THE DEMAND FOR CHANGE CHICAGO AT A CROSSROADS · 2 JUNE 8, 2020 • CRAIN’S CHICAGO BUSINESS...

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MCD’S: Franchisees like the smaller menu so much they want to keep it. PAGE 4

WRIGHT: The architect’s only Lake Forest home is on the market. PAGE 31

THE TAKEAWAYLinda Imontiis the first femalemanaging principal of KPMG Chicago.PAGE 6

OPINIONManufacturing will lead the state’s and the nation’s post-pandemicrecovery. PAGE 10

Getting from here to there has neverbeen more complicated. PAGE 13

BY JUDITH CROWN

COVID-19 SCRAMBLES THE

COMMUTE

TRANSPORTATION

Insurance agents on collision courseWhile State Farm and Allstate reap windfalls,their agents cut costs as commissions fall

One of the few industries ben-e� ting from this time of econom-ic hardship is auto insurance, as fewer cars on the road reduces in-surers’ loss payouts. But a key seg-ment of that business—thousands of agents across the country who sta� storefront o� ces and sell and service policies—is su� ering.

� e hardship is taking di� er-ent forms. � e 19,200 agents of

Bloomington-based State Farm, the largest U.S. car insurer, will see their commissions drop sub-stantially once the company’s nationwide rate cut averaging 11 percent takes e� ect.

A State Farm spokeswoman declines to comment.

Agents are paid a percentage of the premiums their custom-ers pay, so State Farm agents will

BY STEVE DANIELSNE

WSC

OM

THE DEMAND FOR CHANGE

The city needs a strategic game plan to address inequities while also regaining its economic footing. Here’s a framework.CHICAGO AT A CROSSROADSFIFTY-TWO YEARS after Martin Luther King Jr. was killed and much of the West Side burned, 52 years after Gov. Otto Kerner headed a national commission that reported America was becoming “two societies, one black, one white—separate and unequal,” what’s really changed?

Oh, African Americans have more power—people like Barack Obama and Lori Lightfoot. A growing number of black profession-als have moved solidly into the middle class. But Laquan McDonald demonstrated that, at its heart, the Chicago Police Department has not changed. Nor have big parts of the West Side, which are as empty

BY GREG HINZ

See AGENTS on Page 30

See HINZ on Page 2

Demonstrators take part in a protest in the Uptown neighborhood on June 2.

CRAIN’S COLUMNISTSDavid Greising and OrpheDivounguy weigh in. PAGE 25

STREET-LEVEL PERSPECTIVECommunity organizers andbusiness owners assess thecauses and aftermath.PAGES 26-27

JOE CAHILLThe e� ect on Lightfoot’seconomic agenda. PAGE 4

LETTER FROM THE PUBLISHERLighting the path forward.PAGE 10

2 JUNE 8, 2020 • CRAIN’S CHICAGO BUSINESS

Chicago-born private-equi-ty firm Thoma Bravo is raising $16.5 billion in its latest and largest fund, just over a year after it raised a $12.6 billion in-vestment fund.

The firm, named for its founding partners Carl Thoma in Chicago and Orlando Bravo in San Francisco, announced the new fundraising target in a filing with the Securities & Ex-change Commission on May 22.

Thoma Bravo has become a buyout juggernaut in the soft-ware arena, delivering returns that have fueled its ongoing big-dollar fundraising. This is the 14th investment fund the firm has raised, tapping insti-tutional investors for money to invest in software company acquisitions that Thoma Bravo aims to make more profitable.

Bravo has previously attribut-ed its success to its partners’ “deep sector expertise” in the software industry and their ability to work with the exist-ing management of companies they purchase. As software company targets have become bigger, prices and competition to buy them have also grown, he said last year. The firm’s cen-ter of gravity has shifted west in recent years as Bravo has taken on more leadership responsi-bility.

Private-equity firms typically

buy companies and then add to them, usually via addition-al acquisitions. They also aim

to streamline the business by cutting costs and jobs along the way. Ultimately, they seek to boost profits so they can deliver returns to investors.

Thoma Bravo has continued to do deals through the coro-navirus pandemic, despite a

general slowdown in merg-er and acquisition activity. Earlier this week it closed on the sale of Detroit-based Compuware mainframe software company to BMC, without disclosing a price.

In January, Bloomberg reported that sale could be in the offing and valued it at about $2 billion, including debt, citing people fa-miliar with the matter.

CORRECTION� The name of the Association for Digital Asset Markets was incorrect in a June 1 story on cryptocurrency markets.

and desolate as in 1968.Nothing happened, or at least not enough happened. �at is a short-

coming we all are dealing with today. And if the tragedy surrounding the utterly inhumane killing of George Floyd doesn’t spark change, we’ll live through Groundhog Day again. And again. And again.

We need to take advantage of this moment, use the energy it’s gener-ated. But how, and for what?

�e bigger part of what needs to be done now belongs not to protest-ers but the political class, the governors and mayors and legislators and congressmen who are supposed to run this country. �ey need to act. Now.

After talking to a cross section of people—activists and politicians alike—the needed actions seem to fall into two categories: fundamen-tal, lasting police and criminal justice reform, and economic develop-ment that gives hope even to people from the least-advantaged neigh-borhood.

What sorts of reforms? Illinois Attorney General Kwame Raoul says it’s time to take a serious

look at statewide police licensing. His argument is that, just like a bad lawyer can have his license lifted by the Illinois Attorney Registration & Disciplinary Commission, a bad cop ought to be sidelined without go-ing through less-than-impartial local agencies. He also suggests enforc-ing use of police body and dash cams, and allowing complaints to be �led without signed a�davits that subject the complainer to retaliation.

State Rep. Kam Buckner, D-Chicago, proposes lowering the standard for excessive force from unreasonable to unnecessary. He also wants a special prosecutor, not the local state’s attorney, to take a look at any case involving homicide by an o�cer.

Lots of other lawmakers have their own ideas, and they shouldn’t wait until Speaker Mike Madigan feels like returning to Spring�eld. Buck-ner and other black lawmakers are absolutely right to call for a special emergency session, and if Madigan doesn’t comply, the caucus ought to �nd someone else to elect speaker in January.

Lightfoot has some ideas and was right to declare that “reform has been too slow.” She vowed in the wake of the demonstra-tions to fast-track action on better training, ensure new police meet local residents, particularly young ones, and prioritize help for o�cers who

are burning out in what can be an excruciatingly tough job. Of course, it’s now been six months since the independent federal monitor over-seeing the city’s police consent decree reported the city had missed 37 of 50 agreed-on deadlines. Good to get religion later than never, I guess.

One bad, bad idea: “defunding” police, a favorite of the social-ism-for-all crowd. No. More money is needed for violence prevention, job training, community outreach and other proven interventions. But anyone who says Chicago police need to be defunded has never owned a store and doesn’t know someone who has, nor have they walked down the street alone late at night. Any alderman who pushes such an idea ought to �rst donate half their salary to the nonviolence cause.

�e other priority—providing economic opportunity that inspires—will be at least as challenging to achieve.

Short term, all of the businesses that have been whacked �rst by COVID and then by looters need help. �e city has a $10 million fund. �e state at that special legislative session needs to come up with much more. Entrepreneur and former mayoral hopeful Ja’Mal Green has raised money via 9,000 donors, but the demand for support is huge, with just 49 businesses so far reporting $2.9 million in damage, he maintains.

Longer term, much of the solution remains as it always has with ed-ucation, and particularly Chicago Public Schools. �e system has im-proved graduation and test results, but it’s also pushed out lots of par-ticularly di�cult young people into alternative education programs. Are those steps really working?

Lightfoot’s Invest South/West program to incentivize investment in neglected West and South Side neighborhoods is a good thing. Deputy Mayor Samir Mayekar says the city is more committed than ever to the program and, more important, so are some private companies. �at’s great. But what’s more important than locating jobs in neighborhoods is attracting jobs period and then getting quali�ed people to them. Down-town could use a little love right now.

Much more on all of this later. Let’s �x our criminal justice system. And then provide the economic opportunity to minimize how often that system has to be employed. Start there. But do it.

