limited English proficiency. Prior to joining the agency, Chube was counsel to the governor’s office. Before that she negotiated complex corporate transactions with major health care providers, software companies, Big Four accounting firms and large financial institutions.

and training done virtually. Before joining First Midwest, he practiced law and was a partner at Indianapolis-based Krieg DeVault in for more than 20 years. He holds leadership roles at the American Bankers Association, Mid-Size Bank Coalition of America and Illinois Bankers Association.

OUR TEAM PROUDLY INCLUDES CHICAGO’S VERY BEST We know our best asset is our people. And, we wouldn’t be where we are today without them. We’re lucky to call some of Chicago’s very best part of the Wintrust family. Leaders like Kate Boege, executive vice president, general counsel, and corporate secretary, contribute to our success by offering expertise, guidance, and dedication to everything we do. Congratulations, Kate, for your recognition as one of Crain’s 2021 Notable General Counsels. Your contributions are invaluable to making us the company we are.

Congratulations on being named one of Crain’s 2021 Notable General Counsels! KATHLEEN M. BOEGE Executive Vice President, General Counsel, and Corporate Secretary

wintrust.com Banking products provided by Wintrust Financial Corp. banks.

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16 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

ANGELIQUE DAVID

KATHY DEIGHAN

PEDRO DEJESUS

BRETT GERRY

JULIE GETZELS

Executive managing director, COO, general counsel and corporate secretary Ziegler

Vice president, general counsel and corporate secretary Elkay

Executive vice president, general counsel, corporate secretary and head of international business Tampico Beverages

Chief legal officer and executive vice president-global compliance Boeing

General counsel Heartland Alliance

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At Ziegler, a privately held investment bank, capital markets and proprietary investments firm, Angelique David’s roles include compliance, IT, HR, marketing, accounting, research and office services. Her legal work involves advising the board and executive management on all matters relating to the broker-dealer including, but not limited to, M&A, employment, corporate governance and security law. She is Ziegler’s first Black and female leader to serve as a director on its board, as a member of its executive committee and as chair of its operating committee. Before joining Chicago-based Ziegler in 2007, she practiced law at Locke Lord Bissell and at Liddell. She is the founder of Just4Girlfriends, a global organization that creates networks for women to embrace self-care and self-preservation via supportive networking experiences while forming important professional connections.

Kathy Deighan leads the legal department at Elkay, a 101-yearold international plumbing and interior systems business, offering consumer products such as sinks and drinking solutions as well as design, sourcing, construction and construction-management services. Her department handles acquisition, joint venture and other major business transactions, negotiates contracts, manages litigation and provides day-to-day legal

advice. She also advised on COVID protocols at Elkay’s multiple locations. Before becoming general counsel, Deighan was the first corporate attorney at Downers Grove-based Elkay. Prior to that, Deighan worked at Dean Foods, primarily in acquisition work, and started her career as an associate at Lord Bissel & Brook.

Pedro DeJesus leads Tampico through legal matters that include mergers and acquisitions, corporate compliance, intellectual property management and HR functions. As head of international business, he led the acquisition of a bottling manufacturing facility in Texas in 2021. A frequent speaker on the experience of Hispanics and Afro Latinos in corporate America, he works with the Tampico Foundation to provide funding for not-for-profit organizations working to support communities of color. Before joining Chicago-based Tampico, DeJesus was corporate counsel at Information Resources. He works with the Latino Corporate Directors Education Foundation, the Hispanic Lawyers Association of Illinois and Hispanic Lawyers Scholarship Fund of Illinois. DeJesus is on the board of Lake Forest Bank & Trust and is a Lurie Children’s Hospital trustee.

Brett Gerry is Boeing’s senior legal adviser, leading its law department as well as its principal ethics and compliance organizations. He led Boeing’s litigation after the grounding of the 737 Max and guided the company’s resolution of an investigation by the Department of Justice. Since joining the company in 2008, he has served in various senior positions, including vice president and general counsel for Boeing Commercial Airplanes; before that, he was chief counsel to Boeing’s network and space systems businesses. He also served for three years as president of Boeing Japan. Gerry came to Boeing after holding several senior positions in the U.S. Department of Justice (including chief of staff to U.S. Attorney General Michael Mukasey) and the White House (associate counsel to the president).

As the first general counsel for Heartland Alliance, Julie Getzels is tasked with building the legal department at one of Chicago’s largest human service agencies. The organization (five separate companies with 1,700 employees in multiple states and countries) has a broad focus that includes delivering health care, housing and legal services to immigrants. Getzels served as the Art Institute of Chicago’s executive vice president, general counsel and secretary for 16 years. Before that, she was the first general counsel at Weiss Memorial Hospital, and she also worked as a chief assistant corporation counsel in the city’s Law Department and as an assistant U.S. attorney. Getzels sits on the advisory council of the University of Chicago charter school in Bronzeville and on the board of Seminary Co-Op Bookstores.

Kirkland & Ellis is proud to join in congratulating our friend and client

Brett Gerry of Boeing on being recognized as one of Crain’s Notable General Counsels of the year.

Kirkland & Ellis LLP | 300 North LaSalle, Chicago, IL 60654 +1 312 862 2000 | www.kirkland.com

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KAREN HARRIS

KEITH HORTON

LILIANNA KALIN

MOHIT KALRA

CRISTEN KOGL

Senior vice president and general counsel Illinois Health & Hospital Association

General manager and general counsel Camelot Illinois

General counsel College of DuPage

General counsel and chief privacy officer Numerator

Chief legal officer Zebra Technologies

Karen Harris’ department provides legal guidance for all IHA entities, covering corporate governance, insurance coverage, contracts, intellectual property, HIPAA privacy and security, antitrust, employment law, and nonprofit and tax-exemption issues. She was at the center of Illinois’ response to COVID-19, coordinating the state’s 200 hospitals with local, state and federal agencies, helping draft state executive orders, filing amicus briefs and requesting regulatory

As general counsel at Camelot Illinois, the private manager of the Illinois Lottery, Keith Horton handles litigation, procurement, intellectual property, compliance and regulatory-affairs functions. In 2020 he oversaw the company’s transition to a predominantly work-fromhome operation, overhauling Camelot’s policies, deploying technology and managing the legal and technology teams responsible for the lottery’s first new game launch in eight years. Before joining Camelot, he served as the general counsel and ethics officer for the Illinois state treasurer, implementing public-private partnership programs. He is vice president and secretary of the Yale Club of Chicago Foundation, which provides financial aid to Chicago-area students, and is active in Black Shop Friday, a campaign to support local Black-owned businesses on the day after Thanksgiving.

waivers to enable hospitals to respond to the pandemic. She helped hospitals obtain PPE and testing supplies and also worked to establish drive-thru testing facilities and vaccination sites. She was appointed colead of IHA’s health disparities activities in June 2020.

Lilianna Kalin handles a range of issues at College of DuPage, including employment and labor law, compliance with regulatory agencies and contract law. She also manages outside counsel on litigation matters, provides legal guidance to the board of trustees and manages Freedom of Information Act matters. Kalin developed the college’s first freedom of speech policy and negotiated successor contracts for full-time faculty, operating engineers, and police and classified employees. Before

joining College of DuPage, she served as senior labor and employment counsel for the Cook County Health & Hospital System and worked with the Cook County state’s attorney’s office prosecuting narcotics cases.

Mohit Kalra’s legal team works on consumer-sourced data-privacy compliance, commercial negotiations, intellectual property, and mergers and acquisitions issues for Numerator, a market-research company serving Fortune 500 clients. He leads efforts to ensure data privacy and collection practices that comply with all laws as well as global programs covering M&A efforts. He also has been working with HR on COVID-related changes. He is a founding executive sponsor of Numerator’s Culture, Belonging, Inclusion & Diversity Council. A Harvard Law graduate, Kalra spent 13 years at Google as senior counsel. He’s on the board of the Chicago chapter of College Possible and works with Cradles to Crayons. He’s been a guest lecturer at Northwestern University’s Law School and was a Public Interest Law Fellow at the Bluhm Legal Clinic at Northwestern.

Cristen Kogl oversees the global legal practice at Zebra Technologies, a member of the S&P 500. This includes environmental health and safety, trade, privacy and compliance, as well as all matters related to securities, governance, M&A and government affairs. She co-led Zebra’s legal response to COVID-19, including activating the business-continuity program before the virus became a pandemic and spearheading an analysis of the 9,000-person worldwide workforce to issue personalized letters stating exceptional work allowances for essential employees. She also oversaw an acquisition, negotiated multiple commercial deals and spearheaded an effort to secure refunds from U.S. Customs after the imposition of Section 301 tariffs. Before joining Lincolnshire-based Zebra in 2015, she served in various leadership roles at W.W. Grainger, ServiceMaster, National Express and Spyglass.

