Chicago Sun-Times: All posts by David Roeder

Heartland Alliance cuts 65 jobs, shuts affordable housing division

2023-12-14T05:30:00-06:00

Olivia Moorer, a former Heartland Alliance employee, was one of 65 employees to be laid off by the nonprofit.

Anthony Vazquez/Sun-Times

Heartland Alliance, a Chicago-based social service organization that dates from 1888, is shutting down its division that operates affordable housing developments in Chicago and Wisconsin after laying off 65 workers.

Ed Stellon, the group’s chief external affairs officer, said the nonprofit is “managing a very severe cash flow challenge.”

He said the layoffs were among 125 workers who got temporary furloughs in recent months. “It’s just a terrible situation for them,” Stellon said.

Heartland’s setbacks have prompted speculation from laid-off workers that its housing unit will file for bankruptcy. Stellon said that won’t happen, but the unit has ceased operations.

He said the group is trying to sell its properties while making sure the trouble doesn’t spread to other Heartland services, which include health care and international programs for oppressed people. After the job cuts, Heartland has 1,236 U.S.-based employees, Stellon said.

“Our North Star throughout this process has been preserving the services we offer throughout the globe,” he said.

Heartland’s roughly 1,200 affordable housing units were turned over to receivers in May and June as the organization’s financial troubles mounted. More than 1,000 of the units are in Chicago.

Stellon said in an email to the Sun-Times: “We are currently working with investors and the receivers to transfer the properties to other owners who can continue to operate them as affordable housing. We are cooperating with receivers, public agencies and the investors to try to assure that tax credits are not affected.”

Furlough to termination

A former Heartland Alliance employee told the Sun-Times the organization was “sunsetting” due to financial difficulties and that “a small group of people were making the decisions with everyone else left unaware.”

The former employee, who wanted to remain anonymous, was told the organization’s “full intention was to bring furloughed staff back.”

Stellon said the laid-off workers were primarily in administrative and back-office roles.

Multiple former employees accused Heartland of violating the state’s WARN Act, which requires employers with 75 or more full-time employees to provide 60 days advance notice of pending closures or mass layoffs.

A mass layoff is when more than 25 employees — if they make up more than a third of the workforce at a single organization — are let go during any 30- to 90-day period without the organization itself shutting down, according to the Illinois Department of Commerce and Economic Opportunity. Terminations of more than 250 employees are also defined as a mass layoff in Illinois.

State WARN records show Heartland Alliance reported 48 “temporary layoffs” Sept. 29. Heartland’s health unit also reported 40 furloughs Oct. 28.

Former Heartland Alliance employee Olivia Moorer holds up a tote bag from Heartland at her home in Lincoln Park.

Anthony Vazquez/Sun-Times

Olivia Moorer worked as an associate for Heartland’s internal communications department for nearly two years.

She said the furlough announcements were made Sept. 29, the same month former Heartland President Evelyn Diaz stepped down. After eight years, Diaz announced in August that she would be departing the nonprofit Sept. 1, with Don Laackman assuming the role of interim president.

Moorer said timing of Diaz’s departure and the subsequent furloughs was too much of a coincidence.

Diaz “was out at the end of August. I was furloughed at the end of September. I have a hard time believing she didn’t know what was about to happen to all of us,” Moorer said.

Moorer said she liked working with her team, but there was a “bit of a disconnect” between its business services, human resources and payroll and the programs that included employees working on the ground — like visiting prisons to help inmates before they’re released, or traveling to shelters to provide medical assistance.

Moorer also said there was a “lack of empathy” from leadership.

In an unedited farewell video viewed by the Sun-Times, Diaz said employees’ “jobs really were easy.”

“She’s gonna say that about folks who are working in shelters with migrants who have just come from Venezuela, who are dealing with some of the most difficult things a human can go through,” Moorer said.

Liz Proscia, former communications manager for READI Chicago, a program to fight gun violence, said her final straw with Heartland leadership came after her supervisor and team “put years into their work and were furloughed without notice.”

“None of us fault any of the program leadership for anything that has happened,” Proscia said. “It’s just really disappointing to see the people at the top do this to their staff, and ultimately, to the participants.”

Proscia, who worked with READI Chicago for over a year, said she was living paycheck to paycheck. She resigned Nov. 13, after finding another job.

“Even if they had given us a warning, we would have at least had time to prepare and figure things out,” Proscia said. “I got very lucky to find a job because I probably would’ve been unhoused if I didn’t.”

Moorer searched for jobs while she was furloughed because she anticipated she’d be terminated. Her grandmother died a week after she was furloughed, and Moorer said she had a depressive episode because of it.

“It made me feel like I wasn’t where I should be in life,” Moorer said.

Still, she said she appreciates the team she was able to work with at Heartland.

“The one thing I will always carry with me from Heartland is the people I worked with,” Moorer said. “My team was phenomenal, and I will always have an incredible network of professionals, individuals and friends that no amount of poor leadership can ever take away from me.”

Pandemic-related losses

Without discussing specifics, Stellon said the housing unit’s finances suffered during the pandemic, which caused heavy job losses among people with lower incomes. Many couldn’t pay rent, he said.

Other experts in affordable housing said Heartland was vulnerable because its properties were devoted to the lowest income groups that need support services, often to avoid homelessness.

“Developing and managing affordable housing is not for the faint of heart,” said Joy Aruguete, CEO of Bickerdike Redevelopment, a leading affordable housing provider in Chicago. “There’s not much fat in affordable housing to cover such a catastrophic situation as COVID.”

Bickerdike was a partner with Heartland in redeveloping the Chicago Housing Authority’s Lathrop Homes into a mix of market-rate and subsidized rental units. Aruguete said her group has taken over Heartland’s piece of the project.

The largest Heartland properties in receivership are Hollywood House at 5700 N. Sheridan Road and the Leland apartment complex at 1207 W. Leland Ave.

Bickerdike’s Aruguete has neighborly approach to affordable housing

‘Tough model’

Heartland Housing’s most recent tax filing, for the 12 months through June 30, 2022, hints at its woes during the COVID-19 era. It said its “program service revenue,” principally rents, fell to $1.56 million from $3.17 million during the prior 12-month period, although donations and other income sources held steady.

