City could get Reese site tomorrow

06/29/2009 12:43 PM

By Micah Maidenberg
Editor

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The City of Chicago is expected to close on the $86 million deal for the Near South Side's Michael Reese Hospital site tomorrow, the Tribune reports, a move that would mark the city's first "financial commitment related to its 2016 Olympic bid." The land could be used for an Olympic Village in 2016, should Chicago be chosen for the summer games that year.
City council voted to purchase the property from Medline Industries last December. The city hopes to sell the parcel to a master developer, erasing taxpayers’ financial commitment to Medline, within five years of closing. During that period, the city only makes interest payments of five percent on the principal, or $4.3 million annually. After five years, the interest rate ticks up to 7.5 percent and principal payments start.
Pete Scales, a city spokesman, told Chicago Journal last winter the five-year period allows the city plenty of time to wade through the economic recession and real estate downfall to find a buyer.
“We’re confident we’ll make the money back if not more on the sale of the property,” he said.
Asked about worst case scenarios, Scales demurred, saying “the mere fact we’ve got five years to never make a principal payment is a very large cushion to hedge bets on the real estate market.”
Developers interested in the site, according to the Tribune article include Enterprise Companies and Kargil Development Partners, both of which have been active in the South Loop.
The Trib piece begs some of the questions that surround the deal:

The acquisition of the Olympic Village site carries substantial risks, given the moribund state of the credit markets, which has created wrenching problems for Vancouver and London. Both cities have had to bail out their respective Olympic Village projects, which, like Chicago's, were supposed to have been privately financed.
And for Chicago, those struggling projects hover like specters, raising any number of questions. Will the lending spigot have opened sufficiently by 2012, when work is slated to begin? Will the city's glut of new housing units have been absorbed by then? Will Chicagoans line up for condos and rental apartments that won't be available until 2016, and only after they have been crash pads for several weeks for about 16,000 visiting athletes and coaches?

Read the entire piece here.



2 Comments - Add Your Comment



By ardecila
Posted: 07/01/2009 3:00 AM

James Reyes: Even if Chicago doesn't get the Olympics, the city will still try to sell the land to a developer, who will probably build a neighborhood of smaller 2-3 story buildings instead of big towers, and will build them more slowly.


By James Reyes from Albany Park
Posted: 06/29/2009 2:05 PM

What are the plans for the property if Chicago doesn't get Olympics?