WE NEED TO TAKE ADVANTAGE OF THIS MOMENT, USE THE ENERGY IT’S GENERATED.

THOMA BRAVO HAS BECOME A BUYOUT JUGGERNAUT IN THE SOFTWARE ARENA.

Chicago at a crossroads

ON POLITICSGREG HINZ

Banking products provided by Wintrust Financial Corp. banks.

We’re still with you

And, we will be in the weeks and months to come. We’re all experiencing these uncertain times together. As Chicago’s Bank®, we’re prepared to continue supporting local companies now and on the other side of this. Know that we’re standing by you in solidarity, with strength and pride for our city. We’re Chicago: we’ll get through this together. wintrust.com

CHICAGO’S BANK FOR BUSINESS®

Thoma Bravo raising its biggest buyout fund yetThe Chicago private-equity �rm’s new $16.5 billion goal comes just over a year after it raised a $12.6 billion investment fund

BY LYNNE MAREK

Carl Thoma, one of the founding partners of Thoma Bravo

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HINZ from Page 1

CRAIN’S CHICAGO BUSINESS • JUNE 8, 2020 3

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A SIGN OF ‘BETTERTHINGS’ FOR GARY

IN DOWNTOWN GARY, there are long-standing scars, including blocks that have stood empty since a 1997 arson and the empty lots where derelict buildings used to stand. But now, two “high-quality developments on Broadway will provide the audacity to hope for better things for the city of Gary,” says Eric Reaves, Gary’s director of economic development and com-munity investment.

One is a new city hall and city services building, slated for the former site of a derelict hotel build-ing. Reaves says an announcement will come later this summer but that the aim is for that structure to achieve the highest rating of LEED, the U.S. Green Building Council’s set of principles for sustainable building.

� e other project, scheduled to

will come later this summer but that the aim is for that structure to

When shopping mall owner Steven Levin ponders the state of his industry, he often thinks about a famous quote from Moth-er Teresa: “I know God won’t give me anything I can’t handle. I just wish he didn’t trust me so much.”

With the coronavirus pandem-ic ravaging the retail business, many mall owners are handling a lot these days. Department stores, the engines that propelled malls for decades, were slowly slipping into irrelevancy before the health crisis, as shopping habits changed and e-commerce ate into their business.

Now, some chains are trying to escape a death spiral. Many malls will need some bold thinking—and lots of money—to avoid their

own demise. “It’s not for the faint of heart,”

says Levin, founder and CEO of Dallas-based Centennial Real Es-tate, which owns the Hawthorn Mall in Vernon Hills and the Fox Valley Mall in Aurora.

Mall owners across the country are bracing for an unprecedented wave of store closings and prepar-ing themselves for the post-de-partment-store era. Green Street Advisors, a California-based re-search � rm, forecasts that more than half of the roughly 1,800 U.S. mall-based department stores will vanish by the end of 2021.

Lord & Taylor is liquidating, closing its two stores here, at Northbrook Court and Wood� eld Mall in Schaumburg. Nieman Marcus, which has two stores in Chicago-area malls, and J.C.

Penney, which has 11, are trying to stay alive by restructuring in bankruptcy court. J.C. Penney is shrinking, initially closing 154 stores nationwide, including one at River Oaks Center in Calumet City, with another 88 to shut down later. But many in the in-dustry expect the chain to go out of business.

“J.C. Penney is going to be very di� cult to turn around,” says John Melaniphy, president of

A wave of department store closings will force many mall owners to think creatively

BY ALBY GALLUN

Chicago private-equity � rms that handle distressed situations are preparing to buy up ailing businesses, or parts of them, acting as the sharks and bottom feeders that clean up in crises.

With the coronavirus pan-demic and a plunge in oil pric-es having upended the econo-my and businesses along with it, private-equity � rms adept in restructuring operations, such as Chicago-based Wyn-nchurch Capital Partners, will have targets nationwide, and Midwest businesses, which tend to be middle-market play-ers, may be more vulnerable to faltering � nancially than their larger rivals.

� e private-equity � rms dig-ging into the market to � nd val-ue is the � rst step to restoring it. With more companies on the verge of defaults than in recent years, and more expect-ed, the environment is ripe for the transfer of assets from weak owners to stronger ones across industries.

“� ere is going to be a lot of opportunity for investors that can stomach the rough waters,” says Martin Ruhaak, a Ropes & Gray partner in Chicago, who is part of its pri-vate-equity practice.

With a major slowdown in typical mergers-and-acquisi-tions activity, private-equity

Here come thebottom feedersCompanies stressed by the fallout of COVID arethe � rst targets for investments and acquisitions

BY LYNNE MAREK

COVID is only addingto retail’s ailments

See BOTTOM FEEDERS on Page 29

Fox Valley Mall

JOHN

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See MALLS on Page 28

Two ‘high-quality,’ energy-e� cient developments, one by a Chicago architecture � rm, are coming to a downtown ravaged by arson, neglect BY DENNIS RODKIN

See GARY on Page 29

Matthew McGrane, the Farr Associates architect leading the project.


JOE CAHILL ON BUSINESS

McDonald’s franchisees want to keep a limited menu even af-ter the coronavirus pandemic is over.

Citing improved speed and bolstered profitability, fran-chisees want to trim what they describe as a bloated menu that numbers more than 100 individual items. Options like salads, chicken fingers, grilled chicken sandwiches and some breakfast items were identi-fied as targeted cuts by multi-ple franchisees who spoke to Crain’s.

Those items have limit-ed market share, increase drive-thru times and are dif-ficult to prepare with limited staffs practicing social distanc-ing protocols.

“If we are able to decrease drive-thru times, put more cars through the drive-thru, have less food waste, and our people are happier because there are less items and ingredients to worry about it, it’s a win-win-win situation,” one franchisee source says. They were not authorized to speak public-ly about the chain’s moves, so they did not want to be identi-fied. “Everything else is better (with a limited menu).”

The Chicago-based fast-

food giant introduced the lim-ited menu in late March and planned to run it for 90 days as several states, including Illi-nois, banned in-person dining. The initial goal was to speed up service times because Mc-Donald’s generates around 70 percent of its revenue from drive-thru sales.

But with the limited menu set to expire at the end of June, franchisees are making a con-certed effort to gain greater control on what items return.

In a public letter sent June 1, the National Owners Association—a group of franchisees that represents around 1,300 of McDonald’s 1,600 total operators—said “keeping our menu’s (sic) simplified is your NOA’s number one priority.” McDonald’s did not respond to a request for comment.

STAFFINGMcDonald’s franchisees are

also concerned with main-taining adequate staffing lev-els after the company issued a 59-page guide detailing how to properly reopen dining rooms. One Georgia-based franchi-see source mentioned that a limited menu allows fewer staff members to prepare the food, letting managers reassign workers to clean bathrooms, wipe tables and handle other safety protocols. By increasing the menu once again, the fran-chisee says, it would require

more staffing and potentially lead to more workers getting sick.

But a permanent reduction in the number of menu items could impact profitability after McDonald’s same-store sales declined 3.4 percent during the first quarter. While individual items like chicken tenders and salads might represent only around 1 to 2 percent of total restaurant sales, McDonald’s

risks alienating customers if they cut too many items, ac-cording to Jim Lewis, a recently retired New York McDonald’s franchisee.

Reduced sales already ex-posed lingering tensions be-tween franchisees and man-agement with store traffic figures dropping in recent years despite owners paying for costly restaurant renovations. However, franchisees report that the limited menu is per-forming well and they might not have another opportunity to make wholesale changes to how the restaurants operate.

“It’s a once in a 10-year oppor-tunity to reset the menu,” says Lewis. “Long before COVID, there’s been a strong feeling that we have way too much on the menu.”

BLOO

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For those of us who have been around long enough, televised images of burning stores and looted shopping strips evoke bad memories.

A half-century ago, large swaths of the West Side caught �re in riots following the assassi-nation of Martin Luther King Jr. Commercial corridors reduced to ash and rubble left neighbor-hoods without grocery stores and other businesses that provided essential goods and services.

We all know what happened next. Nothing. Businesses burned out or closed down never returned. Jobs disappeared for-ever. Empty lots still stand where vital community businesses once thrived.