CONGRATULATIONS TO

NICK CHULOS Named one of Crain’s 2021 Notable General Counsels

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18 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

ELENA KRAUS

LAURA LAZARCZYK

STEPHEN LEVY

JAMES L. MARVIN

DAN MCSHANE

Senior vice president and general counsel Walgreens

Executive vice president, chief legal officer and corporate secretary Zurich North America

Executive vice president and chief legal officer Senior Lifestyle

Executive vice president and general counsel John Bean Technologies

Chief strategy officer and general counsel The McShane Cos.

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As general counsel at Walgreens, Elena Kraus’ responsibilities include regulatory and commercial legal advice and counsel, mergers and acquisitions, litigation and health care-services legal support. Walgreens played an integral role in U.S. COVID-19 testing and vaccination efforts, and the legal department advanced these goals working to develop contracts with CDC on long-term care and with the Federal Retail Pharmacy program, as well as contracts for community-based testing in partnership with the Department of Health & Human Services. Previously, Kraus was at Rudnick & Wolfe (now DLA Piper), advising Walgreens’ leadership. She provides legal services to the Center for Disability & Elder Law, the National Immigration Justice Center and Equip for Equality, advocating for the civil rights of people with disabilities. She’s also a sponsor at the National Association of Minority & Women Owned Law Firms.

In the past 18 months, Laura Lazarczyk established a committee to enhance legal operations at Zurich North America in Schaumburg, inspiring similar initiatives in other regions. The team implemented AI to reduce manual entry of subpoenas into the tracking system by 80 percent, freeing paralegals to perform higher-value work. They streamlined legal metrics to an interactive dashboard, and she onboarded a legal technology vendor to more easily connect Zurich attorneys with pro bono service opportunities. Lazarczyk sponsored a new D&I committee and collaborated with the National Association of Minority & Women Owned Law Firms to broaden the slate of women- and minority-owned law firms for engagement as outside counsel. She was selected to serve on the Federal Reserve Board’s insurance policy advisory committee when it formed in 2019.

As a principal and member of the board of managers at the senior housing provider, Stephen Levy collaborated with staff, investors and vendors in the response to COVID. That involved keeping residents and staff safe, procuring PPE and developing procedures and protocols for community access, testing, vaccination and infection control. Over the past 23 years, Levy has worked with public and private REITS, private-equity and venture-capital firms, high-networth individuals and family offices to orchestrate and close more than $3 billion in real estate transactions while leading the company’s compliance, licensing, risk management and legal functions. He is on the legal committee of the American Seniors Housing Association and the legal and governmental affairs committee of Argentum, formerly the Assisted Living Federation of America.

As a leader on the executive leadership team, James L. Marvin helped the diversified manufacturer navigate the pandemic as well as the appointment of a new CEO last year. Marvin has advocated for diversity and inclusion at the company—his legal team of six includes three women of color, an African American man and an LGBTQ man. He’s also led efforts to participate in pro bono work. JBT’s legal department teamed with the Dykema law firm and the National Immigrant Justice Center to participate in several clinics. Legal department staff members assisted undocumented immigrants who were brought to the United States as children prepare and file renewal applications to continue their status under the Deferred Action on Childhood Arrivals program. Marvin joined JBT predecessor FMC Technologies in April 2003.

In concert with other senior leaders, Dan McShane crafted policies to safeguard the health of employees and continue on-site construction operations throughout the pandemic. “I never thought, when I was in law school, that my job would one day involve driving my own toilet paper to our job sites so that we could keep our port-a-potties supplied,” McShane says. He also kept his eye on the bigger picture, positioning the Rosemont-based firm to capitalize

on growth opportunities in the industrial and multifamily housing sectors that arose in the second half of 2020. He guided his family through the complexities of business continuity and estate planning and shepherded the transfer of ownership to the second generation.

Congratulations!

CF Industries congratulates Doug Barnard on the well-deserved recognition as a 2021 Notable General Counsel!

Douglas C. Barnard Senior Vice President, General Counsel, and Secretary

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Thank you for the vital role you have played in shaping today’s CF Industries. Your strategic leadership, sound counsel and interdisciplinary interests have helped lead CF Industries through its transformations from co-op to publicly traded company to world’s largest producer of ammonia and now to our next evolution as a provider of clean energy to feed and fuel the world sustainably. Your work is helping us transform for generations to come.

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MICHAEL MCVICKAR

JENNIFER NICHOLS

DHARMA PATEL

AMY PEÑA

ADRIENNE PITTS

General counsel Origin Investments

Senior vice president, general counsel CRG Integrated Real Estate Solutions

General counsel Unite Here Health

General counsel Chicago Community Trust

General counsel Loop Capital

With tens of thousands of hospitality workers displaced during the pandemic, Dharma Patel has worked to extend benefits. UHH is a multiemployer Taft-Hartley trust fund that provides health care to 225,000 employees and dependents in the hospitality industry. She advised executive leadership and the board on changing conditions, including how to make 100 percent federally subsidized COBRA coverage available to a large number of participants. Patel has advised the fund about how to promote testing and vaccinations to members. Earlier, she managed the due diligence for five health plan mergers into UHH. Most recently, she helped guide staff on new requirements related to the CARES Act, Families First Coronavirus Rescue Act and American Rescue Plan Act. Patel joined UHH as a pension project leader in 2001.

At the Chicago Community Trust, Amy Peña supported the development of the Chicago COVID-19 response fund with United Way of Metro Chicago. More than 6,000 donors raised $35 million for the region. Over the past year, the trust distributed grants to more than 400 organizations providing emergency services to people most affected by COVID-19. Peña provides legal guidance on board governance, nonprofit tax, donor-advised funds, complex gift transaction, lobbying, trademarks and risk management. Before joining the trust in 2019, Peña was general counsel of Lions Clubs International. While at Lions, she was responsible for forming nonprofit entities in Brazil and Japan and advised on issues related to remote offices in India, Japan and South Korea. Peña is on the advisory board of the Chicago Blackhawks Foundation.

In the past 18 months, Adrienne Pitts has helped manage one of Loop Capital’s investments, the Michael Reese redevelopment in Bronzeville, providing counsel to the venture working to revitalize the neighborhood. Following the death of George Floyd, Pitts wrote a Chicago Tribune op-ed highlighting racial injustice, particularly when it comes to policing young Black men. She has mandated that vendors use talent from diverse backgrounds for Loop work. Pitts joined Loop Capital in 2016 from Baker McKenzie, where she was principal and did pro bono work to help homeless youth for the Chicago Coalition for the Homeless. She began her career at Winston & Strawn, where in 2003 she was elected the firm’s first Black female litigation partner. Pitts is on the World Business Chicago Legal Advisory Board.

At the private-equity real estate investment firm, Michael McVickar has helped develop new investment products such as the QOZ fund, which focuses on tax-advantaged multifamily ground-up developments. The fund invests in opportunity zone projects in Chicago, Denver, Phoenix, Houston and Charlotte, N.C. Origin recently launched the multifamily credit fund that invests in mortgage-backed securities issued by Freddie Mac. The company uses crowdfunding strategies to bring its fund offerings to individual investors who lack access to institutional quality real estate investments. Before joining Origin in 2015, McVickar was vice president and senior associate general counsel at General Growth Properties. He is principal French horn in the Chicago Bar Association Symphony Orchestra and is a founding member of an all-lawyer woodwind quintet that has played together for 30 years.

Jennifer Nichols joined the privately held development firm in December. CRG has developed more than 9,000 acres of land and delivered 200 million square feet of commercial, industrial, institutional and multifamily assets exceeding $12 billion in value. Previously, Nichols was vice president and general counsel at Portland, Ore.-based Harsch Investment Properties. She’s helped acquire, finance, develop and sell more than $1 billion of real estate in the past two years. Earlier, she was deputy general counsel at Banner Real Estate Group in Northbrook. She won a pro bono adverse possession case on behalf of several elderly people who were at risk of losing their land to the tax assessor for nonpayment. Nichols is co-chair of the in-house committee for the Coalition of Women’s Initiatives in the Law.

Chief Strategy Officer and General Counsel

The McShane Companies would like to congratulate all of the Crain’s 2021 Notable General Counsels.

