Crain's Chicago Business, June 10, 2024

Filling the gaps in health insurance

Even the insured get saddled with staggering medical debt. Cook County and the state are stepping up to offer relief. | PAGE 11

IBM eyes Chicago for quantum computing play

Another sign of interest as the state prepares to fund new tech and jobs

By John Pletz

Add IBM to the quantumcomputing companies circling Chicago.

e Armonk, N.Y.-based technology giant has been discussing an expansion here, according to three people familiar with the conversations who requested anonymity because of condentiality agreements involved.

e company won’t detail exactly what it has in mind. “At

IBM, we are excited to see continuously growing interest and investment in quantum computing across Chicago and the state of Illinois,” Jay Gambetta, vice president of IBM Quantum, says in a statement.

“We are working with partners such as the University of Chicago, University of Illinois Urbana-Champaign and members of e Bloch Quantum Tech Hub on several projects to advance our timeline of bringing useful quantum computing to the world, and are looking forward to being a part of other signi cant developments soon.”

Local

Call a foul what it is, and a female athlete an athlete

Never the clearest of thinkers, Dennis Rodman brought more ridicule than condemnation on himself when he insisted, at the conclusion of the 1987 Eastern Conference finals, that white skin was the factor that elevated Larry Bird to greatness in the NBA of 37 years ago.

Teammate Isiah Thomas, whose deceptively engaging smile masked a propensity for jerk behavior, doubled down, suggesting that if Bird were Black, he’d be “just another good guy.”

Anger, frustration, disappointment . . . sure — the Detroit Pistons had just lost a sevengame street fight to Bird’s Boston Celtics, and Bird was, well, Bird throughout: 36 points and a game-turning steal (off Thomas) in Game 5, followed by 37 points, nine rebounds and nine assists in the Game 7 clincher.

The comments weren’t so much racist as they were ridiculous — Larry Bird, at the peak of his game at age 30, was a basketball marvel. Still, the NBA was alarmed enough by the kerfuffle to call a clear-the-air press conference during the LakersCeltics Finals, where Bird was diplomatic, absolving Thomas of any malicious intent but pointedly getting the last word. “Isiah,” he said, “knows I’m a bad man.”

Neither Caitlin Clark nor Chennedy Carter was alive when the Rodman-Thomas-Bird imbroglio took place, but, being the geezer that I am, I thought of it

when Ms. Clark’s rump hit the floor after an unfriendly hip check from Ms. Carter during the Indiana Fever-Chicago Sky WNBA game on June 1.

Had the play occurred last season, or in any game played before Clark’s arrival broadened the WNBA’s appeal as a thing, it would have been nothing more than what it eventually became: an off-the-ball flagrant foul, with two free throws and maybe a warning to Carter to tone it down. But the fact that it was Clark who hit the floor, along with Carter’s defiant lack of remorse, adds all sorts of overtones, some of them racial, just as many economic.

Unions call for boycott of downtown hotel

By Brandon Dupré

Local unions are calling for a boycott of the downtown Holiday Inn & Suites as some organized workers there remain without a contract.

A rally in support of the workers, which will include calls for patrons to boycott the hotel until a contract agreement is reached, was set to take place outside the hotel at 506 W. Harrison St. on June 6 featuring members from the Chicago Federation of Labor, Mid-America Carpenters Regional Council Local 13 and Unite Here Local 1, which represents the workers at the Holiday Inn.

The 10-member union, which consists of workers from the hotel’s housekeeping unit, won its union election in April 2023. Now, over a year later, the union is saying their employer is refusing to bargain with workers.

“After just six bargaining sessions, the employer claimed im-

passe — they have not bargained with the union for the last seven months,” Angel Castillo, organizing director at Unite Here Local 1, said in a written statement to Crain’s.

“We want this employer to return to the negotiations table and collectively bargain for a fair contract.”

Pedro Raymund Sanchez, a houseman at the hotel, said the union is fighting for better pay and health insurance. He said the workers are getting paid $19 an hour, $6 less than other hotel workers downtown.

The Holiday Inn did not immediately respond to a request for comment.

The boycott calls come ahead of an especially busy Chicago summer that’ll include headline events such as the city’s second NASCAR race, Lollapalooza and the Democratic National Convention, all of which promise to draw throngs of visitors to the city and pack downtown hotels.

Clark is not only the most ballyhooed player to enter the WNBA in its 27 years, she is also the wealthiest, thanks to NIL (name, image and likeness) deals and other endorsement opportunities that came her way as she was becoming the brightest star in the college game over four years at Iowa.

Such dollars are a byproduct of the changing face of college athletics and weren’t even available to the vast majority of WNBA players, many of them seasoned pros who have put in years of hard work for a relatively minimum wage to keep their league running. Some resentment toward the fuss over Clark is

understandable, if shortsighted — more eyeballs and more interest means more opportunities for everybody.

But we’re kidding ourselves if we don’t believe Clark being white factors into her appeal in a sport that’s increasingly Black.

And it’s way more physical than she was accustomed to in college — the Carter collision wasn’t the first time Clark has hit the floor in her brief career, prompting leaguewide consternation. She’s playing with adults now and will have to get stronger to be all she can be.

It’s not just that she’s white, it’s that Clark fits the preferred “model” that informs our view of

female athletes, perceived as “normal” at a shade under 6 feet in a game that favors and rewards size, strength and aggressiveness. Again, the geezer in me recalls Chris Evert, who encountered similar resistance when she emerged as a tennis sensation as a 16-year-old in 1971. It took a while, but the older hands gradually came to realize her ponytailed, girl-next-door persona was drawing attention that would benefit all of them.

Evert and Martina Navratilova staged a fierce rivalry on the world’s courts in the ‘70s and ‘80s. Over time Navratilova proved to be stronger, quicker, a tad better and truly courageous, coming out as gay at a time when most public figures were loath to do so. But “Chrissy” remained the more popular player, owing to a carefully crafted image of wholesome, delicate femininity that survived three marriages. Around that time, Laura Baugh and Jan Stephenson were two of the biggest names in women’s golf, for reasons that had more to do with looks than performance. Keep that in mind if you’re watching the Olympics this summer. Who will get more airtime and commercial opportunities, the women gymnasts or the shot-putters?

It’s how we are.

Clark’s arrival as the poster child for a heralded rookie class is hailed as a good thing for the WNBA and for women’s sports in general. We’d do well to judge the players as athletes rather than as runway models or beauty queens.

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

Dan McGrath

Caitlin Clark | GETTY IMAGES

Hispanic Chicagoans want worker permits from Biden

Their frustration reflects an uneasy relationship the president must navigate as he courts voters |

By Leigh Giangreco

On a sunny Tuesday morning in Pilsen, La Malinche Coffee & Tea House buzzed with activity.

Héctor Aguirre, who owns the Halsted Street cafe where vibrant murals pop on fuchsia and azure walls, hustled about taking orders and making espresso. With any luck, he’ll be just as busy this August if delegates from the Democratic National Convention make their way to Pilsen from the main event at McCormick Place.

Aguirre already gained some business from the DNC when organizers reserved his cafe as part of a neighborhood listening tour. But while Aguirre welcomes the potential dollars from the DNC, he’s tepid about the president the convention will fete.

PERMITS on Page 25

“I think one message that President Biden should say and should do is, ‘work permits for all.’ ”

Jaime di Paulo, president and CEO of the Illinois Hispanic Chamber of Commerce

Rate hike is slashed for Peoples Gas

The union representing the utility’s on-the-ground workers blasted the move by the ICC, setting up a likely legal battle

By Andrew Adams, Capitol News Illinois

Regulators at the Illinois Commerce Commission on May 30 once again reduced a request to increase customer rates from Chicago natural gas utility Peoples Gas.

In November, the ICC paused all spending related to Peoples Gas’ controversial “safety modernization program” for replacing aging infrastructure and reduced its $404 million rate request to $303 million — which was still the largest ever increase granted by the state.

Peoples Gas, which serves 894,000 customers in Chicago, then requested a “rehearing,” asking for another $7.9 million rate increase based on the argument that much of the spending the ICC paused was necessary to conduct “emergency” repair work and other critical upgrades.

But regulators once again pushed back on these claims in reducing the increase to $1.6 million, based on the recommendation of the Illinois Attorney General. This smaller increase was approved “out of an abundance of caution,” according to ICC Chair Doug Scott.

Scott said May 30 the ICC came to its decision because Peoples Gas used an “overly broad” definition of emergency work and that the company “failed multi-

ple times” to provide enough information to the commission to justify the increased spending.

“The Commission’s decision should in no way prohibit Peoples Gas from performing necessary emergency work to maintain a safe and reliable gas system,” Scott said in a May 31 statement. “While still important, the bulk of Peoples’ system and public improvement work

As a result of this decision, typical residential bills are expected to go up by about 15 cents per month, less than the 60 cents per month the company requested.

falls under the utility’s general reliability responsibilities to its consumers and does not constitute true emergency work.”

Scott said the ICC came to its decision because Peoples Gas used an “overly broad” definition of emergency work and that the company “failed multiple times” to provide enough information

West Suburban Medical Center staff report issues

The new owner of the Oak Park hospital denies most of the claims made by medical residents, saying he’s saved it from financial ruin

By Katherine Davis

Following the 2022 sale of West Suburban Medical Center, young doctors at the Oak Park hospital are reporting the facility is in decline as quality of care and patient safety, along with other workplace issues, intensify under new ownership intent on cutting costs.

Six medical residents who talked to Crain’s said West Suburban is often lacking necessary supplies and equipment to care for patients. They also said the hospital is chronically understaffed, sometimes missing essential hospital staff like X-ray techni-

cians, phlebotomy workers and even surgeons. A shortage of staff, especially on the weekends, is sometimes extending the length of patient stays at the hospital, according to the residents. The hospital’s CEO, while acknowledging some complaints, has pushed back against most of the residents’ claims.

Other issues are related to the hospital’s failing infrastructure, residents said. Air conditioning units have been out of commission for as long as two weeks at a time, and elevators are sometimes down for as long as three days, forcing patients to climb

stairs to reach appointments.

To assist patients, chairs are placed at each landing so they can rest in between flights, residents said. But if patients are still unable to make the trek, some opt to reschedule or cancel appointments.

“All of these things have been affected by the cost-cutting measures,” said Dr. Lauren Lucas, a resident at West Suburban, which was purchased by Resilience Healthcare in 2022. “We’ve all been feeling the effects. It’s been very difficult to get things done

West Suburban Medical Center in Oak Park | AP IMAGeS

Héctor Aguirre, owner of La Malinche Coffee & Tea House in Pilsen

See PEOPLES on Page 27

Ascension outsourcing prompts workers to quit

Workers at 10 hospitals here have left amid backlash over the system handing off workers to a staffing firm owned by private equity

By Katherine Davis

Following Ascension Illinois’ decision to outsource hospitalist staff at all 10 of its Chicago-area hospitals to a private-equitybacked staffing firm, more than a third of those doctors and clinicians have left the organization, Crain’s has learned.

About 35% of the 110 fulland part-time workers, including medical directors, doctors, physicians assistants, nurse practitioners and other providers, left Ascension when the outsourcing transition started on June 1, according to a person familiar with the matter who spoke to Crain’s on the condition of anonymity out of fear of retaliation. More hospitalists are expected to leave once the transition is complete, the person said.

The outsourcing move, which Crain’s first reported in March, turned over hospitalist employees — providers who care for patients during a hospital stay — to Atlanta-based health care staffing firm SCP Health.

Since hospitalists were first notified of the labor transition in January, some have been concerned about SCP Health’s private-equity ownership, a fact they have said will lead to larger patient caseloads at some Ascension hospitals, as proposed under the staffing firm’s contracts, as it seeks to grow revenues. SCP Health is majority owned by private-equity firm Onex Partners.

Hospitalists who previously spoke to Crain’s argued more patients per provider and other changes to staffing models could

worsen patient care quality. Hospitalists also stood to take pay cuts under SCP Health’s contracts.

Ascension Illinois spokesman Timothy Nelson told Crain’s that while a “majority” of the hospitalists have committed to stay through the transition and work under SCP Health, the staffing firm has moved forward with filling anticipated vacant positions.

“Delivering compassionate and timely care to the patients we serve is at the center of all we do,” Nelson said in a statement. “SCP has the expertise to create strong collaboration among our hospitalists.”

SCP Health spokeswoman Dawn Moyer said the firm has 99% of Ascension’s June hospitalist shifts already filled.

“We are confident we will have a seamless transition,” she said.

Departing Ascension hospitalists are heading to nearby health systems, such as Endeavor Health, Advocate Health and Rush University System for Health, according to the person familiar with the situation.

Endeavor and Advocate declined to comment on the matter. Rush did not immediately have a comment.

After the outsourcing deal became public, local industry groups and unions spoke out against Ascension’s move. The Chicago Medical Society, which represents more than 17,000 local physicians, including some at Ascension Illinois, expressed worries over how the deal would impact patient care.

Meanwhile, the Illinois Nurses Association was more direct, calling the move “a private-

equity scheme” that has potential to harm patient care if caseloads are increased.

Disruption of care

The exodus at Ascension Illinois and SCP Health could result in staff shortages that lead to a disruption of care and the hiring of less experienced physicians or those simply unfamiliar with Ascension facilities and its patients, Chicago Medical Society President Dr. Tariq Butt said in a statement to Crain’s.

“We hope it does not affect patient care,” he said. “However, with the large number of physicians leaving, we are very concerned about patient care and safety.”

The situation at Ascension Illi-

nois represents another flashpoint in the ongoing debate about whether private equity hurts the American health care system. Private-equity firms have deepened investments into the health care sector in recent years, particularly in staffing firms, which many U.S. hospitals have come to rely on.