�e question now is whether the looting and vandalism of recent days will have a similar impact on nascent progress toward ending �ve decades of disinvestment in places like Lawndale and Engle-wood. Mayor Lori Lightfoot has made a top priority of drawing pri-vate investment to neighborhoods left out of the urban revival that has lifted areas closer to the Loop over the past 20 years.

Never an easy sell, that goal just got a lot tougher. �ough the scale of destruction may not be as great this time around—long stretches of Madison Street and Roos-evelt Road burned in 1968—the psychological impact on investors and business owners could be as signi�cant. In a few short nights, scenes of mayhem have reawak-ened perceptions of some parts of town as no-go zones for business.

�at reputation kept chunks of the South and West sides o� the economic map for generations, robbing residents of basic services and opportunity. Starved of capi-tal, these neighborhoods fell into a vicious cycle of unemployment, poverty and crime, making it even harder to attract investment.

E�orts to open investors’ eyes to untapped demand and un-derutilized assets in these areas faced long odds. Still, local pol-iticians, community groups and some business leaders worked for years to bring businesses back.

Recent years brought some hopeful signs, as retailers began to rediscover the potential of markets they’d long ignored. Walmart, Walgreens and Target opened stores. Distribution cen-ters and even a new manufactur-ing plant popped up, too.

�ese projects barely made a dent in the economic woes of some neighborhoods. But they represented progress and con-�rmed that businesses could be persuaded to take a risk on areas abandoned since the 1970s.

Now many of those stores are shut down, their shelves stripped

bare by looters. Local leaders wonder how many will reopen. Far more uncertain are the chances of attracting new investment to looting-scarred corridors.

“It makes it doubly hard,” says David Doig of Chicago Neighbor-hood Initiatives, a development �rm that helped bring a Mariano’s grocery store to Bronzeville, a Whole Foods Market to Engle-wood and a Method Soap factory to Pullman, among other projects.

“We’ve worked a generation to change perceptions, to get retailers to see that there’s a market,” Doig says. Now he worries that “it’s going to take years to get that con-�dence back.”

Deputy Mayor Samir Mayekar, who oversees Lightfoot’s economic development agenda, acknowl-edges “the events of the last few days represent a setback.” But he insists the unrest won’t derail plans to revitalize neglected neigh-borhoods. Local shop owners and neighborhood business groups are showing a “sense of resolve to reopen,” he says.

Nor does Mayekar expect big retail chains to �ee. “We have been in touch with the larger retailers—Walmart, Walgreens, CVS, Target, and these companies are com-mitted to rebuilding.” While he concedes that the chains are still in the “assessment phase,” he says none have revealed plans to close any outlets permanently.

As for new investment, Mayekar says he’ll be reaching out to major players to address any concerns and emphasize City Hall’s con-tinuing commitment to a redevel-opment program that will enable them to make money investing outside Chicago’s central area.

“�is is not going to radically change what investors see in the South and West sides, as long as we do our job,” he says.

�eir job is to persuade inves-tors that the outbreak of violence doesn’t change the long-term case for betting on undercapital-ized neighborhoods. Lightfoot and Mayekar must get them to look past the broken glass and scorched facades and see con-sumers with money to spend, workers with talent and drive, and acres of cheap land with easy access to major highways and rail lines. Investors will have some tough questions, including why the city didn’t act more quickly and forcefully to protect business-es from looters.

�ere’s a lot riding on Lightfoot’s answers. Events of the past week highlight the impact of allowing entire sections of the city to lie fallow for generations. A lack of investment helped create the con-ditions that sparked the protests and ensuing violence. A sustained commitment of capital is essential to breaking the cycle.

Mayhem threatens mayor’s economic agenda

THE INNOVATORS

“If we are able to decrease drive-thru times, put more cars through the drive-thru, have less food waste, and our people are happier because there are less items and ingredients to worry about it, it’s a win-win-win situation,” one franchisee source says.

McDonald’s franchisees seek permanent menu cuts

JOE CAHILL ON BUSINESS

BY DALTON BARKER

Burger giant has ‘a once in a 10-year opportunity to reset the menu’

A PERMANENT REDUCTION IN THE NUMBER OF MENU ITEMS COULD IMPACT PROFITABILITY.

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THE TAKEAWAY

Advice for women? Don’t worry about other people’s per-ceptions of you. If you are people-ori-ented and caring, be that. If you’re fearless, be that.

First job? I was a maid at the Dream Inn, a famous hotel on the beach in Santa Cruz.

First business? While I was a full-time student at San Francisco State, I put myself through college working full time as a book-keeper for small businesses. I sold the business three years after I graduated.

Who are you? Bold and direct, but that doesn’t exclude caring. I want to empower people to be the best they can be.

Where did you grow up? On a ranch in the Santa Cruz mountains, riding horses, throwing hay, painting fences. It shaped my work ethic and grounded me.

Who inspired the younger you? My dad was an entrepreneur. My mother was a hardworking single parent who returned to work at 40 and raised three kids who believed we didn’t have any boundaries around our dreams. I went to a small, rural grade school that didn’t have girls baseball or basketball teams, so in third grade I started county teams. That is the empowerment I got from my parents.

Isn’t accounting boring? I love it. My passion is enabling business through technology. New tech is shifting how we do business.

Imonti, 56, is the �rst woman to be named managing principal of KPMG Chicago, the global consulting �rm’s second-largest U.S. o�ce, with more than 2,600 employees. She had led the advisory practice since 2012. Imonti and her husband live in Glenview and have a daughter, 20.

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Linda Imonti

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Your favorite app? American sign language—@theaslapp. Both my grandparents became deaf at a young age, so I grew up around their community and

learned some signing.

>

Are you �uent? My skills have declined, but I brush up with that app sometimes when I’m on a plane. Eventually I want to volunteer with the deaf.

How do you blow o� steam? Pilates, kickboxing, skiing and dirt biking. My family has trailered our bikes on camping trips to Colorado and the Midwest.

On what do you splurge? Designer clothes and shoes, but only at sale prices. My favorite de-signer is Akris Punto. My favorite shoes are Jimmy Choo. I wear heels all the time, and I can wear those all day or all night.

By Laura Bianchi

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On June 29, Crain’s will publish a special feature honoring Notable Healthcare Heroes in the Chicago area. These are the dedicated workers on the front lines of the COVID crisis who are making an impact and saving lives. They are the doctors and nurses at hospital ICUs and emergency rooms caring for COVID patients and their families. They are business people helping source personal protective equipment. And they are outreach workers helping the homeless get tested and supporting vulnerable communities. Culled from the nominations received, these heroes are sharing their moving stories of how they are helping meet the crisis while putting their own safety on the line. Please join us in celebrating and supporting the health care community with a thank you ad in Crain’s. As a way of giving back, Crain’s will donate 5% of all advertising revenue to the Chicago Community COVID-19 Response Fund.

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Vandalism brings added pain for bizBusiness owners will face higher costs for property insurance

BY STEVE DANIELS

Fortunately for the business-es hit by the vandalism and theft during widespread looting, prop-erty insurance policies in most cases will cover inventory loss, repair and other costs tied to the civil disorder.

Unfortunately, just like home-owners and businesses located in parts of the country prone to nat-ural disasters like wild�res and hurricanes, many of those busi-ness owners will pay substantially more in the future for the same protections following this expe-rience.

�e cost of property insurance for businesses already was rising before the widespread urban un-rest and the COVID-19 pandem-ic. Premiums are increasing 10 to 30 percent on average absent those factors, according to Rick Miller, Boston-based U.S. com-mercial property practice leader for brokerage Aon.

For many businesses that re-port losses from the rioting, they will see even greater increases when their policies expire and need to be renewed, he says.

“If a particular account has a severe loss, that could certainly color the renewal,” Miller says.

Additionally, even for those businesses that escape looting

and damage, just the fact that they’re located in parts of a city now shown to be prone to this level of widespread theft and van-dalism could lead to increases beyond others in the market, he says.

Many Chicago businesses, of course, are struggling to cope with deep revenue declines tied to the pandemic. Unlike many other costs that can be reduced or temporarily eliminated, business insurance is unavoidable. So, as those costs rise, it will just put even more pressure on business-es to cut elsewhere.

