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Arrested Development

It's industry 1, gentrifiers 0 in the first round over the Kinzie Street corridor.



By Ben Joravsky

There have been factories along the Kinzie Street corridor for the last half century, operating night and day without trouble or complaint.

And then a few years ago artists and artist types started to trickle in, followed by developers, nightclubs, coffee shops, and yuppies. Just as the near-west-side community was approaching Clybourn-like gentrification, the city stepped in to halt the trend by proposing a ban on residential development. The howl you're now hearing is the protest of professionals fighting back.

"It's unfair, it's communistic, it's un-American!" says Mitch Einhorn, who owns three buildings in the area. "The city wants to take away the value of my land without compensation. If they think I'm going to sit back and take this, they're crazy."

In many ways, Einhorn's story symbolizes the conflict. He moved to the area (roughly bounded by Kedzie, Halsted, Grand, and Lake) about 11 years ago, a 23-year-old college grad looking for cheap space to start a photography business. He found what he wanted on the sixth floor of a run-down warehouse. "I got 4,000 square feet for $700 a month," says Einhorn. "What a dump. The elevator didn't work, there were transients in the hallway. I sunk about $50,000 into fixing that place up. I wasn't complaining--I was close to the Loop and I had my start."

Within a few years, Einhorn knew he wanted to buy a building of his own. Sensing he was on the cusp of a new age in near-west-side real estate, he felt savvy investors willing to take risks in the area stood to make millions.

"People like me don't want the white picket fence of suburbia--we want to be downtown," he says. "I grew up in [south-suburban] Flossmoor, but I would never want to live there. It's not country, it's not rural, it's not urban, there's no cultural diversity. It's nothing. I'm not just picking on Flossmoor. Naperville, Highland Park, whatever--they're all pretty much the same thing.

"I moved here with the idea that the neighborhood would grow around me. I didn't mind the factories, the noise. I'm not one of those yuppies who buys a two-flat near Wrigley Field and then complains because he's living next to a baseball park. I don't mind the factories. They were here first--I know that. But I felt it was only a matter of time before the area gentrified. There's a cycle to these things. The artists move in looking for raw space, followed by people who aren't really artists but want to live on the edge, followed by developers who bill it as an 'artist community.' Next thing you know you see kids and families."

In 1988 Einhorn borrowed enough money to buy an abandoned 30,000-square-foot factory on Kinzie near Ashland. "It took a year to get the finances worked out," he says. "The banks didn't want to make a loan in this area. Bankers are so unimaginative. They walked in here and saw 11,000 square feet of scrap metal and junk--they couldn't see the potential."

All told, he says he's spent more than $400,000 turning the first floor into a photo studio and renovating nine other units so he can rent them to artists and designers. He and his brother Cliff have also purchased two other properties in the area: they operate the Twisted Spoke, a restaurant at 501 N. Ogden, and they plan to open a nearby nightclub.

"This was working out well for us," says Cliff. "We created jobs, we revitalized a run-down neighborhood. This place was going nowhere until guys like us took a risk."

Not everyone, however, shares this interpretation. To factory owners, the surrounding community was not just a slum in need of salvation. It was an economic lifeline for the city's working class, once offering about 30,000 relatively high-paying blue-collar factory and warehouse jobs.

And while many industries have left over the last two decades, at least 520 businesses and 16,000 jobs now remain, far more than the city can afford to lose. "There's been some bleeding, but I think we're on the upswing," says Ken Govas, executive director of the Industrial Council of Northwest Chicago. "With some investment in the infrastructure--and some strong marketing--I think we can bring more companies here."

The last thing the industries wanted was more residential conversions, which raise business costs by jacking up property taxes. They're also incompatible with industry. Pioneers like Einhorn may be of hardy stock, but the next wave of settlers are more likely to complain about smelly plants or noisy trucks. Factory owners were not about to let the area go the way of west Lakeview or Lincoln Park.

"A lot of industries came to me looking for help; they said it was too difficult to operate with all the residents," says the area's alderman, Walter Burnett. "I know a lot of folks who work in those factories. I know a lot of folks who need those jobs. I decided something had to be done."

Burnett met with Planning Department officials and local business leaders; in the fall they proposed to convert an as-yet-undetermined portion of the area into a "Planned Manufacturing District," zoned "primarily for industrial, warehouse, and food distribution uses," according to their press releases. In practice it would work much like the PMD in Lincoln Park and Lakeview, which limits commercial and residential development on portions of Clybourn and Elston in an effort to preserve the industries that remain.

To Mitch Einhorn, any restriction, even a limited one, would be disastrous. "If they prohibit residential and limit commercial, they're capping property values. That's horribly unfair to a guy like me--who took a chance, who sunk thousands of dollars into run-down property, not to mention hundreds of hours of sweat equity. Under their plan, I won't be able to sell my property for what I invested in it. Do the math: if you have invested $25 a square foot in your property, how much do you think someone would pay for it if you can't sell it for residential? How much does industrial go for? Three dollars a square foot. The city might as well come out and steal it from me.

"I have nothing against industry. But things change--you can't hold back progress. You can't keep things the way they were. We have to recognize that Chicago's economy's changing. If industry can't survive here, they should sell their property for top dollar and use the profits to move somewhere else. That's the way the free-enterprise system works. That's its genius. That's why it's the best. I believe in free markets. I'm against any government intervention."

Not even zoning?

"Not even zoning. Get rid of it."

What if a toxic-waste dump moves next to your restaurant?

"If that dump's not harming me, I don't care."

But to many factory owners, residential development is a little like a waste dump. It may not emit noxious odors or poisons, but it eventually drives industries out of business. Furthermore, some factory owners say, it's disingenuous for developers to claim they want diversity while working to ignite a real estate explosion that drives industries away. If the city wants to preserve the very urban diversity that makes Chicago different from Flossmoor, industry needs protection. "It's a little extreme to say you don't want any zoning," says Govas. "The neighborhoods don't have to be economically and socially segregated; you can have blue-collar and residential. It takes rational planning."

For the time being Burnett's standing strong in support of the PMD. "I've probably signed off on more development than any other alderman, so you can't call me antidevelopment," says Burnett. "But I can't support everything the real estate developers want. When you have a ward as diverse as mine, a ward that links Old Town, Greek Town, Presidential Towers, Cabrini-Green, East Garfield Park, and the Gold Coast, I can't just be concerned about yuppies or developers. There's a need for jobs--I hear it from people all the time. I can't just let these industries get driven out. If we get this PMD, guys like Einhorn might not make as much money selling their property, but they can still do a good business."

Some developers have quietly warned Burnett they'll put their money behind another candidate if he doesn't flip on the issue. "I can't worry about that--my integrity's not for sale," says Burnett. "They still need me for approval on their projects, so I have some leverage. I learned a few things growing up in Cabrini."

At the moment, Mayor Daley's taking no specific stance on the matter, though it's clear he generally believes in protecting industrial jobs. The Planning Department has been holding meetings on the issue, at which the Einhorn brothers regularly give passionate endorsements of free enterprise.

Most insiders figure some sort of PMD will be adopted--the only issue is where the boundaries will be drawn. "They'll probably draw it between Ashland and Kedzie and leave everything east of Ashland for the developers," says one influential zoning lawyer. "Like everything else, Daley wants it, so he'll get it. Forget those meetings--they're for show. This deal will get cut in a back room, where all these deals get cut."

Art accompanying story in printed newspaper (not available in this archive): Photo of Cliff and Mitch Einhorn by Randy Tunnell.

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