Allow us today to discuss two realities of life and how they can go all wrong in Chicago.
1] When money for city employee pensions is blown on a bad investment, retirees don’t get smaller pensions. Those pensions are guaranteed. You, the Chicago taxpayer, must make up the difference. So you would hope the people who pick and choose pension fund investments are incredibly diligent. But this is Chicago.
2] Sometimes the city gives a big property tax break to a developer who promises to create new jobs. Nothing wrong with that. But you would hope that enough new jobs are created to justify the tax break. But, again, this is Chicago.
Combine those two realities of life in Chicago with a third — people with serious political connections sure have a way of popping up in the most curious ventures — and you have the story of 3348 S. Pulaski Rd.
As Tim Novak of the Sun-Times reported Sunday, two separate deals involving the redevelopment of a warehouse on 15 acres of polluted land at that address could cost Chicago taxpayers $8.3 million. Each deal involved a different nephew of former Mayor Richard M. Daley.
In the first deal, cut in 2007, a company run by Daley nephew Robert G. Vanecko and his business partner invested $4.2 million with another company, Sydney Partners LLC, that bought the land for $10.5 million. Vanecko and his partner, working as DV Urban Realty Partners, obtained their entire $4.2 million from five pension funds for teachers, police officers and other city workers.
DV Urban at some point also guaranteed a bank loan to Sydney of $7.85 million. This proved unfortunate in 2012 when the five pension funds fired DV Urban and hired yet another company to sell the warehouse. When the sale went through, the five pension funds lost their money — they were out their $4.2 million — because DV Urban had guaranteed the bank loan.
The second deal could be a matter of good money going after bad, but there is a chance of a happy ending.
In January 2014, a representative of the five city pension funds, Newport Capital Partners, agreed to sell the warehouse to a California-based company, PanCal Pulaski LLC. A second Daley nephew, future alderman Patrick Daley Thompson, handled the business of getting a property tax break for PanCal that could cost local taxpayers $4.1 million over 12 years.
And what does Chicago get in return for this $4.1 million tax break? An agreement from the developers, PanCal, that a new warehouse on the site will create as many as 250 permanent jobs.
Last December, eight months after getting the tax break, PanCal sold the warehouse to yet another company, PRII Pulaski LLC. That company now stands to benefit from the tax break — but only if and when it can find a tenant to lease half the space.
The bottom line here is that no tax break should kick in until those 250 promised jobs become a reality. Let’s see warehouse boots on the ground first.
Meanwhile, we wait to see whether Cook County Assessor Joseph Berrios will even grant this tax break. Though it was approved by City Hall, Berrios must sign off on it.
As it happens, it was Thompson who submitted the application for the tax break to Berrios. But — goodness, no — not for a minute do we fear that insider favoritism might sway the assessor’s decision.
Even if Thompson is a Daley nephew. And an alderman.
And even if Berrios is chairman of the Cook County Democratic Party.
And even if this whole town was built on clout and favoritism.
Perish the thought.
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