Mayor moving to redevelop Michael Reese site
BY FRAN SPIELMAN AND DAVID ROEDER Staff Reporters August 15, 2012 2:50PM
Updated: September 17, 2012 12:59PM
Four years after then-Mayor Richard M. Daley borrowed $85 million to buy the Michael Reese Hospital site with a dream of building an Olympic Village there, Mayor Rahm Emanuel is moving to realize his predecessor’s back-up vision: to turn the 37-acre site into a technology park.
The Emanuel administration has awarded an $885,000 contract to the architectural firm Skidmore, Owings & Merrill LLP for “property redevelopment, strategic planning and consulting services” for the Reese site on the South Side.
The firm could emerge as an investor at the site, but for now its task is to be a lead consultant. It is supposed to conduct a market analysis, find likely investors and handle dialogue with communities.
Skidmore executives had no comment or could not be reached. The firm, famous for super tall buildings, has a busy practice in urban design.
It has advised on such local developments as Millennium Park and the Lakeshore East housing development downtown. Skidmore also consults for the developer redoing the old U.S. Steel South Works property on the South Side lakefront.
In 2008, Daley rolled the dice that a depressed real estate market would come roaring back to further his dream of hosting the 2016 Summer Olympic Games. Chicago borrowed $85 million to purchase the then-soon-to-be-shuttered campus Reese to pave the way for construction of an Olympic Village.
The price rose to $91 million after the city’s stunning first-round knockout in the 2016 Summer Olympic sweepstakes.
If the property is not unloaded to private developers by 2014, five years after the city took possession, the price goes up to $96 million and the city must start making payments on the loan. The former hospital campus is at 2929 S. Ellis.
Last spring, the City Council agreed to refinance the loan from MRL Financing LLC, a division of property owner Medline Industries, to save Chicago taxpayers $14.5 million over the life of the transaction.
At the time, aldermen questioned why the city borrowed money from the property owner in the first place and whether that was the best deal taxpayers could get.
Chief Financial Officer Lois Scott said she didn’t know because she wasn’t there, adding, “I can only try and make it better and to try to reduce [interest rates and] dig through every drawer we have to save money.”
Days before leaving office, Daley released a report by a panel of experts chaired by then-Commonwealth Edison CEO Frank Clark that concluded Chicago could get its investment back—and create as many as 25,000 jobs—by converting the land into a combination tech park and thriving residential neighborhood for those workers.
The panel cited serious obstacles, including “difficulty securing financing” and anchor tenants because “perception lags reality of Chicago as a technology hub.”
Other problems include: limited access to mass transit, a “lack of basic infrastructure” and “possible environmental issues” at a “relatively small,” property that overlooks an ugly truck staging area for McCormick Place.
But Daley argued that all of those obstacles could be overcome to turn the site into a mecca for jobs and innovation. Daley spent $15 million to bulldoze building on the property, turning aside complaints that some had architectural merit and should be preserved.
He passed the baton to Emanuel in hopes his successor would use the report as a springboard to solicit ideas and design concepts for the park and surrounding neighborhood.
Now, Emanuel is doing just that, silencing the steady drumbeat of those who have urged the city to build a casino and entertainment complex on the hospital site.
He chose Skidmore from 11 firms that vied for the right to, among other things, “identify funding sources and implementation strategies” and quarterback an exhaustive planning process that “requires rigorous community input.”
“The city is confident the site will be very attractive to master developers, given its unique location, particularly as market and credit conditions improve between now and 2014 when payment of up to $91 million plus accrued interest by the city for the site is due,” the city’s request-for-proposals (RFP) stated.
“Redevelopment of the Michael Reese Hospital site is a major development that will transform an area south of the McCormick Place convention center into a new mixed-use, mixed-income, vibrant lakefront community…This is a unique opportunity to transform this world-class development that will position the city for economic success well into the 21st Century.”
The RFP urged developers to “identify the best set of initiatives to pursue” in Daley’s Tech Park Advisory Report. But, the city acknowledged that “market conditions will dictate what shape” the development ultimately takes.
In January 2009, when Daley’s Olympic dream was still alive, the site that once housed 27 buildings was rezoned for mixed use development that may include: residential units, business, commercial, transportation and accessory uses. A new, more efficient road network has also been approved by the city.
The Olympic plan called for the $1.1 billion project to be built in phases, with low-rises for athletes built first on the south end of the hospital campus and high-rises on the north built after the games.
The Chicago Housing Authority had expressed interest in buying 15 percent of the units for public housing. Several major universities were interested in converting units to dormitory rooms.
According to the RFP, the city’s current goals are to: create “high-quality, 21st Century” jobs; attract established companies and foster creation of new companies in emerging business sectors; attract individual and institutional investors to support those companies and foster redevelopment of the nearby Bronzeville and South Loop communities.
But respondents were urged to “balance financial risk and return, using private and public investors while at the same time generating a positive return [direct and indirect] to the city on its initial investment.”
Skidmore will not be precluded from participating in the development phase, either “directly or indirectly,” the document states, noting that a “separate evaluation committee” will make the selection process.