“We have kept our donors apprised of the situation and have been gratified by their concern and willingness to help us preserve the vital services we deliver in the Chicago area,” Stellon said. Heartland’s website said it also serves Latin America, the Caribbean, the Middle East and North Africa.

The receiver for most of its Chicago-area buildings is a division of Community Investment Corp., whose main activity is arranging financing for investors to buy and fix up affordable housing.

Jonah Hess, director of the receivership unit, said Heartland’s buildings are generally older properties that suffered from deferred maintenance.

“Security was scaled back as Heartland was trying to cut costs. We have brought that back, and that has helped a lot,” Hess said.

Overall, he said Heartland’s buildings were in better shape than those his unit usually gets under the city’s Troubled Buildings Initiative. City officials filed the petition to put Heartland’s buildings into receivership.

Hess declined to speculate on why Heartland Housing was so deeply affected by the pandemic.

“The debrief on that will be an interesting one,” he said. “But in affordable housing, it’s a tough model when it works.”

Heartland Alliance started in Chicago in 1888 as Traveler’s and Immigrants Aid. It lists renowned social reformer Jane Addams as founder.

One of the largest Heartland Alliance properties in receivership is Hollywood House at 5700 N. Sheridan Road.

Anthony Vazquez/Sun-Times

Near West Side ventures seed growth in Chicago manufacturing

2023-12-11T05:30:00-06:00

John Welin, mHUB’s shop director (left) shows University of Illinois Chicago student Mahanoor Murtaza how to use a laser cutter at mHUB’s new headquarters Thursday.

Pat Nabong/Sun-Times

There’s this weird thing about the entrepreneurial spirit and trying to create jobs from a new idea: It takes intense work and focus but also patience, qualities hard to find in equal measure.

On the Near West Side, within blocks of each other, are examples of two such operations seeing results from its investments of labor, thought and capital. They will be part of an innovation economy taking root in what was Chicago’s old meatpacking and produce district.

Chicago Enterprise bug

Chicago Enterprise

They are mHUB, a nonprofit incubator for young ventures in high-tech manufacturing, and NanoGraf, a private company developing for the U.S. military lithium-ion batteries that are more powerful, lighter and last longer than others. Both have expanded space to allow for more projects, and both expect to add jobs within the next two years.

In mHUB’s case, it will cut the ribbon Tuesday on its new home. It has taken over a nearly century-old building with a clock tower at 240 N. Ashland Ave. and given it a new address to suit its purposes, 1623 W. Fulton St.

The 80,000 square feet will afford mHUB more space for prototyping and testing compared with its former base on Chicago Avenue.

The acquisition and build-out costs total $50 million, said mHUB CEO and co-founder Haven Allen. He said mHUB is adding companies and startups to its active roster of clients and hopes its own workforce — 33 employees — will grow 50% by 2026.

It works in the field of hardtech — research in engineering and software applied to physical products. Examples of companies that launched with mHUB’s help are NuCurrent, working on wireless power sources, and Sabanto, developing equipment to automate farming.

Haven Allen, mHUB CEO and co-founder, at its prototype lab on the Near West Side.

Pat Nabong/Sun-Times

Allen said hardtech is one business segment that hasn’t lacked for venture capital through the pandemic and concerns about a recession and rising costs. He said the more than 500 startups and small businesses mHUB has supported since its beginning in 2017 tend to set up shop in Chicago.

“I think we’re just getting started,” he said.

The organization is close to other tech-oriented office and lab sites planned in Fulton Market by the Chan Zuckerberg Initiative and developers Sterling Bay and Trammell Crow, among others.

Allen said the activity will draw tech-focused employees who crave the city lights.

“People want to be where they can live, work and play,” he said.

When the mHUB project was announced earlier this year, it caused a stir from its level of taxpayer support, including $17.6 million from the city in tax increment financing. A former city planning commissioner called the request “eye-popping,” even though he supported it. The project also got a $15.5 million tax-exempt bond issued by the state.

Allen said mHUB got the backing because of its exemplary record. “Our return on capital has been 2,000 times the public investment,” he said.

The building that mHUB now occupies at 240 N. Ashland Ave., as seen in 2022.

Brian Rich/Sun-Times file photo

NanoGraf dates from 2012 as a Northwestern University startup and later outgrew its incubator space at the Illinois Institute of Technology. On Dec. 1, it opened its new 17,000-square-foot space at 400 N. Noble St.

The company has a $10 million federal contract for its promise to onshore battery technology, meaning to keep it in the U.S. The military has taken notice and gave NanoGraf a $1.65 million contract. Within days of the office opening, NanoGraf announced an $8 million deal with the U.S. Army.

“The military is our beachhead market,” said CEO Francis Wang. He said the continued ramp-up of work should allow the company to double its count of full-time workers to 60 in two years.

Wang said he hopes the proprietary technology, which increases batteries’ energy density by 20%, will find applications in power tools, electric cars, medical devices and other consumer products.

He said the company practices “stepwise growth,” a conservative strategy in the spendthrift world of tech.

“Our strategy has been to go slow and try to become profitable in the near term,” he said. Wang said he foresees that happening within the next 18 months, buoyed by those federal contracts.

In February, NanoGraf said it raised $65 million in Series B, or second round, funding from private investors.

Michael Fassnacht, president and CEO of the economic development group World Business Chicago, has followed mHUB and NanoGraf and likes what he sees. He said manufacturers in the Chicago area can source half their material from within the region, a key advantage.

“The Chicagoland region stands at the forefront of manufacturing diversity and innovation in the United States,” Fassnacht said.

For Wang, the Near West Side is the right spot for growth. He mentioned the investments in Illinois by Gotion, Lion Electric and Rivian, all related to electric vehicles.

“The Rust Belt is becoming the Battery Belt,” he said.

If that’s a new reputation headed Chicago’s way, we’ll take it.

Halimah Najieb-Locke, deputy assistant secretary of defense for Industrial Base Resilience, discusses NanoGraf’s new space Dec. 1 with the company’s CEO, Francis Wang (center). Behind them are Eric Shields, senior battery adviser at OUSD Industrial Policy (left) and Jia (Chow) He, vice president of manufacturing at NanoGraf.