Overall, riot-induced losses likely won’t be a major issue for the insurance industry nationally.

“Although we haven’t seen any insured loss estimates for riot-re-lated losses, our best guess—based on the relatively small areas a�ected so far—is that losses in-curred to date . . . will be relatively modest,” wrote Meyer Shields, an industry analyst for Keefe Bruyette & Woods, in a note last week.

But apart from the likely local-ized e�ect on businesses in cities rocked by looting, the industry is

raising prices to absorb losses tied to increasingly severe weather events like tornadoes and intense thunderstorms. Rates have been rising modestly over the past 10 quarters—a longer-than-normal period of price increases—but the upward pressure intensi�ed beginning in the middle of last year, Aon’s Miller says.

“IF A PARTICULAR ACCOUNT HAS A SEVERE LOSS, THAT COULD CERTAINLY COLOR THE RENEWAL.”Rick Miller, Aon


Amid one of the worst hotel markets on record, the property’s owner is aiming to cash out

�e owner of a Hyatt hotel near O’Hare is hunting for a buyer, even as fallout from COVID-19 crushes the hospitality sector.

In the face of one of the worst hotel markets on record, Scha-umburg-based Prominence Hos-pitality has hired a broker to sell the 206-room Hyatt Rosemont at 6350 N. River Road.

Rana Rehan Zaid, principal of Prominence, says there is no asking price for the eight-story building, which his �rm bought in March 2017 for roughly $11 million, according to Cook Coun-ty property records.

It’s a tricky time to be cashing out on any commercial property as many buyers and sellers wait for the dust to settle from the coronavirus crisis before they �g-ure out how to value real estate moving forward. �at’s especially true for hotels, which have taken the hardest immediate hit from the pandemic bringing most trav-el to a halt.

But Zaid is betting that investor interest in the hotel market hasn’t waned, especially in the suburbs near one of the world’s busiest air-ports, which is undergoing an $8.5

BY DANNY ECKER

Hyatt Rosemont is looking for a buyer

billion expansion. �ere is also a deep pool of real estate �rms with capital to deploy that share his vi-sion for hotels’ quick revival once the outbreak subsides, he says.

“It’s a one-time shock,” says Zaid, pointing to less restrictive markets in the southern United States where hotel occupancy has improved in recent weeks. “I think there’s signi�cant pent-up demand that’s sitting in the back-

ground just waiting for the policy side to change.”

Zaid says the 20-year-old Hy-att Rosemont performed well for Prominence under its ownership tenure, but the full-service prop-erty doesn’t �t with the �rm’s strategy of owning limited-service hotels such as the Holiday Inn Ex-press & Suites in Des Plaines or the Hampton Inn & Suites in Burr Ridge.

�e hotel has won some recent business from other properties nearby suspending operations, Zaid says, estimating its occupan-cy has �uctuated between 30 and 50 percent in recent weeks. �at’s a far cry from the roughly 70 per-cent level it ran at pre-COVID, but better than the 21 percent average for hotels in the O’Hare market during April, according to STR, a suburban Nashville, Tenn.-based

hotel research �rm.Zaid also sees a “blessing in

disguise” from the crisis in that economic fallout will prevent any new competition from popping up for a while.

“We were at our highest per-formance numbers (pre-COVID), so my take is that once the pent-up demand comes back and this short-term dislocation goes away . . . the existing supply is going to take advantage of it.”

Hotels in the area around the airport staged a slow recovery from the �nancial crisis, though the growth recently hit a plateau. Revenue per available room, a key performance metric that ac-counts for both room rates and occupancy, averaged $93 in 2019, according to STR. �at was up from about $86 �ve years before, but down slightly from 2018 �g-ures.

Against that backdrop, at least four other hotels nearby have traded in the past 13 months, ac-cording to data from Real Capital Analytics. �ose include the Chi-cago Marriott Suites O’Hare and the Best Western O’Hare.

Prominence �nanced its 2017 Hyatt Rosemont purchase with a $6.8 million loan, property re-cords show. �e �rm re�nanced the hotel in 2018 with a $7.5 mil-lion mortgage.

Scott Kaniewski in the Chica-go o�ce of real estate brokerage Hospitality Real Estate Counsel-ors is marketing the Hyatt Rose-mont on behalf of the owner.

A court-appointed receiver is pushing ahead with the sale of nearly 400 South Side apartments tied to an alleged Ponzi scheme, but he’s facing resistance from a group of lenders who contend he’s dumping some of them at “�re sale” prices.

�e lenders want a judge to halt the marketing of 12 properties for sale, citing the di�culty of selling them during “a global pan-demic and the worst eco-nomic condi-tions since the Second World War,” accord-ing to a recent court �ling. �e apartments are part of a larger Chicago portfolio amassed by EquityBuild, a Flori-da-based real estate �rm accused by the Securities & Exchange Commission in 2018 of running a Ponzi scheme.

A court-appointed receiver, Kev-

BY ALBY GALLUN

A court-appointed receiver wants to sell buildings acquired through an alleged Ponzi scheme

Lenders fight South Side apartment sale amid COVID

in Du�, is overseeing the staggered sale of the portfolio to recover as much money as possible for inves-tors who the SEC says were bilked by EquityBuild. EquityBuild and its leaders, Jerome Cohen and son Shaun Cohen, raised at least $135 million from more than 900 inves-tors, using the money to acquire 79 apartment buildings and 34 sin-gle-family homes here, according to a civil fraud lawsuit �led by the SEC in 2018.

E�orts to reach Du� were un-successful.

�e receiver sold o� a batch of Chicago apartment buildings last year, but he has 93 more to go, ac-cording to a report �led recently in U.S. District Court in Chicago. �e coronavirus pandemic and

recession will make that job a lot harder, potentially depressing real estate values and reducing the amount of money left over for EquityBuild’s investors.

Du� has asked Judge John Zee to approve the sale of 11 proper-ties totaling 161 apartments, ac-cording to a recent court �ling. �ree investor groups have agreed to buy the properties in separate transactions for a combined $6.9 million, according to the �ling. �at’s about 20 percent less than what EquityBuild paid for them from 2014 to 2017, Cook County property records show.

A�liates of Chicago investment �rm Longwood Development are acquiring seven of the proper-ties, including a 29-unit building at 5450-5452 S. Indiana Ave. in Washington Park and a 16-unit building at 8209 S. Ellis Ave. in Chatham, a court �ling shows.

“While some real estate �rms have pulled back due to COVID-19’s impact on the economy, we have become even more bullish after seeing the stability of our

portfolio and are actively looking for additional multifamily invest-ment opportunities throughout the South Side of Chicago,” Kevin Nugent, principal of Longwood, says in a statement. Longwood declines to discuss speci�c acqui-sitions.

But a group of EquityBuild’s lenders, including federally con-trolled Fannie Mae and Freddie Mac, �led a motion last month asking Judge Zee to put the sale of 12 properties on hold. �e lenders cite the di�culty of showing the buildings to prospective buyers while under government restric-tions to limit the spread of the coronavirus. �ey want to hold o� on the sales until more restric-tions are lifted and the real estate

market stabilizes.�e broker hired to sell the

buildings, SVN Chicago Commer-cial, began marketing them to in-vestors in early May. Investors had until June 3 to submit their o�ers. Totaling 234 units, the properties include a 39-unit building at 7201 S. Constance Ave. in South Shore and a 21-unit building at 6250 S. Mozart St. in Chicago Lawn.

“Despite these grim economic and social conditions, the Receiv-er has plowed ahead marketing commercial real estate properties for sale in a �re sale situation,” the motion says. “Perhaps the most egregious is that the marketing period . . . runs almost exclusively during the current Illinois shelter in place period.”

This 29-unit apartment building at 5450-52 S. Indiana Ave. is being sold for $1.8 million.

THE LENDERS CITE THE DIFFICULTY OF SHOWING THE BUILDINGS TO PROSPECTIVE BUYERS WHILE UNDER RESTRICTIONS TO LIMIT THE SPREAD OF THE CORONAVIRUS.

The Hyatt Rosemont at 6350 N. River Road.


