- Lee Hogan/Sun-Times Media
- Developers plan to turn the Old Main Post Office into a mixed-use complex with a three-acre rooftop park.
With the steady upswing in the real estate market—and downtown properties fetching record sales prices—Mayor Emanuel's getting ready for one of his favorite activities: giving your tax dollars to developers.
The money comes from—what else?—the tax increment financing program. That well never seems to run dry.
In the last few months, the mayor's signed on to a plan to give about $16 million in TIF money to the developer who's building 630 units of upscale housing at Montrose and Clarendon—a block or two from the lake.
'Cause, you know, north-side lakefront development would never happen without a handout.
He's also proposing to give developers about $17.5 million to rebuild the Lathrop Homes at Diversey and Clybourn.
Over the last few weeks, he's breathlessly announced two more big development projects: the Old Main Post Office and what I like to call Rezko Village.
For the record, he hasn't said he's going to spend TIF money on these projects. But I think it's just a matter of time. TIF rule number one is never to tell the peasants about the handout until you've stuck 'em with the bill.
And even then—deny, deny, deny.
So let's take it from the top with Rezko Village—that's what I'm calling the 62-acre swath of undeveloped land just southwest of Roosevelt and Clark.
Of course, that's not its real name. Tony and Rezko—like Richard and Daley—are two words you'll probably never hear coming from the mouth of Mayor Rahm. Unless, for some reason, he feels compelled to suck up to the latter.
Rule No. 1 of TIFs is never tell the peasants about the handout until you’ve stuck ‘em with the bill.
I call it Rezko Village because Tony Rezko used to own the land before he was sentenced to ten years in federal prison for his role in extorting millions of dollars from businesses looking for contracts with the state.
Ah, the Blago years.
By the way, we don't have to call it Rezko Village. I think Rezko Field or Rezkoville or Rezko World would also suffice.
Hey, let the public decide!
In 2007, the land was purchased by Nadhi Auchi, an Iraqi-born British businessman who was previously convicted in a corruption scandal in France. How's that for a multinational coalition?
I doubt Rahm will be mentioning Mr. Auchi much either.
Last month, the mayor announced that local developer Related Midwest had "acquired a stake in the site" and "will serve as master developer" on a project that will include—well, they haven't said what it will include. I'm hoping Mayor Rahm makes them tell us before he gives them the green light to build it.
Anyway, I'm sure the transaction is a big relief for the mayor, as it finally gives him a landowner he can mention by name.
Related Midwest is also the lead developer of the Lathrop Homes project. Apparently the company knows a thing or two about convincing the Emanuel administration to turn on the TIF faucet.
Not that the mayor needs much convincing.
- Brian Jackson/Sun-Times Media
- Rezko Village: 62 acres of prime South-Loop real estate once owned by Tony Rezko.
Rezko Village is already in the River South TIF district. So look for the mayor to tell us that we have to spend TIF money to build streets, install sewer lines, and remediate the soil in Rezko Village.
What he won't mention is that whatever taxes the land might generate would go to the TIF district, instead of going into the coffers of our schools or police.
I think Mayor Rahm would call the place Rezko Village for real before he admits to that.
Now, let's discuss the Old Post Office—which straddles the Congress entrance to the Eisenhower Expressway and has been vacant since 1996.
In 2007, Mayor Daley unveiled a TIF-funded deal that would turn the post office into a hotel.
Under the terms of that deal, the U.S. Postal Service agreed to give the developer the building for only $10—while paying $9 million to remove asbestos. And the city would give the developer $30 million to help cover construction costs.
The justification was that the property really had no value, 'cause with more than 2.5 million square feet of floor space it would cost so much to redevelop it.
That deal fell apart. And in 2009, the postal service auctioned off the building to William Davies—a British developer—for about $25 million.
So much for the land having no value.
Davies was what you might call an property scavenger. That is, someone who buys potentially valuable property, then sits on it until someone else who actually wants to develop it comes a calling.
He certainly was in no hurry to pay his property taxes—running up a bill that reached more than $600,000, according to an article in Crain's by Alby Gallun.
Earlier this month, the mayor announced that—under pressure from his administration—Davies had sold the post office and the building next to it to a company called 601 W.
These names could drive anyone crazy.
In that transaction, Davies sold the structures for about $130 million.
That means Davies was "punished" for being an absentee owner by making millions.
Hey, man, where's the line for that punishment?
(Incidentally, Davies died just a few days before the deal went through.)
The mayor says that 601 W plans to turn the post office into a mixed-use complex that includes "a three acre rooftop park complex with a sports and fitness center" complete with a "quarter mile running track."
We still can't afford to build indoor running tracks for our public schools, but there's always plenty of money for another downtown health club.
Once again, the mayor hasn't said that this project will tap into TIF dollars.
But, like I said, it's probably only a matter of time—if only to help the new owner offset the cost of spending all those millions to buy the land from Davies.
So, in effect, the taxpayers will be subsidizing the profits that Davies—or his estate—received for being the scavenger owner.
Maybe I shouldn't be so hard on Mayor Emanuel. Throwing TIF money at developers is what Chicago mayors do.
Mayor Daley did it for the better part of the 90s and 00s, and look where that got us. We can't adequately fund our schools because the tax growth from the new development is diverted to the TIF fund that underwrites the developer's profits.
It's a form of madness, people. Maybe we should call Rezko Village the loony bin. v