Provided

City panel backs landmarks label for two State Street buildings

2023-12-07T18:57:25.551-06:00

The buildings at 202 and 220 S. State St. as seen earlier this year. The three-story building between them has since been demolished.

Tyler Pasciak LaRiviere/Sun-Times

A city panel unanimously recommended landmark designation Thursday for two early 20th century skyscrapers on State Street, potentially setting up a showdown with a federal agency that wants them torn down.

The Commission on Chicago Landmarks urged landmark status for buildings at 202 and 220 S. State St. to the applause of audience members who supported their preservation. The vote sends the matter to the City Council for a final decision.

The federal government owns the buildings and would not be bound by the city’s landmarks ordinance. However, the panel’s vote could increase pressure on federal officials to save them, even though Congress has appropriated $52 million for their demolition.

Federal officials have argued the two buildings, which back up against the Dirksen Federal Building on Dearborn Street, pose a security risk for U.S. courts. The federal government owns the buildings, which have been vacant for years.

The commission’s vote is “positive optics if we do find a successful reuse for these two seminal Chicago buildings,” said Ward Miller, executive director of Preservation Chicago. His group has advanced a plan to turn the buildings into an archive center shared by several organizations.

Miller contends such a plan would satisfy security concerns while still putting the buildings back into use. He gave the landmarks commission 23,000 signatures from an online petition supporting the buildings.

The General Services Administration owns the buildings and has been accused of letting them deteriorate after deciding years ago they weren’t needed for an expanded center of federal offices. The agency had no immediate comment.

It has been holding public hearings on alternatives for the buildings because they are listed on the National Register of Historic Places. Court officials here have stuck to their argument that they pose a security threat, even though wrecking them would expose Dirksen to sight lines as a greater distance.

The properties are the Century Building at 202 S. State and the Consumers Building at 220 S. State, slender towers clad in terra cotta with suggestions of Art Deco trends to come.

A city staff report said they merit landmark designation because they are exemplary works by architectural firms that defined the Chicago School of the era.

The 16-story Century opened in 1915 and was designed by Holabird & Roche. The 22-story Consumers opened in 1913 and was the work of Jenney, Mundie & Jensen.

The business-backed Chicago Loop Alliance has sided with the preservationists, saying that destroying the properties would just leave an empty lot on Chicago’s storied retail thoroughfare.

Rebecca Pallmeyer, chief judge of the Northern District of Illinois, previously told the landmarks panel, “We note suggestions that the Court should consider security enhancements that may be adequate to address the Court’s safety concerns. Media reports have suggested that those concerns are limited to sight lines into the Courthouse from the buildings at issue. We can assure you that while sight lines are significant, law enforcement experts have identified several additional concerns.” She did not go into detail.

The federal government this year wrecked a vacant three-story building between the towers because it posed a safety hazard for pedestrians. The smaller building was at 208-212 S. State.

Scaffolding wraps around buildings in March 2023 at 202-220 S. State St. in the Loop.

Tyler Pasciak LaRiviere/Sun-Times

Salesforce shows off finishing touches on its Chicago office space

2023-12-05T17:00:27.072-06:00

Salesforce employees work in the company’s new offices Tuesday at the Salesforce Tower Chicago in Wolf Point, near the Merchandise Mart.

Pat Nabong/Sun-Times

During the worst of the pandemic when offices were eerily empty, some wondered if Salesforce was still gung-ho about anchoring a 60-story office building in Chicago.

On Tuesday, the software provider answered that with a jaunty “yes,” showing off its new quarters at Salesforce Tower Chicago in Wolf Point, near the Merchandise Mart, with a design that executives say demonstrates a commitment to employees and the community.

The 360,000-square-foot office over 14 floors are Salesforce’s “culture and values come to life,” said Relina Bulchandani, the company’s executive vice president of real estate and workplace services. “We have been really focused on learning through the pandemic how employees want to work today.”

The result is space without fancy corner offices for top brass, and an array of employee gathering spaces, nooks for libraries and nursing parents, and “mindfulness rooms” for staffers who want to escape technology and meditate. “It’s part of our culture. There’s nothing strange about doing this,” Bulchandani said.

ROEDER: City Hall and civic groups need to plot a downtown rescue

The company also wasn’t satisfied with office plants to suggest the great outdoors. It has “green columns” wrapped in verdure.

To top it off, literally: On the two highest occupied floors, Salesforce formally opened its ‘Ohana floors, space available during the day as a workplace retreat. The company moved its first workers into the building in May.

On nights and weekends, the ‘Ohana floors — on the 56th and 57th level — are offered rent-free to nonprofit organizations. ‘Ohana is a Hawaiian term meaning family, but with a broader connotation covering more than blood relatives.

San Francisco-based Salesforce cut the ribbon on the ‘Ohana floors Tuesday during a celebration that included Mayor Brandon Johnson. It was a morale boost for Chicago promoters dealing with critics who say rising crime and City Hall policies are making businesses leery of investing here.

Sabastian Niles, Salesforce president and chief legal officer, yields the lectern Tuesday to Mayor Brandon Johnson at Salesforce Tower Chicago.

Pat Nabong/Sun-Times

None of that flak was voiced at the ribbon-cutting, which featured invocations from five religious leaders and public acknowledgments of the Wolf Point land’s legacy to Native Americans, although no one offered to give it back.

“We’re celebrating something that is, I think, quite profound,” Johnson said. “The opportunity for our collective approach toward economic development … can be tied to your value system. You know, it’s not a pipe dream to believe that that type of structure can exist.”

The mayor said he was “thrilled to see any company thrive in our great city, particularly one that is mission-driven.”

Sabastian Niles, Salesforce president and chief legal officer, said the company has donated $16 million to Chicago-area organizations. He announced an additional gift of $1.25 million shared by two organizations that support Chicago students’ mental and emotional health, CASEL and Peer Health Exchange.

Salesforce once promised to have 1,000 employees here. Executives said the company has 2,200 workers assigned to the Wolf Point tower, with about 800 visiting the building on a given day.

Bulchandani said Salesforce is flexible about allowing people to work from home or elsewhere, with schedules determined by individual teams. Conference rooms are equipped to allow remote workers to participate in meetings.