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Manufacturing will help lead the pandemic comebackManufacturers have always

played an integral part in Amer-ican comeback stories. Whether it is bolstering production during wartime to support our country’s e�orts or revolutionizing factory �oors following economic down-turns to bring new and innovative products to market, manufactur-ers have served as a guiding force in our nation’s resurgent mo-ments. America’s comeback from the coronavirus pandemic will be no di�erent, with the men and women of manufacturing lead-ing the way forward safely and responsibly.

While many manufacturers were desig-nated as essential businesses and allowed to operate during Gov. J.B. Pritzker’s stay-home orders—making lifesaving medical

products, ensuring grocery stores are stocked and equipping �rst responders—some were forced to cease operations.

Now, as Illinois plans to grad-ually reopen the economy, with many regions entering Phase 3, manufacturers large and small are ready to unleash their eco-nomic might to help our state and nation recover.

Illinois’ manufacturers are �rst and foremost concerned about the well-being of employees, cus-tomers and their communities. Building and expanding upon

guidelines from scientists, best-in-class companies and public health experts as well as state and federal regulatory agen-cies, the Illinois Manufacturers’ Associ-ation developed a Safety & Reopening

Guide for manufacturers across the state to reference as they prepare to resume production.

�is guide provides manufacturers of all sizes with best practices on how to protect employees, customers and suppliers. Rec-ommendations include providing employ-ees with appropriate personal protective equipment and training them on how to properly use masks, face shields and other items; reducing potential contact among individuals by changing shift patterns or constructing temporary barriers between stations and sanitizing surfaces more fre-quently, and providing touch-free equip-ment such as time clocks and trash cans.

Screenings are an important tool for employers. Employees can self-screen at home before heading to the workplace or be checked at the start of a shift. Creating a master schedule would allow an employ-

er to track personal contacts in the event that an employee tests positive or exhibits symptoms. More than 92 percent of manu-facturing workers received bene�ts before the pandemic, and manufacturers are of-fering a variety of leave options and sup-portive policies to allow workers to stay home if they are sick or to provide care for a family member who becomes ill.

�e coronavirus pandemic has been one of the greatest societal and econom-ic upheavals in modern history. It will no doubt have lasting e�ects on how we live and work. But manufacturers have proven time and again that they can adapt to and overcome society’s greatest challenges us-ing American ingenuity and innovation.

�e women and men of manufacturing stand at the ready to chart a safe and pros-perous path forward and help deliver yet another American comeback.

Mark Denzler is president and CEO of the Illinois Manufacturers’ Association.

May we all come together�e past week has been one of the most

emotional weeks in recent memory. Rac-ism has been a part of our country since its founding, and its ugliness has never been completely addressed. �ere have been times when racism felt comfortable out in the open but ran away when forcibly chal-lenged. Other times it lurked in the shadows or, worse, hid in plain sight.

�e COVID-19 pandemic forced all of us to assess and evaluate what is important. It illuminated massive health disparities and education gaps, both a result of race and class inequality. But the one thing COVID couldn’t do is fully expose the depth of racial injustice in America. COVID was the acceler-ant, but the murder of George Floyd was the

Lighting the path forwardI t was easy for many to write o� big cities

in recent days.It’s happened before.Even as I write this, the Loop is �lled

with boarded-up windows in the wake of violence that �ared outside of the mostly peaceful protests following the horri�c and senseless death of George Floyd at the hands of a police o�cer.

�e Loop will certainly get cleaned up. Windows will be repaired. Businesses will reopen.

What is not clear is what happens miles south and west of downtown.

Neighborhoods that struggled for years to end food and pharmacy deserts are once again faced with anguish and anxiety about whether the businesses they worked hard to attract and even build will indeed come back.

Everything from wealth gaps to business disinvestment and hopelessness only ex-pands when a neighborhood is wrecked by the kind of violence we saw recently.

And so, as politicians, business exec-utives, philanthropic organizations and church leaders in the coming weeks talk about how to move forward, we need to stop for a minute and consider this: We

have at our hands a moment to start re-ally solving the underlying problems of systemic racism and separation in all its forms that have held back the city for generations.

�is is not just about businesses writing checks, although some of that will be need-ed, especially now.� It’s about truly building workforces that are re�ective of the city and region.� In these early days, there will be a need to get resources to the places where peo-ple need them—so people have access to food and medication without having to travel miles to other neighborhoods to get essentials.� �ere needs to be real police reform, where the police brass, neighborhood leaders, clergy, business leaders and civic leaders come together to understand what that means on the ground.

Pastor Chris Harris of Bright Star Church in the city’s Bronzeville neighborhood, who helped lead an interfaith march of thousands of protesters, says even more is needed.

“�is is not the time for us to be politically correct or not to o�end based on the facts,” he told me. “�is is not the time to hire one or two black people and make them the diversi-

ty face or what I call the diversity diversion.”Harris and others are calling on the city’s

business community to �nally “join the charge to really make systemic change.”

“It shouldn’t be just about writing a check. �e business community should not just want to date the black community, it should want to marry the black community.”

Harris said more needs to be done by com-panies to open up boardrooms and top-level leadership positions to set the tone of change in corporate Chicago. Most of all, these com-panies and their leaders need to “open their hearts.”

Businesses need to adopt schools and make sure the resources are available to match what’s available in better-resourced neighborhoods.

�ey also need to invest in and adopt com-munity-based organizations that can help be the catalyst for real change, Harris recom-mends.

As the leading business publication in one of the greatest business centers in the world, Crain’s also has an obligation to do more. Over the past year, we have gone deep on issues that a�ect this city at stunning levels. Gun violence, education funding, the racial divide and other major issues have been ad-

dressed under our Crain’s Forum project. I’m pleased to announce we will continue the project for another year.

What we have found in our reporting is that underlying a number if not all of the is-sues facing Chicago are widening racial and economic disparities across the region—in-equities that undermine greater growth as a region.

�e Forum project is not just about explor-ing these issues in depth. We seek potential solutions and invite a wide range of voices to join ours in attempting to �nd answers.

Beyond the Forum, Crain’s has sought to cover our diverse region and people of col-or through our news, opinion and recog-nition programs. We know we need to do more. And we continue to ask our readers to reach out to us with stories and opinions to help us round out our coverage that re-�ects inclusiveness.

We have shown before that when we come together, we can solve big issues here in Chi-cago. Consider this moment the next chal-lenge. �en no one will be able to write o� Chicago.

Jim Kirk is publisher and executive editor of Crain’s Chicago Business.


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Reporters Dalton Barker Danny Ecker Stephanie Goldberg A.D. Quig Dennis Rodkin Steven R. Strahler

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Researcher Kasey Hariman

* * * Director of digital strategy Frank Sennett

Director of custom media Sarah Chow Associate director, Jaimee Holway events and marketing

* * *Production manager David Adair

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Crain Communications Inc.

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LETTER TO THE EDITOR

YOUR VIEW

Manufacturing will help lead the pandemic comebacker to track personal contacts in the event that an employee tests positive or exhibits symptoms. More than 92 percent of manu-facturing workers received bene�ts before the pandemic, and manufacturers are of-fering a variety of leave options and sup-portive policies to allow workers to stay home if they are sick or to provide care for a family member who becomes ill.

�e coronavirus pandemic has been one of the greatest societal and econom-ic upheavals in modern history. It will no doubt have lasting e�ects on how we live and work. But manufacturers have proven time and again that they can adapt to and overcome society’s greatest challenges us-ing American ingenuity and innovation.

�e women and men of manufacturing stand at the ready to chart a safe and pros-perous path forward and help deliver yet another American comeback.

May we all come together�e past week has been one of the most

emotional weeks in recent memory. Rac-ism has been a part of our country since its founding, and its ugliness has never been completely addressed. �ere have been times when racism felt comfortable out in the open but ran away when forcibly chal-lenged. Other times it lurked in the shadows or, worse, hid in plain sight.

�e COVID-19 pandemic forced all of us to assess and evaluate what is important. It illuminated massive health disparities and education gaps, both a result of race and class inequality. But the one thing COVID couldn’t do is fully expose the depth of racial injustice in America. COVID was the acceler-ant, but the murder of George Floyd was the

wick that lit the powder keg of racial frustra-tion in our country.

