CTA could be forced to repay federal money used in Block 37 project super-station project

Feds could demand money back because the unfinished basement isn’t being used for mass transit.

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Vacant super-station beneath Block 37

Once envisioned as the starting point for an express train to O’Hare International Airport, this area below Block 37 in the Loop remains unused.

Erin Brown/Sun-Times

Mayor Lori Lightfoot acknowledged Wednesday that the CTA could be forced to repay federal grant money used to retire bonds that bankrolled construction of the still-empty super-station beneath the Block 37 mixed-use project in the Loop.

But even if the feds insist on repayment because the unfinished basement is not being used for mass transit purposes, Lightfoot won’t reconsider Elon Musk’s plan to build a “Tesla-in-a-tunnel” high-speed transit system between downtown and O’Hare Airport.

“I don’t have all the particulars. But,I want to make sure that we’re not violating any grant covenants or otherwise. We’re not in a position where we’re gonna squander money,” Lightfoot said.

“That doesn’t change my view of the Elon Musk project. The notion that he could do this without any city money is a total fantasy. And in thinking about what our transportation needs are, I’m not sure that an express train to O’Hare in the current proposal rises to the top of our list.”

Former Mayor Richard M. Daley once hoped to convince Chinese investors to build a line to O’Hare originating from the super-station the city spent $217 million to build at Block 37. It never happened.

In June 2018, Mayor Rahm Emanuel and Musk announced that the billionaire would build the O’Hare express system; trains to the airport would leave from Block 37.

Rahm Emanuel and Elon Must in the vacant Block 37 superstation

Elon Musk and Mayor Rahm Emanuel in the Block 37 superstation on the day last June when Musk announced he would build express tunnels to O’Hare. | Erin Brown/Sun-Times

Erin Brown/Sun-Times

Musk said then he would built twin tunnels from the superstation to O’Hare and that a one-way fare of $20 to $25 would be enough to cover daily operating costs.

Even after pulling the plug on his own re-election bid, Emanuel hoped to nail down a final contract with Musk before leaving office. The city even sent a delegation of aldermen to Los Angeles to take a bumpy test ride. But time ran out before the mayor left office.

The Block 37 super-station was built with $42 million generated by tax-increment-financing. The rest of the money — $175 million came from CTA bonds. Federal grant money was used to repay those CTA bonds, according to CTA spokesman Brian Steele.

Now, Lightfoot is being told by her financial advisers that the feds could seek reimbursement for those grants because Block 37 is not being used for mass transit purposes and there are no prospects on the horizon. The exact amount the feds might demand is unclear.

But Steele told the Sun-Times this week there is “no deadline from the federal government for when” Block 37 must be “utilized as a transit asset” and there are possibilities on the drawing board that do not include O’Hare express service.

“There is no plan to keep this space empty. We’ve looked at proposals in the past. We took advantage of that opportunity knowing that there would be a future transit use for that space,” Steele said.

What possibilities?

“There’s a potential connection between the Red and Blue subways that have no connection downtown,” Steele said. “That would create operating efficiencies.”

Steele argued there are “examples around the country” where mass transit agencies “got federal money for transit projects that didn’t materialize until years later” and were not required to repay federal money used for those projects.

“We’re still well within the window of developing a transit asset there,” he said.

In mid-March, former U.S. Transportation Secretary Ray LaHood, one of Emanuel’s closest friends in politics, said Musk’s plan to whisk passengers between downtown and O’Hare in 12 minutes was a “pipe dream” from the get-go and it’s a good thing that project is dead.

“I’m not surprised at all. It’s very expensive. It’s complicated. The environmental impact statement that would have to be done on that will take years. And it would take a real commitment from a mayor to make it happen. I don’t see it happening,” LaHood said then.

“I don’t think it’s a bad thing [that it’s dead] because there are limited resources in the country and other things.”

Asked whether he believed the project was ever real, he said: “A pipe dream,” adding that Emanuel just might have been ahead of his time.

“Pipe dreams are what helped build the interstate system. Eisenhower had a pipe dream about connecting America with interstates and back then, there were a lot of governors who said, `I’m not having a road come through my state.’ But 50 years later, we got an interstate system,” he said.

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