From 2020 through 2023, private-equity firms acquired 116 health care staffing companies and were party to more than 60% of all clinical staffing transactions, according to data from The Braff Group, a health care-focused mergers and acquisitions advisory firm.

The primary concern with private equity’s foray into heath

care, supported by a growing body of research, is that firms often cut staff and services while also driving up health care costs for patients and insurers by using aggressive billing practices. In March, the U.S. Department of Justice and other federal agencies launched a probe to examine if private-equity interests are damaging health care workers, quality of care and affordability.

Under the No Surprises Act, providers and insurers negotiate billing disputes through a government arbitration process, but the number of disputes is skyrocketing, and a January Healthcare Dive report showed SCP Health was the top firm filing billing disputes for out-of-network services.

UChicago Medicine strikes deal to stay in Streeterville

Under a new agreement, the health system will continue to occupy a portion of the Retail at River East complex at a lower cost

By Rachel Herzog

University of Chicago Medicine has struck a unique deal to save money on the lease for its outpatient clinic in Streeterville and gain control over its longterm future in the neighborhood.

The health system recently entered into a lease transaction with New York investment bank Mizuho Americas under which the finance company purchased $34.4 million in revenue bonds from the Illinois Finance Authority to acquire the medical portion of the Retail at River East property at 355 E. Grand Ave., according to a U.S. Securities & Exchange Commission filing. Rent paid by UChicago Medicine will cover

the bond payments.

The deal “allows for the continued lease of space at the River East location at a lower cost, with several options at the end of the lease term, including an option to buy,” UChicago said in a written statement. The lease runs through May 2034, according to Cook County property records.

Mizuho paid the property’s previous owner, a joint venture of New York-based Madison Capital and Greenwich, Conn.-based Wheelock Street Capital, $33.8 million in a deal executed March 21, property records show.

The seller had hoped to offload the entire three-level, 251,000-square-foot retail complex, whose other major tenants

include the Lucky Strike bowling alley and AMC Theatres, putting it on the market in March 2023. It would have been the largest downtown retail property to change hands in several years; the seller paid almost $94 million for it in 2016. The complex forms the base of a larger development that includes an 18-story Embassy Suites hotel on one end and a 58-story condominium tower on the other, which were not included in that offering.

But high interest rates have made large commercial property deals tricky to pull off by dampening investors’ borrowing power, and it’s possible that subdividing the property and selling part of it made for an easier lift.

The UChicago Medicine River East clinic covers 43,000 gross square feet and offers primary, specialty and urgent care services, as well as cancer screenings, infusion therapy, and lab and radiolo-

gy services. UChicago Medicine consolidated two Streeterville clinics into the River East location in a $29 million project that was completed in 2019. Spokesmen for Mizuho didn’t respond to requests for comment on the deal, nor did Madison

Capital, Wheelock Street Capital or the Illinois Finance Authority. Cushman & Wakefield Executive Director Michael Marks marketed the River East complex for sale on behalf of the Madison Capital and Wheelock Street Capital venture.

UChicago Medicine River East | GOOGLE

Ascension’s outsourcing move, which Crain’s first reported in March, turned over hospitalist employees — providers who care for patients during a hospital stay — to Atlanta-based health care staffing firm SCP Health. | GETTY IMAGES

LUXURY HOME SPOTLIGHT

A CHICAGOAN TO KNOW

Robert Finkel of Forbidden Root

Finkel, 61, is founder and “rootmaster” of Forbidden Root, a botanically focused Chicago brewery that infuses its craft beers with exotic spices, herbs, roots and bark. Prior to this venture, he founded and was managing partner of Prism Capital, a privateequity firm in the city. Finkel and his wife live in Lakeview East and have two adult children. | By

Laura Bianchi

What’s new at Forbidden Root?

We are launching our first line of tequilas called Cultiverde, featuring natural Mexican flavors such as dragon fruit, prickly pear and hibiscus. The first two are Pitaya Rosa (dragon fruit) and Limonero. Imagine a not-sweet limoncello.

What inspired those?

It started with a tequila train tour from Guadalajara to Tequila with my wife and family. Two years later, with this tequila project in mind, I returned and sampled roasted, caramelized agave from six distilleries in Guadalajara in one day. Just call me Augustus Gloop.

How did you develop your broad palate?

to deconstruct a song, lay down all the tracks and create karaoke tracks so I could sing along. On what do you splurge? Asian snacks. I’ve loved them since I was a kid. I literally have boxes of stuff like Want Want Seaweed Rice Crackers and Chinese dried “jujube” dates. A quote that inspired you?

“Once upon a time, a very long time ago now, about last Friday, Winnie-the-Pooh lived in a forest all by himself under the name of Sanders.” This is a wistful reminder that time accelerates with age. It inspires me to wake up as if every day is my last.

As the youngest of six, growing up in New York City, I was raised to eat well and travel. I became a flavor guy, searching markets all over the world for new experiences. One of my favorites was a southern Turkish market filled with obscure herbs and spices. I took home at least 20 different types.

Describe your childhood.

I was the kid lugging his dad’s briefcase to school, filled with annual reports on stock shares my grandfather would give me. In fifth grade I started a jewelry business, selling seashell necklaces for $1.50 while on vacation in Florida with my family. Back home in New York, I expanded the business, walking up and down 37th Street in a suit, looking for suppliers.

What happened?

I learned how to merchandise, and within a year I was selling nationally through Macy’s, Bloomingdale’s and Neiman Marcus. In 1974, I sold about $35,000 worth. Starting at 16, I worked summers on Wall Street, and one summer during college I worked for PaineWebber in London.

Memorable birthday presents?

Ten years ago, my wife gave me a series of table tennis lessons with an Olympic silver medalist. Later she gave me two years of singing lessons. Eventually I became adept at using studio production software

Lawsuit challenges Evanston’s local reparations program

Citing the equal protection clause, the suit takes aim at the city’s first-in-the-nation effort to repair long-term housing discrimination

By Dennis Rodkin

Evanston’s five-year-old effort at racial reparations violates the U.S. Constitution, according to a federal lawsuit filed by several people with hereditary ties to the North Shore suburb.

The city’s Local Reparations Restorative Housing Program, which has already disbursed more than $3 million and has plans to distribute at least $11 million more, is an effort to compensate Black descendants of people who lived in Evanston between 1919 and 1969, a period when racial discrimination was rampant and the lines of segregation strictly enforced.

The program primarily focuses on grants of $25,000 toward homeownership and home upgrades to help equalize the lost household wealth of Black families. Last year, Evanston expanded the program to include grants of $25,000 in cash not required to go toward easing housing inequities.

By providing funds only to Black households, the program violates the 14th Amendment’s promise of “equal protection under the laws,” the suit filed May 23 in U.S. District Court for the Northern District of Illinois claims.

People who qualify to apply for reparations must have forebears who identified as Black and lived in Evanston during the specified half-century.

“At no point are (they) required to present evidence that they or their ancestors experienced housing discrimination or otherwise suffered harm because of an unlawful Evanston ordinance, policy or procedure,” the lawsuit says.

The program is “overinclusive” because it doesn’t require any evidence an applicant’s forebears suffered any specific discrimination. That suggests anyone, including descendants of white resi-

dents during the time period, would also deserve an outlay of $25,000, according to the suit.

The suit was filed by Judicial Watch, a conservative Washington, D.C., organization whose website says its mission is to “promote transparency, accountability and integrity in government, politics and the law.” It represents six plaintiffs, all of whom claim hereditary ties to Evanston during the specified period and none of whom, according to the lawsuit, identifies as Black.

The six plaintiffs satisfy “all eligibility requirement in the city’s program other than the race requirement,” the lawsuit says.

“But for the (race) requirement, (the) plaintiffs would each be eligible for and in line to receive $25,000 under the program,” the suit says.

The claim boils down to an allegation of reverse racism. By providing a reparative remedy only to Black people, the suit says, Evanston is discriminating on the basis of race, a violation of the equal protection clause.

‘Intentionally discriminating’

Evanston, the suit says, “is intentionally discriminating against (the plaintiffs) on the basis of race” in an attempt to make up for past prejudice. “Remedying discrimination from 55 to 105 years ago or experienced at any time by an individual’s parents, grandparents or great grandparents” is not a legally recognized interest of government entities, the suit says.

Supporters of reparations, such as the Brookings Institution, say discrimination was so pervasive and systemic in the past that compensating for it requires an all-of-government effort.

Judicial Watch did not respond to Crain’s request for comment by its officials or by its attorneys, Paul

Orfanedes and Michael Bekesha. Its local attorney partner, Christine Svenson of the Palatine firm Chalmers Adams Backer & Kaufman, did not respond to a request for comment either.

Crain’s could not reach plaintiffs Margot Flinn, Carol Johnson, Stasys Neimanas, Barbara Regard and Stephen Weiland. Plaintiff Henry Regard declined to comment. The suit requests elevation to class-action status, essentially representing anyone who lived in Evanston between 1919 and 1969.

Evanston’s mayor, Daniel Biss, declined to comment on the lawsuit but wrote in a text message to Crain’s: “I’m proud of Evanston’s historic reparations program and of Evanston’s willingness to honestly confront our past in order to build a just future.”

Evanston was the first municipality in the nation to create a housing reparations program intended to address the harm caused by segregation and housing inequity.

According to the lawsuit, Evanston has already paid $25,000 to at least 129 recipients, for a total of more than $3.22 million.

As of January, Evanston had approved 454 “direct descendants” of Black residents from 1919 to 1969 and “has represented that all 454 will receive $25,000 each,” according to the suit. At least 80 will receive their grants this year, with others paid in later years, the suit says.

If those figures are accurate, Evanston will pay out a total of almost $14.6 million in reparations.

Evanston has allocated $10 million from its cannabis tax and an equal amount from its real estate transfer tax to fund the reparations program, according to the Daily Northwestern, the student-run Northwestern University newspaper.

Dylan Rodolfo Dordoni

ALAMY

EDITORIAL

A chance for Chicago to take the quantum crown

In reporting on the business world, one hears a lot about The Next Big Thing — and frequently those highly touted “next generation” ideas wind up being blips rather than game-changers. So it’s wise to regard such assertions with a healthy degree of skepticism.

And yet, in the tech realm, there are few advances creating more buzz than artificial intelligence, which is generating excitement and hand-wringing in equal measure, and its less-glamorous cousin of sorts: quantum computing. Both promise to change the way humans tackle complex problems — and, in the case of quantum, to potentially change the way we understand reality itself.

Chicago has a shot at claiming a sizable and perhaps even dominant role in the latter discipline. Yes, much has been written in Crain’s and elsewhere about efforts at the University of Chicago and the University of Illinois to harness quantum technology, with government funding driving much of that energy — and that endeavor continues.

But even more exciting than that, from an economic development perspective, is the news that Chicago’s early lead and natural advantages in the quantum computing race are starting to draw the interest not only of governments and academics, but of private industry as well. Corporate investment is the kind of action that can kick Chicago’s ascendancy as a quantum computing capital into overdrive — and the benefits to the Chicago tech community and the entire economy could be profound.

As Crain’s John Pletz was first to report, IBM has been discussing a quantum expansion here. While the company won’t

PERSONAL VIEW

yet detail exactly what it has in mind, it acknowledged to Crain’s that it’s working with UChicago, U of I and others to “advance our timeline of bringing useful quantum computing to the world, and are looking forward to being a part of other significant developments soon.”

Big Blue is one of the few companies that have built a quantum computer. It joins PsiQuantum, a Silicon Valley startup that is prepping a large-scale quantum computer, among companies that are considering setting up shop in Illinois.

Landing IBM would give an added shot of credibility to Gov. J.B. Pritzker’s efforts to make Illinois a hub for quantum technology, which is seen as the next major leap in computing, leveraging quantum mechanics to achieve exponential im-

provement in the speed, security and raw processing power of computers. Harnessing subatomic particles to store, transmit and process information holds the promise of a leap in computing capability that can be used to model everything from cancer to climate change. The technology is reaching a critical point as companies look to demonstrate whether they can deliver it at large scale outside of a lab environment.

Pritzker sees quantum as a source of high-paying jobs for researchers and semiskilled labor for decades to come. That’s why he’s pushed for state investment in a $20 billion, 150-acre campus in the Chicago area for quantum computing. As Crain’s first reported, PsiQuantum is considering the former U.S. Steel plant on

Defense innovation can drive Midwest growth

“The future is already here; it’s just not evenly distributed.”

That famous quote from science fiction writer William Gibson is usually applied to new technologies, but it applies equally well to the economic development those technologies can bring. A great example of that uneven distribution — and an under-tapped resource for the Upper Midwest — is defense innovation.

For decades, the U.S. military has been a central driver of the American innovation engine. Defense driving technological innovation is a well-known story from the first half of the 20th century. From radar to jet travel, whole industries were spawned by defense innovation.

What is less well-known is that this isn’t history resigned to the felt-hat era of Oppenheimer. It is still true today. Defense R&D budgets dwarf any of the Big Tech firms, and defense-related advances continue to find ways into our homes, offices, and even our pockets. Case in

point, the AI voice-assistant Siri started as a defense research project at DARPA. And these defense-led innovations drive economic growth. The Global Positioning System, or GPS, for example, has allowed for a whole range of new businesses from package tracking to ride-hailing. Altogether, GPS has been responsible for more than $1.4 trillion in economic growth for the U.S. economy.

Regions that have successfully activated innovation ecosystems to respond to the U.S. military’s technology needs have enjoyed economic success. Consider that the headquarters of the 10 largest defense contractors closely correlate to the ZIP codes with the highest median incomes. Cities like San Francisco, Boston, and Austin, Texas, have enjoyed sharp growth with research and business communities that respond to the Pentagon’s technology demands — and other regions can do the same.

