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Column Wed Dec 10 2008

Chicago, Open Up Your Pocket Books: Olympic Village Deal Back On

Perhaps while watching yesterday's breaking news regarding the arrest of Illinois Governor Rod Blagojevich you said to yourself, "Surely Chicago politics couldn't get more absurd." Well, try this one on for size.

As the U.S. housing market leads the global economy into its greatest crisis since the Great Depression, that whip-smart team over at the Mayor's Office has decided to bet our futures on yet another condo development. But this isn't just any condo development — this is an Olympic Village.

That's right. The deal to obtain the land underneath Michael Reese Hospital for Chicago's 2016 Olympic bid is back on. And the City of Chicago is about to take out an $86 million loan to acquire the land that is currently occupied by the functioning hospital.

Once they acquire that land, they plan to demolish the hospital and build housing for athletes who will participate in a two-week sporting event that may occur in Chicago eight years from now. How's that for absurd?

In a deal originally put forward last spring, the acquisition was put on hold after the initial demolition costs for the site came in $12 million over budget, forcing the city to renegotiate the deal with Medline Industries Inc., the current owner. The new arrangement has Medline picking up more of the tab to cover the demolition costs — totaling $32.5 million dollars in "charitable contributions," as summarized by the bid team.

Of course, after yesterday's revelations we should all be a little worried whenever something like "charitable contributions" is mentioned.

The Michael Reese deal still has to go before the Chicago City Council on December 17. But with the Daley Machine moving with precision behind the Olympic bid you can bet that little to nothing will be said in opposition.

And if the deal does go through, the citizens of Chicago will have to pray that the City finds a developer as soon as possible, as the interest payments on the 15-year loan kick in five years from now. And given the current economic forecasts, finding a developer could be problematic. According to Crain's, "The delinquency rate for construction loans in the area hit 13.7 percent in the quarter, up from 10.8 percent in the second quarter and more than four times the rate in the year-earlier period."

The Chicago Spire has been put on hold due to the current economy, leaving nothing more than a hole in the ground. And Trump Tower has sold only three quarters of the available units, leading Trump to seek drastic measures. Crain's reports: "Unable to sell his remaining condos and hotel units, Mr. Trump failed to pay back the $334-million loan balance when it came due in early November and has sued his lenders to buy more time."

Block 37's largest tenant has backed out of its lease while the "super-station" that sits underneath the site (which is to connect the Loop to O'Hare via an express train) has been sealed off — while it waits in need of another $100 million in construction funding.

Yet somehow, the City of Chicago, which recently axed public services and nearly 1,000 city employees to close a $420 million budget gap, is able to justify the acquisition of Michael Reese Hospital.

This leads me to ask: Has anyone picked up a newspaper at City Hall in the last year? People are losing their jobs and their houses. They can't afford healthcare — and Mayor Daley wants to buy a hospital to knock it down.

It seems that the priorities of our elected officials aren't in line with that of the average person.

While most of us stood in amazement at the criminal complaint filed against G-Rod yesterday, you can bet that after hearing the news, Daley's mind immediately gravitated to its impact on Chicago's Olympic bid. Just as the first thought through Blagojevich's head following Obama's election victory was, "I'm to make some [expletive] money off this thing," at yesterday's news conference, FBI special agent Robert Grant said of Illinois politics, "If it isn't the most corrupt state in the United States, it's certainly one hell of a competitor."

Well, Mr. Grant, if the circus surrounding the simple task of filling a vacant Senate seat didn't convince you, just wait till the Olympics come to town.

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Nick / December 10, 2008 1:55 PM

"they plan to demolish the hospital and build housing for athletes who will participate in a two-week sporting event that may occur in Chicago eight years from now. How's that for absurd?"

Won't it be used for a development project post-Games, or regardless of the Games? I understand the lack of trust on who will ultimately foot the bill - mainly stemming from a lack of communication which comes from the fact that the Olympics are something like 8 years away. Regardless, it also helps develop new housing units in an isolated area that needs it (yes, it is a good thing for the community, no, it is not a solution to the affordable housing problem Chicago has, and no, the Olympics, unfortunately, can't fix that problem).

Surprisingly enough, developers are still in business, and still building, despite your examples. They're a little extreme, when you're talking about mega-projects like the Spire and Trump Tower.

It'd be nice if for once outsiders and self-loathing Chicagoans stopped trying to shove down our throats that we have been defeated by corruption. Did no one see this coming with Blagojevich? Chicagoans and Illinois residents despised him for both his ineffectiveness and corruption - they wanted him out. If the constitution allowed a recall, he would have been recalled in an instant.