Relina Bulchandani, executive vice president for real estate and workplace services at Salesforce, gives a media tour of the Salesforce Tower Chicago on Tuesday.

Pat Nabong/Sun-Times

The company’s main concession to the pandemic was to reduce its appetite for space. It originally leased 500,000 square feet in the building, at 333 W. Wolf Point Plaza, but has made 140,000 square feet available for sublease.

The other principal tenant in the tower is the law firm Kirkland & Ellis.

Bulchandani said Salesforce was optimistic about growth prospects in Chicago.

“We have amazing talent here with all the universities,” she said.

With recently improved earnings, Salesforce has been reported to be on a hiring binge after laying off about 8,000 workers, 10% of its total staff, earlier in 2023.

The development firm Hines built Salesforce Tower Chicago, which is the third and final building on Wolf Point. It worked in partnership with the politically renowned Kennedy family, former owners of Wolf Point and the Merchandise Mart. Architecture firm Pelli Clarke Pelli designed the building.

Salesforce Tower Chicago, at left, is the last of three buildings to arise from Chicago’s Wolf Point.

Pat Nabong/Sun-Times

Michael Fassnacht to resign as head of World Business Chicago

2023-12-05T08:56:29.148-06:00

Michael Fassnacht, president and CEO of World Business Chicago, announced his resignation Tuesday.

Pat Nabong/Sun-Times (file)

Michael Fassnacht is resigning as president and CEO of World Business Chicago, where he directed efforts to promote the regional economy through the pandemic.

The veteran advertising executive presided over four years of growth at the organization, doubling its workforce to 50 and increasing corporate support to supplement government funding.

He took over WBC in 2020 with the backing of former Mayor Lori Lightfoot after serving as the city’s chief marketing officer.

$1-a-year chief marketing officer handed permanent job to run World Business Chicago

Fassnacht said his decision is personal and that Mayor Brandon Johnson isn’t pushing him out to install someone else. Johnson succeeded Lightfoot as chair of the WBC board.

“I don’t know yet what I’ll be doing next, but I plan to stay in Chicago,” said Fassnacht, 56. “I have no rush” to decide.

Fassnacht said he will stay on to ensure a smooth transition to a successor.

Hiring decisions are made by the WBC’s board of more than 100 members. The public-private agency said it will swiftly begin a search and hopes to have a replacement in February. Fassnacht said he will remain active with WBC as a board member.

Fassnacht ran the advertising agency FCB Chicago before joining the Lightfoot administration.

He thanked Lightfoot, Johnson and WBC Vice Chair Mellody Hobson for their “unwavering support and trust.” According to the organization’s last publicly available tax filing, Fassnacht earned nearly $449,000 in 2021.

In a statement, Johnson praised the contributions of Fassnacht and Hobson, co-CEO and president of Ariel Investments. Hobson is stepping down as vice chair but will stay on the WBC board.

Under Fassnacht, the WBC reorganized to support job growth across the region, not just in Chicago, and became a clearinghouse for local economic data.

He promoted companies’ decisions to expand or relocate in the area, countering narratives that Chicago is declining because of higher crime rates and taxes. The marketing turned aggressive and a little cheeky as the region was dealing with the corporate exits of Citadel, Boeing and Caterpillar.

World Business Chicago launches campaign to boost regional growth

After the U.S. Supreme Court overturned Roe vs. Wade in 2022, Fassnacht sent a letter to 300 CEOs urging them to move their headquarters to Chicago to safeguard employees’ abortion rights.

To promote Chicago’s global image, the WBC started a “Chicago Not in Chicago” tourism campaign that showed how the city’s influence shows up in other metropolises. But the campaign was widely panned for showing scenes of other locales, New York for example, and not sites to visit in Chicago.

Fassnacht told the Sun-Times the region still needs to think of creative ways to spread its message.

“We want to market Chicago as one of the 20 to 25 super-regions in the world, just like Singapore. That’s really the market where we are competing,” he said.

Since 2021, 528 businesses have relocated or expanded in the region, mostly within Chicago, Fassnacht said. “Pro-Chicago” decisions, as he called them, came from firms such as Uber Freight, Kimberly-Clark, Milwaukee Tool and Mars Wrigley.

For 10 straight years, the Chicago area has been No. 1 in business growth and expansion in a ranking by Site Selection magazine.

An effort announced nearly a year ago to promote business growth throughout Cook and neighboring counties continues to pay dividends and enjoys strong support from suburban officials, Fassnacht said. The effort brought WBC back to its original mission of promoting the city and suburbs. Critics said the organization became more city-oriented over the years.

About 25% of its $10 million annual budget comes from City Hall, Fassnacht said. Most of the money comes from corporate donations.

WBC also has heavily promoted the region to startups and venture capitalists.

Technology executive Mark Tebbe, a member of WBC’s executive committee, said, “Michael’s leadership and unwavering commitment to advancing innovation and promoting inclusive economic growth in Chicago have been instrumental in driving the substantial growth and expansion we’ve seen in recent years.”

This story has been corrected to clarify Mellody Hobson will resign as World Business Chicago vice chair but remain on the board.

Chicago’s political and business leaders need to plot a downtown rescue

2023-12-04T05:30:00-06:00

The downtown Chicago skyline is seen from a boat on Lake Michigan on April 11, 2023.

Pat Nabong/Sun-Times file photo

Downtown Chicago is in trouble. Should the average resident care? If so, what can be done?

First, as to the assertion itself — yes, the situation is getting worse. The pandemic awoke many people to the advantages of not having to come to the office every day, and the effect has cascaded over building finances.

The bond rating agency KBRA said Chicago leads U.S. metro markets with almost a quarter of its commercial mortgage-backed securities in distress. Several prominent towers are in that category, such as the Civic Opera Building, the 30 N. La Salle St. building, the Palmer House and the massive 175 W. Jackson.

Chicago Enterprise bug

Chicago Enterprise

Meanwhile, vacancy rates keep rising as companies cut back on space or toss unused floors onto the sublease market. Looking back at the year’s third quarter, Transwestern said almost 20% of downtown offices were vacant. You could tack another five percentage points onto that if you include space available on subleases. The percentages are higher than they were a year ago.