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‘Unconscious bias is the obstacle’ Adrienne Pitts grew up in Dayton, Ohio, and was inspired by classmates at the University of Pennsylvania to pursue a law degree. She began her career at Winston & Strawn, where she was elected the firm’s first Black female litigation partner in 2003. When Pitts began practicing law in Chicago in the mid-1990s, there were approximately seven Black female partners out of 4,000 law partners in the city’s law firms. When she was elected partner, the number had grown to about 25 out of 4,500. She went on to serve as an equity partner at Sidley Austin and principal at Baker McKenzie before joining Loop Capital in 2016. CRAIN’S: What were the obstacles you faced as a Black woman attorney in the 1990s? PITTS: One of the biggest obstacles was being alone, not seeing others like you succeeding. When you walk into an organization, a conference room, a boardroom or a courtroom and everyone looks like you, you have a certain confidence that you belong. How did you overcome that feeling of being alone? You had to develop and harness that confidence elsewhere and bring it with you. I did that with the support of family

and friends. I knew I had the same, if not greater, talent and skills as the majority associates. I just needed the opportunity to shine, and I sought out those opportunities. That is a big difference—the work comes to white associates, but Black associates have to seek it out and wear their credentials on their sleeves even though they have been recruited and hired by the same firm. In the end, the partners I worked with at Winston were very supportive. How would you describe the law profession’s pace of change in embracing Black lawyers? Glacial. Unconscious bias is real, and the adage that Blacks have to work twice as hard and be twice as good to receive the same treatment as white lawyers remains true. And that is what I believe is the real culprit and obstacle to greater diversity in the legal profession—not pipeline issues. Have you experienced a sea change in the past year following the George Floyd murder? I do not think there has been a sea change in racial and social justice; the sea change may be in the awareness of the racial and social injustices facing Black, Indigenous and the AAPI—Asian

American and Pacific Islander—communities. But even our country’s racial history to our current treatment and realities seem up for debate among politicians. Nevertheless, I’m encouraged by some in academia, business and law to act and move faster to recognize our country’s racial history and reckon with it instead of pretending it doesn’t exist. What else is needed? What do law firms need to do differently? Recruit from schools, including HBCUs—historically Black colleges and universities—that have more diverse law students. Recognize the struggles facing solo minority associates and make sure you target your recruiting to grow those numbers so they see more of themselves. Make sure the pipeline to partnership is fair and equitable and mentor potential partners the same across the board. Hold the biggest rainmakers accountable for using diverse teams, exposing your firm’s racial diversity to important clients. And plan so that the relationship and billing partners are diverse, providing a pathway for young Black partners to become senior, with substantial books of business. In essence, do for minority lawyers what you do for majority lawyers. It requires deliberate, thoughtful action.

ANDY POLOVIN

General counsel Tempus Labs

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Since joining Tempus Labs in June 2020, Andy Polovin has helped close an investment from Google and a $200 million fundraising round that valued the firm at $8.1 billion. The young health care technology company uses AI to advance precision medicine. Polovin helped launch new products, including a hereditary genetic test and an at-home COVID test. He also helps lead efforts to establish partnerships with health care institutions. Before joining Tempus, Polovin was general counsel at the industrial data analytics firm Uptake. Earlier, he was a federal prosecutor and was lead investigator on a terrorism case stemming from arson at an Aurora Federal Aviation Administration facility and a drug trafficking investigation that seized more than 165 kilograms of heroin. Polovin is on the board of the Chicago legal aid organization CARPLS.

College of DuPage salutes Lilliana Kalin, recognized as Crain’s Notable General Counsel, for her commitment to our college and our community.

Thank you. “Being a lawyer is not merely a vocation. It is a public trust, and each of us has an obligation to give back to our communities.” —Janet Reno

Lilianna Kalin General Counsel

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MEREDITH RITCHIE

JIM ROGERS

MOLLY RYAN

TRACEY SALINSKI

LAURA SCHUMACHER

Senior vice president, general counsel and government affairs officer Alliant Credit Union

Chief legal officer Cars.com

Vice president and general counsel Berkshire Hathaway HomeServices Chicago

General counsel and senior vice president, legal DuPage Medical Group

Vice chairman, external affairs and chief legal officer AbbVie

Molly Ryan was instrumental in crafting a pandemic response and tools for the real estate brokerage firm to operate as an essential business. She established consistent safety protocol and business expectations for agents, buyers and sellers. In the face of increasing wirefraud schemes, Ryan leads the company’s first-responder team for wire-fraud issues at real estate closings. As last year’s events brought attention to racial inequality, Ryan coached the company’s training and communications leaders to establish relationships with the Chicago Housing Authority and Freddie Mac. She teamed with a CHA leader at a companywide meeting to dispel myths about federal housing vouchers for low-income families and show brokers how expanding landlord participation would create business opportunities. Ryan is on the executive committee of Midwest Real Estate Data.

During the past year, Tracey Salinski worked with colleagues at the Downers Grove-based physician group to navigate the pandemic impact to doctors, staff and patients. Her department of 57 includes legal, compliance and risk management functions. Salinski led discussions with the city of Chicago’s legal team to negotiate agreements ensuring that physician and health care services are available to Chicagoans and local hospitals and health systems. Salinski developed expertise in health care representing health care providers and systems. Before joining DuPage Medical Group in 2019, she was associate general counsel for the U.S. hearing instrument segment for Swiss-based Sonova Group. Earlier, she was a partner at Arnstein & Lehr. She’s mentored other female lawyers as part of her involvement in the Illinois Association of Healthcare Attorneys.

At biopharmaceutical giant AbbVie, Laura Schumacher leads 700 legal and external affairs department employees who resolve government investigations, develop strategies for intellectual property and handle regulatory compliance. In the past year, Schumacher’s team navigated the response to COVID on legal, contract and supply issues. That involved stay-at-home orders, employee safety and donations of PPE. Responding to the heightened national spotlight on equity and diversity, Schumacher led donations of than $50 million to underserved Black communities in the U.S. as well as $35 million for COVID relief. Schumacher has handled legal issues for North Chicago-based AbbVie and predecessor Abbott since 1990. She is on the board of California cybersecurity company CrowdStrike. And she is chair of the board compensation committee at Virginia-based General Dynamics.

Last year, Meredith Ritchie was responsible for onboarding a new CEO and was promoted to the executive team. Alliant is the sixth-largest credit union in the country, with $14 billion in assets. She is also chief ethics and government affairs officer. Ritchie was appointed president of Alliant Credit Union Foundation, which she helped found 10 years ago. Earlier, she was point person in preparing Alliant for the higher level of regulatory scrutiny and compliance required of financial institutions when they reach $10 billion in assets. Ritchie also launched Alliant’s women’s employee resource group. She is on the Fenwick High School board and is co-chair of the governance subcommittee of the American Bar Association credit union committee. She joined the credit union in 2007 from Accenture.

When the pandemic set in, Jim Rogers engaged a law firm to lobby for automobile dealers to be classified as essential business. He also handled the legal aspect of workforce furloughs and the move to remote work. He supported the company’s increased focus on diversity, which included tying compensation to DEI goals. While working with the nominating and governance committee, Rogers collaborated with other leaders add diversity to the board. The company reached out to the National Association of Minority Automobile Dealers and provided marketing benefits to minority dealers. Rogers joined Cars.com in 2017 and help guide the company’s spinoff as a publicly traded firm, grow through an acquisition and establish a $900 million credit facility. For 18 years, he was on the Appleseed Network board.

Elkay is proud to recognize the outstanding legal minds across Chicago working tirelessly every day to help the businesses in our city thrive! As a Chicago-based company celebrating our 101st year, we know a thing or two about what it takes to be in business forever. Great leadership and sound advice are often a business’ greatest assets. That’s why we are pleased to recognize our own Kathy Deighan among your ranks today. A calm, cool, intelligent leader and friend, Kathy has been a trusted advisor, and an incredible force for good within our business. We would not be who we are today without her.