Yet the Upper Midwest may be missing out on this engine of growth. Both Illinois and Wisconsin are doing rela -

tively well compared to other states, but still see less than half the national average in defense spending per person and defense spending as a percent of the state economy.  For cities and states looking for lasting, tech-driven economic growth, that is money left on the table.

And the dynamics that kept the Upper Midwest from playing a larger role in defense innovation are changing. In past eras, the benefits of defense innovation would be produced by only a handful of companies operating in a select few communities. But that is no longer the case. Pushed by new threats, and pulled by attractive technologies emerging from unexpected sources, the Department of Defense is actively courting a new crop of small, unconventional companies. The largest “big five” defense contractors were awarded nearly twothirds of the Defense Department’s R&D contracts in 2006; by 2015, that number dropped to just 33%.

See GROWTH on Page 9

the Far South Side and the former Texaco refinery in Lockport. Sources familiar with the project are hoping a decision will come by the end of this month. IBM has not said explicitly that it would join the PsiQuantum-helmed campus, but signs point in that direction, and sources tell Crain’s IBM is among a handful of quantum companies that have also been making the rounds in the Chicago area lately. Of course, a lot of pieces need to fall into place for either location — U.S. Steel’s old South Works site or Lockport’s Texaco plant — to become what the Pritzker administration hopes it will be: a long-term tech hub that will establish Chicago as one of only a handful of quantum computing clusters in the United States. And of course the Lockport site could be beneficial to the regional economy in its own way, but there’s reason to hope the South Works site prevails in this particular contest, mainly because an investment of this scale there would give new life to a swath of lakefront real estate that’s sat dormant for decades in a part of the city that badly needs a shot of economic energy. That’s why City Hall should do what it can to smooth the way for this investment by helping to make the South Works site the more attractive choice. The tech companies circling the area and the real estate developers working with them will need support to remediate the site and build the infrastructure necessary to make it viable. And though an overreliance on tax-increment financing has rightly come in for criticism in Chicago over the years, revivifying the South Works site and its immediate environs is pretty much the textbook definition of what TIFs were created for.

Thomas Day is executive director of the Frontier Mission Network, a nonprofit serving the Chicago region’s national security sector. Day teaches a course in regional economics and technology policy at the Harris School of Public Policy at the University of Chicago. He is an Army veteran who served in the Iraq War and was a correspondent in Afghanistan for McClatchy in 2009 and 2010.

Joe Mariani leads research into government innovation for the Deloitte Center for Government Insights. Mariani has worked as a consultant to defense and intelligence organizations, a high school science teacher, and Marine Corps intelligence officer. He has testified before Congress on the impact of emerging technology on government.

GROWTH

From Page 8

A story can help put these huge numbers in context: The first company to build an AI algorithm that beat a human fighter pilot in a dogfight was not a massive defense contractor or tech giant, but Heron Systems, a small, family-owned defense contractor based in Maryland, about 60 miles south of Washington, D.C. At the time, Heron was headquartered in a strip mall, next door to an insurance office.

The opportunity for these small companies and their communities is immense. The Pentagon is now making a push to mold the defense industry and perhaps with it the entire technology economy. The Department of Defense is asking Congress for nearly $150 billion in funding for R&D, more than the combined R&D dollars the Big Tech companies spent in 2023 and three times the pace of R&D investment made by the Department of Defense during the Cold War.

And when these new tech-driven defense companies succeed, they have proven that they can become engines of growth in their own right. For example, data analytics company Palantir has grown from a small venture- and government-backed startup into a large defense player with a market capitalization of $57 billion, larger than many established players. This isn’t just a story about one company’s success — it also includes success for our military and for the communities where these companies work as well. Denver, where Palantir is headquartered, is growing into a defense innovation hub, even being designated as a regional Tech Hub. While these innovative companies have cutting-edge ideas, they still need support. First, defense innovation can be a complex ecosystem with many players, each with their own set of incentives. Matching players and cultivating relationships can be a full-time job. At any time, it could mean connecting research laboratories and academia to industry groups that can translate their discoveries into market-ready solutions, or it may mean matching existing solutions from companies with the many demand signals from military services and commands. Second, players in the defense innovation ecosystem need the infrastructure to help develop new ideas into viable solutions. This can be laboratory infrastructure to test new ideas or the financial infrastructure to allow good ideas to scale from prototype to production.

The Department of Defense and interested companies and nonprofits like Frontier Mission Network are already stepping in to fill this role, but they

can only do so much. State and local lawmakers and economic development leaders should step in as well to provide the connections, infrastructure, and funding needed to foster new defense industrialists in their own regions.  Defense innovation is at a pivotal moment, and one that can provide a win-win if properly supported. Effort today can help a new crop of innovative companies emerge, make our nation safer, and help spur lasting economic development in our communities. The opportunity is clear, and the Great Lakes region could lead the way.

Ashley Harrison was billed nearly $37,000 after a hospital visit in 2019.

FILLING THE GAPS IN HEALTH INSURANCE

Even

the insured get saddled with staggering medical debt. Cook County and the state are stepping up to offer relief. | By

Ashley Harrison visited Advocate South Suburban Hospital in 2019 with a headache, fever and joint pain. She left the hospital with a diagnosis of leukemia and a bill for nearly $37,000.

After two nights in the Hazel Crestbased hospital, Harrison, then 30, learned that the hospital did not accept the insurance she received through her employer. “I felt like I was going through bad luck,”

Sophie Rodgers

said Harrison, who earned about $24,000 at the time. “I was diagnosed with cancer, no longer able to work, my hair was falling out, and then I’ve got this big bill.”

Unable to pay, Harrison’s $36,733 bill was sent to a collection agency, which she said aggressively tried to collect payments by calling frequently, only worsening the stress and depression she dealt with following her diagnosis.

Her case is not an anomaly. Despite

91% of Cook County’s 5 million residents having health care coverage, 13% have medical debt in collections, according to nonpro t research organization the Urban Institute. In general, half of U.S. adults are unable to pay an unexpected medical bill of $500 in full, according to recent data by KFF, a nonpro t health policy research, polling and news organization.

See DEBT on Page 12

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Despite 91% of Cook County’s 5 million residents having health care coverage, 13% have medical debt in collections.

MEDICAL DEBT

DEBT

From Page 11

Like Harrison, many Americans are just one illness away from accumulating devastating medical debt despite having insurance, especially if they receive a so-called “surprise bill” from an out-ofnetwork provider. Making matters worse, even those who receive care from in-network providers are not immune to medical debt, attributable to rising premiums, deductibles and co-payments, which have outpaced income and put more strain on household budgets.

Yet the burdens of medical debt are not shared equally. Those managing chronic conditions and other long-term illnesses while earning low incomes often incur more expenses. But Black Americans fare worse than any other racial or ethnic group, largely due to discriminatory practices that severely limit or withhold economic opportunities.

“Medical debt can happen to almost anybody, even with insurance,” says Cynthia Cox, director of the Peterson-KFF Health System Tracker. “It comes down to income and health status. Because of inequities that exist in our society, Black people are more likely to be low income and also sicker.”

Across all races, nearly 8% of U.S. adults carry medical debt, according to a recent report by KFF. Of this share, 13% of Black Americans have medical debt, compared to 8% of Hispanic Americans, 7% of white Americans and 3% of Asian Americans.

The Chicago area follows this national trend. Nearly 13% of all Cook County residents with a credit record have medical debt in collections. Of those, 8% are white compared to 19% of people of color, according to the Urban Institute. (The nonprofit could not provide data on specific racial and ethnic groups.)

The inequities reveal the intersection between wealth and health and can be seen across Chicago’s 77 neighborhoods. The median household income of the predominantly white and affluent Lincoln Park neighborhood is over $145,000 and the average life expectancy of its residents is 80 years old, according to the Chicago Health Atlas. Meanwhile, the largely Black and impoverished East Garfield Park area has a median household income just under $31,000, with its residents living an average of 66 years.

“Life expectancy operates on a gradient. It is directly and linearly associated with income,” says Dr. David Ansell, senior vice president for community health equity at Rush University Medical Center, who has spent years studying the effects of economic inequality and its impact on health. Life expectancy also serves as a barometer of a community’s health, he says. “A neighborhood’s condition has a much larger impact on your ability to live a long life than just wealth alone.”

As for the disproportionate impact of medical debt on Black Americans, he points to the country's history of racism through discriminatory lending and housing practices, known as redlining, which created less opportunity for wealth accumulation for Black people.

For perspective, it would take anywhere from 110 to 320 years for Black Americans to achieve the same economic, social and health qualities of life as their white neighbors, according to a recent report by consulting firm McKinsey.

Financial pressures like medical bills, which can be unexpected and unmanageable, put greater strain on Black families who have fewer means to cover such expenses. This further  widens the racial wealth gap by forcing Black Americans to drain their savings or take on credit card debt, eroding the ability to get ahead financially.

Medical debt also impacts Black families’ access to “a key wealth-building vehicle — homeownership,” according to a report by Berneta Haynes, senior attorney at the National Consumer Law Center. Since medical debt can worsen credit scores, Black families carrying medical debt may face difficulties obtaining mortgage loans.

“That’s not to say that there aren’t a lot of poor whites in this country, or that there aren’t white people suffering,” Ansell of Rush University Medical Center says. “Poverty is a thief for anyone who experiences it. But the context for which medical debt arises is always going to place its blows disproportionately on Black communities.”

When health insurance isn’t enough

“Across the coverage spectrum, people are running into problems with their insurance,” says Sara Collins, senior scholar and vice president for health care coverage at The Commonwealth Fund. “They face high out-of-pocket costs that make it difficult for them to access care. And if they do access care, they’re leaving with a lot

insurance costs and even influence employment, according to the Consumer Financial Protection Bureau, or CFPB.

Despite changes made in 2022 by three major credit bureaus to remove paid medical debts and those less than a year old from consumer credit reports, the CFPB found 15 million Americans still have medical bills on their credit reports.

“Experian, Equifax and TransUnion took steps to remove many medical bills, in part, because of the recognition that they hold little predictive value,” says CFPB Director Rohit Chopra. “Findings from our latest research reveal the impact of these changes and the need for further reforms.”

of bills.” Collins said over the last decade, deductible size has outpaced wage growth, requiring Americans to allocate a greater share of their income to health care. The reason for large deductibles in employer and private plans is due to increases in health care costs generally.

Health care costs have grown so much that even high-income earners can’t keep up, especially if they have chronic conditions that keep them using the health care system routinely.

Take Angela Cooper, for example, a senior consultant at Deloitte who lives in Rogers Park. She has employer-sponsored health insurance and earns a six-figure salary. But Cooper has felt the need to set up a GoFundMe campaign to raise money for the debt she has accrued from years battling various health conditions.

After a brain aneurysm in her 20s, Cooper needed emergency brain surgery. After the operation, she started having seizures. Seizures are not an uncommon complication after brain surgery, though hers have become a lifelong issue contributing to the “financial hole” that has followed her into her 40s. In late February, Cooper needed another surgery because her seizures worsened.

Over the past 15 years, Cooper, now 42, has paid about $35,000 in medical expenses. She has prioritized paying off her medical bills, but that leaves her with little in savings and mountains of other debt: about $25,000 in credit card bills and $100,000 in student loans.

“I’m a pretty tough broad and have been able to get through a lot of stuff, but having debt will always weigh on me,” Cooper said. “I have a friend who gives me a hard time for not having savings or a high 401(k). He doesn’t understand that I’m still digging myself out of debt.”

Like the mountains of other debt Cooper has accrued, having medical debt can create a slew of financial hardships and remains one of the leading causes of bankruptcy in the U.S. It can also negatively impact one’s credit score, which may hinder homeownership and loan options, increase

dents jump through hoops to receive aid.

“We make the deals with the providers and then we wipe out their debt, clean up their credit and send them a letter saying we’ve done it,” Preckwinkle says.

As of October 2023, 10 city ZIP codes that have had the greatest debt abolished are all on the South and West sides of Chicago, according to Cook County data.

Cook County has led the way with this initiative and other local governments are following suit, including those in Akron, Cleveland and Toledo, Ohio; New Orleans; Wayne County, Mich.; Washington, D.C.; and New York City.

In a recent report by the CFPB, the agency said “medical debt can lead people to avoid medical care, develop physical and mental health problems, and face adverse financial consequences like lawsuits, wage and bank account garnishment, home liens and bankruptcy.”

In Illinois, Black and Hispanic adults forgo medical care at higher rates than other races or ethnicities. Across the state, nearly 10% of all residents did not visit a doctor in the past 12 months due to cost. Of this share, 21% are Hispanic and 13% are Black, compared to 6.5% who are white, according to KFF’s analysis of the U.S. Centers for Disease Control & Prevention’s data.

‘A miracle’

To address medical debt in the greater Chicago area, the Cook County Medical Debt Relief Initiative was created with the blessing of Cook County Board President Toni Preckwinkle. The initiative has committed $12 million from federal American Rescue Plan Act funds to propel the program.

“Those of us at the local level can take steps to ensure that medical debt is not a burden to our residents,” Preckwinkle says.

“We’re trying to make the case that, given the absence of universal health care, we ought to be helping our residents.”

In doing so, the county has partnered with Undue Medical Debt, formerly RIP Medical Debt, a national nonprofit and subrecipient of these funds. Undue Medical Debt purchases portfolios of medical debt for pennies on the dollar from hospitals and health systems in the county, canceling debts for Cook County residents who qualify based on financial hardship. Those who qualify must have incomes up to 400% of current federal poverty levels or have medical debt that is 5% or more of their household earnings.

Since its launch in 2022, the initiative has canceled $348 million in medical debt for 200,000 Cook County residents, Preckwinkle says. And unlike other government assistance programs, which entail an application process or proof of income, this initiative does not require qualified resi-

Now it’s going statewide. Earlier this year, Illinois Gov. J.B. Pritzker proposed investing $10 million next year in federal funds to erase more than $1 billion of medical debt for 300,000 lowincome Illinois residents. The erasure is part of a four-year plan to eliminate $4 billion of medical debt for more than 1 million Illinoisans.

