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Chicago rolls out plan to revive financial district in wake of pandemic

Chicago Mayor Lori Lightfoot unveiled a plan Monday to revive the LaSalle Street corridor, a key downtown office district that suffered the double whammy of COVID-19 and the loss of several large firms to new towers rising farther west along Wacker Drive and in Fulton Market.

The mayor said it’s time to take advantage of the Loop apartment boom and fill the corridor’s empty offices with new renters, including hundreds of low- and moderate-income workers typically shut out of downtown living.

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“We must restore this area to its full potential,” said the mayor. “But do so with an eye toward equity.”

The street’s road to recovery could be long. This year’s loss of major LaSalle Street office tenants such as BMO Harris and law firm Chapman & Cutler, which left for the West Loop’s new BMO Tower, were just the latest of many exits, and the mayor estimated during an afternoon news conference that about 5 million square feet of commercial space on the surrounding blocks lies vacant.

But city officials envision developers using an array of government financing tools to create over five years about 1,000 new apartments on the several blocks of LaSalle Street between Washington Street and the Chicago Board of Trade Building, as well as nearby streets. They also plan to fill up the many empty storefronts by bolstering local restaurateurs and retailers, who started drowning in red ink when the pandemic hit and customers disappeared.

Downtown’s prospects did brighten when Google agreed this summer to buy the James R. Thompson Center for $105 million and announced plans to use the entire 17-story structure as office space. The company helped spark the transformation of Fulton Market, a former industrial neighborhood, into a gleaming office center and upscale residential neighborhood when it established its Midwest headquarters there in 2015.

But as Lightfoot gears up for next year’s reelection campaign, she wants to avoid any criticism that she places too much emphasis on downtown development, a charge frequently leveled at predecessors such as former Mayor Rahm Emanuel.

During the news conference she talked up the administration’s Invest South/West program, which gives financial incentives to developers who launch projects in underused commercial corridors on the South and West sides, and the 2021 reform of the city’s Affordable Requirements Ordinance, which increased the amount of affordable housing units required for many new residential projects.

The new downtown initiative will follow that path, she added. Thirty percent of the 1,000 units created will be reserved for affordable housing, currently a scarce commodity in the central business district.

“Today, there are only two completed ARO units in the central business district, and none on LaSalle Street,” she said.

That part of the initiative should find favor with the thousands of janitors and service workers who clean and maintain the downtown’s office buildings, according to Genie Kastrup, president of Service Employees International Union Local 1, which represents about 50,000 workers.

“This will be the first time our Local 1 members will be able to reside where they clean buildings,” she said.

The Loop’s population stood at more than 42,000 in 2020, up 44% from 10 years earlier, the fastest rate of growth for any Chicago neighborhood, according to the Chicago Loop Alliance, an advocacy group.

Many historic buildings along LaSalle Street could also become attractive apartment buildings, said Department of Planning and Development Commissioner Maurice Cox. But city officials frequently sat down with LaSalle Street property owners during a two-year planning effort and heard a clear message: the expense of transforming old office buildings on LaSalle Street into residences makes it challenging to include affordable units.

The market has shown that the only things that are financially viable are luxury units, Cox said.

Cox said officials can make affordable units feasible on LaSalle Street with an array of financial incentives available to developers who hit the 30% bench mark. The sweeteners include tax credits for the rehabilitation of historic buildings, new property tax relief measures for owners that create affordable housing, low income housing tax credits and funding from the LaSalle Central tax increment financing district, created in 2006 but shelved by then-Mayor Emanuel in 2015.

The planning department will accept until Dec. 23 proposals to convert historic LaSalle Street buildings into market-rate and affordable residences, as well as reactivate their storefronts, Cox added, and in January it will shortlist the best proposals. All the conversations between city planners and property owners makes him confident they’ll soon get a lot of pitches.

“We were told that if the city can put together enough incentives, they were game,” he said.

©2022 Chicago Tribune. Visit at chicagotribune.com. Distributed by Tribune Content Agency, LLC.

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This story was originally published September 26, 2022 8:36 PM.

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