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A railroad runs through it: secret talks on a hot property in the South Loop



There are 150 acres of dirt just South of the Loop near Roosevelt Road and the Chicago River that, if cleared and developed, could help resurrect the city. Well, at least residential and commercial development there would increase tax revenues and pump a huge chunk of money into the city's cash-starved schools and public coffers.

There's only one problem. A railroad track--part of a flourishing north-south line operated by Metra, the RTA subsidiary that oversees commuter services--cuts through the heart of that land.

"We're looking at a big, big piece of property with railroad tracks running down the center of it," says Steven Crown, a consultant for Chicago & Pacific, the former railroad company that owns much of the 150 acres. "It has no access. You can't get at it unless you have good suspension on your car or you can burrow. Move the railroad, and you've got the largest contiguous, undeveloped downtown land in the country. It has nothing built on it, which means you don't displace anyone by developing it. You're right up against the financial center, the South Loop, and two expressways. The location is amazing. The potential for development unlimited."

Nevertheless, city officials have a tough decision to make. It will cost untold millions of dollars to deal with the tracks--millions that neither Metra nor the property owners want to spend. At the moment the issue of who should pay for relocating or submerging the tracks is cloaked in secrecy, as the city's Department of Planning, Metra, and property owners feverishly negotiate in some room hidden from public view. Occasionally a word leaks to some enterprising reporter who asks the right source the right question. But no one in the know will say how much their proposals would cost, much less who would cover the tab.

"I can't tell you anything about the South Loop project except that we're working on it ," one usually helpful Planning Department employee told me.

"What does that mean?" I asked.

"It means that this is a very touchy subject because there have been press leaks." The official then suggested I call another Planning Department official. I did, but my calls went unreturned. So much for openness in city government.

"I really have nothing to report on the matter of the South Loop," was the best Jeffrey Ladd, chairman of Metra's seven-person board, would offer.

The damaging part about all of this hush-hush mystery is not so much that it makes city and Metra officials look silly (they do act as though they were White House operatives in All the President's Men), but that it stokes the embers of paranoia that, for good reason, burn in the minds of many Chicago residents.

"We don't know anything about the negotiations," says Barbara Lynne, executive director of the Burnham Park Planning Board, the most active community and business association in the South Loop. "That's surprising, because usually the city is very forthcoming with information. If they don't bring the community in soon, it will be a matter of concern."

"You would think these people were negotiating for the fate of the entire world. I suspect there was less secrecy and paranoia in Geneva when the Soviets and U.S. got together to agree on arms control," says Michael Glab, a journalist who covered the matter first for the New City, a South Loop biweekly, and is now covering it as a reporter for the Pulitzer-Lerner newspaper chain.

"It makes you wonder: Are they trying to hide something? Is there a secret plan for development they aren't telling us about? Is there a secret developer--Donald Trump, perhaps--waiting in the wings? I've covered this story longer than anyone else, and I have no proof that any of this is the case. But when people are so secretive, when they keep saying negotiations are too sensitive to talk about, suspicions are aroused."

The most that outsiders know is that three options exist. The tracks could remain where they are, which would minimize development and demand because it would be difficult for a developer to package as upscale living a town house, condo, or shopping plaza that overlooks a dirty, noisy train track. (Although developers have done a remarkable job selling tacky town houses beneath the Ravenswood train tracks to young professionals. But that's another story.)

The second option is to move the train tracks west of the Chicago River so that they deliver their passengers to Union Station instead of the LaSalle Street Station. This idea, obviously favored by property owners since it would most drastically increase their land's worth, has been the object of at least two consultant reports. The first, prepared for the Heartland Development Company--a consultant to Chicago & Pacific--by the engineering firm of De Leuw, Cather & Company, argues that moving the tracks would result in more money for taxpayers and less inconvenience for commuters.

Metra officials were skeptical of that report, so they commissioned their own study by Baker Engineering, Inc., which, to the surprise of no one, disagreed with virtually everything the De Leuw report said about the proposed move. Developing the full 150 acres would indeed allow the city to reap roughly $70 million a year in tax revenue, Baker acknowledged. But rerouting the tracks would cost more than it would be worth, would drastically inconvenience commuters, and would upset Metra's long-standing plans to redevelop the LaSalle Street Station. "After careful review of the facts, we cannot recommend the move to Union Station," the Baker report concluded.

