City rewriting its plans for the Loop
$400 million in bonds would bankroll transit, LaSalle Street rehab
May 27, 2006
By Greg Hinz
City Hall is preparing to redraft its downtown development playbook with a series of new or revamped taxing districts, a $400-million bond issue and a revised plan for growth in the city's central core all on the drawing board.
Under serious review are proposals that could jump-start construction of a new transit line on the north bank of the Chicago River, revitalize the LaSalle Street office corridor and provide money for street beautification on the Near South Side.
Key business and civic figures familiar with the budding plans generally support what the city wants to do. But some caution that they will demand a much bigger voice in spending decisions than they've gotten in the past.
"If we're going to have to pay for it, we should be more involved in the governance and budget," says Gerald Roper, president and CEO of the Chicagoland Chamber of Commerce. "That's a deal breaker."
A variety of factors are driving the action, including the city's need for cash after last year's failure to win approval of a special downtown property tax and the impending sunset of the Central Loop tax increment financing (TIF) district. The TIF has served as a cash cow for dozens of downtown projects for two decades and now provides nearly $100 million a year for development, but it's due to expire at the end of 2007.
Other pressure stems from a lack of action on the city's Central Area Plan. Unveiled with much fanfare three years ago, it envisioned a wide range of transit and other improvements, but mostly has collected dust.
Here's what insiders say the city is considering or already pursuing:
• Creating a new TIF district covering LaSalle Street south of the river, as well as portions of Wells and Franklin streets. A city spokeswoman confirms that the district could come to life soon and would be used, in part, to help owners of outmoded office buildings compete with newer towers along Wacker Drive and near the commuter railroad stations. The possible new district was first reported by the Chicago Sun-Times.
The TIF also could provide subsidies to help convert outdated Class C office buildings for hotel or residential use, as has happened in the East Loop, says Jon DeVries, director of Roosevelt University's School of Real Estate.
• Renewing all or part of the Central Loop TIF for another 23 years. While depriving schools and other taxing bodies of revenue, restoring the TIF would free up money for proposed city projects, such as the Monroe Street busway or the Carroll Street transit line between Navy Pier and the commuter railroad stations. Those were proposed in the Central Area Plan, but the city does not have money to pay for them.
Asked about the Central Loop TIF, the city's spokeswoman would say only that all options are under review.
• Issuing up to $400 million in bonds — funded by proceeds from the LaSalle TIF, a new Central Loop TIF and/or proceeds from the recently authorized sale or lease of three city parking garages — as early as the city's 2008 budget. That money could help Mayor Richard M. Daley as he prepares for a presumed re-election bid.
A city spokeswoman says "no one knows anything about a $400-million issue," but sources at City Hall and a business group say such discussions are occurring.
• Updating the Central Area Plan. The city is hiring a consultant to re-examine growth projections, create a lighting plan for Michigan Avenue buildings between Washington Street and Congress Parkway, and "explore potential funding mechanisms" for the Carroll Avenue line and other transit projects, according to a summary the city sent to potential bidders.
• Creating special service areas along LaSalle Street and in the South Loop to fund street beautification and perhaps other work. The city proposed such a property tax-funded district last year to finance operations at Millennium Park, but backed down after strong business opposition.
The potential for resistance remains.
"The city needs to give strong consideration to self-governance (of special districts) in order to gain support," says William Barnhoff, vice-president of the Chicago Development Council, a trade group.