“Too many Illinoisans have had their credit ruined or have been pushed into bankruptcy when they had one unexpected accident or one prolonged illness,” Pritzker said in his Feb. 21 budget address.

In addition to Undue Medical Debt, other nonprofit organizations dedicated to medical debt forgiveness exist. One such example is Dollar For. It helped get Harrison’s nearly $37,000 bill canceled by Advocate South Suburban Hospital, which hung in balance three years after her visit.

Dollar For advocates on behalf of low-income patients to access charity care, which is an “unknown and underused solution,” according to its website. Federal law requires nonprofit hospitals to have financial assistance policies in place for low-income patients, which few of these patients know about, leading to unnecessary financial burdens.

Like charity care laws, many patients also may not be familiar with the federal No Surprises Act, which took effect in 2022. It protects patients who unknowingly received medical services from physicians and other providers outside their health insurance network.

In a written statement, a spokesperson for Advocate South Suburban expressed apologies to Harrison and said they are “thankful to have resolved this situation in 2022 and provided financial assistance.” The hospital claimed causes for the initial mistake in coverage denial included a change in its record system, human error and the denial of coverage for emergency services by Harrison’s insurance company.

Dollar For advocated on Harrison’s behalf for over six months to get her bill canceled in full. “I thought it was a miracle,” says Harrison, whose leukemia is now in remission. “I was skeptical at first, but it really happened. All my debt was eliminated.”

Medicaid coverage

Percentage of residents with Medicaid coverage in Chicago neighborhoods from 2018 to 2022

Life expectancy

Average number of years a person may expect to live in Chicago neighborhoods, as of 2020

Medical uninsured rate

Percentage of residents without health insurance in Chicago neighborhoods from 2018 to 2022

Median income

The median household income in Chicago neighborhoods from 2018 to 2022

Crushing burden also takes a toll on patients’ mental health

When bills outstrip incomes, some are forced to take drastic measures

By Sophie Rodgers

The far-reaching consequences of medical debt can devastate the financial and mental well-being of entire households, not just that of the individual with debt.

Medical debt, which burdens an estimated 100 million Americans, can cause a family to deplete savings and force them to forgo basic necessities and deter opportunities to save for education, retirement and housing, according to KFF, a nonprofit health policy research, polling and news organization.

For some, the burdens of medical debt and the sacrifices they make to pay these bills leave them unable to provide for their families or get ahead financially. For others, the strains may deteriorate their mental health.

The medical debt of one Lincoln Square couple is a case in point. The wife of a man who received a $98,000 bill for a 2022 emergency room visit to treat blood clots in his lungs recounts how her husband’s mental health declined after receiving the steep bill.

“My husband told me I shouldn’t have called 911,” says the woman, 34, who asked that their names not be published for privacy reasons. “He said if he had known how much it was going to cost, he wouldn’t have gone to the hospital.”

Her husband felt guilty for going to the emergency room. His wife, an interior designer, covered her husband with health insurance she received through a contract job. She described it as “the worst health insurance in the world” because it provided limited hospital coverage.

Overwhelmed by the nearly $100,000 hospital bill, which she says was akin to acquiring another mortgage, the couple reduced spending and made sacrifices. They felt guilty buying seemingly small items, like ordering a pizza for dinner, she says.

The couple, who earn about $115,000 a year combined, aren’t the only ones making sacrifices to cover health expenses. About 39% of adults paying off medical debt must cut back on basic necessities like food, heat or rent, according to a recent survey by The Commonwealth Fund, a private foundation focused on health care research.

Another 37% of respondents reported using up all or part of their savings, 25% have taken on another job or worked more hours, and 18% postponed buying a home to pay medical bills. The survey also found that nearly 80% of adults with medical debt feel anxiety and worry.

A similar survey by KFF found that those with lower incomes, unsurprisingly, need to make greater sacrifices due to medical debt. For example, 70% of indi-

viduals earning $40,000 a year or less need to cut back spending on food, clothing or basic household items, compared to 51% who earn over $90,000. Many Americans, even those with private health insurance like the Lincoln Square woman, simply do not have enough liquid assets to meet out-of-pocket maximums, says Cynthia Cox, director of the Peterson-KFF Health System Tracker. Among multi-person households where at least one household member has private insurance, 20% do not have savings over $2,000, a separate KFF report shows.

Out of desperation, the wife reached out to Dollar For, a nonprofit that advocates on behalf of low-income patients to access financial assistance. The couple didn’t qualify for financial assistance because their income was too high, but Dollar For informed them of the hospital’s catastrophic assistance program, which helps patients who have had a catastrophic medical event resulting in a large medical bill compared to their income.

In 2023, the couple learned that they had been approved for catastrophic assistance, and the $98,000 bill was reduced to $29,000.

“We felt like we had our lives back,” the wife says. “We couldn’t believe it. If Dollar For hadn’t told us about catastrophic assistance, we never would have known to pursue it.”

Prioritizing profits makes society less healthy and wealthy

Aclinical psycholo gist, Mashana has lived in the Chicago area her whole life and is no stranger to medical debt.

Not only does she have a chronic autoimmune dis ease but her daughter struggles with mental health issues and is on the autism spectrum. “There is a highly emotional component to (medical debt),” she says. “It is incredibly stressful. It weighs on you. There’s anxiety and guilt that people feel if they want to pay their medical bills but aren’t in a position to.” She adds, “Will my insurance cover what I want it to cover? You have to be kind of savvy, otherwise you get burdened with more debt.”

Allison Sesso is president and CEO of Undue Medical Debt,

a national charity that erases unpayable medical debts.

“It’s a horrible position to have to be put in as a parent, to have to . . . do a cost-benefit analysis about your child’s well-being.”

That, in a nutshell, is the burden of medical debt, which is the leading cause of bankruptcy in the U.S. It’s an injustice unique to our country — and as of 2022, medical debt represented the majority (57%) of all collections on credit reports. Many of us are one accident or illness away from crushing medical debt.

A common refrain from policy-

makers and elected officials has been the importance of insurance to protect people from the worst harms of medical debt. And what’s been achieved with the Affordable Care Act (Obamacare) has been significant. But over 90% of the country is currently insured and the medical debt crisis is still affecting 100 million people to the tune of at least $220 billion. Insurance today is too often incomprehensive, unaffordable and insufficient.

And while medical debt can impact nearly anyone, the burden too often falls on communities of color and compounds other social determinants of health like access to quality food, water and employment.

Per the Kaiser Family Foundation, Black adults are 50% more likely and Hispanic adults 35% more likely to hold medical debt compared to white adults. The South, where there are the highest concentrations of Black people in the U.S., is also where there’s stagnation in expanding Medicaid, which would provide quality coverage to those with incomes up to 138% of the federal poverty level.

And despite some real progress — spurred on by the Consumer Financial Protection Bureau and implemented by the three major credit reporting agencies — in removing medical debts under $500 from credit reports, 15 million Americans still have these debts of necessity negatively affecting their credit scores, and they are more likely to live in the South, in low-income census tracts with higher percentages of Black and Hispanic residents.

As the leader of a national nonprofit, Undue Medical Debt, that acquires and erases medical debts primarily for individuals four times or below the federal poverty

level, I see every day the burden of these unpayable debts and the impact of direct relief coupled with upstream policy solutions. Not only are we working with Cook County government to leverage American Rescue Plan funds to erase the medical debts of qualifying county residents (over $300 million of debt so far), we also have three broad policy goals we’re pursuing: 1. Advocating for comprehensive/affordable health insurance so people can engage with the health care system without fears around cost. 2. Proactive and presumptive financial aid from providers so qualifying patients don’t have to navigate pa-

perwork on top of a potential health crisis. 3. The banning of harmful extraordinary collection practices like leveraging medical debts against credit scores or, even worse, lawsuits or liens on homes. Mashana is one of the millions who have benefited from debt relief, and she shares: “It’s this huge weight off my shoulders. . . .It gave me the opportunity to have a fresh start.”

I often say we can walk and chew gum at the same time. To tackle this issue we need to provide relief today to those most impacted and also champion their voices to guide structural policy change to make medical debt a burden of the past.

Medical debt burden reveals the inadequacy of health coverage

As an increasing number of people cope with incurable medical issues, we’re learning good health is real wealth. Healthy people can work, take care of their families and be active members of their communities. But by 2030, it’s estimated more than half the U.S. population will have a chronic illness.

LaTanya Jackson Wilson is vice president of advocacy at the Shriver Center on Poverty Law, a national nonprofit that fights for racial and economic justice.

Under the current system, people must pay to be well. Medical expenses, not credit cards, are the No. 1 reason people file for bankruptcy. More than half of adult Americans (56%) have some medical debt, and nearly a quarter of the population (23%) owe more than $10,000. In Illinois, about 14% of the population has medical debt in collections.

An unexpected medical emergency can decimate a family budget. Households with health insurance — even middle-income families — struggle under the weight of medical debt. People can lose their job, health insurance and income because of an illness or injury. And for the 27.2 million Americans without insurance, the costs are even worse.

The poor are penalized with poor health outcomes. Poverty causes premature death. In the United States, it’s linked to a 42% higher

risk of death than in the general population, according to a recent study. The study also found that 10 years of consecutive poverty is a greater risk factor for death than dementia, obesity and stroke. Mounting bills also cause stress and depression.

At the Shriver Center on Poverty Law, we work at the intersection of race and poverty, fighting to change rules that change lives. That’s why access to quality health care is a critical part of our advocacy. Over the next three years, as part of our new strategic plan, we’re continuing that work while looking at ways to improve health equity in Illinois and across the country.

We know poverty is a policy choice, and we can make better choices. Elected officials did this in Cook County, where they used $12 million in federal funds from the American Rescue Plan Act to erase up to $1 billion of medical debt. In 2022, Cook County became the first local government in the nation to enact a medical debt relief program. Since then, the program has helped over 200,000 residents.

The recently approved Illinois state budget includes Gov. J.B. Pritzker’s program to erase up to

$15 billion in medical debt for 340,000 Illinois residents. His initiative isn’t the only effort in Springfield to alleviate medical debt. The state Senate passed a bill on April 11 barring credit rating agencies from using medical debt on credit scores and reports. When the government shows this kind of innovation, it encourages other sectors to follow suit. As one example, Loyola Medicine will forgive $112 million in medical debt, affecting more than 60,000 Illinoisans.

Medical debt has a disproportionate impact on people of color. Black adults are 50% more likely to hold medical debt and Hispanic adults 35% more likely to carry it, compared to white people. Black people, immigrants and people of color are at disproportionate risk of being uninsured, lacking access to care and experiencing worse health outcomes.

When study after study shows ZIP code dictates life expectancy, communities of color are more at risk from decades of discrimination and

disinvestment. Racism is a public health issue. People in low-income neighborhoods have food deserts and limited access to quality health centers and recreational facilities. Meanwhile, well-resourced areas have multiple grocery stores and community assets like parks and recreational areas.

The health care system also focuses more on treatment after you’re sick instead of prevention. But we can use the built environment to make healthier lifestyles possible, with fitness centers in workplaces and walkable communities for everyone. Outreach and education are key, too, because resources about nutritious meals and exercise can reduce our health care costs.

There are always those who will complain about lack of money. We say: Find the funds. Budgeting is about prioritizing what matters most. What’s more critical than our health, both individual and public? Our society and our health system must prioritize well-being over profit.

Chicago has been a leader in the state and across the country for improving quality of life, from raising the minimum wage to providing paid leave. Let’s add medical debt relief to the progressive policies we pass that benefit all people. Working across sectors, we can lift this heavy burden off Illinois families and build a better future for our communities.

CHICAGO'S HIGHEST-PAID CEOS CRAIN’S LIST

CEOs, non-CEOs saw incomes soar last year

By Sophie Rodgers

This year’s list of Chicago’s 25 Highest-Paid CEOs features some new faces, namely Githesh Ramamurthy of CCC Intelligent Solutions and Dave Flitman of US Foods.

Ramamurthy leads the pack with 2023 total compensation of $54.5 million, largely attributable to the $53.6 million he accrued from stock awards.

Flitman, who stepped into his position at US Foods in January 2023, holds second place with $29.9 million in total compensation. Much of his compensation also comes from stock awards ($23.2 million), plus a generous bonus of $3 million.

Following Ramamurthy’s massive pay raise of nearly 6,327%, other CEOs whose compensation soared from last year include Toby Williams of Paylocity, up 157.3% to $21.7 million; John Rademacher of Option Care Health, up 146% to $16.6 million; and Peter Arduini of GE HealthCare Technologies, up 133.5% to $24.5 million.

Missing from this year’s top 25 are Rosalind Brewer, former CEO of Walgreens Boots Alliance, whose compensation fell over 18% to $14.1 million; W. Anthony Will

of CF Industries, down almost 10% to $12.9 million; and Debra Cafaro of Ventas, down nearly 4% to $13.5 million.

In general, 2023 was a good year for CEO pay — especially compared to 2022, when belts tightened across corporate America. This year, there are 14 CEOs in the exclusive $20 million club, meaning they earned $20 million or more in 2023. That’s compared to only eight executives last year.

Median pay for these 25 CEOs soared 40% last year to $21 mil-

lion. This spike is attributable to a notably strong market last year — highlighted by the S&P 500’s 24% gain — and its overall impact on stock awards. Stock awards made up 61% of these 25 CEOs’ total compensation in 2023, according to Crain’s analysis of S&P data.

