Published June 4, 2009 

City Hall has paid nearly $500,000 in the last 15 months to lease space at a South Side industrial site owned by Mayor Daley’s nephew and his partners, who bought the property with city pension money.

Daley’s nephew Robert Vanecko and his partners — Allison S. Davis and his son Jared Davis — used $4.2 million of the money they manage for five city pension funds to help buy the mostly vacant warehouse and surrounding land at 3348 S. Pulaski.

The city’s Water Management Department was among the few tenants in the building when Vanecko and his partners bought it Nov. 27, 2007. The city has continued leasing space there, apparently on a month-to-month basis.

That lease has become more lucrative under Vanecko’s ownership group, according to city records.

But Vanecko’s partners insist City Hall has the same deal with them as it did under the previous owner.

The city paid $480,408 to Vanecko and his partners between March 17, 2008, and May 26 of this year, according to records on the city’s website. That’s far more than the $50,026 the city paid the previous owner during all of 2006 and 2007, records show.

This is the second time in five years that a Vanecko-owned firm has taken over a city contract whose value then skyrocketed. The first time involved a sewer-cleaning company whose investors included Vanecko and the mayor’s son, Patrick Daley.

Vanecko’s deals with the city are under investigation by federal authorities and the city’s inspector general. Vanecko and the mayor’s son have hired a criminal defense attorney, Charles Sklarsky, to represent them.

Mayor Daley’s press secretary and city leasing officials didn’t return phone calls about the lease with Vanecko’s group. The city’s website contains no information about when the lease began, when it ends, the monthly rent and the amount of space the city is leasing.

The lease, however, was “modified” twice this year, records show.

Mayor Daley's nephew, Robert G. Vanecko wants to revive struggling Chicago neighborhoods with $68 million from city pension funds. He has his eye on areas near his uncle’s proposed Olympic stadium.

Daley nephew Robert G. Vanecko’s deals with the city are under investigation. | Richard A. Chapman / Sun-Times

Water department trucks frequently travel in and out of the industrial property, which also is home to a truck and bus repair company.

“Our 3348 South Pulaski Road location, which ultimately will be redeveloped or sold, still has two of the four original lessees, including the Department of Water Management of the City of Chicago, which has a month-to-month lease dating back to the previous owner,” Jared Davis said in a statement.

His father, Allison Davis, is a longtime City Hall insider and business partner of convicted political fixer Tony Rezko. Davis also once headed a law firm where President Obama worked.

DV Urban Realty Partners — the company Vanecko and the Davises created to manage $68 million in city pension funds — owns 90 percent of the 15-acre site. The rest is owned by Sydney Partners, whose principals include Anthony Burns and Jeff Josephs.

Together, they paid $10.5 million for the property. It’s one of eight Chicago real estate deals DV Urban has done with city pension funds, and it’s the only one in which the city is a tenant.

“The terms of the month-to-month lease that were negotiated by the former owner continue to be the same today as they were prior to us owning the building,” Josephs said in an e-mail. “No terms have been renegotiated or changed. The city continues to be a tenant on a month-to-month basis occupying less than 25 percent of the entire facility.”