Springfield is a whole different ballgame than Chicago - the culture is different, the pay is less, and undoubtedly it is a more target-rich environment for corruption. And remember, for every Blago, there is an Obama. Keep trying to tie Blago and Obama and Daley and the Olypmics together in one little nice package - any combination with Blago will simply unravel. Unlike Blago, Daley, the Olympics, and Obama all have high approval ratings.

Dan / December 10, 2008 4:55 PM

Not to mention Daley's fervent selling of city assets for pennies on the dollar to address shortfalls that are largely a result of his corrupt and mismanaged administration (read: rampant TIF abuse, Block 37, Shakman payouts, etc.) Daley is actually more destructive and scarier than Blagojevich, because he's smarter and maintains oligarchal control over all things Chicago, with nary a whimper from the lapdogs masquerading as city councilmen.

The parking meter lease is the most egregious deal in the city's sordid history. We've passed the point of diminished returns, but why should Daley give a hoot as he nears the end of his mayoral tenure as long as he secures his legacy with an Olympic bid.

Ramsin / December 10, 2008 4:58 PM

Dan - 1
Nick - 0

Tim / December 11, 2008 3:47 AM

All the discussion of the Michael Reese plan, both here and in the Tribune, has completely neglected to mention that the hospital has several historically-significant buildings on its campus that need to be preserved. While many of its buildings are inefficient and wasteful of space, several of the oldest buildings are several stories tall and would fit in well with the density of an Olympic Village. It seems like leaving these older buildings in place would substantially reduce the demolition costs the city keeps whining about, so it's a win-win. Besides, hasn't the city learned its lesson about blank-slate demolition after the 60s?

Carl GiomettiAuthor Profile Page / December 11, 2008 8:26 AM

From an urban standpoint, the Michael Reese hospital demolition is a very good thing. I understand the concerns surrounding the destruction of historical buildings, however, when an area functions so poorly as an urban "element", there are few options. Campus-like areas (see Medical District or Lake Meadows) are disastrous for the urban environment. Automobile-based and lacking in safety, these towers setback from the street grid are black holes in cities.

I think any comparison to the urban renewal of the 1950's & 1960's is incorrect. During that period, communities that were perfectly functioning were razed. This area is absolutely underutilized and completely dysfunctional.

All financial and political discussions aside, Mayor Daley has proven to be a capable urban planner when it comes to specific projects, and while the energy and waste of demolition will be tragic, the end result will probably be fantastic. (not to go all Machiavelli on you)

Bob Quellos / December 11, 2008 4:35 PM

Both Carl and Tim are missing the point.

When talking about urban issues it is good to move away from abstract terms. How is it that Reese functions poorly as an "urban element?" Reese has been an important "urban element" in Chicago for nearly 100 years - as it provides health care to those on the South Side. It was only a year ago that Crain's Chicago warned that the closing of another Chicago hospital would cripple the city's health system.

And if Carl's logic about "campus-like areas" was thoroughly followed through - it would mean demolishing the University of Chicago Charter School on the south of Reese, the whole of McCormick Place to the north, and just about every major hospital in the city.

Perhaps the buildings are historically significant -- but that is far from the main issue at this point. The issue at hand is the fact that Daley wants to shut down a hospital for a 2 week sporting event -- while the rest of the city crumbles.

I'm not against building. I think it would be great to build more public transit, real "affordable" housing, schools, hospitals, etc. But an Olympic Village on the onset of the largest economic downturn since the Great Depression? That's crazier than G-Rod's "chestnut helmet that brazenly mocks Father Time."*
*(quote from the Sun-Times)

And while we should be careful not to draw one-to-one comparisons of 1950 & 60's Urban Renewal, they are similar. Like the period of Urban Renewal, today's urban redevelopment (often hidden behind the facade of new-urbanism or phrases like "restoring the street grid") has little to no regard for the people who stand in its way. And today, just as in the 50's and 60's -- those people tend to be poor minorities and immigrants.

As Daley and his cronies see it, the Olympics in Chicago are to serve as a catalyst for gentrification from Reese down to Hyde Park. And in doing so they are going to displace the communities that currently reside there.

Over the last 20 years the Olympic have never provided a city with a lasting increase in tourism and have not proven to be a boon to an economy. When the Olympics leave town - their greatest legacy has been the debt that they leave behind -- a tab the taxpayers are responsible for picking up.

Tim / December 12, 2008 2:44 AM

^^ The Michael Reese campus is poorly-planned and sprawling. However, the oldest buildings existed BEFORE the 1960s clearcut of the neighborhood, so they're perfectly fine from a design standpoint.

It is regrettable that this hospital must close, but realistically, it can't stay in business if it isn't making money - at least in the twisted healthcare sense of "making money". Besides, Mercy Hospital is literally just across King Drive and the U of C hospitals exist for people further south. Mercy has plenty of parking lot space to expand onto, by the way, if there is demand for additional healthcare beyond what they can currently provide.

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