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City Council OKs $1.6 billion in subsidies for Lincoln Yards, ‘The 78’

After a late-night reversal by Mayor-elect Lori Lightfoot, the City Council on Wednesday approved $1.6 billion in subsidies to unlock the development potential of two-mega developments: Lincoln Yards and “The 78.”

Both projects were dispatched in just minutes during an early-morning Finance Committee meeting briefly disrupted by a handful of protesters. The full Council signed off two-and-a-half hours later.

The vote on the $700 million subsidy for “The 78” was 31 to 14 with Ald. Edward Burke (14th) abstaining.

The vote to approve the $900 million subsidy for Lincoln Yards was 32 to 13.

The money for Lincoln Yards will be released in two installments.

The developer, Sterling Bay, will be reimbursed for infrastructure improvements as projects are completed and certified by the city. The developer can borrow $533.7 million initially. Only after certain benchmarks are met can the developer borrow against the remaining $487 million. The higher figure includes financing costs.

First-round Lincoln Yards improvements include: the realignment of Elston Avenue and viaduct; the Armitage Avenue extension and bridge; the Armitage viaduct; improvements to Cortland, Kingsbury, Willow and Dominick streets; improvements to Southport and Wabansia avenues; a pair of sea wall improvements along the Chicago River; and pedestrian bike and trail landscaping along the wildly popular 606 trail.

At “The 78,” the structure is similar; of the $700 million, Related Midwest was authorized to borrow against $551 million Wednesday, with the rest contingent on infrastructure completion.

During the abbreviated debate, Ald. Ray Lopez (15th) decried the “lying” and “divisive rhetoric” that has allowed opponents to claim — falsely, Lopez said — that the $1.6 billion in TIF subsidies were being “stolen” from Chicago Public Schools and from impoverished South and West Side neighborhoods.

“This is a good deal for all the people of Chicago. You are not stealing. You are generating. In order to generate, you must build,” Lopez said.

Ald. Scott Waguespack (32nd), who voted no, countered that “lies and deception have been built into” the Lincoln Yards project “since Day 1.”

Ald. Brian Hopkins (2nd), whose ward includes Lincoln Yards, said he never once argued that the massive project should be approved simply because the local alderman wanted it. Rather, he said, it should be approved because it will “transform a toxic wasteland into the city of the future” and generate 20,000 jobs and $300 million developer dollars for sorely needed infrastructure the city can’t afford to build on its own.

Mayor Rahm Emanuel added: “I know there’s a lot of hard feelings. There’s a lot of strong feelings — and that’s OK. But at the end of the day, we’ve had that debate. It’s time to move forward” with a project that will help a shrinking city grow.

The mayor noted that, like the Old Main Post Office, both sites have been “empty for years, decades. Sometimes, at least in the case of The 78 almost a century. And if we want to solve the problems” of generating more money for affordable housing and after school and summer jobs, “You cannot do that without growing.”

After the early morning vote in the Finance Committee, Chairman Pat O’Connor (40th) played defense for the mayor-elect. O’Connor diplomatically denied Lightfoot’s abrupt about-face had spared her from an embarrassing defeat.

“I don’t think the matter would have been called. In fact, I’m quite certain it wouldn’t have been. … There would have been no vote. There wouldn’t have been a chance for  victory or a defeat. It would have been a non-event,” O’Connor said.

“We were pretty clear on Monday. The recess was to give the mayor and the mayor-elect time to determine whether this matter would move forward. It’s moved forward based on the discussions that they’ve had in the interim.”

Artist's rendering of the Lincoln Yards development. | Provided by Skidmore, Owings & Merrill LLP (SOM)

This rendering of the Lincoln Yards development was released in July. Some aspects of the plan have since been revised. | Provided by Skidmore, Owings & Merrill LLP (SOM)

As the full Council meeting was scheduled to begin at 10 a.m., chanting protesters sat in the middle of La Salle Street outside the main entrance to City Hall, blocking traffic as a phalanx of Chicago Police officers stood to the side. Joining the protesters were seven newly-elected progressive aldermen: Daniel LaSpata (1st); Mike Rodriguez (22nd); Byron Sigcho-Lopez (25th); Andre Vasquez (40th); Matt Martin (47th) and Maria Hadden (49th).