His treatment at the hand of law enforce-ment is the latest in a long line that can be traced back to the brutal beating of Rodney King in 1992. However, frustration in the black community long preceded that, and it is the decades upon decades of injustice whose e�ects have been passed down from generation to generation that drive the pro-tests and civil unrest we are witnessing to-day.

Many will say protesting and civil dis-obedience are permissible, but looting and criminal activity mar the purity of Mr. Floyd’s martyrdom. As one who was personally af-fected by the looters and vandals in Chicago, the aforementioned people are missing the point.

Protests, civil disobedience, looting and crimes of opportunity �nd their roots in the aforementioned decades of inequity. If schools were equally as strong, homeown-ership equally accessible and access to cap-

ital equally available generations ago, we wouldn’t be at this moment today. We lose the purity of Mr. Floyd’s death when we focus our attention on how frustration is commu-nicated and not eliminating its cause.

LINK Unlimited Scholars was founded during a similar period in the 1960s and grew in response to the death of Dr. King and sub-sequent unrest. We have been and will con-tinue to serve as a gathering point for all peo-ple of goodwill who believe the color of one’s skin should not place limits on their oppor-tunity. We remain steadfast, eradicating bar-riers to economic opportunity through edu-cation for our students.

May we all come truly together as one.

JONATHAN T. SWAINPresident and CEO, LINK Unlimited Scholars

A peaceful protest on Chicago’s North Side

ALAM

Y

Lighting the path forwarddressed under our Crain’s Forum project. I’m pleased to announce we will continue the project for another year.

What we have found in our reporting is that underlying a number if not all of the is-sues facing Chicago are widening racial and economic disparities across the region—in-equities that undermine greater growth as a region.

�e Forum project is not just about explor-ing these issues in depth. We seek potential solutions and invite a wide range of voices to join ours in attempting to �nd answers.

Beyond the Forum, Crain’s has sought to cover our diverse region and people of col-or through our news, opinion and recog-nition programs. We know we need to do more. And we continue to ask our readers to reach out to us with stories and opinions to help us round out our coverage that re-�ects inclusiveness.

We have shown before that when we come together, we can solve big issues here in Chi-cago. Consider this moment the next chal-lenge. �en no one will be able to write o� Chicago.

Jim Kirk is publisher and executive editor of Crain’s Chicago Business.


With no kids’ soccer games, people working remotely and short-term rentals’ legality up in the air in Michigan during COVID, monthlong and summerlong rent-als are in high demand.

“People are itching to get out-side safely and have a place of their own,” says Jason Milovich, owner of Blue Fish Rentals based in Union Pier and a member of the Harbor Country Vacation Rental Association. “Since they’re work-ing remotely and there are no kids’ soccer or baseball keeping them in the city, this year may be their only opportunity since their kids were babies to get away to a di�er-ent venue without any schedule.”

Of 110 rentals Blue Fish manages in southwest Michigan, Milovich says, at least 15 are occupied now by monthly or summerlong rent-ers, and about the same number are being used that way by their owners who in normal summers would stay for less time.

At Yellow Bird Vacations in New Bu�alo, owner Toni Morris says she has 46 long-term renters booked in her 100-property port-folio. At this time last year, she had “one or maybe two,” she says.

While southwest Michigan draws visitors from Illinois, Mich-igan and Indiana, the monthly renters “are coming from Chica-

BY DENNIS RODKIN

Longer rentals in southwest Michigan are in high demand

Sheltering in place becomes a month in the country

go,” Morris says. “�ey’re coming out of your dense neighborhoods, where your parks and beaches are closed, to �nd a place where their kids can be outdoors and social distancing is easier.”

Tim Salm, a Chicago real estate agent who owns two Michigan rental homes, posted on Facebook May 24 that his four-bedroom rental in Sawyer was available for a month. “I got 50 inquiries and had it rented for the month within 24 hours,” Salm says.

�e second house is occupied, and Salm has a third under con-struction, due to �nish in Septem-ber. “I wish I had that one ready now,” he says.

Morris and Milovich both say they have �elded far more requests than they could ful�ll. �at’s in part because Blue Fish and some individual owners have kept exist-ing June and July weekend reser-vations on the books in the hope that short-term rentals will be per-mitted again after Gov. Gretchen Whitmer’s ban on rentals shorter than 28 days expires in mid-June.

Most properties are going for full price, Morris says.

Ron Morales, who owns Waya Rentals in New Bu�alo, says peo-ple may reason that because they won’t be paying airfare and other expenses for a faraway vacation this summer, paying full price in southwest Michigan doesn’t faze

them. Waya has no full-month bookings.

Salm’s rental went for $7,500 for the month. Blue Fish has a three-bedroom home two-tenths of a mile from an asso-ciation-owned beach listed for about $11,100 for the month of June. From Yellow Bird, there’s a beachfront property with a total of eight bedrooms in the main house and a guesthouse listed for about $14,750 for the month.

�e most popular monthly rent-als are those with their own pool or beach access—or both—Milovich says. “�ey want to be able to relax and enjoy summer safely,” he says. One housing cluster of about 40 homes that is usually very popular closed its shared swimming pool because of current public health recommendations, Morris says,

and as a result has been hard to book this year.

Also unlikely to draw renters this summer are big houses capable of sleeping two or more families or a family and several guests. Gather-ing in groups of 10 or more is unac-ceptable now, and in the pandem-ic, visitors “are safer coming with only their family,” Morris says.

Long-term rentals bene�t the property owners and management companies, and not only because they make it possible to salvage some income during a pandemic that has shattered tourism. Mor-ris says turning a property once a month rather than every weekend or even every few days in the high season reduces the frequency of housekeeping, which cuts the risk to the cleaners’ health.

All the operators have enhanced

their cleaning and sanitation pro-cedures during the pandemic, and post details on their websites. �e level of sanitation now required, Morris says, “isn’t something we can do in the six hours between one person checking out in the morning and another one check-ing in that afternoon.” Most prop-erties are kept empty for a few days between rentals, she and Milovich both say.

�e longer stays may also help assuage the larger community’s concerns about the virus being brought into the area. “Our com-munity doesn’t feel safe with �ooding the market with new peo-ple every week,” Morris says.

�e rental operators inter-viewed for this story declined to connect Crain’s with long-term renters.

�e boutique �tness industry experienced a meteoric rise the past few years. But will people �ock to gyms again once stay-home orders lift or stick with their home workouts?

�e popularity of boutique gyms like Orangetheory, Pure Barre and SoulCycle transformed Chicago’s �tness industry by at-tracting gym-goers with a strong community aspect, group work-out classes and tailored �tness plans. U.S. boutique brands saw their revenue double to $12.8 billion between 2013 to 2017, according to the International Health, Racquet & Sportsclub As-sociation.

But the reliance on tightknit classes, small facilities of around

BY DALTON BARKER

The surging industry’s reliance on smaller facilities and classes makes it more vulnerable in the new reality

How will boutique gyms fare now?4,000 square feet and high costs makes the surging industry vul-nerable in the ongoing pandemic. Unlike larger gyms, which feature options like basketball, tennis and pools, boutique gyms specialize in one core exercise and charge between $25 to $50 per class. �at was a luxury item for many people before 40 million Americans lost their jobs and the economy was expected to slip into a recession.

Since the widespread shelter-in-place orders were enacted in

mid-March, people have been investing in home �tness equip-ment, according to Amine Ben-said, a Bloomberg Intelligence analyst.

Bensaid says sales of Peloton workout bikes and treadmills have increased 61 percent since March. Peloton o�ers a similar experi-ence to boutique gyms, with daily

live classes featuring interactive instructors and upbeat music.

Any customer defections have an outsize impact on boutique gyms, because most boutique brands sell individual passes in-stead of membership programs. �at was more pro�table before the virus appeared but now leaves the industry without a stable rev-enue base.

“�ey need high class atten-dance (to survive),” says Bensaid. “It’s unlikely people go back to

boutique gyms en masse because so-cial distancing will be a problem.”