Thank you, Kathy and Congratulations! Kathleen J. Deighan, Vice President General Counsel and Corporate Secretary www.elkay.com

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22 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

KEVIN SHERLOCK

MATTHEW SIMMONS

DEBORAH SOLMOR

ANN SPILLANE

KATHRYN STIEBER

General counsel and corporate secretary SpotHero

General counsel Metropolitan Pier & Exposition Authority

General counsel and corporate secretary TCS Education System

General counsel Office of Illinois Gov. J.B. Pritzker

Vice president, general counsel and secretary DePaul University

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During the past year, Kevin Sherlock was the legal lead for SpotHero’s acquisition of Rover Parking and for the integration of Apple CarPlay. As a member of the senior leadership team, he helped navigate the pandemic. He was a member of the return-to-office committee and part of the team that reviewed diversity and inclusion. Earlier, he was legal lead for SpotHero’s $50 million Series D round that closed in fall 2019. Sherlock has been a volunteer attorney for the Wills for Heroes program, organized by the Wills for Heroes Foundation, to provide estate planning documents free to veterans and first responders. He’s a founding member of TechGC, a private, invitation-only organization for general counsels of leading venture-capital firms and venture-backed technology companies.

As general counsel for the organization that owns and operates McCormick Place, Matthew Simmons handles matters ranging from construction to food service. At the start of the pandemic, Simmons’ department represented MPEA in establishing an alternate care facility at McCormick Place. This involved a $64 million construction transaction with the U.S. Army Corps of Engineers in coordination with other government units. During its 2020 fiscal year, MPEA exceeded its diversity goals, achieving 33.6 percent participation from minority business enterprises and 13.8 percent from women-owned firms. Simmons is on the Chicago Sports Commission and was a member of the host committee for the NBA All-Star Game in February 2020. He joined MPEA in 2015 from Mayer Brown and was named general counsel in 2019.

During the past year, Deborah Solmor provided counsel related to workplace safety, employment and a move to remote learning at the nonprofit system of six colleges and universities. She is an integral part of the COVID-19 crisis response and return-to-office teams. Solmor provided guidance to support the Chicago School of Professional Psychology’s acquisition of TCS affiliate Dallas Nursing Institute, now known as the College of Nursing & Advanced Health Professions. And she was instrumental in the development of the Kansas Health Science Center’s proposed Kansas College of Osteopathic Medicine. Before joining TCS in 2018, Solmor was chief compliance officer at Career Education, now Perdoceo Education. She’s a member of the Women’s Bar Association of Illinois and is co-chair of the in-house counsel committee.

At DePaul University, Kathryn Stieber leads a team of five attorneys handling issues ranging from canon law to athletics. As secretary, she is an executive officer and leads the team that facilitates the business of the DePaul board of trustees. Over the past year, Stieber’s team responded to issues stemming from the COVID-19 pandemic, including the campus shutdown and reopening, the move to remote work and the impact on foreign students and students studying abroad. Stieber joined DePaul in 2005 and was named to her current position last year. Earlier, she was an associate at Jones Day, where she handled labor and employment matters. She is a founding member of Theater Wit and has been board president since 2004.

O Te ti

Ann Spillane has been central to the state’s pandemic response and related legal issues. She advised on legislation to address systemic racism, including the criminal justice reform bill that eliminated cash bail. She has been instrumental in addressing issues of racial inequality in state government, including a statewide diversity and inclusion initiative. Before joining the governor’s office, Spillane was chief of staff to Attorney General Lisa Madigan for 16 years and was the first female chief of staff in that office. Spillane oversaw the recovery of hundreds of millions of dollars for mortgage fraud victims and established a unit to assist identity theft victims. As a volunteer attorney at Chicago Volunteer Legal Services, she’s handled adoptions and guardianship cases and is currently on the advisory board.

Driven Dedicated The Illinois Health and Hospital Association celebrates our very own,

Karen Harris, as she is recognized

as a Notable General Counsel of 2021. With passion and expertise, Karen delivered for Illinois hospitals and health systems on the most challenging issues of the past year—caring for patients during the pandemic and addressing racial disparities in healthcare.

Thank you, Karen. You are an asset to IHA, our members and the communities they serve!

Just as IHA honors our colleague for her excellence, we also honor IHA members for their extraordinary efforts battling the pandemic.

See our video at vimeo.com/547516516

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ANNIE TERRY

BRIAN VANDENBERG

GEORGIA VLAMIS

WANJI WALCOTT

BRYAN ZAIR

Managing director, general counsel and chief compliance officer Madison Dearborn Partners

Senior vice president and general counsel American Medical Association

Senior vice president, general counsel and corporate secretary USG

Executive vice president, chief legal officer and general counsel Discover Financial Services

Senior vice president, chief legal officer, assistant secretary Sasser Family Cos.

Over the last 18 months, Annie Terry has dedicated significant time to accelerating ESG—environmental, social and corporate governance— efforts at the private-equity firm. That includes the formation of an ESG committee, adoption of an ESG policy and providing guidance to the firm in evaluating ESG considerations as part of diligence for acquisitions and monitoring portfolio companies. An inaugural ESG report was issued in April. Terry has led the legal aspects of fundraising efforts for Madison Dearborn’s eighth private-equity fund, which includes negotiating governing agreements with investors, including pension plans, sovereign wealth funds and university endowments. She’s also been involved in the creation of diversity, equity and inclusion working groups evaluating new practices. Terry is on the Legal Aid Chicago board and chairs its audit committee.

At the AMA, Brian Vandenberg diversified the general counsel’s office with women of color in leadership positions. His office has advocated on health equity issues including access to care, gun violence, immigration-related issues, women’s health and LGBTQ protections. Vandenberg established a program to increase the AMA’s retention of outside counsel from diverse backgrounds. Vandenberg’s department helped navigate community involvement as the AMA joined the West Side United collaborative as an anchor partner and deepened its relationship with Rush University Medical Center. The organization committed $2 million over two years for loans to community development financial institutions, which will lend those funds to businesses and nonprofits on the West Side. Vandenberg joined the AMA in 2017 from Livongo Health. He is on the board of the Chicago Children’s Choir.

Georgia Vlamis joined the century-old manufacturer in the midst of the pandemic last year. She helped guide the company in managing a remote workforce, navigating shutdown orders and complying with COVID-related laws and regulations. The maker of wallboard and other building products employs 6,900 and operates mines, quarries and manufacturing facilities. Vlamis coordinated with USG departments to develop safety standards and protocols to protect employees and customers. She has focused on diversifying outside counsel as well as in-house attorneys. Vlamis previously was vice president and general counsel at FreightCar America and also headed human resources. Earlier, she held legal positions at Motorola and successor Motorola Solutions, most recently as vice president and head of litigation. Vlamis has spoken on professional panels on leadership and the role of general counsels.

In response to the pandemic, Wanji Walcott worked to respond to the changing needs of Discover’s customers and fast-moving developments in Washington and across the states. She focused on helping Discover customers maintain access to credit in the face of job loss and economic uncertainty. Following the heightened awareness of racial injustice, Walcott was named executive co-sponsor of a new diversity, equity and inclusion task force. She works with Discover’s DEI office to develop and execute a plan to foster a more inclusive environment, achieve a more diverse workforce and increase impact through programs to benefit employees, customers and communities. She is the executive sponsor of Discover’s Latino employee resource group. Walcott joined Discover in 2019 from PayPal, where she was senior vice president and general counsel.

Early in the pandemic, Bryan Zair teamed with the HR department to comply with COVID regulations and ensure safe workplaces for employees at the Schaumburg company specializing in transportation asset leasing and management. He worked to amend credit agreements to provide financial flexibility and crafted creative approaches to allow Sasser to provide relief to customers affected by shutdowns. He also worked with the board to create a committee to evaluate environmental, social and governance principles for the company. Zair co-led the company’s recent divestiture of its Australian rail business and has been involved in structuring securitizations, secured lending facilities and joint ventures. Before joining Sasser in 2017, Zair was a partner at Jones Day and led the M&A practice for the firm’s Detroit office.

Congratulations to Burke, Warren, MacKay & Serritella, P.C.’s nominee, KATHRYN STIEBER of DePaul University, who was chosen by Crain’s Chicago Business as one of the Notable General Counsels of the year. Kathy consistently demonstrates outstanding leadership of her team of remarkable attorneys.

www.burkelaw.com

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WEALTH MANAGEMENT

ESTATE PLANNING ISSUES AND OUTLOOK

The COVID-19 pandemic underscored the importance of estate planning, as individuals realized their own mortality—perhaps more than ever before. Four Chicago-area executives involved with the process shared their insights on creating (or revising) a comprehensive estate plan so that in the event of incapacity or death, one’s wishes can be heard and carried out.