The 25 executives on the accompanying list of Highest-Paid NonCEOs likewise had a good year in 2023. Median compensation among these executives was $9.6 million in 2023. Comparatively, median compensation among last year’s top 25 non-CEOs was about $8.6 million in 2022.

Coming in first place among the non-CEOs is Frederick Pollock, chief investment officer and head of the strategic investment group at GCM Grosvenor. This is Pollock’s second year taking the No. 1 spot, with compensation up 322.8% to $50.8 million in 2023.

Jonathan Levin, president at GCM Grosvenor, likewise saw a pay raise over 300%. Levin takes second place with $34.7 million. Stock awards made up 62.4% of the 25 non-CEOs’ total compensation last year.

Both lists are based on data from S&P Global Market Intelligence and ranked by 2023 total executive compensation packages.

City’s $20 million CEO club nearly doubles in size

By Sophie Rodgers

Chicago’s CEOs are back to receiving normal pay raises after belts tightened across corporate America in 2022. Since last year’s ranking, the city’s elite $20 million club has nearly doubled in membership.

There are now 14 CEOs in the club, which is exclusive to top executives who earned $20 million or more in 2023. That’s compared to only eight CEOs last year, which shrank from 10 members amid a slowdown in CEO pay growth in 2022.

Leading the pack — and far ahead of the rest — is first-time member Githesh Ramamurthy,

CRAIN’S LIST

chairman and CEO of CCC Intelligent Solutions. Ramamurthy saw a whopping 6,327% increase in compensation, bringing his total to $54.5 million.

There are now 14 CEOs in the club, which is exclusive to top executives who earned $20 million or more in 2023. That’s compared to only eight CEOs last year.

Despite receiving only a 3.7% increase in base salary to $867,860, a closer look at CCC Intelligent Solutions’ proxy statement reveals that Ramamurthy accrued more

than $53.6 million in stock awards. Second place is also held by a newcomer: Dave Flitman, CEO of US Foods Holding Corp. Flitman, who stepped into the role in January 2023, earned a total of $29.9 million last year, with over $23.2 million from stock awards and a $3 million bonus.

Also new to the club are Peter Arduini of GE HealthCare Technologies and Toby Williams of Paylocity. Arduini ranks sixth with total 2023 compensation of $24.5 million, up

CHICAGO'S HIGHEST-PAID CEOS

133.5% from 2022. Williams places 11th, up 157% to $21.6 million. Returning members from last year include Gregory Brown of Motorola Solutions, with total compensation up 34% to $28.2 million; John May of Deere & Co., up nearly 32% to $26.7 million; Richard Gonzalez of AbbVie, down 2.4% to $25.7 million; Juan Luciano of ADM, down 1.4% to $24.4 million; Terrence Duffy of CME Group, up 2.3% to $23.5 million; Robert Ford of Abbott Laboratories, up 7% to $23.3 million; and Scott Santi, former CEO of Illinois Tool Works, up 1.2% to $22.5 million.

In 2023, median CEO pay at Chicago-area S&P 500 companies

rose 11% to $14.1 million, according to Crain’s analysis of the 35 companies. Among these local CEOs, all but 11 saw a pay raise. Meanwhile, median CEO pay among the nation’s S&P 500 companies rose 12.6% to $16.3 million, according to an analysis by Equilar and The Associated Press. This spike is attributable to a notably strong market last year, highlighted by the S&P 500’s 24% gain. Stock awards made up approximately 70% of total compensation in 2023, according to Equilar and The Associated Press. The median value of stock awards rose 10.7% to $9.4 million last year, largely contributing to the overall rise in total compensation.

Githesh Ramamurthy of CCC Intelligent Solutions

Dave Flitman of US Foods

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

Fulton Market apartment building set for hotel conversion

The developer has partnered with TMC Hospitality on a plan to convert the Lake Street Lofts building into a 140-room inn

By Danny Ecker

The developer behind a new office building underway in the Fulton Market District has struck a deal to turn the property next door into a hotel, the latest pivot for a historic-but-vacant former apartment building in the trendy neighborhood.

Fulton Street Cos. has signed a letter of intent with Irvine, Calif.based TMC Hospitality to convert the Lake Street Lofts building at 910 W. Lake St. into a 140-room Drift-branded hotel, according to Fulton Street CEO Alex Najem. The six-story building is next to the site where the Chicago developer broke ground last fall on a 400,000-square-foot office building at 919 W. Fulton St. If the redevelopment — which requires a City Council sign-off — comes to fruition, it would add a big new block of hotel rooms to the former meatpacking corridor as it welcomes new high-profile corporate tenants and thousands of new residents in apartment buildings under construction.

Fulton Market hotels today include the Hoxton, Soho House, Nobu Chicago and the Emily Hotel, a collection of inns that have capitalized on business from a list of companies in the neighborhood like Google and McDon-

ing into the 919 W. Fulton office project, but the developer ultimately scaled down that development to kick-start its construction.

Fulton Street’s plan last fall was to maintain the loft building — which housed the original

If the redevelopment — which requires a City Council sign-off — comes to fruition, it would add a big new block of hotel rooms to the former meatpacking corridor.

ald’s. Other big office users, including Boston Consulting Group and law firm Greenberg Traurig, are moving into the area.

Fulton Street’s plan for the Lake Street Lofts building has evolved since it paid $49 million for the property in 2022. Its original vision was to incorporate the build-

CRAIN’S LIST

Schwinn bicycle factory shortly after it was built in the late 19th century — as apartments, but the developer has now shifted again to bet on the growth of Fulton Market’s hospitality sector.

“We just think that, if we’re going to spend money renovating it, we might as well put it toward the

highest and best use,” Najem said. “There are thousands of apartments coming to the market, and we just don’t think that we can get the rents for apartments that we’d need. . . .There likely won’t be a lot of hotels built in the neighborhood, and there’s a huge demand for hotel rooms.”

Najem said the $75 million conversion project will include a rooftop bar and restaurant and ground-floor workspace, and it is projected to be done by fall 2025, pending city zoning approval. Fulton Street is partnering on the project with Chicago-based Weldon Development Group and Shanna Khan of investment firm SNK Capital. Khan, who is the daughter of Jacksonville Jaguars owner Shahid Khan, is also a partner on the 919 W. Fulton project.

The Drift hotel would be TMC’s first in Chicago. The company has

opened other Drift hotels in Nashville, Tenn.; Palm Springs, Calif.; Santa Barbara, Calif.; and San Jose del Cabo, Mexico. Launched in 2021, the hotel brand is framed as a “modern hotel that celebrates its dualities: a spare and minimalist aesthetic but a vibrant and friendly demeanor,” according to the TMC website.

TMC CEO Philip Bates told CoStar News, which first reported the hotel deal with Fulton Street, that TMC had been eyeing Chicago for several years and plans to expand into San Francisco, Boston and Texas, among other markets.

A spokeswoman for TMC Hospitality did not immediately respond to a request for comment.

Fulton Street and TMC aren’t the only ones trying to add to the supply of hotel rooms in Fulton Market. A joint venture of New

CHICAGO'S HIGHEST-PAID NON-CEOS

Ranked by total 2023 compensation; includes executives from public companies only.

From Page 19

York-based developer Cogswell Realty and Elmhurst-based investor Erol Stapleton last fall proposed a 14-story, 143-room hotel on a small lot at 1016-1020 W. Lake St., roughly two blocks west of the Lake Street Lofts building. A surge in leisure travel last year helped the downtown hotel market recover from the pain of the COVID-19 pandemic, though hotels are still trying to reclaim the level of business they were doing before the crisis.

Revenue per available room at downtown hotels — a metric that accounts for both occupancy and room rates — averaged $147.92 in 2023, according to real estate information company CoStar Group. That was still slightly below the $149.45 average for downtown in 2019, though the 2023 figure is still well below the pre-pandemic average when accounting for inflation.

Fulton Street and its capital partners have been one of the most active developers and investors in Fulton Market over the past several years. Among other projects, the company developed a boutique office building at 1045 W. Fulton St. and is aiming to begin construction soon on a 32story, 433-unit apartment highrise at 1201 W. Fulton St. That $210 million project is across the street from a larger development site at 1200 W. Fulton St., where the developer unveiled plans earlier this month for a two-tower, 1,079-unit apartment complex.

The office project at 919 W. Fulton is on track to be completed next year. The building will be anchored by Harrison Street Real Estate Capital, which signed a roughly 112,000-square-foot lease to move its office there, as well as a new Gibsons restaurant. Fulton Street is also in advanced talks with high-end fitness chain Equinox to open a 40,000-square-foot gym on the building’s second floor.

The Lake Street Lofts building at 910 W. Lake St. COSTAR GROUP

The Budlong’s parent company acquires fried chicken chain, plans to merge the two

The acquisition target was Hot Chicken Takeover, out of Columbus, Ohio

By Ally Marotti

The Budlong Southern Chicken’s parent company has acquired another fried chicken chain out of Columbus, Ohio, and plans to merge the two as they expand.

Craveworthy Brands, which bought then-named The Budlong Hot Chicken in 2022, closed its acquisition of Hot Chicken Takeover’s parent company, Untamed Brands, last month. Founder and CEO Gregg Majewski declined to disclose a purchase price.

“Hot Chicken Takeover is an incredible brand, just like Budlong,” he said. “We felt the two have synergy together that will allow us to expand our footprint at a much greater rate.”

The plan is to keep the Hot Chicken Takeover name at its existing nine locations in Ohio and keep The Budlong’s name on Chicago-area restaurants, Majewski said. Craveworthy will then take menu items from both restaurants to create a new chain called HCT Southern Chicken.

“We’re going to take the highs of each brand and bring them into each other,” he said. “That doesn’t mean we’re changing the chicken recipe. Budlong fans don’t have anything to worry about. But there are things HCT has on their menu that we don’t

that’ll definitely be something we bring in, and vice versa.”

The Budlong has more sandwiches on its menu than Hot Chicken Takeover, for example. Hot Chicken Takeover — which will also have the tagline “Southern fried chicken” added to its Columbus restaurants — offers more chicken plates on its menu.

The Budlong expanding

Meanwhile in the Chicago area, The Budlong is expanding. There are four locations in Chicago — its original restaurant in Lakeview,

another location in Lincoln Square that existed under past ownership, and newer spots in Lakeview and in Craveworthy’s food hall in the Loop, Craveworthy Kitchen at Hayden Hall. There is one location in Dallas and two additional locations under construction in Chicago’s suburbs.

Majewski said he expects to sign a franchisee agreement for Chicago’s northwest suburbs that carries the possibility to open 15 locations, too.

Fried chicken, particularly in sandwich form, has been having a

moment, and that moment has lasted half a decade. Popeyes released a fried chicken sandwich in the summer of 2019 to long lines and rippling social media buzz. In the years that followed, most major fast-food chains jumped into the craze and tried to get a bite of that market share.

Five years later, consumers’ appetite for chicken is still insatiable. When market research firm Technomic asked consumers what menu items they crave at limited-service restaurants, 12.4% named chicken without being

prompted. That’s up from 12.1% the year prior. And in both years, chicken beat every other item consumers named as craveable, including burgers, baked goods and fries.

Consumers wary of prices

Still, consumers are wary of ever-increasing menu prices, regardless of their cravings. To combat that headwind, The Budlong introduced a chicken thigh sandwich for $7, so customers can come eat for under $10. The original chicken sandwich is about $10, Majewski said.

“People are fatigued by the continual menu hikes,” Majewski said. “You have to be conscious of the overall value proposition you provide your franchisees and your consumers.”

South Elgin-based Craveworthy, which launched in 2022, is on a mission to reach $1 billion in systemwide sales in five years. Majewski, a quick-service restaurant executive who oversaw Jimmy John’s expansion, said that will come largely through acquisitions and expansions.

So far, Craveworthy has 13 brands with more than 200 restaurants in its portfolio and 500 locations under development. Some of its brands include BD’s Mongolian Grill, Flat Top Grill, Lucky Cat Poke, Soom Soom Mediterranean and more.  Its latest acquisition of Untamed Brands also included Taim, a Mediterranean restaurant with 13 locations in New York and Washington, D.C. Craveworthy plans to integrate Taim with Soom Soom, in a manner similar to its plans for the fried chicken restaurants.

Investor weighing sale of Oak Street retail corner

The firm that bought the prominent Gold Coast property for $154 million a decade ago and undertook a major redevelopment could be cashing out

By Rachel Herzog

An East Coast real estate firm is looking to cash out on its repositioning of one of Chicago’s most prominent retail corners. Bethesda, Md.-based ASB Real Estate Investments is preparing to list the six-story property at 1-15 E. Oak St. for sale, according to sources familiar with the potential offering. Located at the intersection of Oak and Rush streets in the heart of the ritzy Gold Coast shopping district, the retail and office property boasts luxury brands Cartier and Balenciaga as tenants.

A venture backed by ASB paid $154 million for the 94,600-squarefoot property in 2013. After retailer Barneys New York filed for bankruptcy in 2019, closing its multilevel store at that location and leaving the property largely empty, ASB undertook a major

redevelopment of the property that included carving up the space to market it to multiple retail tenants as well as office users on the upper floors.

The recently unveiled Cartier boutique at 15 E. Oak St. takes up about 8,000 square feet of retail space on the first and second floors, and Balenciaga’s two-level, 6,700-square-foot shop opened earlier in May. The first floor also holds a 4,600-square-foot Citibank branch.

In talks with restaurant

Commercial real estate brokerage CBRE is marketing retail space on the second and fifth floors and 38,467 square feet of office space of the building for lease, according to marketing materials. The building’s owner is in talks with a restaurant to take the former Fred’s restaurant space on the top floor, according to sources.

While high retail vacancy rates have hammered downtown property values, Oak Street has remained a desirable location for upper-crust retailers. The Gold Coast also has some of the highest office rents in the city, with some tenants paying $40 per square foot, according to people familiar with the market.