When the pandemic hit, experts speculated office building values would decline 20%. Then the talk went to 40%. Now, it’s 60%, bolstered by the one completed sale of a downtown office property so far this year — 230 W. Monroe St. It fetched $45 million, 35% of what it sold for in 2014.

“We haven’t hit bottom yet,” said Farzin Parang, executive director of the Building Owners and Managers Association of Chicago.

It’s fair to ask why people should care. Aren’t the investors on the losing end the type who can afford a debacle? Yes, but a bad debt pileup means owners grow unwilling or unable to fix them for what tenants want today. It’s bad for jobs in the part of the city with the best transit access from anywhere. It hurts downtown housing, the cultural institutions and the spirit of the city.

Another argument literally hits home. Downtown commercial and industrial property makes up about a quarter of Chicago’s tax base, in which every property owner has a part. When tax bills go down in one place, they go up in another.

Researchers at the University of Chicago crunched the data and concluded that a 40% hit downtown would lead to a 9% increase — $479 — in the annual tax bill for an average Chicago home. They acknowledge limitations in their work — property taxes are notoriously tangled.

But Parang says the findings are consistent with his group’s “back-of-the-envelope math” that concludes a 60% decline could yield a 20% hike for homeowners. Downtown property gets reassessed for tax purposes next year, and building owners, who know the political influence game, traditionally get most of what they argue for.

Parang, downtown developer John O’Donnell and others in real estate — I couldn’t confirm more names — presented their concerns to Mayor Brandon Johnson last week. Johnson got elected by running against the business interests, but Parang said the talk went well.

“He has consistently said he wants people at the table,” Parang said of the mayor. “We take that on good faith.”

O’Donnell declined to comment.

Business leaders also have started their own conversations in various civic forums, with ideas getting kicked around. The most common one is to introduce mixed uses to old office buildings, a main point of formal proposals about the future of La Salle Street and the Magnificent Mile. Traffic on La Salle and Michigan Avenue could be slowed for pedestrians’ sake.

One brash developer said Chicago should take out outmoded space by bulldozing blocks to create its version of New York’s Central Park.

Others don’t think demolition makes sense, but three insiders separately told me if open space makes the central core more appealing, why not build landscaped decks over the Kennedy Expressway as it passes through downtown?

It’s the old “cap the Kennedy” idea that comes up occasionally but never goes anywhere — a lot of money for a downtown section still doing well. So the mayor might not go for it.

But if civic and business groups want to take up downtown’s cause, City Hall has to take a lead. It’s midway through Chicago’s first update of its overarching Central Area Plan in 20 years. Its next session for public input on the plan is 5 p.m. Wednesday at the Cultural Center, 78 E. Washington St.

Another resource could be the planning department’s Committee on Design. It’s got a lot of brainpower — 23 experts in various aspects of urban design. They have reviewed large-scale projects at monthly meetings. But Johnson has let this creation of the prior administration go on hiatus — there’s been no public session since August.

So what if this committee isn’t his idea? As those Loop tax bills plummet, Johnson will need all the help he can get.

A rendering of a potential landscaped cap over the Kennedy Expressway.

Scott Sarver/RATIO Architects

United, American airlines want O’Hare Airport expansion scaled back or canceled

2023-11-28T17:38:22.778-06:00

A rendering of the planned new Terminal 2, the “global terminal,” at O’Hare International Airport. When complete, it would allow travelers to transfer from a domestic flight to an international flight without traveling to Terminal 5, the airport’s current international terminal.

Studio Gang

O’Hare Airport’s two largest carriers want to slow down, dramatically scale back or indefinitely ground the airport’s massive expansion project, including a global terminal and two satellite concourses now $1.5 billion over budget.

Ald. Matt O’Shea (19th), chairman of the City Council’s Aviation Committee, said high-stakes negotiations with hometown United and Dallas-based American Airlines have gone on for months. Those rival carriers — at loggerheads when the original agreement was signed in 2018 — are now joining forces.

“The two major carriers, United and American, want to see this project to be scaled back, to slow down,” O’Shea told the Sun-Times. Another meeting between the mayor’s office and both airlines was held Monday.

Their concern is “certainly, the cost,” O’Shea said. “Everything is significantly more expensive now than it was before the pandemic. They have stated that air travel, whether it be a combination of business, international, leisure travel — is not where it was in 2019. They’ve been vocal about that, particularly over the last several months.”

O’Shea said it is particularly “concerning” that United has revived a 2018 threat to move its corporate headquarters at Willis Tower out of Chicago.

Both airlines confirmed city officials have told them the next major phase of O’Hare work is $1.5 billion — 24% — over budget. Construction has yet to start on the next phase’s main elements, including the global terminal, designed by the firm of renowned Chicago architect Jeanne Gang.

One option could be to economize on the Gang design that some in the industry have derided as an expensive “Taj Mahal.”

O’Shea said he has no idea how Mayor Brandon Johnson will respond to the airlines’ demand — but he knows what the mayor’s answer should be.

“O’Hare and Midway need to be modernized. Need to be improved,” O’Shea said. “Parts of both those airports are old and tired. … During the pandemic, were it not for cargo, I don’t know what would have happened at O’Hare Airport. Top airports throughout the country continue to come after us, looking to take passengers. Looking to become stronger hubs. And we need to stay competitive.”

Rendering of the interior of a new “global terminal” planned at O’Hare International Airport. It would replace Terminal 2, and would allow passengers to transfer from domestic to international flights without changing terminals.

Studio Gang

Global terminal key part of expansion

United and American were tight-lipped about sensitive negotiations over the new global terminal, which would replace Terminal 2. It’s the core of O’Hare’s Terminal Area Program, or TAP. “Work on the most expensive TAP elements has yet to begin — we have concerns that costs will escalate further after the work begins,” United and American wrote in a joint statement.

The carriers added, however, that they remain committed to modernizing O’Hare. The work is funded by airline ticket taxes, landing fees and other revenue sources at the airport.

In a separate statement, United said it remains “committed to building a bigger, stronger, more efficient and modernized” O’Hare, just as it has done “at many of our other hub markets.” But costs on a project bankrolled in part by airline ticket taxes must be controlled, the airline stated.

