Looking at the heart of its historic financial district, the City of Chicago recognized it is in desperate need of a costly revival that municipal tax dollars can help jump-start.
On Tuesday the Daley administration announced its intention to invest $550 million in property tax revenues over the next two decades to upgrade a large portion of the downtown LaSalle Street district.
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“This is incredibly significant because it will provide the extra financing developers need to rehabilitate older buildings in the area,” said David Dewey, president of Brownstone Realty, which is renovating The Buckingham, a 1929 art deco former office building on East Van Buren Street, into student apartments. “These projects require a lot of investment, and this financing can make the difference in bringing some buildings back to life.”
The area of the 49-block plan encompasses the LaSalle Street financial district, bounded generally by Dearborn Street on the east; Van Buren Street on the south; Canal Street and the Chicago River on the west; and portions of Lake, Randolph and Washington Streets and the Chicago River on the north.
Under the proposal the area would be designated the LaSalle Central Project Redevelopment Project Area, becoming one of the more than 100 tax increment financing (or TIF) districts in the city.
In TIFs, certain property tax revenues are diverted from the Chicago Board of Education, Chicago Park District and other public agencies for investments within the district’s boundaries for 23 years. Improvements are designed to increase property values and, ultimately, yield higher property taxes.
A study commissioned by the city’s Planning Department concluded that the LaSalle Street area is eligible for TIF designation because at least half of the buildings within its boundaries are 35 years old or older. Many are deteriorated, with obsolete mechanical systems, high vacancies and declining values.
“Consolidation within the banking industry has diminished the importance of LaSalle Street as the center of the financial-services sector,” said the report, by S.B. Friedman & Co. “Office buildings near the commuter rail stations of the West Loop have drawn tenants away from the area’s traditional commercial core, and vacancy rates in many of the Loop’s older office buildings have climbed to economically unsustainable levels.
“Wacker Drive, the principal arterial roadway . . . has become seriously deteriorated,” and competition from other communities for corporate headquarters and use of incentives by other municipalities to lure firms threatens to hurt the area as an employment center, according to the report.
Overall, however, some of the money generated by the TIF, combined with funds from property owners, “would go to helping buildings in the area upgrade and become more attractive . . . in terms of new amenities, new facilities that tenants are looking for,” said Connie Buscemi, a Planning Department spokeswoman.
The proposed plan calls for use of $200 million for rehabilitation and improvement of existing buildings and $50 million for property assembly for new developments.
An additional $200 million would be devoted to public infrastructure improvements, including such things as a Monroe Street transitway, transit station upgrades and street, sidewalk, bridge and viaduct improvements.
A public hearing on the proposal will be held next month, Buscemi said.
The City Council must approve the plan.