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Chicago Approves $1.6B in Subsidies

Wednesday, April 24, 2019

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Earlier this month, the Chicago City Council approved a tax increment financing plan for $1.6 billion in subsidies for the Lincoln Yards and “The 78” in order to unlock both developments' potential. 

The TIF deal also provides the possibility of reimbursing the developers with up to $2.4 billion for various infrastructure improvments needed to support the millions of square feet expected to be built at each site.

Once votes were tallied, The 78 was approved in a 31 to 14 vote for a $700 million subsidy, and a $900 million subsidy was also approved for the Lincoln Yards in a 32 to 13 vote.

Approaching Approval

Prior to the full Council meeting, Mayor-elect Lori Lightfoot held a meeting with the development teams to secure work agreements for minority- and women-owned businesses. Originally committed to hiring 26 percent minority- and six percent woman-owned, Sterling Bay agreed to raise those numbers to 30 percent and 10 percent, respectively, the day before City Council voting would take place.

“The increases would lift the overall M/WBE participation by $80 [million] to $400 [million] overall,” Lightfoot stated.

“In addition, both developers agreed to add language to the redevelopment agreements to provide explicit controls for the city to measure and require compliance with actual utilization of M/WBEs on the projects.”

However, Lightfoot’s focus on the issue of MBE/WBE participation wasn’t enough to divert the concerns about affordable housing or whether the TIFs are a fair and reasonable method to kick-start the developments.

In debates before voting took place, Ald. Ray Lopez (15th) rebutted false claims that the $1.6 billion in TIF subsides were being “stolen” from Chicago public schools and impoverished neighborhoods in the South and West Sides.

“This is a good deal for all the people of Chicago. You are not stealing. You are generating. In order to generate, you must build,” Lopez said.

However, Ald. Scott Waguespack (32nd), accused Lincoln Yards of being built with “lies and deception” since day one.

Grassroots Collaborative Executive Director Amisha Patel also adds: “The decision to move forward these mega-TIFs epitomizes a legacy that has been a disaster for working families.”

“Throughout his administration Mayor [Rahm] Emanuel has governed as the mayor of two cities. In one he closed schools, shuttered clinics, and nickeled and dimed residents with fees and tickets. In the other, he rolled out the red carpet for the corporate elite, all at the expense of working families.”

Ald. Brian Hopkins (2nd), on the other hand, whose ward includes Lincoln Yards, thought that that project should be approved, not because certain aldermen wanted it, but because it would “transform a toxic wasteland into the city of the future” as well as generate 20,000 jobs and $300 million in developer money for infrastructure that the Chicago can’t afford to build on its own.

Hopkins' approval follows the major changes made by Sterling Bay after he rejected the original master plan on behalf of his constituents. Since the 2nd Ward wished to avoid traffic and heavy congestion that a planned Live Nation entertainment center and soccer stadium would induce, Sterling agreed to cross them off of the design all together.

This decision increased the property’s park space to 40 percent in addition to lowering both the density and building heights and added more infrastructure improvements.

Though many activists and disapproving aldermen hoped that Lightfoot’s election would postpone the developers’ plans, approval was announced the day after she released a statement, withdrawing her opposition to hold the votes.

“I know there’s a lot of hard feelings. There’s a lot of strong feelings — and that’s OK,” stated Mayor Rahm Emanuel.

“It’s time to move forward.”

What Happens Next

The City Council’s approval marks the sign-off of two of the biggest projects to take place in Chicago history. According to the Chicago Sun-Times, the money for Lincoln Yards will be released in two installments, while The 78 will receive $551 million, with the rest contingent on the completion of infrastructure.

Courtesy of Related Midwest

The City Council’s approval marks the sign-off of two of the biggest projects to take place in Chicago history. 

As Sterling Bay begins work on Lincoln Yards, they have been approved to borrow $533.7 million. Once proper benchmarks have been met, the developer will be permitted to borrow the remaining $487 million. These figures include financing costs.

During the first stages of the project, Sterling will be working on: realigning Elston Avenue and the viaduct; extension and bridge work at Armitage Avenue; the Armitage viaduct; various improvements to Cortland, Kingsbury, Willow and Dominick streets; improvements to Southport and Wabansia avenues; two sea wall improvements along the Chicago River; and landscaping along the 606 pedestrian and bike trail.

Related Midwest is also slated to begin work on The 78, creating 10,000 new units of mixed-use spaces including residential, retail, offices, entertainment venues, recreation facilities and public space in what will be Chicago’s 78th neighborhood in the South Loop and Chinatown.

Lightfoot has vowed that after taking office on May 20, she will continue to have the power to shape the Lincoln Yards and The 78 as construction breaks ground, promising to “engage with the community and committed activists who have advocated forcefully for affordable housing, park space and the responsible use of tax increment financing dollars.”

   

Tagged categories: Commercial Buildings; Commercial Construction; Commercial contractors; Construction; Contractors; Funding; Maintenance + Renovation; NA; North America; Ongoing projects; Projects - Commercial; Taxes; Upcoming projects

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