“We continue to work with the city of Chicago and our fellow airlines to advance the terminal redevelopment program in a manner that not only ensures O’Hare’s future financial stability and competitiveness, but also limits costs for the millions of passengers who fly through Chicago’s airport each year,” the United statement said.

U.S. Secretary of Transportation Pete Buttigieg was at O’Hare International Airport for a news conference in November 2022 in Terminal 2, which under current plans would be replaced with a new “global terminal” handling both international and domestic flights.

Anthony Vazquez/Sun-Times

American Airlines said it also will work with the Johnson administration “to deliver a capital plan that will enhance the customer experience in a prudent and cost-effective manner to keep O’Hare well-positioned for the future and cost competitive for the airline and our customers.”

Aviation Commissioner Jamie Rhee, a Rahm Emanuel administration holdover who took over after hard-fought negotiations with the airlines in 2018, refused to comment on the delicate talks with United and American.

Instead she issued a statement that did not disclose what exactly the two major carriers were demanding, their reasoning for seeking a change or what, if anything, United and American have threatened to do if they do not get what they want.

The statement simply said the Chicago Department of Aviation “remains committed to the continued growth and development” of O’Hare “through … a once-in-a-generation investment in the airport’s terminal facilities to meet the needs of all airline partners, airport employees and the traveling public in the 21st century.”

The statement noted “enabling work for the next phase of this vital infrastructure project” began in March and the department “remains engaged in consultation with airline, agency and business partners on the complex phasing and implementation associated with a development of this magnitude.”

Johnson’s chief operating officer, John Roberson, who served as aviation commissioner under Mayor Richard M. Daley, told the Sun-Times he “can’t say anything just yet” about the sensitive talks.

“We’re not doing anything. We’re having discussions with the airlines. Aviation has met with the airlines on a number of occasions. Those discussions are still going. … We value our partnership with the airlines as we always have,” Roberson said.

Asked whether Johnson was more inclined to modify the 2018 agreement, or will instead insist United and American honor the contract, Roberson replied, “I can’t speak to anything related to what the mayor is thinking right now.”

A deal’s a deal, Emanuel says

Emanuel urged Johnson to stand firm and demand that United and American honor the contract they signed in 2018.

That includes plans for a greatly enlarged facility that would allow United and American to combine domestic and international flights in the same place. It would make O’Hare the nation’s first “global alliance hub,” with domestic airlines and their international carrier partners all in the same terminal.

Delta Airlines got more breathing room by shifting its operations from Terminal 2 to the newly expanded international terminal, officially Terminal 5, where its Sky Team alliance partners are located.

An expanded international terminal at O’Hare Airport adds 10 new gates, with new food offerings and other improvements.

Ashlee Rezin/Sun-Times

“Across the globe and everywhere, people are modernizing their aviation systems and Chicago should be no different. They signed onto it. It’s a contract,” said Emanuel, who is now serving as U.S. ambassador to Japan.

“They got the additional gates already. And Chicago should get the modernization,” Emanuel continued. “That’s part of the agreement that they signed. It was good then that they signed on. And it’s good now — especially considering that airports are busier than ever before. It’s not like air travel is declining.

“There are certain things they wanted. Those have already been delivered. … We modernized the runways. And we’re now going to modernize the terminals so it stays the premier, No. 1 airport and aviation hub not only in the United States, but in the globe.”

In 2020 when airlines also raised concerns about O’Hare improvement costs, they were worried their business was collapsing due to the pandemic. Now overall passenger loads have returned to pre-pandemic levels, although industry experts say business travel has been slower to return than the leisure trade.

United said its third-quarter profit rose 21%, to $1.14 billion, largely on summer vacations. But it warned near-term profits will be affected by rising jet fuel prices and a suspension of flights to Tel Aviv because of the Israel-Hamas war.

American posted worse results in the third quarter, a $545 million loss on revenue that was flat from the same period a year ago. It blamed higher costs, including a new labor agreement that increases pilots’ pay.

Aviation business looking up

But the business outlook for aviation remains much better than it was during the pandemic, and may make it harder for the carriers to drive a hard bargain with the city.

The decision by United and American to join forces in demanding the expansion slowdown is a reversal from what happened in 2018, when American and United were bitter adversaries.

At one point, American accused Emanuel of favoring United by awarding the hometown airline five additional gates. American threatened to file a lawsuit, shrink its dual hub at O’Hare — or both — in the high-stakes dispute over new gates.

O’Hare expansion cleared for takeoff

American even sought communications between Emanuel and his top aides and United in an attempt to determine whether a United threat to pull its corporate headquarters out of Chicago had prompted Emanuel to award those five gates to United, the airport’s largest carrier.

“We want to know if we’re getting a fair shake here,” Mike Minerva, American’s then-vice president of government and airport affairs, said at the time.

Asked then about a threat by United to move its corporate headquarters out of Chicago, Minerva said, “We have heard that has been discussed.”

In 2012, United moved its corporate headquarters from Elk Grove Village to Willis Tower. United at the time denied having threatened to “leave Chicago or move the corporate headquarters, nor did we ever discuss it.”

Passengers enter the TSA Pre-Check security line in O’Hare’s Terminal 1, United’s hub at the airport, earlier this month.

Erin Hooley/Associated Press

In the early months of the pandemic, the Sun-Times reported the O’Hare expansion would be delayed and potentially scaled back because airlines — fighting for survival after air travel virtually ground to a halt — could not afford their share of what was then an $8.7 billion project. The total cost is now pegged at $12.1 billion.

At the time, security screenings showed passenger traffic was down 95% from the year before the pandemic.

In January, then-Mayor Lori Lightfoot presided at the opening of the new 10-gate extension of Terminal 5. The futuristic, L-shaped extension has 10 gates, all able to handle wide-body jets. Nine have “multiple aircraft ramp systems” capable of accommodating narrow-body jets as well, providing the flexibility to park a pair of wide-body jets in space that can also accommodate three narrow-body jets.

Four years in the making, the $1.3 billion project increased by 25% the capacity of an international terminal once located in the ground floor of an O’Hare parking garage. That increased capacity will mean fewer delays. Space for passenger amenities was increased by 75%, with a smorgasbord of new concessions showcasing Chicago restaurants and vendors.

