Olympic Village deal salvaged

Construction of a $1.1 billion Olympic Village will be moved to the campus of Michael Reese Hospital after all, now that the property owner has agreed to restructure the deal to accommodate soaring demolition and environmental clean-up costs.

Mayor Daley initially wanted to roll the dice that a depressed real estate market would come roaring back — by borrowing $85 million to finance the hospital purchase and sell it to a private developer.

The mayor’s original plan called for Medline Industries, which owns the 37-acre Reese site, to make a “charitable contribution” of $20 million that was supposed to be enough to cover demolition, environmental cleanup and five years of interest payments on the loan at a rate of 5 percent.

Instead, demolition and cleanup costs were projected at $32 million and rising.

On Monday, Chicago 2016 Chairman Pat Ryan officially announced that he has salvaged the deal by re-structuring it.

Under the new plan, Medline’s “charitable contribution” will rise to $32.5 million. And instead the overall purchase price will rise by $1 million — to $86 million.

“We are very pleased that we have been able to reach a final agreement, and we appreciate Medline’s flexibility in structuring a transaction which works for our needs,” Ryan said in a press release.

“Their charitable contribution clearly indicates that they share in our vision for how the Village development can provide long-term benefits to the city, such as affordable housing, new job development and the creation of a new, environmentally advanced community in the city. For that, we thank them.”

Medline spokesman Jerreau Beaudoin could not be reached for comment on the new agreement.

Local Ald. Toni Preckwinkle (4th) said Medline’s decision to raise its charitable contribution by $12 million will benefit the company as well as the city. The deal also includes “an interest rate reduction” that stands to benefit Chicago taxpayers, the alderman said.

“Medline understands that, in the present environment, it would be hard to get anybody to have an interest in this site and to move ahead the way the city is prepared to move ahead. This is a bird in the hand for them,” Preckwinkle said.

She added, “This is a great step forward. It’s better to build on dirt than to build on caissons over the [truck] marshalling yards and destroy the marshalling yards in the process.”

Initially, city officials planned to build the Olympic Village on air rights over a truck staging area for McCormick Place.

Mayor Daley and Preckwinkle (4th) pushed for the move to the Reese site because the village could be built on solid ground at a lower cost and more easily integrated into the surrounding Bronzeville community.

Ryan said the larger Reese site gives developers “more flexibility” to deliver an Olympic Village that will be converted into a mixed-use residential neighborhood that includes affordable housing after the Games are over.

During the Olympics, the complex is expected to include an array of amenities for athletes, including a 5,000-seat dining room, a private work-out facility, Internet cafes, clubs and cinemas.

“Our enhanced plan for the Olympic Village development reflects the bid’s focus on creating the best possible competitive conditions and overall experience for the athletes and is an example of how Chicago’s bid for the Games will make a lasting contribution to the city,” Ryan said.

Daley has called the hospital campus a “perfect site” for the Olympic Village because of its proximity to the lakefront and McCormick Place and the opportunity to build sorely-needed affordable housing on the mid-South Side.

“Rebuilding that community would really be important to us,” the mayor said in late September.

But, the mayor said he was not about to go forward with a transaction that puts Chicago taxpayers on the hook for demolition and environmental clean-up.

“It could be $30 million now and, [ultimately] $60 million to clean up. … You go down deeper. … It gets more complicated. Many times, they dump things that no one ever knew they dumped in there,” Daley said then.

Last month, the Chicago Sun-Times reported that talks between the city and Medline had heated up and that Daley hoped to have an agreement in time to present it to the City Council in December.

Ryan has told the Sun-Times he expects to take the wraps off the city’s final Olympic plan later this month.