Emanuel trying to unload Michael Reese albatross

With the clock ticking on a $91 million loan that carries $50 million in potential interest costs, Mayor Rahm Emanuel is finally moving to unload the financial albatross otherwise known as the old Michael Reese Hospital site.

On Oct. 12, the city will issue a request for proposals from developers interested in building “one or more” commercial, institutional, residential and recreational projects on the 49-acre Bronzeville site purchased for an Olympic Village before former Mayor Richard M. Daley’s dream of hosting the 2016 Summer Olympic Games turned into a nightmare.

Final bids will be due on Feb. 22, paving the way for a developer to be chosen next spring. Time is of the essence. Nearly $73 million in principal remains on the $91 million loan with $50 million in interest added to the burden taxpayers will bear if the loan is not paid off before 2024.

“The Michael Reese site has been vacant for nearly ten years. This is a once-in-a-generation opportunity to transform a part of the South Side and generate economic opportunities that will reach throughout Chicago,” Emanuel was quoted as saying in a press release.

The Emanuel administration made no specific mention of a Chicago casino at a time when the city is poised to renew its decades-long quest for a land-based casino.

But speculation abounds that at least a portion of the site bounded by 26th Street, Martin Luther King Drive, 31st Street and the Illinois Central railroad trucks may someday house a Chicago casino.

Fueling that speculation is the city’s decision to consider incorporating 28 acres of air rights directly east of the hospital site. The land below is owned by McCormick Place and used as staging area for trucks and other vehicles servicing conventions and trade shows.

Planning and Development Commissioner David Reifman said the “potential for a larger footprint” could pave the way for “more high-quality and creative development proposals” along with a host of public improvements potentially bankrolled by the Bronzeville tax-increment financing district.

They include a Metra Electric Line station, local bus routes, lakefront connections and open space.

“The potential to expand the development site to the east will also afford better connections to the lakefront while enhancing north-south connections between downtown and the Mid-South Side,” Reifman said.

Three years ago, the architectural firm of Skidmore, Owings & Merrill concluded that a multi-phased, 6.5 million-square-foot development on the Michael Reese site could generate more than 3,000 full-time jobs.

The study further concluded that a massive redevelopment anchored by a casino would be far more lucrative for the city than another batch of convention hotels or even the Obama presidential library.

At the time, Skidmore recommended that the city acquire five adjacent sites as well as the truck staging area, essentially creating a “north district” of McCormick Place.

The cost of roads, sewers and other infrastructure serving the hospital site would top $200 million, the study concluded.

But a land-based casino on the site would produce a $208 million jackpot for the city — even before gambling revenues are factored in. The Obamas’ ultimately chose Jackson Park for their presidential library.

“The casino and entertainment district scheme provides positive proceeds to the city, while the presidential library and hotel complex schemes require city investment,” the study concluded, pegging the cost of an Obama library at $142 million and additional hotels at $199 million.

The Obamas ultimately chose Jackson Park for their presidential library.

In 2008, Daley rolled the dice that a depressed real estate market would come roaring back to further his dream of hosting the 2016 Summer Olympic Games. Chicago borrowed $85 million to purchase the Reese campus to pave the way for construction of an Olympic Village.

The price rose to $91 million after the city’s stunning first-round knockout in the 2016 Summer Olympic sweepstakes. When the property was not unloaded to private developers within five years, the price rose to $96 million and the city was forced to start making payments on the loan.

Shortly after taking office, Emanuel refinanced the Michael Reese debt to save $14.5 million. He then used $35 million in short-term “commercial paper” to make the 2014 and 2015 loan payments and repaid it with long-term borrowing. Since then, quarterly loan payments have been made from the city’s operating budget. So far, taxpayers have made $49.5 million in payments on the loan. Still, $72.8 million in principal remains.

Days before leaving office, Daley released a report by a panel of experts chaired by then-Commonwealth Edison CEO Frank Clark. It concluded Chicago could get its investment back — and create as many as 25,000 jobs — by converting the land into a combination tech park and thriving residential neighborhood for those workers.

Daley passed the baton to Emanuel in hopes his successor would carry it over the finish line.

Now, Emanuel is taking a step that could lead to an idea his predecessor and political mentor summarily rejected: a development at least partially anchored by a Chicago casino.

“No. That would be unacceptable. . . . I would be against that completely,” Daley told reporters in 2009, shortly after returning from Copenhagen, where Rio de Janeiro was awarded the 2016 Summer Olympic Games.

“I don’t know why . . . everybody is going around thinking casinos [are] the answer to all the problems of society. . . . That whole redevelopment project was for both affordable housing and market-rate housing for the citizens in the long run. It was not to be used whatsoever for any type of gaming.”