Maxwell Street's $750 million makeover
University Village is proving gold mine for developers with the clout to seize the day
For more than a century, Chicago's immigrants lived their American dreams on Maxwell Street. Some opened stores, selling clothes, food, tires and other goods to bargain hunters. Others set up card tables and blankets, peddling their wares on the same sidewalks where blues musicians entertained the masses.
It was Chicago's melting pot. Jews. Blacks. Irish. Koreans. Poles. Mexicans.
(Brian Jackson/Sun-Times)
Photos: Historic Maxwell Street
But when City Hall agreed to tear down the market in the late 1990s and help build a "campus town" for the University of Illinois at Chicago, Maxwell Street provided fortunes for a different group:
The politically connected.
Maxwell Street's ongoing $750 million makeover has been a gold mine for people with clout, including a friend and frequent dinner companion of Mayor Daley and a Springfield businessman who has been indicted on corruption charges along with former Gov. Rod Blagojevich, a Chicago Sun-Times investigation found. They top a long list of construction companies, lawyers, real estate brokers and politicians who have made money in the new development, called University Village.
Even as the insiders have profited, the 58-acre development has failed to provide all of the long-term affordable housing that City Hall promised, the Sun-Times found. And taxpayers are on the hook for tens of millions of dollars for the project through 2022.
University Village runs along Halsted Street south of Roosevelt Road and includes student dorms and stores, condos and million-dollar homes. It's being built by City Hall and the University of Illinois, which in 1997 hired three developers to handle the job:
• William F. Cellini, the Springfield businessman now indicted along with Blagojevich. A former high school physics teacher and Springfield city councilman, Cellini, 74, rose to power in the late 1960s, when he helped elect Gov. Richard B. Ogilvie, who put him in charge of state public works programs. Cellini left government and over the next 37 years established companies that would make him a fortune on state deals -- from casinos to hotels, and state pension investments to government-subsidized housing. He was indicted last year for allegedly being part of an attempted-extortion scheme to generate hefty campaign contributions for Blagojevich. Cellini denies any wrongdoing.
• Michael Marchese, one of Daley's close friends. Marchese, who lives on Chicago's Gold Coast, and Cellini have been partners on many commercial and residential real estate projects. The way they usually work, Marchese's Harlem-Irving Companies develops the stores, and Cellini's New Frontier Companies oversees the housing. Marchese, 61, has been involved in several high-profile deals with City Hall, including a West Side shopping center built on land he bought from the CTA for one dollar. His wife, Debbie, is a board member of After School Matters, a charity started by the mayor's wife, Maggie.
• Richard Stein, who has been a close associate of politicians including Illinois House Speaker Michael Madigan. A longtime developer, Stein, 70, of Glencoe, is senior managing director of real estate for Mesirow Financial Real Estate. Among his signature projects: the United Center and the redevelopment of Fort Sheridan in Highland Park into a residential community.
Operating as the South Campus Development Team, the three developers have been paid more than $16 million to oversee construction of dorms, stores, an "academic superblock" and other University of Illinois at Chicago facilities under a contract that runs through January (see map/graphic).
As part of the deal, they're also building 900 homes on land they bought from the university.
Here's how they came to buy that property:
The entire University Village project covers nine square blocks. The university already owned some of that land when it began pushing to relocate the Maxwell Street market in the early 1990s. Since 1995, the university has paid more than $29 million for the rest of the land, including a United Parcel Service distribution center just west of the Dan Ryan Expy., records show.
In addition, it paid lawyers hundreds of thousands of dollars to negotiate deals with property owners, including some who didn't want to sell.
Over time, the university sold about three-quarters of all the land -- already cleared and ready for construction -- to Cellini, Marchese and Stein for a total of $17.8 million. As of December, the three developers have sold 837 homes for a total of $312 million.
How much profit they've turned is unknown. Cellini, Marchese and Stein didn't respond to interview requests.
An additional cost: After the university bought the UPS property for the developers, City Hall gave the delivery company $6.9 million to move to the other side of the Dan Ryan.
Construction is now wrapping up at University Village. So far, the project has cost $647 million, and UIC still plans to build another academic superblock and a second parking garage. The final tab is expected to be $750 million.
To help finance the project, the university borrowed $332.5 million, and the city created the Roosevelt/Union tax-increment financing district. It's estimated the TIF district will provide about $75 million to $100 million for public improvements such as streets, sewers and sidewalks throughout the development.
University officials praise the project, saying it has allowed them to provide on-campus housing for 1,500 additional students, to build a high-end conference center and to give a boost to the economy with new shops and restaurants.
"The South Campus project has been extremely successful for our campus and the community," UIC spokesman Mark Rosati said. "Our goals for enhancing our academic and campus environment have been met."
The old Maxwell Street market is now University Village -- a 58-acre development with everything from million-dollar mansions to student dorms. To pay for it, the university borrowed $332.5 million, and the city set up the area as a tax-increment financing (TIF) district to provide as much as $75 million in public money.
University of Illinois at Chicago property
Academic superblock
Cost: $111.7 million
Includes the UIC Forum, with a 3,000 seat auditiorium, and Stukel Towers a 740-bed dorm. Completed in 2007.
Beckham Hall
Cost: $39.2 million
A 450-bed dorm with retail space. Completed in July 2003.
Robinson Hall
Cost: $25.7 million
A 320-bed dorm with retail space. Completed in August 2001.
Parking garage
Cost: $19.2 million
653 spaces. Also includes retail.
Retail space
134,000 square feet of space for about three-dozen restaurants and shops.
Land university sold to developers
Cellini, Marchese and Stein got to build and sell 900 homes on acres of land they bought from the university for $17.8 million. 837 homes have been sold for $312 million.