When Mayor Lori Lightfoot cut the ribbon Tuesday on a new factory where affordable homes will be built, she helped write a new chapter for a Southwest Side property on which Chicago city pension funds lost millions of dollars in a deal involving a nephew of former Mayor Richard M. Daley.
The factory’s lease also might finally allow the warehouse’s owners to cash in on a property tax break that could save them about $4 million in a deal secured four years ago with help from another Daley nephew, attorney Patrick Daley Thompson, who has since been elected to the Chicago City Council.
Skender, which will build homes for developer Sterling Bay, is leasing part of the warehouse for the factory.
Lightfoot was invited to Tuesday’s ceremony exactly six weeks after she dropped her opposition to Sterling Bay’s massive Lincoln Yards project along the Chicago River in exchange for additional contracts for women and minorities to work on the development that’s been promised millions in city subsidies.
Lightfoot also had been pushing for more affordable housing there.
Though she met with Sterling Bay representatives before taking office, the developer didn’t mention its deal with Skender to provide affordable homes, the Chicago Sun-Times has learned.
Skender’s Todd Andrlik says the lease for the warehouse at 3348 S. Pulaski Rd. was signed in August, when Lightfoot was still a mayoral hopeful.
“We had performed the search and selected the site long before she became mayor,” Andrlik says.
It’s unclear, though, when Sterling Bay and Skender reached their deal for the affordable housing.
Sterling Bay president Andy Gloor didn’t return calls.
Referring to the millions Chicago taxpayers lost on the 15-acre Pulaski Road site, Lightfoot says the factory “could truly be lemonade out of lemons.”
Skender and City Hall say the factory will create as many as 150 jobs, many of them expected to go to union members in the Chicago Regional Council of Carpenters.
The deal is expected to produce as many as 200 multi-unit buildings to be installed on vacant lots, starting on the Northwest Side in Humboldt Park.
City Hall has a long history with the Pulaski site. Under the Daley administration, it was leasing part of an otherwise largely vacant warehouse there, using it to park city trucks, when the property was sold Nov. 27, 2007, to investors including Daley nephew Robert G. Vanecko and his business partner Allison S. Davis.
The land was among properties they invested in with $68 million from city pension funds representing Chicago teachers, police officers, other city employees and transit workers.
When the Sun-Times revealed the ties to Vanecko in June 2009, Daley said he hadn’t known his nephew invested city pension money in the project.
The report prompted Vanecko to leave DV Urban Realty, which he and Davis had formed to handle the pension investments. It’s unclear how much money Vanecko made on those deals.
The pension funds’ boards, unhappy with the performance of their investments, seized control of DV Urban’s real estate deals and began selling off the real estate, including 3348 S. Pulaski.
Vanecko and Davis had invested $5.2 million from the city retirement funds in the warehouse by the time the funds decided to get out of the deals, hiring Newport Capitol Partners to sell the Vanecko-Davis properties for whatever they could get in an effort to cut their losses.
They still ended up losing $54 million — 80% of the money they invested.
3348 S. Pulaski Rd.
A decrepit warehouse on land that was tainted by arsenic and lead
Newport Capital got three bids for the Pulaski warehouse, accepting a $5.4 million offer from Panattoni Development in California and California’s state teachers pension fund.
The pension funds also had to pay $2.6 million to help clean up the heavily polluted site.
In addition, Panattoni wanted what’s called a 6(b) property tax break, which provides for a 60 percent break on those taxes for 10 years to spur the redevelopment of industrial property.
Panattoni hired Thompson, Vanecko’s cousin, who at the time was an elected Metropolitan Water Reclamation District commissioner, to lobby City Hall for the tax break, which Emanuel and the city council approved. In a financial disclosure statement, Panattoni reported paying Thompson and his law firm as much as $100,000 to help them get the tax break. It’s yet to kick in because the property wasn’t substantially occupied.
Thompson says he got involved until only after his cousin was out.
Panattoni tore down the old warehouse, removed 70 tons of toxic soil and built a 316,000-square-foot warehouse, which it sold to an arm of Prudential Insurance in December 2015 for $29.7 million.
Nealey Foods moved in. Still, much of the warehouse remained unoccupied.
A leasing agent for the property says it’s likely that the company will finally be able to use the tax break now that Skender plans to build the modular units there that will provide some of the affordable housing Lightfoot wants.