Lightfoot had little choice but to go along with the two biggest tax increment financing subsidies in Chicago history.

Without her consent, aldermen may well have approved the subsidies anyway. That would have put the mayor-elect in the politically difficult position of suffering an embarrassing defeat before she even took office.

It could have set the tone for a contentious relationship between the new mayor and City Council that is likely to be bumpy enough already.

READ MORE: Did Lightfoot make a mistake by weighing in on Lincoln Yards and ‘The 78’?

That’s particularly true because Lightfoot has promised to issue an executive order on Day One ending aldermanic privilege, the unwritten rule that gives a local alderman virtually iron-fisted control over zoning and permitting in his or her ward. Most aldermen don’t want to give up that control.

Several aldermen have accused Lightfoot of making a “rookie mistake” by diving into the Lincoln Yards controversy.

They have argued that she would have been far better off letting Mayor Rahm Emanuel wear the jacket for the record subsidies and extracting her pound of flesh from the developers on the other end as both projects wend their way through the City Hall bureaucracy.

As the clock wound toward midnight Tuesday, Lightfoot tried her best to seize victory from the jaws of defeat.

She issued a statement claiming that day-long negotiations between her staff and the developers — Sterling Bay for Lincoln Yards and Related Midwest for “The 78” — had produced a commitment to “meaningfully strengthen” their joint commitment to minority contracting.

“The increases would lift the overall M/WBE participation by $80 million to $400 million overall,” Lightfoot said.

Her staff later said that instead of 26 percent and 6 percent respectively for minorities and women, the bar has been raised to 30 percent and 10 percent. O’Connor confirmed the change and distributed copies of the revised redevelopment agreements to prove it.

62-acre site at Clark and Roosevelt

A massive project planned for a 62-acre site at Roosevelt Road and Clark Street is slated for hundreds of millions in tax-increment financing money. It’s set for City Council approval on Wednesday, as is another mega-project, Lincoln Yards. Both votes were put on hold at the request of Mayor-elect Lori Lightfoot and Mayor Rahm Emanuel, but it’s an open question if that gesture will allow Lightfoot to address her concerns. | Provided photo

In addition, Lightfoot said language would be added to both redevelopment agreements to provide “explicit controls” for the city to “measure and require compliance” with the minority contracting commitments.

“These changes represent a vital sign that my administration will be able to make progress toward an equitable and fair deal for our communities,” Lightfoot said.

The mayor-elect then acknowledged what her own allies told the Sun-Times this week: The city has “additional controls” over the two mega-projects that she plans to use to “further improve these deals” and add “community voices to the process going forward.”

Lightfoot further acknowledged that there are “sufficient votes” to pass both subsidies without her support and that she is “not yet the mayor.”

After she takes office on May 20, Lightfoot promised to “engage with the community and committed activists who have advocated forcefully for affordable housing, park space and responsible use of TIF dollars.

Full City Council approval marks the final city sign-off for two of the biggest projects in Chicago history: one with the potential to transform the entire North Side with 6,000 new residential units, the other so big — with 10,000 new units — it would create Chicago’s 78th neighborhood in the South Loop and Chinatown.

The newly-created, 141-acre Roosevelt/Clark TIF is expected to generate at least $700 million to bankroll job training and a host of infrastructure improvements needed to access that long-dormant site.

Those projects include: extending Wells Street to Wentworth Avenue; moving and enclosing Metra tracks running along Clark Street 300 feet to the west; extending 15th Street into the site to connect with Wells; a new Taylor Street bridge; and a new Red Line stop at 15th and State streets.

The 168-acre Cortland and Chicago River TIF will reimburse Sterling Bay for a host of infrastructure projects needed to unlock the development potential of Lincoln Yards.

Those projects include: wider roads; revamped intersections; three new bridges; an extension of the wildly-popular 606 trail; a new Clybourn Metra station and a “multimodal corridor” that may include “high-capacity buses.”

Protesters on the LaSalle Street side of City Hall

Protesters rally outside City Hall against $1.6 billion in subsidies for two mega-developments, Lincoln Yards and “The 78,” shortly after the projects were approved by a Chicago City Council committee vote, Wednesday morning, April 10, 2018. | Ashlee Rezin/Sun-Times


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