The building would be offered for sale debt-free, with ASB having paid off a $68 million mortgage on the property that was set to mature in May 2021.

ASB didn’t respond to requests for comment from Crain’s but confirmed to industry publication The Real Deal Chicago, which first reported on the potential listing, that the firm is considering selling the property.

CBRE’s David Knapp, Doug Middleton, Luke Molloy, Blake Johnson and Tim Gifford would market the property for sale.

The plan is to keep the Hot Chicken Takeover name at its existing nine locations in Ohio and keep The Budlong’s name on Chicago-area restaurants | HOT CHICKen TAKeOVeR

PEOPLE ON THE MOVE

ARCHITECTURE / CONSTRUCTION

McKissack & McKissack, Chicago / DC

McKissack & McKissack, one of the nation’s leading Black- and womanowned architecture, engineering, and construction management companies, welcomes Carmelo Torrisi, an AEC industry leader, as the new president. Torrisi will focus on guiding McKissack & McKissack’s continued growth strategy across multiple markets and regions. “Carmelo’s leadership will be instrumental as we reach the next level in our business and enhance the lives of people through AEC,” said Founder & CEO Deryl McKissack.

ARCHITECTURE / DESIGN

Lamar Johnson Collaborative Chicago

Lamar Johnson Collaborative (LJC) has promoted Mike Staats AIA, LEED AP to Associate Principal. Mike’s collaborative spirit and design and technical knowledge make him an extraordinary and valuable mentor on residential, corporate and adaptive reuse projects. He is an honor graduate of the architecture programs at Illinois Institute of Technology and Karlsruhe Institute of Technology in Germany. LJC has promoted Veronica Widholm AIA, LEED AP to Associate Principal. Veronica has experience in corporate, residential and educational markets. Veronica holds a Master of Architecture from University of South Florida and a Bachelor of Architecture from Marist University.

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has promoted Matt Delehanty to Vice President. He joined the firm in 2011 as an Assistant Project Manager, managing a diverse array of tenant improvement projects. Known for reliability and client rapport, he values every project as a learning opportunity. Particularly rewarding is guiding former clients through space transitions, completing a fulfilling circle of service. Matt earned his Bachelor of Science in Construction Management from Bradley University.

CONSTRUCTION

CONSTRUCTION

Clune Construction, Chicago

Clune Construction has promoted Peter O’Toole to Vice President. He joined Clune in 2012 as an Assistant Project Manager, focusing on the firm’s tenant improvement projects. O’Toole’s success is attributed to his transparent communication with team members and stakeholders through every step of a project. O’Toole earned his Bachelor of Science in Construction Management from Illinois State University. He regularly volunteers at the Greater Chicago Food Depository.

FINANCIAL SERVICES

Wintrust Financial Corporation, Rosemont

Wintrust Financial Corp., a financial services holding company based in Rosemont, Illinois, with more than 170 locations across Illinois, Indiana, and Wisconsin, is pleased to announce two promotions.

Abigail Taylor was promoted to SVP, Credit Administration, Commercial Banking at Wheaton Bank & Trust Company, N.A. Abigail will celebrate 12 years at Wintrust this June.

Clune Construction, Chicago

Clune Construction has promoted Tom Eberhardt to Senior Vice President. Eberhardt joined Clune in 2020, bringing over 35 years of financial experience in privately held and publicly traded companies. He has been instrumental in implementing a new financial program that safeguards and optimizes the firm’s assets. In 2023, he helped establish the Clune Cares Foundation, and now serves on the Board as its Treasurer. Eberhardt holds a Bachelor of Science degree in Accountancy from DePaul University.

CONSTRUCTION

Clune Construction, Chicago

CONSTRUCTION

Clune

Construction, Chicago

Clune Construction has promoted Erica Cox to Vice President. During her tenure, she served in various roles within Clune’s Human Resources department and now oversees the administration of the company’s compensation and benefits program. One of Erica’s significant achievements is enhancing Clune’s benefits to evolving industry standards. She takes pride in expanding offerings based on employee feedback, reflecting Clune’s commitment to employee satisfaction.

Clune Construction has promoted Joe Klippel to Senior Vice President. Klippel has spent most of his 20year career managing projects at Clune. His resume includes some of Clune’s most challenging tenant improvement projects, including the recent 27-floor buildout in Chicago’s Salesforce Tower. Klippel’s commitment to team growth and transparent client relationships defines his impactful career at Clune, setting a standard for success in the industry.

CONSTRUCTION

CONSTRUCTION MANAGEMENT

Mortenson, Chicago

With the continued growth of their business in Chicago and surrounding area, Mortenson has added Jacquelyn Harvey and Jack Bilanzic as Business Development Managers. Jacquelyn’s background is with not-for-profit organizations where she was integrally involved in implementing strategic initiatives to drive revenue generation. Jack brings a wealth of industry knowledge coming from World Business Chicago where he built meaningful connections with multiple stakeholders focused on economic development across the Chicagoland region. They will combine and leverage their unique skillsets to expand and strengthen customer and partner relationships, increase Mortenson’s outreach, closely monitor industry trends, and provide market sector support.

EDUCATION

95 Percent Group Lincolnshire

Clune Construction, Chicago

Clune Construction has promoted Kevin McIsaac to Vice President. A United States Navy Veteran, McIsaac joined Clune in 2017 as a Senior Project Accountant. Throughout his tenure, he has helped develop a new process for assigning project accountants to designated departments and implemented operational procedures to streamline Clune’s workflow. McIsaac holds a Bachelor of Arts in Finance from Carthage College and a Master of Business Administration from Louisiana State University.

Erin Hamilton, Ed.D joins 95 Percent Group as vice president, educational strategy. She earned her doctorate in educational leadership from Immaculata University, with her dissertation focused on the selfefficacy of elementary principals in foundational literacy leadership. Building on her relationships with state education leaders, Hamilton is charged with accelerating awareness and growth of the adoption of 95 Percent Group’s proven solutions at the state, district, and regional levels.

Embarc, Chicago

Broderick

Sean Broderick was promoted to SVP, Senior Commercial Banker, Commercial Banking at Old Plank Trail Community Bank, N.A. Sean will celebrate five years at Wintrust in September.

Benesch, Chicago

Scott M. Eckel has joined Benesch as an associate in the firm’s Litigation Practice Group. Scott is proficient in navigating complex legal landscapes. With a strategic approach, he has drafted and reviewed a variety of motions across different contexts. He excels in preparing and defending witnesses for cross-examination while managing potential settlements.

Parker

Amelia Parker has joined Benesch as an associate in the firm’s Corporate & Securities Practice Group. Amelia focuses her practice on mergers and acquisitions, private equity transactions, and reorganizations.

Lisa Wheeler, Head of AML for the Commercial & Investment Bank at JP Morgan, has joined Embarc’s Board of Directors. Lisa is a diversity champion, and will support Embarc’s work to transform Chicago’s education system into the most experiential and equitable in the country. She is passionate about active community involvement and applying the “reach-one, teach-one” philosophy to her work with Embarc.

NON-PROFIT

One Hope United, Chicago

After an extensive national search, One Hope United (OHU) has appointed Damon Cates, EdD as its new President & CEO. Under his leadership, Damon will guide the organization to meet the growing need for quality childfocused programming through the development of OHU’s strategies and manage overall operations and resources. A leader in fundraising with more than 25 years of experience, Damon previously served as the organization’s Interim President & CEO and Chief Advancement Officer.

Bilanzic

Staats Widholm

Designer of the world’s tallest building wants to turn skyscrapers into batteries

Chicago’s Skidmore Owings & Merrill is mulling ways that buildings can store energy using gravity

By Will Wade, Bloomberg

The architecture firm that designed the world’s tallest building is considering ways to build skyscrapers that can store energy using gravity.

Skidmore Owings & Merrill has developed a series of prototype designs that use electric motors to elevate massive blocks, creating potential energy that can be converted into electricity when the blocks are lowered. The designs are based on technology developed by partner Energy Vault Holdings Inc. as an alternative to lithium-ion batteries and other types of chemical cells. They are seeking developer partners interested in offsetting greenhouse gas pollution from buildings, which the United Nations estimates are responsible for almost 40% of global emissions.

The concept is similar to widely used pumped hydroelectric plants.

Energy Vault completed its first major project last month near Shanghai, a standalone storage system that can supply as much as 25 megawatts of power for four hours. Other companies are testing new types of gravity storage systems, including ones using abandoned oil wells and mines.

Building owners and designers have a growing number of tools to limit carbon emissions from dayto-day operations, from better insulation to heat pumps. However, there are no substitutes for steel and concrete that are critical components of modern buildings, both of which are major sources of carbon emissions. There are efforts to decarbonize those materials, but they remain far from reaching a meaningful scale. For building owners looking to zero

out emissions, turning a skyscraper into a massive battery is one avenue, according to Bill Baker, a consulting partner at Chicagobased SOM.

Four prototypes

SOM has created four storage system prototypes based on this concept. Three are standalone systems that use either heavy blocks or water, with two built into hillsides and a third that’s a tall, cylindrical tower. The last is intended for urban areas, a towering skyscraper that could include residential, retail and office spaces.

Energy Vault’s Shanghai project is about 150 meters (490 feet) high, but SOM’s skyscraper batteries may be much higher, starting at 300 meters.

Tall buildings are SOM’s spe-

cialty. Baker was the lead designer for the Burj Khalifa, the 828-meter tower in Dubai that’s the world’s tallest building, and he sees significant potential for incorporating energy storage into skyscrapers. That’s because the higher the weights are lifted when there’s a surplus of cheap electricity, the more potential energy they will hold that can be released when electricity is needed.

“If I store it twice as high, twice the energy,” said Baker. “High is better.”

Energy Vault’s current systems can provide energy for about five to 10 cents a kilowatt-hour, according to Robert Piconi, the Westlake Village, California-based company’s chief executive officer. That’s cheaper than lithium-ion batteries, which come in at about 13.5

Why Amazon now owns a

By John Pletz

Amazon now owns 7% of Grubhub through a partnership that started in 2022 and is being extended for five more years.

The two companies are reupping a deal in which Amazon Prime members get free access to Grubhub+, which offers free delivery on Grubhub food orders over $12. The new agreement also allows Amazon Prime members to place their Grubhub orders through Amazon’s website and app.

Under terms of the original deal, Amazon got warrants equal to a 4% stake in Grubhub. Amazon got another 3% cut under the new deal and will receive another 1% in a year. It could end up with another 10% of Grubhub, depending on how much business

the deal delivers to the fooddelivery company over the next five years.

The companies haven’t detailed exactly how the deal is structured. Grubhub normally charges $12 per month for Grubhub+. Amazon says Prime members save about $300 a year in delivery fees if they order from Grubhub once a month. For Grubhub, Amazon Prime brings access to a customer base of an estimated 170 million users in the U.S.

“Customers we’ve gotten from Amazon, who’ve linked their Prime accounts, order more frequently than our average customers," Grubhub CEO Howard Migdal told Bloomberg News. "They’re a really good cohort of customers.” He says the partnership also helped Amazon retain Prime subscribers.

It’s not exactly clear how much

cents, according to BloombergNEF. Going higher will shift the economics significantly, and he said the goal is to get that figure down to less than 5 cents, the levelized cost over a project’s lifetime.

Once a building gets above about 200 meters, a gravity-storage system could supply more than enough power to cover its operations. That’s when building operators can start to offset the carbon footprint of construction materials, with some of SOM’s designs expected to see that payback in two to four years.

“Instead of buildings being carbon emitters, think about a carbon payback,” Piconi said. The companies are talking to potential developer partners in the Middle East, and if things proceed smoothly, Piconi could see a proj-

ect begin construction in early 2026.

That date may be optimistic, though. Energy Vault has faced hurdles, including fundamentally redesigning its gravity system and offering chemical battery storage systems to customers as a way to generate revenue now. While completing the Shanghai project was an important milestone, and partners in that venture are now planning additional storage systems in China, Energy Vault’s shares have tumbled more than 85% since it went public in 2022 in a deal with a special purpose acquisition company.

Could appear in the 2030s

The idea of adding storage to a major skyscraper is fundamentally sound, according to Thomas Boyes, an analyst with investment bank TD Cowen. Planning, permitting and financing for these kinds of developments take years, however, and there’s only a limited number of so-called supertall projects that exceed 300 meters. Boyes said it’s more likely that mixed-use towers with Energy Vault technology could appear sometime in the 2030s.

“It makes sense on paper,” he said. “There are underlying reasons why buildings will want this technology, but it’s a market that takes a long time.”

Storage technology built into tall structures would significantly change the energy economics of the construction industry, said Adam Semel, a managing partner at SOM.

“Gravity energy storage has a huge role to play in the economy of the future,” Semel said. “We want to get to work on some actual buildings.”

big slice of Chicago-based Grubhub

the stake in Grubhub is worth to Amazon. Grubhub, which has about 800 employees in Chicago, was sold to Amsterdam-based Just Eat Takeaway for $7.3 billion in

stock in 2021, when the COVID-19 pandemic led to a boom in orders for takeout food.

But Just Eat Takeaway has struggled with the acquisition. Grub-

hub, which has been losing ground to rivals DoorDash and Uber Eats, has been a drag on the company’s performance. Just Eat Takeaway said its gross revenue outside North America increased 4% in the first quarter from a year earlier, while its North American business fell 11%.

Grubhub, which pioneered the business of ordering food online, struggled as the business morphed to include delivery. It once dominated the industry but now has less than a 10% share of the U.S. food-delivery market, compared with 67% for DoorDash, according to estimates by Bloomberg Second Measure.

Just Eat Takeaway, which now has a market value of about $2.9 billion, has been looking to sell all or part of Grubhub for the past two years.