How is your organization involved with estate planning? Kathryn Kennedy: As a comprehensive wealth management firm, Cerity Partners believes estate planning is integral to the complete financial health of a family. We encourage our clients to address estate planning issues and we work with them to determine their goals for their assets in the event of their death or incapacity. As financial advisors, we’re in a unique position to have a deeper understanding of a client’s entire financial picture, so we can help facilitate the conversation between clients and attorneys, review and monitor the entire process and oversee the implementation of the final plan.

Karen R. Mills: Aronberg Goldgehn’s estate planning and probate litigation attorneys work closely with clients to create a comprehensive plan ensuring that their wishes are put into effect upon incapacity and death. We design estate plans to avoid litigation during the client’s lifetime and after they pass away, and where litigation is unavoidable, we have significant experience in estate and trust disputes. Finally, we work closely with our clients’ other trusted advisors to clarify and facilitate estate planning wishes to give them and their families peace of mind.

traumatic experiences. As a nonprofit, we receive donations from a variety of sources, including a large number of charitable bequests from donors’ estates. In fact, posthumous gifts make up nearly 25 percent of Mercy Home’s operating budget each year—a significant sum driven by a strong belief in our mission and the desire to leave a legacy for children in need. We have a team of philanthropic advisors committed to showing donors how to leave a charitable bequest and still provide for their own families, while also limiting tax exposure for their heirs.

and “qualitative” estate planning. Prior to the higher estate tax exemptions that came into effect in 2018, our team was more focused on the quantitative results on a client’s death. Today’s higher exemptions mean that fewer clients have estate tax issues, but those same clients are still transferring a meaningful amount of wealth. Regardless of whether an estate tax exists, making sure that our clients understand how their plans are designed and the options available give them the confidence to make informed decisions regarding their estate planning documents.

Phil Zielinski: Mercy Home is a children’s charity in the heart of Chicago that offers solutions for kids affected by abuse, neglect, violence, homelessness or other

Rebekah Berry: Baird’s estate planning department has evolved over the last two years, doubling the number of estate planners and increasing the focus on education

What’s the most common question or concern you hear about the process?

Discover the power in partnership For decades, Baird has been a trusted financial partner to families like yours. Our only priority is a thorough understanding of your needs and concerns – what’s most important to you. Let us put a century of insight and expertise to work for you.

bairdchicago.com 800-79-BAIRD

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Mills: Clients want to know how to address family issues. Blended families, past relationships, a special needs child or an addicted family member can seem unresolvable to clients. Not knowing where to start can paralyze a client and we communicate the importance

our estate planners is their ability to make it easier for clients to understand the documents. While reviewing drafts with clients, our estate planners ask questions to make sure clients know what the plan is stating and to confirm that it accurately reflects what they want. Kennedy: People often assume that estate planning only needs to be done once. But the reality is an estate plan may change over time. To accommodate the inevitable changes in life, most of the documents that we help to create are very flexible. No estate plan can anticipate every single possibility, but a strategic and welldrafted plan will have significant flexibility to help a family negotiate the challenges ahead. With that in mind, there’s great value to having one’s wishes memorialized. We monitor established estate plans to ensure that they’re still achieving the clients’ goals as both legislative environments and family dynamics may shift.

“THE UNPREDICTABILITY OF THE PAST YEAR AS WELL AS THE PROXIMITY—AND DISTANCE—OF FAMILY HAS BROUGHT SPECIAL FOCUS ON THE NEED TO PLAN.” —KATHRYN KENNEDY, CERITY PARTNERS of creating a plan that works for them and their family members. Occasionally, spouses don’t agree and as such, they want to avoid dealing with conflict. During client meetings, we listen, acknowledge what we’ve heard and assure them that we can develop appropriate solutions for their particular needs. Berry: People wonder how they’ll know if the attorney captured everything that they wanted inside their estate plan. We review draft documents with clients to ensure that their wishes are being addressed. Breaking down the legalese of estate planning documents can be challenging. One advantage of working with

Zielinski: Most people who reach out to discuss their estate plan are looking to add a charity to their list of beneficiaries and are wondering how best to go about this. Often, it’s as simple as adding their favorite charities as “residual beneficiaries” in the trust—in other words, after all friends and family receive specific gifts, the rest falls to charity. But others ask how best to divvy specific assets between loved ones and charities. It’s usually best to leave untaxed assets such as a brokerage account to family members, and name a nonprofit as the beneficiary of any highly-taxed assets, such as a retirement plan. This way, children will receive the full value of their parents’ stock portfolios. And the

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ABOUT THE PANELISTS REBEKAH BERRY is associate branch manager at the Elgin office of Baird, a multinational independent investment bank and financial services company. She provides private wealth management strategic direction—from the development of the plan itself to the execution of the action steps necessary to achieve a successful outcome. She has more than 20 years of industry experience and is a certified financial planner (CFP) and certified divorce financial analyst (CDFA).

Partners, we want you as our client to understand the complexities of the current financial, legal and tax landscape. We believe our role is to see the big picture and ultimately keep your team of professionals in sync with your goals and needs. Mills: We like to remind our clients that a well-planned estate plan is one of the most thoughtful gifts they can give their loved ones. We work closely with clients to ensure that their wishes are heard, that their questions are adequately addressed and that sound decisions are made surrounding their plan. While creating an estate plan may seem like an overwhelming process, the burden can be eased by the individual identifying who they’d like to help them if they’re incapacitated and after they pass away, what their estate consists of, who their beneficiaries are and what they’d like them to receive upon their death.

KATE KENNEDY is a Chicago-based partner at Cerity Partners, a wealth management and retirement consulting firm with offices nationwide. She leads the firm’s Midwest executive financial counseling practice, providing comprehensive wealth management services to corporate executives and high-net-worth individuals and families. She has more than 27 years of industry experience, including financial counseling, taxes, investments, wealth transfer plans and charitable initiatives. She is a certified public accountant (CPA), a certified financial planner (CFP) and a member of the Illinois Bar.

KAREN R. MILLS is a member of Aronberg Goldgehn, a full-service business law and litigation firm with offices in Chicago and Wheaton. She concentrates her practice on estate planning, trust and estate administration, probate litigation, special needs planning, asset protection and guardianships for minors and disabled adults. Earlier in her career, she spent nearly 20 years at JPMorgan Chase and BMO Harris Private Bank advising clients on trusts, estates, guardianships and wealth management issues.

a minimum, individuals recognize that they should have powers of attorney for health care and property. The pandemic has brought the realities of incapacity and death front and center for many clients. Zielinski: Since the beginning of the pandemic, we’ve seen a dramatic increase in the number of donors interested in leaving a legacy gift to the kids at Mercy Home. This past year has given us all a chance to think about our own lives, values and legacies, and reflect on what’s most important to us. After all, a core question your estate plan should seek to answer is, “How will you define your own legacy?”

Berry: The long-lasting effect will surely be in the charitable giving space. More than ever, communities need the support of their charitable partners. As we’ve seen with the CARES Act, the government is providing tax breaks for individuals and corporations that are making cash donations to

PHIL ZIELINSKI is director of philanthropy for Mercy Home for Boys & Girls, a residential care facility that has served kids in crisis since 1887. He advises donors on the most tax-efficient ways to support their favorite charitable causes, whether with outright gifts of cash or through planned giving vehicles. His work emphasizes charitable bequests, retirement assets, donor advised funds and gifts of stock. He has 15 years of experience in the nonprofit sector, and is a certified fundraising executive (CFRE).

public charities. A mental health crisis is looming and charities will be asking for even more support in the coming years to combat the downstream impacts of the pandemic. The creation of rainy-day funds has never been so important and I’d anticipate that clients will try to create long-term

trusts for their heirs to provide a source of funds in the event of the unknown. Long-term trusts have historically been created to pass on wealth to the next generation and avoid a beneficiary’s predators. Now these trusts will be favored for providing cash flow during extreme economic and world events.

Kennedy: The COVID-19 pandemic highlighted the importance of being prepared in the event of a catastrophic life event. We all know someone the virus impacted, and we witnessed the adversity that little to no planning had on

“BUSINESS OWNERS SHOULD TAKE STEPS TO ENSURE THAT BUSINESS LIABILITIES DON’T PUT THEIR PERSONAL ASSETS AT RISK.” – KAREN R. MILLS, ARONBERG GOLDGEHN What long-lasting effects will the coronavirus pandemic have on estate planning? Mills: COVID-19 has caused many people to realize that life is precious, circumstances can change quickly and they need to be prepared. At

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those individuals. The pandemic brought important health care decisions to the forefront of people’s minds. Establishing these health care documents now, and talking with family members about your wishes has an immediate benefit, giving you— and them—peace of mind.