Nonetheless, Da-vid Blitz, CEO and co-founder of bou-

tique fitness company Studio Three, is continuing construc-tion of his third area location de-spite the pandemic. Located at 333 N. Green St. in Fulton Mar-ket, the 10,000-square-foot space will offer yoga, interval and cycle classes.

But it will also include some new safety features, including

touchless kiosks that take quick temperature readings, plexiglass panels and upgraded air �lters. �e changes are part of a $100,000 redesign to prepare for a post-COVID future. “�e last eight weeks have been demanding,” says Blitz.

Blitz knows that if people don’t feel safe, they won’t come back, and his business won’t recover. It’s a fear shared throughout Chi-cago’s �tness industry, which will be one of the last businesses to reopen under Gov. J.B. Pritzker’s plan.

Gale Landers, CEO of Fitness

Formula Clubs, says the pandem-ic is making the entire industry rethink how it operates. When members return to one of the 11 FFC locations, they will enter a space with increased cleaning protocols, fewer group classes and more emphasis placed on in-dividual sports training like swim-ming and rock climbing.

Landers plans to use those ex-isting features to keep his custom-er base involved. But he admits that it will take months to rebuild, and many Chicago gyms won’t survive. “You are essentially re-opening your clubs,” Landers says.

This four-bedroom home in woodsy Sawyer, Mich., landed a renter for the month of June in less than 24 hours after its owner, a Chicago real estate agent, posted about it on Facebook.

“THEY NEED HIGH CLASS ATTENDANCE (TO SURVIVE).”Amine Bensaid, Bloomberg Intelligence

Studio Three CEO David Blitz is continuing construction of his third area location despite the pandemic.


JAN GOLDBERG, A RETIRED TEACHER from Riverside, normally uses the CTA or Metra to go downtown for volunteer work or social engagements. But in a post-COVID-19 world, she is reluctant to return to mass transit, not knowing whether pas-sengers will be crowded together or socially distanced.

“I would be skittish about going back,” she says.

Goldberg and many others are likely to forsake mass transit for the safe bubble of their cars. And that will leave transit in a weakened � nancial state with renewed pressure on roads that are congested and badly in need of repair.

“I have no doubt that when the economy opens up, people who have a choice are going to drive,” says Randy Blankenhorn, the Illinois secretary of transportation un-der former Gov. Bruce Rauner. “� en we’re back to signi� cantly more congestion.”

Fallout from the coronavirus has crippled mass transit. Since March, Metra has lost 97 percent of its riders and cut service in half.

� e Chicago Transit Authority has main-tained a full schedule of buses and trains even though more than three-quarters of its riders disappeared. Pace, the suburban bus and paratransit service, lost two-thirds of ridership.

As the region considers how to reopen, short- and longer-term questions are con-founding. How many riders will return to mass transit? Will it be slow and steady or all at once? How will trains and buses allow enough room for social distancing? Will businesses adapt to new commuting pat-terns? Can technology provide the informa-tion commuters need to stay safe?

“Normal before COVID won’t come back for years, if ever,” says Stephen Schlickman, a transit consultant and former Regional Transportation Authority executive director.

� e crisis has underscored striking in-equality in the region, with many white-col-lar employees working from home, while es-sential workers in health care, public safety and the food supply chain are vulnerable on the front lines. � ese workers, many from

low-income and minority communities, de-pend on mass transit to reach jobs. Service cuts or fare hikes would hurt them the most.

� e loss of fares and anticipated declines in the sales tax revenues that fund transit operations underscore the need to reassess how transit is funded and recalibrate the pri-orities of daily operations and capital invest-ments, transit advocates say.

“We can learn from this,” says Sharon Feigon, executive director of the nonpro� t Shared-Use Mobility Center, which advo-cates for a multimodal transportation sys-tem, services that are shared among users such as mass transit, taxis, ride-sharing and bike-sharing. “In a crisis, people are willing to change.”

PRACTICING SOCIAL DISTANCINGEven before COVID-19, mass transit use

had been declining moderately for several years due, in part, to the rise of telecom-muting and the convenience of ride-hailing

O’HARE: If history is a guide, the travel slowdown is unlikely to stop new terminal plans. PAGE 14

INFRASTRUCTURE SPENDING: Why is it so hard when it creates jobs and ful� lls needs? PAGE 20

TRANSIT DESERTS: Getting to work can be as big a chore as work itself in parts of the city and suburbs. PAGE 21TRANSPORTATION

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MORE FORUM ONLINESee Crain’s in-depth stories, interactives and guest columns on Transportation and these previous topics:

COVID-19 Economic Development Racial Gaps Taxes Jobs & Wages

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Getting from here to there has never been more complicated BY JUDITH CROWN

COVID-19 SCRAMBLES THE

COMMUTE


JIM KIRK PUBLISHER • ANN DWYER EDITOR • BOB SECTER FORUM EDITOR • THOMAS J. LINDEN CREATIVE DIRECTOR • JASON McGREGOR DIGITAL DESIGN DIRECTOR • KAREN FREESE ZANE ART DIRECTOR • DANIELLE NARCISSÉ COPY CHIEF

We work in � ve program areas

Culture Democracy Education & Economic Mobility

Environment Gun Violence Prevention & Justice Reform

The Joyce Foundation invests in the future of the Great Lakes region by supporting

policies that advance racial equity and economic mobility for the next generation.

Learn more at JoyceFdn.org

Invest in cleaner, healthier public transitDespite the headwinds of cost, poli-

tics and understandable fears about public transit, Chicago can steer its

post-COVID-19 future toward a far healthier way to get around.

�e ongoing pandemic is straining every facet of our communities, not least our trans-portation systems. �e Chicago area’s transit agencies have seen ridership and farebox revenue plummet as people stay home or get back in their cars.

As providers of essential services, those agencies are pursuing multiple strategies to keep riders and employees safe now and as more businesses reopen. In addition to more frequent and deeper cleaning, they are changing boarding patterns, requiring face coverings and increasing space between riders.

Nevertheless, many car owners who used to commute by transit are now likely to drive to and from work, especially in the early stag-es of reopening. �at will deprive the system of badly needed revenue and push emissions back up after a respite of bluer skies during the shutdown.

But, as our COVID-19 response shifts to longer-term recovery, funding for infra-structure investments needs to include a forward-looking vision for transportation,

RECOVERY PRIORITIES

Rafael Salmi typically �ies 300,000 miles a year, touching down on every continent as pres-ident of Richardson RFPD, an electronics distributor based in suburban Geneva. Most trips start and stop at O’Hare International Airport, but because of COVID-19, Salmi hasn’t been on a plane since mid-March and is making do with video and teleconference calls.

“If I could travel tomorrow, I would,” he says. “You can conduct a lot of e�ective internal meetings electronically. If you’re build-ing new relationships or want to meet customers or partners, you have to do it in person. As soon as there’s clarity and safety, we’re going to travel.” He just doesn’t know when that will be.

With U.S. air travel down 90 percent, airlines are lining up for government funding, their plans for growth replaced by surviv-al strategies. It hardly seems like time for an airport makeover, but O’Hare is embarking on its most ambitious project in a generation, an $8.5 billion overhaul featuring a new terminal and concourses that will forever change the ap-pearance and �ow of the airport.

�e expansion is in the ear-ly design phase, which provides valuable time for travel to recover before airlines, led by United and American, would have to start paying higher landing fees to cov-er the cost of the project.

“�e timing of everything has put us in a very good spot,” says Jamie Rhee, commissioner of the Chicago Department of Aviation. “It’s a big design project right now. We’re still working on en-vironmental approvals from the FAA. So we can’t put a shovel in the ground till that’s done. Proba-bly you’re looking at 2023 for con-struction.”

Even as some U.S. airports are delaying expansions, O’Hare is pushing ahead, wagering that the COVID crisis is temporary. Since 1971, air travel has increased steadily, interrupted eight times by recessions before growing again. Such downturns tend to be short-lived, according to bond-ratings agency S&P Global.

“Forty years of aviation history

BY JOHN PLETZ

Planned construction is years o�, so there’s ample time to bounce back

Travel meltdown unlikely to ground O’Hare revamp

will tell you it bounces back,” says Peter Arment, an aviation analyst at �nancial services �rm Baird. “But each one is di�erent. �is is a health crisis, so people are go-ing to remain somewhat cautious. We’ve seen downturns before. �ey all eventually get resolved one way or the other.”

