City offers to buy Michael Reese site
By Susan Fong
The City of Chicago and Medline Industries, owners of Michael Reese Medical Center at 29th Street and Ellis Avenue in Bronzeville, have announced tentative plans for an $85 million sale of the Michael Reese property to the City. The City would then resell the land to developers who would build 7,500 apartments and condominiums and 1,000 hotel rooms for the 2016 Olympics, which will be converted into housing after the Olympics are over.
The deal has locals wondering if taxpayers will have come up with the $85 million to buy the property, if any of the post-Olympics housing will be designated "affordable," if the development constitutes gentrification of Bronzeville that will push residents out of their own neighborhood, and if environmental hazards could result from demolishing Michael Reese.
Michael Reese Hospital opened in 1881, and most of its buildings were erected in the first half of the last century. Some elements used in their construction now are considered health hazards, such as asbestos insulation and lead paint.
Joseph Kearney, program director of the Chaddick Institute at DePaul University, a think-tank focusing on land use and urban development policy issues, thinks the City has a good record in dealing with polluted sites.
“Chicago has been taking the lead in buying brownfield sites, like this property,” Kearney said.
A brownfield is an industrial or commercial property that has the potential to be underused “in part because of environmental contamination or the fear of such contamination," according to the Environmental Law Institute.
Medline to chip in $20 million
Medline, the seller, will pay for demolition and cleanup, according to Jerreau Beaudoin, Medline’s communications director. “With that proposed sale, Medline will give a $20 million charitable donation” to the City, “the majority of which is be used for demolition and remediation on the property,” Beaudoin explained.
City officials said taxpayers will not get stuck with the $85 million bill because of "creative financing." As part of the agreement, the City will not have to pay the principal at the closing, which is expected at the end of the year; instead, the City will pay only the interest for five years and then will pay Medline the principal once the City sells off the property. Spokesperson Peter Scales from the City Department of Planning and Development added that the City “does not intend to hold onto the property for long.”
Kearney agreed that, without this kind of “creative financing,” brownfield land such as the Michael Reese site could not be developed further. He noted that without government assistance such as tax-increment financing (TIF) money, federal Environmental Protection Agency funds, or other federal and state money, many brownfield sites simply would be abandoned.
The property comprises 37 acres, "much more than was originally expected" for the Olympics, said spokesperson Patrick Sandusky of the Chicago 2016 organization, a group working to bring the Olympics to Chicago.
Scales explained the City is in the middle of carrying out its "due diligence" research concerning the property, including an environmental assessment. Due diligence should be finished soon, so the purchase agreement may come up for a vote as early as the next City Council meeting.
Hospital may close soon
The City hopes to close the deal by the end of the year if hospital operations cease in December. Michael Reese Medical Center Corp. informed the Illinois Health Facilities Planning Board in June that, regardless of the property sale and City's Olympic bid, it intended to close the hospital between Sept. 30 and Dec. 31 due to the hospital's allegedly poor financial condition. Alderman Toni Preckwinckle (4th Ward) said she is working to help Michael Reese's 700 employees obtain job placement help.
In February, the City will issue a request for proposals (RFP) for developing the site; that timing coincides with the International Olympic Committee (IOC) plan for considering final bids from cities interested in the 2016 Olympics in the second quarter of 2009. The City then will have eight months to receive and review RFPs before choosing one.
Chicago’s chances for hosting the 2016 Olympics depend on the IOC, which will announce its decision in October 2009. Other cities vying for the 2016 games are Tokyo, Madrid, and Rio de Janeiro.
Preckwinkle believes the City is getting a great deal on the property, regardless of whether an Olympic village is built. The original Medline asking price was $100 million, which “was an outrageous sum [that] only included the truck marshalling yards," Preckwinckle said. "Now, the City has twice as much property to work with.” She added she welcomes this purchase and the Olympics bid as a way to develop and strengthen the area’s infrastructure and development and to connect the South Loop, south lakefront, Bronzeville, and McCormick Place.
Community concerns
Johnnie Blair, Bronzeville Chamber of Commerce president and founder, is concerned the community is not as involved with the process as it should be, however. He said he knew that "things were in the works," but wished he had learned about the sale before the fact rather than after the deal was announced.
Chicago 2016’s Sandusky countered that officials have held a number of public forums with neighborhoods and aldermen along with the Chicago 2016's bid leadership team and community relations director.
The Department of Planing and Development’s Scales emphasized the City’s interest in developing the area as a historically significant "legacy neighborhood,” saying that “the future of this area is just as important, if not more important, than the Olympic village." Regardless of whether Chicago hosts the Olympics, he said the City will be involved from start to finish in the site’s design and development and will work continually with community groups and partner with the Bronzeville area and lakefront residents.
The Chaddick Institute’s Kearney noted that, with the City exercising its power of eminent domain, the area’s development would lead to "displacement of certain populations. The neighborhood with its surrounding community must be taken into context, [regardless of] whether Chicago wins the Olympic bid," he said.
Blair agreed. "What are the real consequences that the [development] will carry for the neighborhood and community, both in the long and short term?" he asked.
He and others worry the development may cause gentrification that could push out Bronzeville's traditional residents, a mix of low-, middle-, and upper-income African-Americans.
Many low-income residents already are gone, as the City over the last decade has torn down approximately 2,700 units of Chicago Housing Authority public housing.
If TIF funds are used in developing the area, the City is supposed to require developers to make at least ten percent of new units "affordable," but the City also may waive that requirement under certain conditions. The City defines "affordable" as what a family making $75,000—the median household income for the metropolitan area—could afford. Chicago’s affordable housing advocacy groups are lobbying for the City to redefine affordable housing to constitute what a family making $47,000—the median income for the city itself—can afford.