A rendering of a building designed to also store energy. | eneRGY VAuLT

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Gold Coast apartments going condo despite the opposite trend

By Dennis Rodkin

In a reverse of the years-long trend of turning condo buildings into rentals, a historic Gold Coast building is going from apartments to condos.

Built in 1927 as the Lake Shore Athletic Club and shifting into a series of other personas in subsequent years, the building at 850 N. Lake Shore Drive “should have been condos,” said Jason Buchberg, Chicago-based partner for Crescent Heights, a Florida real estate development firm.

In March, a Crescent Heights-related legal entity bought the building for $79.75 million, according to the Cook County clerk. That’s about 57% of the $140 million that an affiliate of J.P. Morgan Asset Management paid for the 19-story, 198-unit building in 2016.

Buying the building at a hefty discount “is what makes the numbers work” for going condo, Buchberg said.

It’s the biggest conversion of an existing downtown building in several years, larger in number than even the Tribune Tower’s 162 units.

Crescent Heights alerted rental tenants to the switch June 5 and will give them the first right to buy their units or a lengthy run-out of the lease, as required by law. The sales effort began June 6 on the condos, which range from studios with prices starting at $240,000 to three-bedrooms at $1.17 million and above.

Because the units were rehabbed in 2014, minimal work, mostly cosmetic, will be needed before buyers move in, said David Wolf, whose firm, Wolf Development Strategies, is handling sales. Thus, the units can be sold over time as tenants vacate them. Parking is inside the building, on its lowest three floors.

For most of the past decade, de-

converting condo buildings to apartments has been a common practice in Chicago. Among the buildings that went through the transition in that direction are the South Loop’s River City, Edgewater’s 28-story Granville Tower and the Barry Quad complex in Lakeview.

The trend has continued for so many years that a broker in the field told Crain’s in November, “I’ve come to realize it’s never going to go away.”

On swimming against the tide, Buchberg said, “We’re contrarians.”

Both Buchberg and Wolf said news of downtown Chicago’s protracted condo price slump didn’t deter them.

They gave a few reasons:

“That part of the neighborhood,” bounded by Oak Street Beach and the southward turn in DuSable Lake Shore Drive, “is its own submarket where people really want to be, and they’re loyal to it,” Buchberg said. He feels the aerial view of the downtown market doesn’t capture details such as the strong demand he and Wolf say is in this particular neighborhood.

The prices on the units — again, made possible by a hugely discounted building price — are mostly below the luxury level, which affluent buyers, including suburban empty nesters, have been reluctant to buy in recent years.

Keeping the finishes that went in during a 2014 upgrade designed by architecture firm Booth Hansen is a part of keeping the prices low, Buchberg said. “We’re trying to deliver prices that make sense in the market today,” he said, “and if we over-improve, we lose that.”

“Chicago is a market that likes reuse of historic buildings,” Buchberg said. He believes that and price will give them an edge over new construction, such as the

slow-selling St. Regis in Lake Shore East.

The building, Buchberg said, wants to be condos.

“Look at it from the lake. The materials, the history, the location,” he said of the 19-story building, which stands between the high-end 21st century condos at 840 N. Lake Shore and a string of four midcentury towers by Ludwig Mies van der Rohe.

Buchberg said Crescent Heights has eyed the building for condos in the early 2000s after longtime owner Northwestern University stopped using it as a dorm, but a different developer picked it up with a plan to put luxury-priced senior housing in the building. That developer, Integrated Development Group in Northbrook, later switched the program to luxury rentals.

In its original incarnation as an athletic club, the building, designed by architect Jarvis Hunt, was promoted in ads in the Chicago Tribune as promising to be “the finest club building in the United States.”

The often-reported tale that champion swimmer and future “Tarzan” movie star Johnny Weissmuller did his Olympic swimming trials in the building’s pool is difficult to confirm and may be apocryphal. Weissmuller was a member of a different club on Michigan Avenue.

Northwestern, with its downtown campus a few blocks south of the building, bought the former club in 1977 and used it as a dental students’ dorm before closing it in 2005. Shortly thereafter it narrowly avoided demolition, to be replaced by a condo high-rise.

The present owner, Crescent Heights, is the firm that in April handed over an unbuilt South Loop site next to its 76-story Nema apartment tower back to the lender, as Crain’s reported last month.

850 N. Lake Shore Drive | COSTAR GROUP

PERMITS

When examining the migrant crisis that has brought thousands of new arrivals to Chicago since 2022, Aguirre pointed at the U.S. sanctions imposed on Venezuela that stretch back to the Trump administration. He also expressed frustration over the Biden administration’s decision to grant temporary legal status to Venezuelan migrants while earlier waves of immigrants have not received work permits.

“It’s very disappointing for the people who have been immigrants, who have been here since decades ago. They haven’t (gotten) what the new immigrants have (gotten),” Aguirre said. “So they’re getting work permits, they’re getting access to a lot of things that a lot of people like us, we didn’t get anything. We pay taxes. We create employment. And we work for the community. And what (have) we (gotten)?”

That’s a point that has riled many Hispanic residents in Chicago, particularly among its Mexican population. Though Mexican residents make up the largest share of the city’s Hispanic community, it’s far from a monolith. Just look at some of the rising stars in Chicago’s progressive political class to understand the power of the city’s Puerto Rican population, which is second to the Mexican community in size. Roughly 4.6% of the city’s total Hispanic population were of Central American origin and 4.3% were South American, according to a study from the University of Illinois Chicago’s Greater Cities Institute that relied on 2019 data.

Even with that diverse population, Chicago’s Hispanic community appears to agree on one thing ahead of the DNC: They want to work. They want convention attendees to leave the comfort of the United Center and McCormick Place so they can patronize their businesses

MEDICAL

From Page 3

compared to before. Doing work in this hospital has been a struggle.”

As they seek solutions, residents said they asked the Accreditation Council for Graduate Medical Education to examine conditions at the hospital. The council regulates residency programs at hospitals across the country. (Residency, a required multiyear period after medical school, gives doctors in training fulltime and hands-on experience in hospitals and other care settings.)

The ACGME has visited West Suburban intermittently, residents said. In 2022, before Resilience owned West Suburban, the council revoked accreditation of the hospital’s internal medicine residency program and the hospital has yet to recover it.

The ACGME declined to comment on whether it is investigating West Suburban, but its website shows the organization last conducted a site visit to the hospital on Aug. 31.

The complaints from residents come after West Suburban was passed around to several new owners in recent years. At the end of 2022, Resilience Healthcare, a

in Little Village, Pilsen and Humboldt Park. More importantly, they want Biden and Democrats to deliver on work permits for all.

“The immigrant issue is dividing our community. I think one message that President Biden should say and should do is, ‘work permits for all.’ I think that would take care of a lot of issues,” said Jaime di Paulo, president and CEO of the Illinois Hispanic Chamber of Commerce. “But they don’t want to do it. And in fact, (Biden) called us ‘illegals’ at the State of the Union. So you need to understand that he’s playing to his base and he’s playing to the other base.”

Biden later regretted using the term “illegal” in his State of the Union address, saying he should have used the term “undocumented” instead. The comment earned a rebuke from Hispanic members of Illinois’ delegation in Washington, D.C., including Reps. Delia Ramirez and Jesús “Chuy” Garcia.

During an April 23 event in Humboldt Park, Ramirez told Crain’s she spoke with the administration and appreciated that the president later rescinded his comment.

for-profit company co-formed by CEO Dr. Manoj Prasad, finalized the deal to buy West Suburban, along with Weiss Memorial Hospital on Chicago’s North Side, from Los Angeles-based Pipeline Health for $92 million.

Shortly before the sale, however, Pipeline filed for Chapter 11 bankruptcy protection, citing its hospitals dealing with dwindling COVID-19 emergency funding, inflation, labor shortages and delayed insurance payments.

Problems have intensified

Third- and fourth-year residents at West Suburban say the hospital struggled with safety, quality and other workplace issues under Pipeline’s ownership, too, but that problems have intensified since Resilience took over.

“The hospital was in bad shape when we got (here) three years ago, but it’s in even worse shape now,” said Dr. Iris Marin, another West Suburban resident.

In response to what residents describe as subpar working conditions, as well as low pay, West Suburban residents formed a union in November. All 26 West Suburban residents are now represented by the National Union of Hospital &

“We have moved the needle . . . because of our efforts. I have instructed my team, my staff of 24, to actually promote this and help the businesses apply.”

Delia Saboya, who came to the states from Cuba in 1967 and now owns a printing company the DNC has used for badges and signage, noted her introduction to the organization got off to a rocky start.

“I have to admit that it was a little bit hard because I don’t think they reached out as well as I thought they were going to,” Saboya said, adding she approached several chambers of commerce including the Hispanic chamber. “There was a lot of digging. So that part was a little bit harder than I thought it was going to be. But once you got connected, then it was a little bit better.”

“We extend forgiveness, and we also know that there’s an opportunity for the president in the coming weeks to have the courage to be able to issue executive action, to demonstrate absolutely no human being is illegal and here are the ways that I’m showing you the work I do in absence of congressional action,” Ramirez said. “I’m saying that the president has the ability to extend work permits right now for longterm immigrants, as well as people coming here, (to) help boost the economy, address supply chain issues, and be able to fill these jobs that we’re going to need.”

Uneasy relationship

Mea culpa aside, Biden’s rhetoric helps illustrate the uneasy relationship the president must navigate as he courts Hispanic voters. In Chicago, though, the rapport between the DNC host committee and the Hispanic business community is progressing, according to di Paulo.

“We see that there’s room for improvement in terms of outreaching to Latinos, specifically our Latino community that we serve, but we have made a lot of strides,” he said.

Health Care Employees, which is currently in contract negotiations with the hospital.

In interviews with Crain’s, Prasad, the hospital’s CEO, acknowledged various complaints from the residents, but also completely denied others.

Prasad said he installed new air conditioners, fixed faulty elevators and addressed other infrastructure issues at West Suburban.

“Look, the building is 112 years old,” Prasad said. “Because of all the previous changes in ownership, maintenance had not been adequately done.”

He also acknowledged a temporary issue in which one surgeon was unresponsive to calls, but Prasad said he soon added other surgeons to the hospital’s rotation to remedy the issue.

Prasad, however, rejected residents’ claim that the hospital is missing necessary supplies and equipment, as well as claims that patient care is suffering.

“There is no patient safety issue,” he said.

But ratings from The Leapfrog Group, a widely used and respected metric for hospital safety, issued West Suburban a D grade this spring, in part because of high in-

loved the experience because they were able to . . . sell their goods and really get that exposure,” said Jennifer Aguilar, executive director of the Little Village Chamber of Commerce. “The attendees were also really pleased because they were able to experience something different, mariachi music, Mexican food, and of course, to support the local vendors. So that was a really good opportunity and partnership that came for us to highlight our community through the DNC.”

Still, other chamber of commerce leaders feel the DNC isn’t doing enough to reach out to the Hispanic community.

DNC organizers point to ties they’ve forged so far, including hiring the local Hispanic-owned firm Elemento L2 to produce events welcoming attendees, and more opportunities coming down the pike, teasing four subcontract awards to Latino businesses in the coming weeks. Choose Chicago, the city’s tourism arm, has taken the lead on vendor recruitment efforts by bringing host committee leaders to speak in front of local businesses and encouraging its members to register on the convention’s vendor directories, Choose Chicago spokesman Stephen Crano told Crain’s. That work includes partnering with small-business development organizations, like the Economic Strategy Development Corporation in Pilsen, to promote local neighborhoods.

In April, the DNC brought hundreds of delegates together for a party complete with a full mariachi band at Mi Tierra restaurant, a Little Village staple that has become a goto for Chicago political events.

“It was a complete success. They asked us to invite our small businesses to be vendors, so we had a few vendors at the event, and they

fection rates and understaffing. That’s down from C grades in 2023 and 2022, and Bs in 2021.

Asked about this year’s poor grade, Prasad downplayed its significance, saying Leapfrog did not have updated, accurate data about West Suburban because he did not submit it for this year’s rating. He said he declined to submit data on West Suburban to Leapfrog because it is a time-consuming process and requires many “resources.”

“Is it adding any value to us when we are fighting for our survival?” Prasad said.

In lieu of data directly from hospitals, Leapfrog uses publicly available data from other sources to determine safety grades.

When Prasad and his partner, Reddy Rathnaker Patlola, purchased West Suburban and Weiss Memorial, the hospitals had a combined debt of $80 million. Prasad said much of the debt has been paid but would not disclose exact figures.

At the time of the deal, Prasad said he planned to improve the hospitals’ financial outlook and fill open roles, a commitment he says he’s kept. As a safety-net hospital, West Suburban encounters the specific challenge of mostly serving patients on Medicaid, a govern-

“I think we’re being a little overlooked and perhaps other neighborhoods are being overlooked in that sense,” said Javier Yanez, co-founder of the Pilsen Chamber of Commerce.

Yanez argued the DNC hasn’t made a clear effort to give local businesses a seat at the table and help them access the economic boon that the convention should bring. However, he also admitted the Pilsen chamber has not reached out to anyone at the DNC.

“We have not. But considering this conversation, we’re probably going to try and see where that lands us,” he told Crain’s. “But I feel like those conversations should have happened already.”

Back at La Malinche, one wall above the booths is graced with a smattering of photos, rather than sweeping murals. In one of those frames smiles Aguirre’s staff with a prominent Chicago DNC host: Gov. J.B. Pritzker.

“I like the guy,” Aguirre said. “With a little bit of good luck, he may be the next president.”

When asked if he’d like to see Pritzker elected, the Mexico City native paused and then shrugged with a “yeah.”

“Because I’m not a citizen,” he said. “That’s why I hesitated about it.”

ment-sponsored insurance program for low-income and disabled Americans that typically reimburses providers at lower rates than commercial insurance plans.