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28 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

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How the First Midwest deal will alter the market FIRST MIDWEST from Page 1 time to be the death knell for Chicago as an important banking center. But the disruption enabled midsize local lenders like MB Financial, PrivateBank, First Midwest and Wintrust to grow exponentially, both through acquisition and snatching business customers from the two giants. Starting with Private’s acquisition by Toronto-based CIBC in 2017, those players sold one by one, leaving just Rosemont-based Wintrust as the city’s business bank of scale based here. Chicago is one deal away from suffering the fate experienced over the years by smaller Midwestern cities like Milwaukee and St. Louis, which no longer host important regional or commercial banks. “We’ve adopted the moniker of Chicago’s bank, but now we are,” Wintrust CEO Edward Wehmer says in an interview. With $46 billion in assets, Wintrust has grown more than fourfold since 2007, when Charlotte, N.C.-based Bank of America acquired LaSalle. That still is middling compared with other Midwestern regional players like Minneapolis-based U.S. Bank, Cincinnati-based Fifth Third (which bought MB Financial in 2019) and Columbus, Ohiobased Huntington Bank. Chicago may be the capital of the Midwest, but it’s been a happy hunting ground for banks based in far smaller cities like Cincinnati and now Evansville. It’s a testament to the desire of many Chicago businesses and residents to bank with a truly local institution that Wintrust is among the top five in local deposit market share. Chicago-based Northern Trust, which isn’t really a business bank and instead caters to the investment needs of the wealthy and institutions, is also in the top five. The three others are JPMorgan Chase (by virtue of taking out Bank One in 2004), BMO Harris Bank (a unit of Toronto-based BMO Financial Group) and Bank of America (thanks to the LaSalle deal). Wehmer says he’s not seeking a buyer, but he acknowledges the reality of running a publicly traded company. “We’re in no rush to do anything,” he says. “We’re not for sale. If someone makes an offer we can’t refuse, we’d have to take it.”

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Find your next corporate tenant or leaser.

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Thankfully for Chicago’s banking future, acquisitive banks aren’t making those kinds of offers these days. In vogue now are noor low-premium deals like the one First Midwest accepted from Old National, which entail less brutal cost-cutting to justify the high price tag and are presented as “win-win” combinations for workers, customers and affected communities. But in First Midwest’s case, it’s difficult to see the strategy behind this transaction even though it creates a bank the size

MARKET POWER OUTAGE Old National’s merger with Chicago’s First Midwest will forge a Midwestern bank nearly $50 billion in size, yet its market share will be significant only in smallish Indiana towns. Bloomington is the biggest market where it holds at least a No. 2 position. DEPOSIT SHARE FOR COMBINED BANK* With market ranking

Bloomington, Ind. (No. 2 market ranking) 24.4% Madison, Wis. (No. 10) 3.7% Chicago metropolitan statistical area (No. 10) 2.7% Indianapolis (No. 13) 2.1% Minneapolis-St. Paul (No. 8) 1.7% Milwaukee (No. 9) 1.7% Source: Investor presentation

of Wintrust. First Midwest and Old National hardly compete with each other. Old National’s strongest market is its hometown; other markets where it’s either No. 1 or No. 2 are smaller Indiana municipalities like Terre Haute and Jasper. It has a presence in Minneapolis, Milwaukee and Indianapolis but has the equivalent impact in those places that First Midwest does in far larger Chicago.

REBRANDING

*Based on data as of June 30, 2020

suddenly will be its biggest and most important market and is one of the most competitive and fragmented in the country. “These are two different banks who’ve competed in very different markets,” says Terry McEvoy, analyst at Stephens in Portland, Maine. For years, Old National CEO Bob Jones, whom Ryan succeeded in 2019, said repeatedly he had no desire to enter the Chicago market because of its size and brass-knuckled ways. Asked what changed, Ryan told analysts that First Midwest was a rare opportunity and that Chicago has many small businesses and suburban marketplaces with which Old National is familiar. “Somebody recently asked us, how do you guys plan to be a Midwest powerhouse with no Chicago presence?” Ryan said. “I thought it was a pretty interesting question, right?” If a low-premium merger was what Scudder was after on his

Old National CEO Ryan and his First Midwest counterpart Mike Scudder, who will become executive chairman, say they’re creating a premier Midwestern bank. But most bank deals—even so-called mergers of equals— strive to become more powerful players in at least some of the affected markets. That’s not happening here. And, with the First Midwest brand being erased, the new Old National will have to rebrand in by far the most expensive market it’s in—Chicago. “WE’RE IN NO RUSH TO DO ANYTHING. First Midwest spent WE’RE NOT FOR SALE. IF SOMEONE $11.5 million on advertising and pro- MAKES AN OFFER WE CAN’T REFUSE, motions in 2019, and that dropped mod- WE’D HAVE TO TAKE IT.” estly to $10 million in Edward Wehmer, CEO, Wintrust Financial the pandemic year. Old National’s lending standards are more conser- exit from the banking industry, vative than First Midwest’s. Said there likely was another much Ryan on a June 1 call with ana- different, but potentially more lysts to discuss the deal, “I think value-creating, option available: we can afford to take more risk teaming up with Wintrust and on our side.” But where will credit creating a true Chicago powerdecisions be made? And how will house that could go toe-to-toe they change? How that’s resolved with Chase, BMO and any other often sends more business bor- lender in town, according to inrowers looking for alternatives dustry observers. That, however, than any change other than their would have entailed substantial personal banker leaving for a ri- cost-cutting and job loss given the overlap between the two. val. Scudder dismissed questions This gives Scudder a three-year about the rationale behind the employment deal as executive deal and said the two banks are chairman where he’s likely to extraordinarily similar cultural- clear $5 million or more annually. “Culture will outstrip strategy ly and the ability now to reassure the vast majority of his employany time,” he told analysts. The two CEOs may like each ees their jobs are secure. Whether that creates a premier other, but the most important issue facing the new Old National Midwestern bank is an open is succeeding in Chicago, which question.

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CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 29

AON BUILDING

200 E. Randolph St. Total taxing district debt attributed: $148,454,797 Property value: $358,136,044 Total attributed debt as % of property value: 41.5%

WILLIS TOWER

233 S. Wacker Drive, Chicago Total taxing district debt att ributed: $288,920,912 Property value: $696,999,99 6 Total attributed debt as % of property value: 41.5%

BRIDGEPOINT

WOODFIELD MALL

290

COSTAR

Ave., Cicero 1400 S. Laramie strict debt Total taxing di 62,149 ,0 attributed: $1 e: $3,253,230 Property valu ed debt as % Total attribut lue: 32.6% of property va

21000 E. Woodfield Road, Schaumburg Total taxing district debt attributed: $38,708,061 Property value: $293,001,25 2 Total attributed debt as % of property value:13.2%

Report shows each property’s share of debt PAPPAS from Page 3 to it. Municipal governments tap a range of revenue sources to repay borrowings. But local governments primarily rely on property taxes to cover many costs. General obligation bonds and pension contributions, for example, are covered almost exclusively by property taxes. Pappas’ analysis combines all debts, including borrowings for infrastructure projects, ongoing expenses and unfunded pension and other post-employment obligations for government workers. “It is an important report because it allows individual citizens, with very little effort, to identify all of the government agencies and the liabilities that attach to their property as a result of those governments, both the past levying of property taxes and likely future levying to pay for the unfunded debt and other liabilities,” says Laurence Msall, president of the Civic Federation of Chicago. He hopes the data spurs renewed conversations about consolidating units of government and statewide pension reform. In many municipalities, government debts appear overwhelming and will likely bring property tax hikes in the future to pay them off. In places like Chicago, McCook, Calumet City and Bridgeview, total debt equals

more than a third of the entire property value in the city. Overall, the office found the correlation between higher debt and higher taxes was 0.61, suggesting that taking on more debt generally results in higher taxes. “The idea behind this is for people to begin to understand that when they purchase a piece of real estate in Cook County, they are also purchasing a long-term credit card,” Pappas says. But as governments turn to property taxes to help address debt, more people will move away, she argues. “The greater the increase, the greater the exit. So we’re going to have to look at other sources of funding.” The bill isn’t due immediately. Debts are paid off over several years or decades. Pension liabilities, too, can change from year to year based on market performance and the economy. An improving economy, increased population, more development or pension reforms might reduce liabilities. On the other hand, if the fear of rising debt scares people and investment away, those figures could grow. In areas with heavy debt loads, property tax bills are already so steep that property owners will pay more in taxes than their home is worth in a relatively short period of time. For example, the owner of a $100,000 house in highly-leveraged Ford Heights will pay that much in taxes within 18 years.

