City makes $85 mil. gamble on Reese site
OLYMPIC VILLAGE | Taxpayers won't 'be on the hook': Daley aide
Rolling the dice that a depressed real estate market will come roaring back, Chicago will borrow $85 million to purchase the soon-to-be-shuttered campus of Michael Reese Hospital to pave the way for construction of an Olympic Village.
Although the $85 million note is backed by the city, Mayor Daley's chief of staff, Lori Healey, promised Tuesday that the deal is structured so taxpayers "will never be on the hook.''
The city aims to resell the land to developers who would build the Olympic Village and then sell it after the 2016 games.
Medline Industries, which owns the 37-acre Reese property near McCormick Place, has agreed to make a "charitable contribution" of $20 million to cover demolition, environmental cleanup and interest payments tied to the 15-year loan.
The deal is structured so that the first five years of payments are "interest only," with a rate of 5 percent. If Chicago loses the Olympic sweepstakes, the city would have to pay Medline $90 million.
Long before the principal is due, the city plans to sell the property to a master developer -- ideally for more than the city is paying for it -- with a closing expected shortly after the International Olympic Committee chooses a site for the 2016 Summer Olympic Games in October 2009.
Chicago 2016 Chairman Pat Ryan acknowledged that credit is tight and "there's an economic downturn'' now but "there's been very significant interest from developers" about the site.
In 2006, officials announced that the $1.1 billion Olympic Village would be built over a truck-staging area near McCormick Place. Officials said that 37-acre space might still be part of the project, which would double the size of the Olympic development.
The air rights were expected to raise $100 million from developers to be used for construction of an Olympic stadium in Washington Park and an aquatics center in Douglas Park. If developers lost interest in the staging area, Ryan said the $100 million could be covered by proceeds from the Reese site or by "raising it the old fashioned way -- individually, corporations, families."
Expanding the project would help the bid group meet the "legacy" expectations of the IOC, which wants improvements left behind after the games are over, he said.
Olympics or not, a new neighborhood will be built on the Reese land to knit "the downtown together with the rebirth of the near South Side and the neighborhoods of the lakefront,'' Healey said.
The Sun-Times reported last month that the Daley administration filed a zoning application for 7,500 permanent dwelling units and 1,000 hotel rooms that could be converted into residences, including affordable housing on the Reese site. A traditional street grid would be created, along with retail, parks, schools and other amenities.