One Central, a multibillion-dollar real estate development proposed for the South Loop just west of Soldier Field, is a bold plan to turn an ugly railyard into a lakefront jewel while boosting South Side transit or a ploy to get the public to subsidize a private venture, depending who you ask.
At its heart is a complex plan in which Landmark Development would get a federal loan to build a South Loop transit center involving Metra, the CTA and Amtrak at a cost as high as $3.8 billion, plus interest.
The state of Illinois would buy the transit center from Landmark on an installment plan, probably over 20 years or longer, using sales taxes from the project, and Landmark would use that money to repay the federal loan.
“This is an innovative way to finance infrastructure,” says Steve Schlickman, a transportation consultant and former transit official. “It would put all the risk on the developer. If Landmark can prove it’s got the wherewithal, why not pursue it?”
“Using sales-tax revenue to offset development costs is a dangerous precedent,” counters Joe Schwieterman, director of DePaul University’s Chaddick Institute for Metropolitan Development. “It’s hard to see the transit agencies making this work without massive capital outlays.”
But Schwieterman acknowledges the proposed development “could be the impetus for reviving plans for a central-area circulator by giving it a prominent destination on the South Side.”
Landmark, which plans to release a feasibility study soon, calls the area “grossly underserved by transit. South Side residents struggle with commute times far higher than in other parts of the city.”
Mayor Lori Lightfoot expects “a robust and inclusive community engagement process and thorough city review,” a City Hall spokesman says.
Transportation experts are skeptical about the need for a transit center but agree Chicago’s rail transit system should be revamped and expanded to improve access to the growing number of jobs downtown.
If the city and Landmark agreed on how to meet that goal, One Central could go far toward making that happen.
The developer wants to put a deck over a Metra railyard at 18th Street and Lake Shore Drive and build a mixed-use complex on 34 acres of air rights above it, with office and residential towers, shops, restaurants and entertainment.
To pay for the deck, Landmark persuaded the Illinois General Assembly last year to authorize a public-private partnership between the company and the state.
The law was enacted with minimal public discussion and might seem like a sweet deal for Landmark, with tax revenue paying for the deck.
But a deeper analysis suggests Schlickman is right in thinking both sides would benefit. Landmark would get the deck. The state would get a way to finance transit infrastructure that wouldn’t involve tax-increment financing — TIFs — and also would cost the city of Chicago little or nothing.
The scheme, complicated but ingenious, would work like this:
- Landmark would get the loan through the Railroad Rehabilitation and Improvement Financing program, administered by the U.S. Department of Transportation, and use it on what it calls the “civic build” — the deck, transportation facilities and parts of the project that would bring in sales taxes, such as shops, restaurants, entertainment and parking. These federal railroad loans can be used to pay for real estate development, not just transportation facilities.
- Once sales taxes start coming in, the state would buy the “civic build,” and Landmark would use the money to repay the loan.
- The developer also would handle what it terms the “private build” — the office and residential buildings, which it estimates could cost $20 billion.
The ingenious part is the civic build concept. Transit alone can’t generate the money to cover its construction costs. But transit combined with other revenue-producing development could be a different story. If all goes as planned, the civic build would pay for itself.
For City Hall, a plus would be that only the state’s share of sales taxes would be tapped, according to Landmark, which says “there are no city tax dollars contemplated toward the civic build.”
A lot could go wrong. Sales taxes might not be enough to pay off the loan. The partnership would have to be structured so Illinois taxpayers wouldn’t bear the burden if the project went south.
Something else that needs serious thought is what kind of infrastructure the state would get for its money.
No one I spoke with expressed much enthusiasm for One Central’s transit center as it’s conceived. For one thing, it appears that CTA Orange Line trains and some Metra trains would be detoured to One Central — which could benefit Landmark and people who go there but likely would inconvenience everybody else.
The CTA says it’s had only preliminary discussions with Landmark.
If Chicago wants to increase access to job opportunities, other transit initiatives are more urgent. For instance, Cook County has offered to underwrite a three-year pilot project that would make it cheaper and faster for Far South Side residents to get to the Loop, lowering fares on Metra’s Electric and Rock Island lines.
But South Siders still need a way to get the last mile to their jobs, increasingly found in outlying parts of downtown poorly served by transit.
Over the years, there have been proposals for a high-capacity transit service linking the L and Metra to each other and to outlying areas. [I was on a team that developed one proposal, published in 2016 by the Chicago Central Area Committee business group.]
A transit line connecting One Central to the L and Metra would be hugely advantageous for Landmark. It also would let commuters reach the fringes of downtown where big projects have been proposed.
Landmark might not be eager to help build transit infrastructure that would aid its competitors as well as itself. But if the state is going to invest billions, the results need to provide wide public benefits reflecting a collective, longterm vision that’s clear and achievable.
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