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UPTOWN CHICAGO COMMISSION

Uptown in the News  

April 25, 2005
The Chicago Reader
CRAZY KRUESI -- HIS PRICES ARE INSANE!
If the CTA's broke, how can it afford to let Wilson Yard go for below market value?
By By Ben Joravsky


CTA officials say the agency is so broke they'll have to cut service, raise fares, and fire employees unless the state bails it out. If that's true, say Uptown residents who've been poring over the financial details of the Wilson Yard development, why is the CTA selling the north-side lot the development will sit on for so little?

CTA officials have been dodging that question for months. "They're selling valuable property to subsidize a housing project," says Katharine Boyda, a member of the Uptown Neighborhood Council, which opposes the project. "Tell me, how can the CTA afford to subsidize real estate deals when they can't afford to run their trains and buses?"

From the outset nearby residents have been furious that Shiller wants to cram more low-income housing into Uptown, which already has the highest concentration of subsidized housing on the north side. They aren't happy about the financing either. The city estimates the project will cost $113 million, $26.5 million of which will come from out of the local Tax Increment Financing District fund. (TIFs freeze the amount of property taxes the city gets from each district -- money that pays for schools, parks, and other public services -- and reserve revenue from subsequent tax hikes to pay for neighborhood development.) The rest of the Wilson Yard project will be funded by various federal and state programs -- and the CTA, which will subsidize the deal by selling the lot for less than it's worth.

CTA officials insist that they're getting a good deal. At a community meeting in February, CTA president Frank Kruesi said the agency was selling the land at "market rates." CTA board chairman Carole Brown goes a step further. "Selling Wilson Yard at market rate enables the CTA to maximize the value of this resource, as well as add much-needed revenue to its operating budget," she said. Without the revenue from this anticipated sale, CTA's 2005 Gridlock budget proposal would have contained even more substantial service cuts."

So what exactly is the deal the CTA's making? Well, in its original request for proposals and at subsequent public meetings, the agency said it was selling 5.7 acres, or about 248,000 square feet. But Shiller told me Tuesday that it wound up selling only 3.79 acres, or about 164,000 square feet, and holding on to land west of the tracks. Either way, recent sales in the neighborhood suggest that the CTA is taking less than the market rate in hot Uptown.

At $6.6 million for 5.7 acres, the price of Wilson Yard is about $27 a square foot. For 3.76 acres, it's about $40 a square foot. By contrast, three lots in the 4600 block of North Kenmore went for $111.39 a square foot. The two lots at 4701 North Clark went for $84.64 a square foot, the lot at 4831 North Winthrop for $98.67 a square foot. At the low end of the spectrum was the site of the old Rainbo Roller Rink at 4830 North Clark -- $54.28 a square foot, two years ago.

"Any way you look at it, the CTA sold for less," says Boyda. "The CTA's selling the property at bargain-basement prices at a time when it's nearly bankrupt. If they sold all 5.7 acres for top dollar, they'd generate about $24 million -- almost half of their deficit."

Real estate experts say it isn't always fair to compare property prices within the same neighborhood, because each piece has its own peculiarities. "The Wilson Yard doesn't have a lot of frontage, so that works against it -- and it's right against the el tracks, so that has some limitations," says one Uptown real estate salesman who wanted to keep his name out of this fight. "But on the positive side, it's got great location. It's next to the el stop, which. makes it very convenient for a shopping mall or residents. If the CTA had put it out for competitive bids, they'd have gotten a lot more.... Put it this way -- I wish I could have had it for that."

Kruesi and Brown say they have an appraisal from an unnamed real estate consultant saying they're getting a good price for the land. The Uptown Neighborhood Council filed a Freedom of Information Act request to get the appraisal, but the CTA denied it on the grounds that it can't release "records, documents and information relating to real estate purchase negotiations until those negotiations have been completed or otherwise terminated."

Council members protested that the CTA board had already voted to sell the land, but Olga Domeher, the CTA's Freedom of information officer, wrote back in an email that they couldn't have the appraisal because "the real estate closing has not taken place."

"They say they have an appraisal that proves they're selling the land at market rate. We say, 'OK, show it,"" says Boyda. "They say, 'File a FOIA request.' So we file it and they say, 'Sorry, we can't show you the appraisal until after the deal is done.' Well, what good is it then? What's the point of publicizing information after it's irrelevant? They're stonewalling -- they're waiting until it's too late to stop them." Developer Peter Holsten did not return calls for comment.

Politicians and other City Hall insiders say the deal is Daley's reward to Shiller. Throughout the 90s she was one of the mayor's sharpest critics, and she wasn't afraid to vote against his programs or budget. But in the last election, she supported him, and he supported her. She's voted for his last two budgets and stayed out of fights that would pit her against him. She wouldn't, for instance, help activists a few years ago in their unsuccessful battle to save the old Plymouth Hotel. "Control over projects like this is the courtesy Daley gives aldermen -- it's the last vestige of power they have," says one city planner. "He's giving her the green light on this stuff so Shiller will keep her mouth shut in the council."

Shiller says there was no quid pro quo on the Wilson Yard deal. "It's obviously easier for me to communicate with the administration today than ten years ago," she says. But "I don't play games, I don't like being cute. The issue has always been much more broad: what's best for the ward." Daley, she says, supports the plan on its merits, not because she endorsed him. "Whenever the mayor sees me, he raises Wilson Yard -- 'how's the block going?'"

Now, it's laudable that the city wants to build low-income housing -- though concentrating so much of it in this corner of Uptown is at odds with Daley's general policy of replacing low-income high-rises with mixed-income, low-rise homes. But the CTA clearly doesn't have the money to subsidize it.

Despite Daley's support, the project isn't a done deal. The not-for-profit that signed on to manage the seniors' building recently pulled out rather than deal with all the federal regulations governing the site. And the state hasn't yet agreed to finance the family high-rise.

Holsten and Shiller's people say they hope to break ground in the fall. Boyda and her allies hope the deal falls apart so everyone can start over -- including the CTA.


To view the entire article for a fee, please visit the Chicago Reader website at www.chireader.com.












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