Even still, West Suburban hired more than 250 workers over the last year and has been able to reduce reliance on temporary — and expensive — staffing agencies, Prasad said.

“Staffing is getting better,” he said, noting Resilience employs about 1,800 workers between its two hospitals, with about 1,000 of them at West Suburban.

Prasad also said he financially stabilized the hospital by substituting vendors, consolidating some contracts between West Suburban and Weiss Memorial, as well as renegotiating agreements with vendors and insurers and switching electronic health system vendors.

“We are sort of, I’d say, leaner and meaner,” Prasad said. “We are doing significantly better.”

Prasad declined to share West Suburban’s financial figures but said the hospital broke even for the first time in seven years.

The Wednesday Journal of Oak Park and River Forest was first to report the medical residents’ complaints.

Héctor Aguirre, who owns Malinche, already gained some business from the DNC when organizers reserved his cafe as part of a neighborhood listening tour. | LeIGH GIAnGReCO

Owners of two apartment buildings test the market

An Old Town shoe factory turned apartment complex and a new mid-rise building in River West are both up for sale

By Rachel Herzog

The owners of two apartment buildings near downtown Chicago, including a former shoe factory owned by a venture led by the late billionaire investor Sam Zell, are looking to cash out.

Commercial real estate brokerage Jones Lang LaSalle has been hired to seek a buyer for Cobbler Square Lofts, a 292-unit apartment complex at 1350 N. Wells St. in Old Town, according to a marketing flyer. Built in 1889 and serving as a shoe factory and headquarters for Dr. Scholl’s, the property was converted to apartments in the 1980s.

Separately, Chicago residential developer Lipe Property has hired brokers at CBRE to market a 97-unit apartment complex dubbed Nevele22 at 1122 W. Chicago Ave. in River West that it completed in 2022, marketing materials show.

Both are located in popular neighborhoods and come on the market at a time when rising rents make the Chicago area attractive to apartment building

investors. They’ll also be a test of the investment sales market as interest rate hikes have impacted property values and borrowing power.

Most heavily traded sector

Nationally, apartments were the most heavily traded sector of commercial real estate in April, according to data from research firm MSCI Real Assets, but transaction volume was still down 49% year over year compared with April 2023, and prices were down 6.9%.

The Cobbler Square Lofts apartments are being offered for sale with something that could help: assumable debt. The buyer would be able to assume the seller’s mortgage on the property, a Fannie Mae loan that carries an interest rate of 3.8% — likely lower than what an investor would be able to get on a new loan today — and a 2034 maturity date.

JLL is also playing up the buyer’s opportunity to build more residential units to generate more revenue, according to the brochure. The apartment complex, which was renovated in

2009, has an average effective monthly rent of $2,095, or $2.65 per square foot, and was 94% occupied as of May 15, according to marketing materials. The complex also includes 19,038 square

feet of fully occupied retail space. If the property trades, it will be the first time it’s changed hands in decades. Entities tied to Zell and his firm, Equity Group Investments, have owned the

building since the 1980s, Cook County property records show. The building’s owner secured a $51 million mortgage on the property in 2019, according to a loan document signed by an Equity Group Investments executive. A spokesperson for the firm did not respond to a request for comment on the listing.

JLL brokers Mark Stern, Kevin Girard, Zachary Kaufman and Sam Grohe are marketing the apartment building for sale on behalf of the owner.

Meanwhile, CBRE is touting Nevele22’s location in River West, a formerly industrial area that apartment developers have flocked to in recent years due to its proximity to the trendy Fulton Market District as well as the planned Bally’s casino development.

The mid-rise apartment complex is about 99% leased, with average in-place rents of $2,379 per month, or $3.42 per square foot, according to CBRE.

Lipe Property Principal Steve Lipe referred questions about the listing to CBRE. CBRE Executive Vice President John Jaeger, who is marketing the property for sale along with CBRE vice presidents Justin Puppi and Jason Zyck, didn’t respond to a request for comment.

Billionaire family builds a real estate empire fueled by tequila

The heir to a fortune built on Jose Cuervo has plowed cash into U.S. commercial real estate for 15 years. Now his sights are set on Chicago.

By

The heir to a fortune built on Jose Cuervo tequila has plowed cash into U.S. commercial real estate for the past 15 years, quietly amassing a portfolio that runs from Miami to Minneapolis.

Juan Beckmann Vidal, the patriarch behind the tequila maker and other spirits housed under Becle SA, has purchased and developed at least 5 million square feet of mostly commercial properties across three US states. All told, the buildings are worth more than $1 billion, according to the Bloomberg Billionaires Index. The real estate business has been entirely backed by the Beckmanns and has thus far declined co-investors, said Jose Antonio Perez, a Mexican lawyer by training who heads Agave Holdings, as the firm is known.

Agave’s latest project, a mixeduse complex in trendy Coral Gables near Miami, is not only its most ambitious yet but emblematic of the US playbook of one of Mexico’s richest families, which holds a combined fortune of $7 billion, according to Bloomberg’s wealth index.

Agave purchased the Coral Ga-

bles land out of foreclosure more than a decade ago. Their early arrival in South Florida is proving a boon as property prices skyrock et following the influx of new res idents from the US and abroad. The new building, which is fully leased, will include offices for Apple Inc.

The firm is hoping to replicate that success in Chicago. Agave snapped up real estate in the city over recent years at steep dis counts, betting one of the most battered commercial real estate markets in the U.S. will eventually bounce back.

Beckmann “wants to maximize the square footage as part of a long-term strategy for future generations,” Perez said in an interview in Miami. “In 15 years everything has been reinvested into Agave. He’s never taken a dime out of the company.”

While Beckmann, 84, continues to reside in Mexico along with his children who run publicly traded Becle, his relative Carlos Beckmann, a cousin from the second generation, is a managing director at Agave.

The properties include the newly finished Plaza Coral Gables with 2.25 million square feet of office, residential and retail

space. Agave also owns 396 Alhambra in Coral Gables, which will house the headquarters for FIFA during the 2026 World Cup soccer tournament.

In Chicago, they own and operate two office towers: 303 W. Madison St., and 225 W. Washington St. In Minneapolis, they acquired a 93-room hotel.

As pioneers of wealthy Latin American families building US real estate businesses, they’re now in talks with other investors and families to potentially partner outside of Agave or to offer

expertise. They’re strategic partners with White Bridge Capital, a firm led by former Citigroup Inc. bankers that’s looking to connect family offices with investment opportunities.

Overexposed

in Mexico

Beckmann had been overexposed to real estate in his home country of Mexico in 2008 when he began to unwind holdings there to diversify his investments.

He tapped Perez, who was already working for his family office, to build a real estate business in the US even as the reverberations of the global financial crisis were still hitting the economy. Besides the real estate assets, Perez also oversees the Beckmanns’ personal real estate, investments, assets and tax structures in the US.

Gregory Schwartz, who joined Agave in 2018, runs the firm along with Perez. They both help younger generations of the Beckmann family analyze investment opportunities including startup tech deals, they said.

The liquor business dates back to 1758 when Jose Antonio de Cuervo was granted approval by Spain’s King Ferdinand VI to plant agave to produce tequila. The company built a distillery in the early 19th century and began to bottle and export the product. Beckmann, a descendant of German immigrants, married into the family and took control of the

distiller in 1970. Under his leadership, the company began to acquire other types of spirits to diversify from tequila and mezcal. While Beckmann used to visit Miami almost monthly to supervise projects, he’s curbed his travel since the pandemic, Perez said.

During the construction at the Plaza there were plenty of nervous moments when the pandemic struck and they were without leases locked in. They realized they didn’t have enough money to “build this monster.”

At one point, Beckmann asked them how much they needed to finish it. The answer: $300 million.

“So he sent us $300 million. He said, ‘Just finish. I don’t want any nightmares, I don’t want headaches, I don’t want to be overleveraged,’” Perez said.

Agave has a team of about six people and while they’ve looked at other fast-growing cities postpandemic, they aren’t convinced that they’ll do better than their current locations where they know the market and are consistently pitched new opportunities.

One criteria for any new destination is to have a direct flight from their base in Miami, they joked.

“We always say that we’re not looking,” Perez said, peering out the office window to the Coral Gables Plaza complex. “But that’s the way we ended up with this.”

Daniel Cancel and Felipe Marques, Bloomberg

Juan Beckmann Vidal’s Agave Holdings has snapped up real estate in Chicago over recent years at steep discounts, betting one of the most battered commercial real estate markets in the U.S. will eventually bounce back. He’s scouting for more deals. | BLOOMBERG

Cobbler Square Lofts at 1350 N. Wells St. in Old Town | COSTAR GROUP

to the commission to justify the increased spending.

Stacey Paradis, another member of the five-person board, said the company’s pipeline replacement program was “over budget and with an ambiguous scope,” noting that the program was currently under investigation at the ICC.

The decision likely sets up a legal battle in the state’s appeals court, with the company contending in a May 30 statement that the work that the ICC disallowed is required to comply with federal safety requirements and that it will appeal the decision.

The move continues a trend that began last fall of the agency’s board of commissioners — which has traditionally been friendlier to utility companies — siding with consumer advocates and pushing back on requested rate increases.

As a result of this decision, typical residential bills are expected to go up by about 15 cents per month, less than the 60 cents per month the company requested, according to Peoples Gas spokesperson David Schwartz.

“The Commission’s decision risks the continued safety and reliability of Chicago’s energy system,” Schwartz said in a statement on May 30.

That sentiment echoes that of the International Union of Operating Engineers Local 150, a union which represents much of Peoples Gas’ on-the-ground workforce.

Last month, the union urged the ICC to approve the company’s full request for spending.

Local 150 President James Sweeney noted the original November decision to limit that spending “created safety risks and cost thousands of jobs.”

From Page 1

Big Blue, as the company is known, is one of the few companies that has built a quantum computer. It joins PsiQuantum, a Silicon Valley startup that is preparing to build a large-scale quantum computer, among companies that are considering setting up shop in Illinois.

Landing IBM would give an added shot of credibility to Gov. J.B. Pritzker’s efforts to make Illinois a hub for quantum technolo-

The rehearing decision contradicted recommendations from the ICC’s own staff and a proposal from an independent administrative judge earlier in the case, who recommended approving the full spending amount.

Consumer praise

Consumer advocates who have long railed against the company’s pipeline replacement program praised the decision.

“This proceeding provided further evidence that the Peoples Gas pipe replacement program is profoundly troubled, reinforcing why

ic development, such as building a cryogenic facility needed to provide the extremely cold environment needed for quantum computers. Lawmakers also approved quantum-specific tax breaks for construction spending, payroll and utilities.

The state is working to create a massive campus for quantum computing companies, suppliers and researchers that would attract up to $20 billion in investment and several thousand jobs over five to 10 years.

the commission’s investigation is critically important,” Abe Scarr, a longtime critic of Peoples Gas and head of the advocacy group Illinois PIRG, said in a statement.

The Citizens Utility Board, a nonprofit set up by the state to represent consumers in cases like this, also issued a statement applauding the decision. Sarah Moskowitz, CUB’s executive director, noted in the organization’s statement that Chicago remains “engulfed in an affordability crisis.”

Approximately one in five Peoples Gas residential customers

quantum clusters include the San Francisco Bay area, Denver, Boston and upstate New York.

Early partner

IBM, which has 1,500 employees in Chicago across various roles and business lines, was an early corporate partner of the Chicago Quantum Exchange, a research consortium based at the University of Chicago. It has built several quantum computers, including one at the Cleveland Clinic.

had outstanding debt to the company as of April 30, with 39 percent of low-income customers having debt, according to data from the ICC.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

the individual partners don’t.

Landing IBM would give an added shot of credibility to Gov. J.B. Pritzker’s efforts to make Illinois a hub for quantum technology.

gy, which is seen as the next major leap in computing. He sees quantum as a source of high-paying jobs for researchers and semiskilled labor for decades to come.

Legislators last month authorized $500 million sought by Pritzker for quantum-related econom-

The PsiQuantum project to build a large-scale quantum computer, which could anchor the campus, would involve 500 direct jobs and 1,000 construction jobs. It’s considering the former U.S. Steel plant on the South Side or the former Texaco refinery in Lockport. The company’s decision could come in a few weeks. Unlike other industries that have attracted economicdevelopment incentives, such as electric vehicles, quantum computing is still in its infancy. Illinois has an early foothold because its universities and national labs have received hundreds of millions in federal research funding. Other

IBM is synonymous with technology, and it’s a venerable corporate giant with deep pockets that has withstood plenty of economic cycles and industry ups and downs.

It’s among a handful of quantum companies that have been making the rounds in Chicago lately, says a person who has spoken with several of them. Others include a manufacturer of cryogenic equipment, a large semiconductor company and another startup looking to build a largescale quantum computers.

By landing multiple companies that are pursuing different approaches to quantum computing, Chicago would start to build critical mass as well as put itself in position to succeed even if some of

For decades, researchers have been dabbling with the idea of using quantum mechanics to achieve exponential improvement in the speed, security and raw processing power of computers. But it’s only recently begun to show real promise. The technology is reaching a critical point as companies look to demonstrate whether they can deliver it at large scale outside of a lab environment.

IBM has emerged as one of the early leaders — including Google, Microsoft, Amazon and Honeywell, as well as several startups — that are investing heavily in quantum computing to develop the early software and hardware that will be needed for the technology to gain adoption. IBM, like Google, is one of the few companies that has quantum computers in operation.

“IBM is in a different league than some of the other developers out there,” says Heather West, an analyst at technology-research firm IDC. “Building a quantum system requires a lot of trial and error. It’s a new technology, and we don’t know how to get there. To do that you need money. IBM has multiple funding streams and a name behind it.” IBM

THOMAS J. LI n D en