Other plans for the international terminal include an adjacent hotel and roadway improvements. Neither have been designed — or, more crucially, approved by the airlines that pay the bills.

EDITORIAL: O’Hare improvement plan arrives right on time

Chicago Mayor Lori Lightfoot and U.S. Transportation Secretary Pete Buttigieg greet travelers at O’Hare International Airport after a news conference in November 2022. Buttigieg was in town to announce final federal approval for the next step in a massive O’Hare renovation project.

Stefano Esposito/Sun-Times

Specialty grocers Foxtrot and Dom’s Kitchen & Market to merge

2023-11-27T16:00:13.396-06:00

The store at 2801 N. Broadway is one of 15 Foxtrot locations in Chicago. Foxtrot is merging with Dom’s Kitchen & Market.

Tyler Pasciak LaRiviere/Sun-Times

Foxtrot and Dom’s Kitchen & Market, two Chicago-based companies whose grocery stores combine the appeal of convenience shopping with dining and socializing at a cafe, said Monday they have agreed to merge.

They will join under a new company, Outfox Hospitality, in a deal expected to close by year-end. Financial terms were not announced.

Foxtrot CEO Liz Williams will take the top operational role at Outfox. Dom’s CEO Don Fitzgerald will continue through a transition period.

Both have smaller store formats compared with mass-market grocers. With locations in upscale neighborhoods, they carry curated selections and emphasize online orders for pickup or delivery.

Williams said in a statement that the two companies “share a common mission of modernizing the way people shop. Merging our two brands will elevate the experience for our customers and move the retail industry forward.”

Foxtrot CEO Liz Williams

Foxtrot

Dom’s co-founder and co-Chairman Bob Mariano will be an adviser and board member in the new company. The former head of Dominick’s founded the Mariano’s chain when he was chairman of Roundy’s. His eponymous grocery stores are now part of Kroger.

Foxtrot is the smaller of the two concepts, with its stores running 1,800 to 4,000 square feet, according to the company. With more grocery items, Dom’s said its outlets range from 17,000 to 25,000 square feet.

Mike LaVitola, co-founder of Foxtrot, and Jay Owen, Dom’s co-founder and co-chairman, also will stay on in adviser and board roles.

Dom’s has stores at 2730 N. Halsted St. and 1233 N. Wells St., with plans for a third at 30 W. Huron St. opening next summer. Foxtrot has 15 locations in Chicago and 17 stores across Dallas and Austin, Texas, and Washington, D.C.

Owen said Dom’s has long admired the Foxtrot brand as a market disrupter. “Our shared vision centers on bringing the convenience of a market together with the experience of a restaurant into hospitable spaces that are destinations in the communities we serve. We do this by curating high-quality goods, preparing expertly crafted meals, and delivering warm and friendly service,” Owen said.

The separate brand names will be kept and Foxtrot specialties will pop up in Dom’s stores, the companies said.

They said that with both headquarters in Chicago, they can employ economies of scale.

Williams said, “In addition to our markets, our cafe and coffee businesses are at the heart of our stores and we look forward to continued growth through our partnership.”

Customers shop on the opening day of Dom’s Kitchen & Market at 2730 N. Halsted St. in 2021.

Ashlee Rezin/Sun-Times

Chicago Housing Authority mounts $50M program to fix scattered sites

2023-11-27T05:30:00-06:00

A house owned by the Chicago Housing Authority at 2128 N. Moody Ave. in Belmont Cragin that the agency intends to renovate.

Pat Nabong/Sun-Times

The Chicago Housing Authority doesn’t have the greatest reputation for keeping its promises.

So every time it makes a new one, it has something to prove to many Chicagoans.

The agency owns property in every Chicago ward and, via vouchers or its own housing, serves 63,000 households, with more than 200,000 people on its waiting lists.

The CHA has announced a program to renovate part of its holdings — a portion that, for a bureaucracy focused on larger sites, can be too easy to neglect. It involves small- to mid-sized apartment buildings and single-family homes — yes, the CHA owns some. These are vacant properties it plans to fix up as part of an initiative called Restore Home.

Chicago Enterprise bug

Chicago Enterprise

The agency discussed details with its board last week. The projected $50 million cost is expected to be part of its 2024 budget, due for approval in December.

It involves repairs and in some cases gut rehabs to create 217 housing units in 77 buildings, including 36 small- to mid-sized apartment buildings, especially those with two to six flats. And the CHA has a goal of finishing the work in 18 months.

“It’s an aggressive target,” said the agency’s CEO, Tracey Scott.

That’s probably an understatement as financing, supply issues and permits all can produce delays. But she said the CHA has analyzed the vacant parcels, worked up plans and found the funding.

Staff and contractors, many working under a federal program to steer job opportunities to those getting housing help, will be “laser focused” on the mission, Scott said. She said the CHA is in close contact with the city’s Buildings Department to smooth the permit process.

The vacant properties, many more than 40 years old and with outdated mechanical systems, are among the nearly 900 smaller properties the CHA owns citywide. They are its “scattered sites” portfolio that dates from when the agency, for years accused of reinforcing racial segregation, was under legal pressure to expand holdings beyond Black neighborhoods.

The CHA in the 1990s was under the thumb of the U.S. Department of Housing and Urban Development and later went into receivership, an arrangement that ended in 2010 after a federal judge decided the agency had improved its behavior.

Scott has led the CHA since 2020. She said in an interview last week that the new focus on scattered sites will help neighborhoods that are combating blight. And it will provide more housing options for CHA residents, including the chance for home ownership, she said.

Properties in the program indeed are scattered around the city, but there are concentrations on the South and West sides.

Tracey Scott, CEO of the Chicago Housing Authority.

Ashlee Rezin/Sun-Times

The apartment buildings in Restore Home will be fixed up as rentals. But the 41 single-family homes are to be sold as affordable dwellings. The CHA said rules for those sales, such as how purchasers can qualify, have yet to be announced. Another 145 single-family houses it owns will remain rentals.

“We really believe that we have an opportunity to use the assets to create additional home ownership opportunities,” Scott said.