According to Pappas’ report, “the annual property taxes in some municipalities are so high that homeowners end up paying far more in taxes over the course of a 30-year mortgage than they paid for the home in the first place. Take Park Forest, where the annual taxes per $100,000 of home value are $6,558. That means that the buyers of homes in that village would pay twice as much in taxes over 30 years than they paid for their homes in the first place. Other municipalities with taxes topping $5,000 per $100,000—meaning homeowners would pay as much in taxes over 20 years as they did for their homes—are Riverdale, Ford Heights, Country Club Hills and Harvey.” All five of those cities are majority-minority, highlighting another trend Pappas’ analysis found: Most of the “cities and villages with high debt-to-value ratios were in less thriving areas with predominantly minority populations and less broad tax bases.” There are 15 cities or villages where total debt equals more than 25 percent of the total property value. Of those, eight have a population that is at least 50 percent Black or Latino. Of the areas where debt equaled less than 10 percent of the total property value, all but one—East Hazel Crest—were majority white or had no racial majority.

1 10

DEBT-TO-PROPERTY VALUE PERCENTAGE

1. Rosemont 2. Riverdale 3. Chicago 4. McCook 5. Calumet City 6. Bridgeview 7. Park Forest 8. Chicago Heights 9. Cicero 10. Bellwood

9 4

48.1% 46.6% 41.5% 40.5% 37.8% 37.6% 34.0% 31.4% 30.3% 30.0%

Color key 0% to 9.6% 19.2% to 28.9%

9.6% to 19.2% 28.9% to 38.5%

5 8

38.5% to 48.1%

The map does not include unincorporated areas of Cook County. Overall, unincorporated Cook had a debt-to-property value percentage of 9.0%.

“The majority of the data really indicate that the debt burden is highest and most concentrated—from a dollar value per value of property—for communities of color than it is for more white, more affluent communities,” says Ralph Martire, executive director of the Center for Tax & Budget Accountability. And tax bills are at least 2.5 times higher for commercial property owners as they are for homeowners. In suburban high-debt, high-tax communities especially,

Martire says, it’s difficult it to attract new commercial investment, broaden the tax base and begin to dig out of the debt hole. “The only way you spread the burden is investment and growth,” says Farzin Parang, executive director of the Building Owners & Managers Association of Chicago, whose members represent about 80 percent of all rentable office space in the city. With debts already so high, “we’re out of balance to the point where it’s limiting growth.”

HOW THE TREASURER PUT TOGETHER THIS STUDY To complete the analysis, the treasurer’s office added up the debts and liabilities of all of the county’s taxing districts within a village or city. That includes outstanding bond and credit balances, unfunded pension obligations and post-employment benefit liabilities. The office requested debt information from 547 local governments in Cook County, including

P029_CCB_20210607.indd 29

cities, towns and villages; school boards and park districts; and smaller units like mosquito abatement districts. It received 467 responses. For those that didn’t, the office used the most recent figures from prior years. They added that debt—on a cash basis—and compared it to the total assessed market value of the property within that village or city. Then they created

a ratio of debt to property value, a simple percentage. To calculate an individual property’s share of debt in each taxing district, they determined what percentage of the total district property value that property represents and multiplied that percentage by the debt in each district. You can check your property at cookcountytreasurer.com.

6/4/21 3:58 PM

30 JUNE 7, 2021 • CRAIN’S CHICAGO BUSINESS

TOLMAR from Page 3 expansion plan. And it began carrying even more inventory that March to prepare for any pandemic-related supply issues that might arise. By the time the U.S. Food & Drug Administration announced the Lupron shortage in July, Tolmar was ready to supply national and global markets. Now Tolmar faces the challenge of protecting its newfound market dominance as Lupron supply returns and AbbVie’s sales force picks up where it left off. D’Souza acknowledges that while some doctors say they’ll stick with Eligard, others plan to switch back as Lupron supply returns in coming months. Eligard’s market share has slipped to around 53 percent since some dosages of AbbVie’s drug started becoming available early this year. “If we retain somewhere around 50 percent or north of the market, whatever we spent (to increase capacity) is creating great value for the company because it’s still a branded product with good margins,” D’Souza says, declining to say how much the company invested to boost Eligard production. AbbVie will have some advantages as it re-enters the market. The company has long-stand-

ing relationships with clinicians who are familiar with Lupron, which has been around for decades and also is approved to treat endometriosis, fibroids and precocious puberty. And Lupron is relatively easy to administer, requiring only a traditional shot into a muscle in the arm, thigh or buttocks. Eligard, by contrast, requires a subcutaneous injection, often under the skin of the abdomen. “There’s familiarity with AbbVie and this product,” says Morningstar analyst Damien Conover. “Even with a bump in the road supplying it, it probably doesn’t mean quite as much (lasting) market share shift there, unless it gets really price sensitive and (Tolmar) starts to lower the price substantially.”

CHOICES

A price battle with AbbVie could force Tolmar to choose between preserving profits or market share. Tolmar charges its clinician customers around $100 for a one-month injection of the life-extending drug, D’Souza says. But patients without insurance can expect to pay more than $480 for the same dose, according to Drugs.com. Lupron accounted for less than 2 percent of AbbVie’s $45.8 billion in total revenue last year.

Worldwide sales of the drug have hovered around $880 million in recent years but fell 15 percent to $752 million in 2020, primarily due to the shortage. Lupron sales are projected to be more than $700 million this year, Conover says. AbbVie didn’t respond to a request for comment. D’Souza says Tolmar’s total revenues are somewhere between $100 million and $500 million. He says revenue rose more than 20 percent last year, driven largely by Eligard sales. Ramping up Eligard production wasn’t easy, particularly during the first months of the pandemic when little was known about COVID-19, D’Souza says. Early on, shifts were shut down at the first sign of exposure or infection to prevent an outbreak that might have threatened the company’s ability to meet market demand. “If you care about your patients, you have to keep your employees healthy,” D’Souza says. Among the biggest unknowns for Tolmar was the possibility that, in the midst of the Lupron shortage, COVID-19 vaccine production would threaten the availability of syringes and needles used to administer Eligard. Anticipating increased demand, Tolmar decided to keep additional inventory on hand.

TOLMAR

How a small suburban pharmaceutical company is grabbing sales from AbbVie

Tolmar employs more than 750 at its Buffalo Grove headquarters and two Colorado plants. Lupron supply is increasing, but the FDA website still says the drug is “currently in shortage.” It shows that most doses were available as of May 24, with additional units expected in the coming months. Still, D’Souza says he isn’t worried. “I’m not dealing with the Humira marketing machine,” he says, referring to AbbVie’s top-selling drug. “I’m dealing with an older product for these guys. This is a big deal for us. It’s our main product. It’s what’s funding all our R&D and everything we’re doing, trying to bring new medicines going forward. I

think a specialty pharmaceutical company that’s focused can take on a big health care pharmaceutical company on an older medicine that’s not their main thing.” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, warns against assuming AbbVie won’t fight hard to re-establish Lupron as the market leader. “While it may be a small piece of the business for AbbVie, for somebody at AbbVie, it might be a big piece of their next promotion,” Gordon says. “I don’t think AbbVie is looking to lose 5 cents of the business.”

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CRAIN’S CHICAGO BUSINESS • JUNE 7, 2021 31

TRIBUNE from Page 1 Operating cash flow also turned positive, topping $22 million. Profits and positive cash flow allow Alden to start harvesting gains through dividends and other possible payments from Tribune Publishing. Alden’s financial challenge is cutting costs fast enough to outpace continuing revenue declines. That becomes more difficult as newsroom staff cuts diminish the size and quality of Tribune newspapers, reducing their value to readers. “How are they going to make the case to the public that this is a news organization that’s still worth supporting financially? That it’s still worth subscribing to,” asks Tim Franklin, senior associate dean at Northwestern University’s Medill School of Journalism. “If there’s no value proposition left to the journalism that’s being produced at the Tribune, then people aren’t going to buy it.” As subscribers turn away, revenue declines accelerate, making deeper cost cuts necessary to preserve profitability. Adding more pressure is the substantial debt Alden used to finance the Tribune Publishing acquisition. The company is obligated to repay two loans: one for $218 million, which matures in five years and is priced at an undisclosed prime rate plus 0.5 percent, and another for $60 million at 13 percent. The second loan is from Alden’s other newspaper group, MNG Enterprises, and matures in six years. The interest totals about $8 million a year and is payable in

cash for 6 percent and “in kind” for 7 percent, according to Securities & Exchange Commission filings. If interest on the larger loan is at a conservative 4 to 5 percent, Tribune Publishing will be on the hook for about $14 million in annual debt service.