Its pride apparently wounded, Heartland challenged Baker to a duel. Let us both submit our reports to yet another consultant, Heartland proposed in a press release, and have it determine whose findings are more accurate. ("The only time anyone in this case is forthcoming is when they're trying to besmirch someone else," says Glab.)

Mercifully, Baker ignored Heartland's challenge, as the city, property owners, and Metra seemed to settle on option number three: submersion. They would lay the tracks within a trench, about one mile long, running north to south from just beyond Roosevelt Road to the LaSalle Street Station.

"Moving the train tracks is out. They're going to dig the ditch," Glab speculates. "That's a big operation. It'll cost them $200 million. You're talking about building pedestrian and road overpasses, They have to dig a ditch that's about a mile long and 30 feet deep. That's a big ditch! You're talking about the Erie Canal."

Left unexamined is the far more important matter of whether the project is worth the trouble. Most city planners see the South Loop as a wonderland where the wildest dreams of developers come true. Once upon a time, it was a thriving printing and railroad community. But over the years the railroads closed, the industries moved, and all that remained was vacant land and abandoned factories.

Then in the late 1970s a consortium of developers plowed over vacant land south of Polk Street and built Dearborn Park, a sprawling complex of town houses and midrises. At the same time, a different group of developers created Printers Row--a string of converted lofts along Dearborn Street. All told, more than 2,000 office and housing units were added to the area, and a seedy section of Chicago was transformed into a thriving, integrated community.

"We have churches, restaurants, museums, and schools here," says Barbara Lynne. "[Acting] mayor Sawyer called us a renaissance community in that we grew out of the ashes of dead industries and abandoned buildings. And now we have phase two of Dearborn Park getting ready to start. That will build about 600 units between Roosevelt Road and 16th Street. You're talking about adding 2,000 people to the community in homes ranging in price from $165,000 to $300,000. The reason it's worked is because the city community and developers all worked so well together."

To that recipe for success one more ingredient must be added: demand. Dearborn Park and Printers Row drew on a well-stocked reservoir of professionals eager to live in the Loop so they could walk to work. No one can say for certain whether that market still exists. After all, how many more people can there be who want to live in the Loop? Even if there is a demand for future Loop housing, can the next generation of buyers and renters afford the escalating rents and asking prices? Let's say they can. How long will they want to remain? What happens ten years from now when their children become school-age? Will they hightail for suburbia? If so, who will buy their town homes and condominiums?

Developers rarely look this far down the road, since they usually make most of their money by building a project. The city, however, should have a broader perspective. What's the point of subsidizing development that may be abandoned 10 or 20 years later?

These questions are terribly important because unless a miracle occurs and either Metra or the property owners offer to pay for moving or submerging the tracks, city officials most likely will burst from the shelter of their private negotiations hollering: "Hallelujah, we'll take care of those railroad tracks for free! We'll borrow the money to finance construction and pay back those loans with the increased property tax yield generated by developing the land."

The technical name for this financing device is tax incremental financing. From the city's point of view, it's free in that such construction pays for itself: every dime taken from the current tax coffers will be repaid later.

But city officials rarely talk about the risk. Should a development built on that land fail, no new tax revenue would be generated, and the money spent digging a trench for the railroad would be tax dollars intended for other things--like schools.

"The question of future development is like asking 'What comes first, the chicken or the egg?'" says Crown. "Without the capability to expand, it's difficult to expand. Yes, to a degree, the city is overbuilt. But why cut off a major piece of land now? Who knows what changes will come later? This is prime location. By developing it, we may create a demand. Look at Presidential Towers. Before that was built, no one figured it would succeed. Afterwards, everyone said, 'Of course it would succeed.' Sometimes you have to create your opportunities. There has to be something there for people to want to move into."

"I definitely think this area has the potential to grow," says Lynne. "You could put single-family homes there, maybe town houses, maybe some office space. Right now we have a residential feel here that we don't want to lose. A few years ago there was a proposal to put a sports stadium there. The neighborhood went up in arms against it. The development has to be compatible with the community."

Unfortunately, the longer the city, Metra, and property owners spend haggling in private, the more credibility they lose with the community. "We're for developing that land. We'd like to see it put to good use. The city needs the tax revenue," says Lynne. "But the community should be brought into the process soon. This is an educated, aware, and vocal community. People here won't put up with the plan if they don't think it's in their best interest. If the city and Metra keep us in the dark, they could only cause trouble for themselves."

Art accompanying story in printed newspaper (not available in this archive): photo/Jon Randolph.

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