The program is supposed to supplement its other initiatives, such as the Down Payment Assistance Program that provides grants of up to $20,000 so qualified tenants can buy their first home.

“It’s good to see some movement from the CHA,” said Teresa Cordova, professor at the University of Illinois Chicago and director of its Great Cities Institute. She said the program’s focus on smaller buildings “can be a great booster for neighborhoods, especially if these are in-fill projects.”

Cordova said the CHA should keep communities apprised of its plans. “People want to know what’s going on in the neighborhoods,” she said. “It’s not always a reactionary thing.”

She said she hoped the rules for the single-family homes would keep them permanently affordable, so some lucky buyer can’t just flip the property. There often is a trust that retains the land while allowing homeowners who sell to receive some gains on their equity.

The agency is routinely criticized for keeping people on waiting lists for decades and for setting aside some land for other purposes, such as its lease to the Chicago Fire soccer club for a training center on the Near West Side. It has defended that deal as a revenue producer and a broad neighborhood benefit.

It has stepped up construction at larger properties and in July approved three new housing developments. They include the first phase at the long dormant LeClaire Courts property on the Southwest Side.

Scott didn’t want to discuss much about what past administrations did or didn’t do. CHA brass told the board the vacant and deteriorated scattered sites may stem from too many acquisitions during the receivership years.

“We are definitely focused at this point on trying to turn the ship around,” Scott said.

It’ll take about 18 months to see if the CHA no longer has a scattered approach to scattered sites.

In the foreground is a home at 2612 W. Haddon Ave. in Wicker Park that has been renovated under the Chicago Housing Authority’s scattered sites program.

Pat Nabong/Sun-Times

Chicago’s small-business owners have their day amid the holiday hoopla

2023-11-24T05:30:00-06:00

Jenny Beorkrem, owner of Neighborly gift shop at 4710 N. Lincoln Ave., stands in the Lincoln Square store, Wednesday, Nov. 22.

Ashlee Rezin/Sun-Times

On your mark … get set … shop!

But wait a minute — haven’t we been holiday shopping for some time? Black Friday used to be an eagerly awaited day for some, but now retailers have been pushing Black Friday deals since before Halloween.

The post-Thanksgiving spending season has changed a lot over the years. Yes, the big-box titans are primed for a blitz of customers, but other competitive factors are in play. Cyber Monday is huge, but experts also cite growing interest in supporting local merchants, typified by Small Business Saturday.

Check with any local chamber of commerce, and you’re liable to find events and promotions tied to the coming weekend.

In Lincoln Square on the North Side, for example, the community plans a tree lighting ceremony and caroling to get people in the spirit.

Among the storeowners anticipating the occasion is Jenny Beorkrem, owner of the gift shop Neighborly at 4710 N. Lincoln Ave., which specializes in home goods and artwork, some with a Chicago theme. She said her business has picked up through the pandemic the last two or three years.

“We saw a shift during the pandemic of people being more aware of small businesses,” she said.

A customer shops at Neighborly gift shop at 4710 N. Lincoln Ave. in Lincoln Square, Wednesday, Nov. 22.

Ashlee Rezin/Sun-Times

Beorkrem said her shop carries only products that meet fair trade and eco-friendly standards, with many made locally. To draw the weekend’s shoppers, she’s running a 15% off deal on local goods, such as the popular Bright Endeavors candles made by a West Side organization that supports young mothers.

Neighborly also has a pop-up location at 1554 N. Milwaukee Ave. in Wicker Park.

Retail analysts are often guardedly optimistic when projecting holiday sales. Some are emphasizing the “guarded” part this year because of signs that American consumers are stressed.

Is that a concern for Beorkrem? “As a small business, we’re always concerned. It’s kind of our second nature,” she said. But she’s felt confident enough to add three temporary workers for the holidays, supplementing her staff of six.

Other areas with “shop local” events this weekend include Logan Square, Rogers Park and Bronzeville.

The Bronzeville organizers call their Saturday festivities at 35th Street and King Drive the largest holiday kickoff on the South Side.

Organizer Kenya Renee, owner of Absolutely Anything Essential Gift Shop at 3521 S. King Drive, said the season comes at a crucial time for local entrepreneurs. “You see a record number of big-box stores closing, so just imagine how small business owners are dealing with the changes affecting retail,” she said.

Renee said she hopes the Bronzeville event will educate consumers about what’s available to them near their homes. Her own location, which she said has operated for seven years, is an incubator for artisans and hobbyists and those who wish to buy or learn from them.

The National Retail Federation said it expects 182 million people in the U.S. to shop in-store or online through the five-day shopping weekend, ending on Cyber Monday. It’s the highest projection since it began the analysis in 2017.

Shopping for gifts in November and December is nearly a $1 trillion affair. NRF reckons that this year’s holiday spending will rise about 3% from 2022 to around $960 billion, a smaller rate of increase than the economy posted during its bounce back from COVID-19 closures.

In a national survey by Gallup and e-commerce firm Shopify, 36% said they expect to visit a small business Saturday, and another 44% said they would do so another day. The survey said the support for small business is strongest among middle-aged shoppers.

Consulting firm Deloitte, in its annual outlook for holiday budgets, said Chicago-area consumers are feeling a pinch. It said respondents figure they will cut spending on presents by 6% from 2022, to an average of $1,600.

Deloitte found a preference shift toward online shopping and specialty beauty retailers and away from department stores.

Nationally, the firm was more bullish, expecting average spending per person to increase by 13% to $1,652, topping pre-pandemic highs.

“In short, the tinsel is no longer in a tangle,” Deloitte analysts wrote.

Inflation in the grocery aisles has caused some people to cut holiday budgets, while others have been hit by a resumption of student loan payments.

But this year finds consumers overall in decent shape, said Rob Karr, president and CEO of the Illinois Retail Merchants Association. He said retailers that fare well will have absorbed lessons from the pandemic.

“As tragic as it was for people, the pandemic did retail a favor in a fashion. It forced retailers to quit experimenting with technology and to jump in with both feet.”

But for this weekend, the technology will take a back seat to face-to-face commerce and visits from Santa, who will be in heavy demand for gift orders and photo shoots. He can’t linger, though. He’s got promises to keep and continents to visit before he sleeps.