Mayor Johnson proposing more than $150M in TIF assistance for LaSalle Street revamp

Mayor Brandon Johnson’s office is making good on its promise to not let the city’s record tax increment financing surplus interfere with the transformation of LaSalle Street office buildings to residential use.

He announced four projects on Wednesday that he plans to formally propose for development assistance this spring.

The projects — including three that were short-listed by former Mayor Lori Lightfoot — stand to create more than 1,000 new apartments with at least 319 projected to have affordable rents through TIF assistance. The affordable units would be reserved for tenants who earn an average of 60% of the area’s median income, about $53,000 for a two-person household.

“These transformative projects within the Loop signify more than a revitalization of space; they embody our city’s dedication to inclusivity and growth,” Johnson said in a news release.

Details on the proposed projects, along with the TIF amount:

  • 111 W. Monroe St. — Prime Group and Capri plan to create 345 units with 105 earmarked as affordable through a requested $40 million TIF subsidy. The $202.8 million project will cover 14 floors within a pair of adjacent buildings, including a high-rise built in 1911. There’s also a 228-room hotel planned on the lower levels, which could be supported through a property tax incentive if the complex lands city landmark designation.
  • 208 S. LaSalle — Prime Group would convert four floors in the building into 226 apartments. Of those, 68 would be affordable through $26.2 million in TIF assistance. The TIF request is $6.8 million less than the original submission made last year.
  • 30 N. LaSalle — Golub & Co. and Corebridge Financial plan to create 349 apartments, including 105 affordable units. The $130.2 million project would span 14 floors in the 1975 high-rise and utilize $57 million in TIF assistance — $5 million less than what the developers requested.
  • 79 W. Monroe — A $64.2 million project planned by the Italy-based spirits company Campari Group, would convert eight floors in the 1913 Bell Federal Savings & Loan building into 117 residences with 41 affordable units. Key architecture features — like the Weather Bell sign — would be restored and preserved. The project’s TIF request is $28 million.

Prime Group’s Michael Reschke, a voice at the forefront of downtown revival in the Loop, declined a request for comment ahead of Johnson’s announcement. Golub & Co. did not respond to requests for comment.

The four projects will be reviewed this spring by the Community Development Commission and the Landmarks Commission.

City Council will need to approve TIF support and, potentially, other aspects of each project. Both 208 S. LaSalle St. and 30 N. LaSalle St. saw reduced TIF requests. Johnson’s office cited “city review and underwriting” as the reasons, in its news release.

Aside from 30 N. LaSalle St., the projects have additional proposed funding sources, including low-income housing tax credits, tax exempt bonds, federal loans and historic tax credits.

Reviving downtown’s foot traffic

Michael Edwards, president and CEO of the Chicago Loop Alliance, welcomed Johnson’s decision to recommend TIF assistance for the projects.

“We were there at the beginning of LaSalle Reimagined. It’s an important street in the Loop. We were very involved with the [Urban Land Institute] and the whole idea of creating these projects that need to be funded because the conversion of office to residential is expensive and a challenge anywhere in America, especially here in Chicago on LaSalle Street,” Edwards said.

“We’re very supportive of the idea and have been advocating for the mayor to be supportive of the projects as they were laid out in the past administration with some tweaking that he probably had to do, which is totally understandable. We think it’s extremely important that there is some significant reinvestment going on on LaSalle Street. It’ll benefit the whole Loop.”

The Chicago Loop Alliance is in the process of doing what Edwards called a “value of downtown” study that “sort of positions downtown, the value of it, within the region over a number of different variables.” Against that backdrop, the city’s $150 million contribution toward converting largely-vacant office buildings to residential use will “demonstrate its commitment to downtown,” he said.

Johnson has been “extremely thoughtful” in the eleven months since taking office to “make sure that these projects made sense in the whole scheme of things,” Edwards said. Now that he’s moving forward, the Chicago Loop Alliance is “very appreciative of that.”

“The city is making kind of a big statement that the Loop is important and will continue to be important,” he said.

Chicagoland Chamber of Commerce President Jack Lavin said LaSalle Street Reimagined is very important to the future of downtown Chicago.

“If we’re not gonna have the same number of workers coming downtown, we need to evaluate how can we increase traffic. Residential and new kinds of commercial are both things that will do that,” Lavin said. “The city went to the private sector and got ideas and now, they’re making decisions. … It’s a good thing. If you can reimagine LaSalle Street, you can create more foot traffic. You can create more energy and that’s gonna be good for thousands of small businesses.”

LaSalle Street already has anchor businesses, Lavin said. On the north end, Google is redeveloping the Thompson Center. On the south end is the state government’s new headquarters that replaced the Thompson Center.

Even after Johnson declared a record TIF surplus, Lavin said he was never concerned about the new mayor pulling the plug on the plan to convert half-vacant and antiquated office building to residential and commercial use.

“I wasn’t worried. It seemed like they were just taking their time to evaluate the projects and what would have the greatest impact,” he said.

Ald. Bill Conway (34th) said he’s “thrilled and grateful” that the four projects are “moving forward,” even after the TIF surplus Johnson used to balance his first budget.

“The Central Business District can’t just be a place where people work, based on how work has changed in a post-pandemic environment. It has to be multi-use where people can live, eat, shop and visit,” Conway said. “These four projects will help catalyze that effort. And even more importantly, we face a shortage of housing inventory. People are struggling with homelessness and rising costs. Having these over 300 affordable units will help those issues as well.”

LaSalle Street Reimagined

In late 2022, Lightfoot’s LaSalle Street Reimagined initiative invited developers to submit proposals for reducing vacancies in office and retail space in what was Chicago’s nerve center for finance. Developers had a big incentive to play along: The city was dangling millions of dollars in tax increment financing as potential subsidies.

The three original winners — which doesn’t include 79 W. Monroe — were drawn from six short-listed responses to the city’s call. The city’s Department of Planning and Development scrutinized the entries. The two other short-listed entries, 135 S. LaSalle St. and 105 W. Adams St., “continue to be evaluated by DPD and DOH [Department of Housing] for City support,” according to a news release.

The four projects highlighted by Johnson’s office could start construction in early 2025 if approved, slashing the estimated 5 million square feet of empty commercial space within the LaSalle corridor by more than 25%, according to Planning and Development Commissioner Ciere Boatright.

“One thousand new, mixed-income homes will add vitality and diversity for more neighborhood-oriented investment like retail and restaurants, as well as traditional commercial projects that are long synonymous with the central business district,” Boatright said in a news release.

This is a developing story. Check back for updates.

The four projects named by Johnson’s office stand to create more than 1,000 new apartments with at least 319 projected to have affordable rents through tax increment financing assistance.

LaSalle Street would be perfect for the new federal effort, announced last week, that encourages cities and states to turn empty office buildings — particularly ones near transit — into housing.

During Wednesday budget hearing, assurances sought from city planners that developers now fronting huge costs for revamp can count on the city to be their partner.

Six competing teams that want to add housing to important buildings want $388 million in tax increment financing but not all will get help.

The lessons learned there — both good and bad — can be applied to other efforts to remake downtown business strips.

The City Council’s Finance Committee approved a $5 million grant program to entice neighborhood restaurants and “cultural” establishments to open downtown.

The proposals, mostly for housing and offered with the hope of snagging city subsidies, respond to the city’s call for ideas to rejuvenate Chicago’s longtime financial district, now plagued by vacancies.

City officials are offering landlords money if they come up with new ideas for buildings that have lost their allure amid downtown’s expansion.

The Lightfoot administration is offering tax incentives to developers who want to change the “monoculture” of office buildings by converting some to residential use.

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