The University of Illinois and the developer of the 62-acre site south of downtown known as The 78 have reached a deal for a technology center serving as an anchor for what’s envisioned as a new Chicago neighborhood.
Related Midwest, which controls the site running southwest of Roosevelt Road and Clark Street, said the U of I’s Discovery Partners Institute will build a research center at The 78. The deal, announced Wednesday by Gov. J.B. Pritzker and Mayor Lori Lightfoot, gives the massive project a booster shot intended to draw other employers and developers to the property.
But it also pushes to the forefront the controversy surrounding tax incentives that support private development. The 78 is in line for up to $1.1 billion in subsidies for public improvements that would support the private investment.
The institute, known as DPI, has signed a letter of intent to build on land Related Midwest will donate, the developer said. DPI and other tech centers around the state are backed by $500 million from the General Assembly and private pledges worth $230 million to date. DPI expects to start construction in the next 12 months, Related Midwest said.
The original plan called for private donations to match the state’s money dollar for dollar. Pritzker said he urged the university to “redouble its efforts” in fundraising after he became governor last year. Speaking at a VIP-laden event to announce DPI, Pritzker said some donors needed to know the state would meet its commitment.
“We are launching a new era for Chicago as an extraordinary focal point for an unparalleled technology workforce and research and development that will attract talent to our state from around the world, strengthening Illinois’ long-term economic vitality for generations to come,” the governor said.
Pritzker, who started the 1871 business incubator eight years ago, said many were skeptical Chicago could be a thriving tech center. He said he knew otherwise, in part because of the strength of the state universities. “Most of the ingredients for success have been here all along,” he said.
At the same event, held in a tent at The 78’s property, Lightfoot said, “We are literally standing on a field of possibilities.” DPI’s arrival will set more investments in motion, she said. “Education, technology, entrepreneurship, transportation, housing and infrastructure — all right here, all reinforcing each other,” Lightfoot said.
The state money will support DPI and a network of U of I-affiliated research and innovation hubs around the state, dubbed the Illinois Innovation Network. Pritzker said the initiative will create or fill 48,000 new-economy jobs over the next 10 years and generate a return of nearly 40 times the original state investment.
Related Midwest President Curt Bailey said DPI will be built near 14th Street, just within the northern part of the site and where its planned Phase One of activity will occur. It would be near a million-square-foot office building, Bailey said. He also said he’s close to a deal with another large occupant of The 78.
“With a dynamic Phase One plan that includes DPI as its centerpiece, we’re showing how a 21st century neighborhood, created from the ground up and connected to so many exceptional areas, will bring opportunities to all of Chicago,” Bailey said.
The subsidies under the tax increment financing program got City Council authorization last year in the waning days of former Mayor Rahm Emanuel’s administration. Lightfoot has promised to increase oversight of the program amid criticism it rewards developers by diverting needed revenue from schools and other public agencies.
Lightfoot has been caught between public criticism of TIFs, including her own comments as a mayoral candidate, and her desire for economic growth. At Wednesday’s event, she said TIF reimbursement won’t go to The 78’s developers until after they have documented their costs for public improvements. “The commitment that the city made remains firm,” she said.
The 78 — so-named because Chicago has 77 official neighborhoods and this is touted as a new one — covers what’s in effect a gap between the South Loop and the Dearborn Park and Central Station regions. Its full development could take decades and will depend on economic cycles, but general plans call for a mix of uses, with about 11 acres of open space. The site has about a half-mile of Chicago River frontage.
The site was among those city officials offered to Amazon during its headquarters search. While Amazon turned down Chicago, the offer demonstrated the ambition developers and city officials have for the long-vacant site, formerly railroad land.
What gets built there — how tall and dense — is a matter for future zoning decisions. Lightfoot plans to create a council of development experts and local residents to review progress and designs for the site. She said she’s working with Ald. Byron Sigcho-Lopez, whose 25th Ward includes the property, to find members.
Bailey said the site plan for Phase One is being designed by Skidmore, Owings and Merrill. Construction is under way on the Wells-Wentworth Connector, a main thoroughfare for the project that will connect the Loop to Chinatown. Other planned infrastructure improvements include construction of LaSalle and 15th streets through the site, renovation of Clark Street, relocation and enclosure of Metra tracks and reconstruction of the Chicago River seawall.
The private fundraising for DPI includes a $10 million gift to the University of Illinois at Urbana-Champaign by Don Edwards, chairman of the school’s board of trustees, and his wife Anne. Half of the money will be dedicated to DPI and the statewide tech hubs.
The U of I facility has been under discussion for years and was advanced by former Gov. Bruce Rauner. Pritzker praised former Mayor Rahm Emanuel for supporting the project but didn’t mention Rauner.
Related Midwest is part of New York-based Related Cos. and is among Chicago’s most prominent builders. Its investments include downtown towers and affordable housing sites.