SHRINKING PAYROLLS

To accelerate savings, Alden has taken aim yet again at Tribune Publishing’s payroll. Two days after Alden’s May 24 acquisition of the Tribune Publishing shares it didn’t already own, full-time editorial employees at the company’s newspapers were offered a buyout. It’s a familiar tactic. At 12 newspapers it owns—including the Denver Post, St. Paul Pioneer Press and San Jose Mercury News—Alden cut unionized staff by 76 percent, according to data from the Chicago Tribune Guild. The Chicago Tribune’s newsroom underwent two rounds of buyouts and leadership shakeups since late 2019. A cut of that magnitude would leave the Chicago Tribune with roughly 30 union-represented newsroom employees to cover a metropolis with 9.5 million residents. Last year, Tribune Publishing reduced headcount by more than 800, or 30.4 percent, according to regulatory filings. Employee compensation was reduced by $58 million, or 16 percent. An additional 86 staff positions were eliminated in the first quarter, and compensation costs fell 36 percent to $62 million. As recently as 2018, Tribune Publishing’s main revenue driver was advertising. That flipped as the pan-

demic pummeled advertising sales. The company reported in its annual filings that 47.3 percent of revenue comes from circulation and 35 percent from advertising. The company hopes to offset the loss of ad dollars by generating more revenue from subscribers, particularly digital readers. But total subscription revenues are falling, too, as plunging print circulation dollars outpace rising online subscription sales. There is a silver lining to declining print circulation. Selling fewer physical newspapers can save money in delivery and printing costs, Franklin says. That is one of the many reasons newspapers around the country are emphasizing digital subscriptions and even e-editions of newspapers over the printed versions. Alden could also cut costs by publishing papers less frequently, Franklin says. This is not a move Alden has made yet at any Tribune Publishing newspapers, but it is a broader trend in the industry.

SELLING THE PARTS

Asset sales could raise more cash for Alden. Other Alden-controlled papers sold off real estate, but Tribune Publishing doesn’t own much property. The company sold off the BestReviews website for $20.5 million in 2020. That leaves individual newspapers as potential divestiture candidates. When the deal to buy the company first came to light, Maryland hotel magnate Stewart Bainum was set to buy the Baltimore Sun and other area newspapers from Alden. That deal ultimately fell through, as

JOHN R. BOEHM

Here’s how Alden Global Capital will make money owning Tribune Publishing

The Chicago Tribune Freedom Center at 560 W. Grand Ave. Bainum pursued his own bid to buy the entire company. Throughout that process, other shareholders and parties indicated interest in buying certain publications. Shareholder Mason Slaine was interested in the Florida publications, for example. No divestiture deals have been struck, leaving Alden’s endgame for Tribune Publishing a mystery. Traditionally, private-equity firms buy a company, beef up profits and then sell it at a profit or cash out in an initial public offering. Sometimes portfolio companies are carved up, and business units are paired with other investments. Others, however, end in bankruptcy. Some Alden-owned companies wound up in bankruptcy, according to data from deal tracker PitchBook. Those include Payless ShoeSource and Memphis-based retail

and pharmacy chain Fred’s. Alden’s tactics at Tribune Publishing could leave the company with little value to potential acquirers, says professor Erik Gordon of the University of Michigan’s Ross School of Business. “I don’t see how you can make a profit on . . . selling a business that you’ve wrecked,” he says. “Who’s going to buy them?” The alternative looks grim, says Jim Friedlich, chief executive of the Lenfest Institute for Journalism, the nonprofit owner of the Philadelphia Inquirer. “It is hard to divine a happy endgame for these newspapers under Alden ownership,” says Friedlich, who advised Bainum on his bid. “There will come a point when there’s nothing left to cut except to turn out the lights.”

Illinois affordable housing law draws applause from residential developers AFFORDABLE from Page 3 Curt Bailey. “This is one of the tools people will be able to utilize to close that gap.” The omnibus legislation passed unanimously in both houses with the support of the real estate industry and tenant groups, frequent legislative adversaries that often spar over issues like rent control and eviction laws. “It’s something that we could all come together on and agree that this is a good solution,” says Michael Mini, executive vice president of the Chicagoland Apartment Association, a landlords’ group. But developers and housing advocates also have been on opposite sides of the debate over Chicago’s Affordable Requirements Ordinance, or ARO. The ordinance requires developers that seek a zoning change from the city to offer as many as 20 percent of their units at prices or rents affordable to low- or moderate-income residents. In April, the City Council strengthened the ARO, pleasing advocates, who say it will increase the city’s supply of affordable housing in expensive neighborhoods and reduce segregation. But many developers

opposed the changes, saying they will do the opposite by reducing the financial feasibility of many projects.

CARROT VERSUS STICK

Naturally, developers prefer the carrot of tax incentives to the stick of the ARO. But Bailey, who says he supports the revised ARO, says the two solutions will actually work hand in hand. The ARO makes an apartment development less profitable by reducing the rents the developer can charge on some units. But the state legislation will reduce that financial drag by lowering a key cost, property taxes. Under the ARO, developers must offer some affordable units within their projects, but they can comply with the ordinance by providing the rest at an off-site location and by paying a fee to a city housing fund in lieu of building the units. The state bill creates an incentive for developers to include all the units on-site, says Bailey, an early and vocal supporter of the legislation. In Fulton Market, Related plans to build 300 apartments at 900 W. Randolph St. With a property tax break, the developer will include all 60 its affordable units—20 percent of the total—in the building, Bailey says.

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

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“It should be a great way to deliver affordable housing into areas that have little affordable housing or none,” he says. The broader social goal: to expand housing options for lower-income families, including people of color, in wealthier neighborhoods with better schools, jobs and low crime. A landmark 2015 study found that children’s financial success later in life depends heavily on the ZIP code where they are raised. Housing policy can help families move to previously unattainable ZIP codes. Related, which is best known for its massive 78 development in the South Loop and other high-end residential projects, also oversees a large affordable housing portfolio in the Midwest. The firm is in the process of securing financing for its Fulton Market high-rise, which will cost about $200 million to build. It may seek tax-exempt bond financing through the Illinois Housing Development Authority or just take out a construction loan from a private lender, says Bailey, who aims to break ground this summer. The state legislation works like this: Developers constructing or renovating buildings in expensive neighborhoods can receive a 30-

year reduction in their property tax assessments if they set aside 20 percent of their units as affordable.

TAX VALUE FREEZE

A property’s assessed value used to calculate taxes effectively is frozen at the predevelopment level initially, so the developer does not have to pay taxes on the tens or even hundreds of millions of dollars of additional property value created by the project. The assessment steps up over time, with an 80 percent reduction from the property’s true value at year four, a 60 percent reduction at year seven and so on. New York state offers similar incentives to developers through its 421-a program, which was created in the early 1970s. Though the program has been popular with developers for decades, it more recently has come under fire amid allegations of fraud and concern that it’s a handout for developers and deprives New York City of tax revenue. Some state legislators want to abolish the program. Bailey says the Illinois bill won’t be a drain on local tax revenue. It actually will be a “net-positive,” he says, because the tax breaks burn off over time, with the end result being a

property that’s worth a lot more than it was before it was developed. The Illinois bill also includes similar property tax breaks aimed at creating or preserving affordable housing in less expensive neighborhoods. One, requiring a 35 percent set-aside, targets apartment buildings in poorer neighborhoods in need of renovation. Another, with a 15 percent set-aside, targets properties in gentrifying neighborhoods, where rising rents are forcing some residents out. “The real story is the thousands of units in existing buildings in our city,” says Stacie Young, director of the Preservation Compact, an affordable housing nonprofit. The state legislation also includes funding and provisions for other housing programs, including low-income housing tax credits. Gov. J.B. Pritzker is expected to sign the bill. Tenant groups, meanwhile, won’t stop pushing other items on their agenda, and the real estate lobby won’t stop pushing back. “We are certain that the proponents of rent control are not going to walk away from that fight, but we think this is a much better solution,” Mini says.

Vol. 44, No. 23 – Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the last week in December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2021 by Crain Communications Inc. All rights reserved.

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