THE WATCHDOGS: Daley deal makes Rahm Emanuel’s pals richer

Published Nov. 25, 2013

A wealthy North Shore family with deep ties to Mayor Rahm Emanuel stands to make a fortune over former Mayor Richard M. Daley’s failed Olympic dream.

It’s a financial nightmare, though, for Chicago taxpayers, who now owe the Mills family more than $111 million for a 37-acre site along Lake Michigan that was home to Michael Reese Hospital at 29th and Ellis before the city bought it as part of Daley’s plan to lure the 2016 Olympics to Chicago.

And the final tab could top $146 million unless the city can find someone to buy the property.

The longer it takes City Hall to find a buyer, the more taxpayers will owe the Millses.

It’s a rich deal for the family, owners of a private medical-supply company called Medline Industries Inc. that was awarded the property by a federal bankruptcy court judge in 2004 to satisfy a $19.3 million debt the hospital owed the family.

They leased the property back to the hospital until shutdown in 2009, when Daley bought it for $91 million. The deal also called for the Mills family to donate millions of dollars to City Hall to cover the cost of demolishing the hospital.

City Hall hasn’t paid a dime yet under the deal that the city reworked last year with the Mills family, which agreed to cut the interest rate on the loan — a move City Hall says has already saved taxpayers $2 million and could save as much as $10 million by the time the loan comes due in 2024.

In return, City Hall gave the family a tax break by making the interest exempt from taxes, according to the mayor’taff.

City Hall won’t say whether Emanuel was involved in reworking the loan with the Mills family, longtime campaign contributors who have given his campaign fund $172,600 over the past three years.

The mayor’s staff says Daley cut a bad deal with the Mills family, sticking taxpayers with an overpriced piece of property.

“While the city paid $91 million for the property, it is likely that the city overpaid,” Emanuel’s staff says in an email. “This property was bought by the previous administration . . . Mayor Emanuel was serving as chief of staff to the president of the United States and had absolutely no role in the deal whatsoever. . . Any [campaign] contributions are completely, unequivocally unconnected to this situation.

“It has no connection whatsoever to any personal relationships he may have with any members of the Mills family.”

The family includes Wendy Mills Abrams, an environmentalist from Highland Park who founded Cool Globes, a not-for-profit organization focused on global warming. She put together the Cool Globes public art exhibit that featured 120 big, decorated globes along the lakefront during Daley’s tenure.

Abrams’ father, Jonathan Mills, founded Medline with his brother James Mills. James Mills’ son Charles Mills graduated from New Trier West High School in 1979 with the mayor’s younger brother, Hollywood agent Ari Emanuel.

Charles Mills is Medline’s chief executive officer. Abrams’ brother Andrew Mills is president. Abrams’ husband James Abrams, the company’s chief operating officer, signed the deal selling the lakefront land to City Hall — a deal in which the city agreed to create a park on the property and name it after a Mills family member of their choosing.

Emanuel began getting campaign contributions from the Mills family in 2003, when he was elected to Congress from Chicago’s Northwest Side, succeeding newly elected Gov. Rod Blagojevich.

In Congress, Emanuel gave a short speech Dec. 6, 2004, honoring Wendy Abrams on her 40th birthday, identifying her as an owner of Medline who “is helping to make the world a safe and healthy place for our children. I am proud to call Wendy a good friend . . . I wish Wendy, her husband Jimmy and their four children continued good fortune.”

Wendy Abrams and her family have spread hundreds of thousands of dollars in campaign contributions to politicians, primarily Democrats, including Daley, U.S. Sen. Dick Durbin and Hillary Clinton. Abrams also has been a so-called bundler for President Barack Obama, helping raise between $50,000 and $100,000 for the president, according to the Center for Responsive Politics.

When Emanuel left Obama’s staff to run for mayor, Abrams’ husband, father and uncle each gave $50,000 to his campaign.

Emanuel was a guest last year at the home of James Abrams, records show — though the mayor’s staff won’t say where the home is located nor when or why he stayed there.

Last June, Emanuel and Andy Mills announced Medline, based in Mundelein, would open an office on the West Side, bringing the city 35 to 40 jobs.

“We are excited to work with the city of Chicago and Mayor Emanuel in expanding our tech division to Chicago,” Mills said in the announcement the mayor’s office released.

In August, Emanuel announced Wendy Abrams was donating $50,000 to provide free CTA passes to 500 students at five high schools.

She says she hasn’t talked with Emanuel about the Michael Reese deal. Other Mills family members didn’t return calls.

On top of the $91 million purchase price, the city owes more than $19 million in interest so far. A minimum payment of $1.3 million is due in September. The final tab could top $146 million.

Under the deal, the city can’t pay off the loan before June 2016 — even if it sells the property before then.

Emanuel’s staff and Lori Healey, who headed Daley’s Olympics committee, say City Hall will find someone to buy the property before the loan is due. Healey says city officials might even find the property is worth more than they think.

“They don’t know because they have’t taken it out to the market,” Healey says. “It’s a legacy site. It’s important to the future of the city.”

Last week, City Hall released a 67-page, $885,000 study – prepared six months ago by the architectural firm Skidmore Owings & Merrill – suggesting three options for the property: a casino, the Obama presidential library or a group of hotels that could serve McCormick Place, which is a few blocks north.

Between Jan. 1, 2013, and Jan. 31, 2014, the city says it will spend $263,707 for grounds-keeping, landscaping, snow removal and security at the Michael Reese site — including a private security guard patrolling the fenced-in site and lone remaining building 24 hours a day.