�e question is when. United CEO Scott Kirby said May 22, “We don’t think there will be a full re-covery until there’s a vaccine.” �at could take 18 months or more, according to experts. S&P estimates it will take four years for travel to recover.

�e coronavirus will disrupt the economics and operations of the industry, at least in the short run. But unless the pandemic triggers a permanent reduction in air trav-el or causes one of the big carriers in Chicago to go away, the city’s place in the industry is unlikely to change.

Because of Chicago’s geogra-phy, size and status as home to United Airlines, one of the na-tion’s largest carriers, the city has long been at the center of U.S. aviation. O’Hare opened to com-mercial tra�c in 1955, overtook Midway Airport by 1961 and be-came the world’s busiest airport a year later. It’s been the city’s eco-nomic engine ever since, helping Chicago attract or retain business. “O’Hare was (reason) one, two or three, depending on the compa-ny,” says Steve Koch, a longtime Chicago investment banker at Credit Suisse who served as Rahm Emanuel’s deputy mayor.

O’Hare handled more �ights last year than any other U.S. air-port. �e current renovation and expansion project, called O’Hare 21, was approved in 2018 as part of a nationwide wave of expan-sions and renovations as U.S. air travel headed toward a record 1.1 billion passengers last year. It’s the second-largest airport project underway, according to S&P.

�e downturn in travel caused by COVID-19 is unprecedented. Airports Council Internation-al had forecast global passenger tra�c would reach 9.5 billion passengers this year, up 4.6 per-cent from 2019. It now predicts a 41 percent drop in North America and a 50 percent decline world-wide. Airport revenue will be 47 percent below forecast.

Airports in Dallas/Fort Worth, San Francisco and Austin, Texas, have postponed expansions.

“O’Hare will get �nished,” says Ray LaHood, a former Illinois

congressman and U.S. secretary of transportation from 2009 to 2013. “�ere’s been such a huge invest-ment and commitment by the dif-ferent parties to make it happen. Some of the aspirational (airport expansions) may not happen for several years.”

FORTUNATE TIMINGTwo things working in the city’s

favor are time and a timely new lease with the airlines that pay most of the bills for O’Hare’s op-eration and expansion. For now, they’re backing the project, in part because it’s in the earliest phases and they can’t easily stop it.

“American Airlines is commit-ted to Chicago and the O’Hare 21 modernization project,” the airline, O’Hare’s second-biggest tenant, says in a statement. “We are continuing to work closely with our partners at the city of Chicago on all airport matters, including long-term modernization.”

“United and the city continue to work extremely closely on both short- and long-term planning for O’Hare, and we continue to focus on maintaining cost-e�cient op-erations at the airport during the COVID-19 crisis,” O’Hare’s largest carrier says in a statement. “We appreciate the city’s partnership and look forward to continuing our joint long-term planning work in the near future.”

Airlines sought to put the brakes on expansions when times got tough in the past. In 2011, United and American sued O’Hare to stop the second phase of the airport’s roughly $7 billion runway project.

Two years ago, the city entered into a new 15-year lease agree-ment with airlines that use the air-port. Carriers got continued use of gates, and the city got the airlines’ approval for $6.1 billion worth of construction.

�e deal greatly reduced the veto power that airlines have over capital projects.

“�ere are some trigger points

where they get to look at designs, where we check in with them on certain milestones, but they’ve been part and parcel of everything we’ve been doing,” Rhee says.

�e airport has no interest in putting its tenants in the poor house, she stresses. “Our mission is to stay within budget and build in a way that doesn’t adversely impact them,” Rhee says.

�e project is in the early stages, with architecture teams—led by Jeanne Gang and Skidmore Ow-ings & Merrill—doing preliminary design work for the terminals. First up are the satellite concours-es, at a cost of $1.4 billion, which aren’t expected to break ground until 2023, followed by the $2.2 billion Global Terminal.

“�e big commitments are years out,” says Joseph Schwiet-erman, a transportation expert at DePaul University. “�at’s a better situation than making the key de-cisions tomorrow. You can delay or spread out investments.”

�e city already pushed back the completion date to 2028 from an original target of 2026.

“(�e lease agreement) doesn’t have speci�c dates,” Rhee says. “It allocates funding and lists specif-ic projects. �e �exibility is there for us to work with our partners to make sure that we are building responsibly.”

So far, the city has sold about $1.8 billion worth of bonds. Much of the money will be used to ex-pand Terminal 5, which currently is being used mainly for interna-tional arrivals, to house airlines Delta, JetBlue and Spirit, which will leave Terminal 2. Other funds will be used for design and prepa-ration work.

WHAT GETS BUILT WHEN�e growth projections that

O’Hare planners envisioned, from 40.6 million passenger boardings last year to 60 million by 2038, will get reset, as others have before them. In 2006, just after work be-

gan on new runways, the Federal Aviation Administration was ex-pecting O’Hare to hit 60 million boardings by 2025, but the 2008-09 recession quickly spoiled those projections.

�e O’Hare 21 project is only partly a growth story. �e replace-ment of Terminal 2 and two new concourses will increase the space for arriving and departing planes and passengers by about 25 per-cent, allowing airlines to make use of the new runways. Another goal is to allow international travelers to �y in and out of the same termi-nal, something most can’t do un-der the current airport setup.

“�ey’re still in the warm-up phase, so there are a lot of op-tions,” Schwieterman says. “In two to three years, the pace dramati-cally quickens. Hopefully, air trav-el recovers by then.”

Even if the recovery lags, as some fear, O’Hare and big airports such as Atlanta’s Harts�eld-Jack-son, New York’s trio of LaGuardia, John F. Kennedy and Newark Lib-erty, and Dallas/Fort Worth stand to bene�t more than others.

“�e megafortress hubs are go-ing to be best positioned coming out of this,” says Earl He�ntrayer, a senior analyst at Moody’s Inves-tors Service, a bond-rating agency. “Airlines will have to rely on hub-and-spoke operations to continue to serve the markets they want. Given our opinion that domestic travel is going to return �rst, that puts the airports that are central geographically in the U.S. at a bit of an advantage.”

�at’s when the competition for O’Hare begins anew.

“It’s even more important than before to have a new terminal to keep up with other airports,” says Salmi, who came to Chicago from Brazil in 2015 and travels to 20 countries in a normal year. “I’m a believer that those who are invest-ing are well-positioned to grow. If we don’t invest in the airport, it will hinder the city.”

O’Hare’s $6.1 billion plan to build a new terminal and two new concourses, shown in this rendering, is still in the early stages.


JIM KIRK PUBLISHER • ANN DWYER EDITOR • BOB SECTER FORUM EDITOR • THOMAS J. LINDEN CREATIVE DIRECTOR • JASON McGREGOR DIGITAL DESIGN DIRECTOR • KAREN FREESE ZANE ART DIRECTOR • DANIELLE NARCISSÉ COPY CHIEF

We work in � ve program areas

Culture Democracy Education & Economic Mobility

Environment Gun Violence Prevention & Justice Reform

The Joyce Foundation invests in the future of the Great Lakes region by supporting

policies that advance racial equity and economic mobility for the next generation.

Learn more at JoyceFdn.org

Invest in cleaner, healthier public transitDespite the headwinds of cost, poli-

tics and understandable fears about public transit, Chicago can steer its

post-COVID-19 future toward a far healthier way to get around.

�e ongoing pandemic is straining every facet of our communities, not least our trans-portation systems. �e Chicago area’s transit agencies have seen ridership and farebox revenue plummet as people stay home or get back in their cars.

As providers of essential services, those agencies are pursuing multiple strategies to keep riders and employees safe now and as more businesses reopen. In addition to more frequent and deeper cleaning, they are changing boarding patterns, requiring face coverings and increasing space between riders.

Nevertheless, many car owners who used to commute by transit are now likely to drive to and from work, especially in the early stag-es of reopening. �at will deprive the system of badly needed revenue and push emissions back up after a respite of bluer skies during the shutdown.

But, as our COVID-19 response shifts to longer-term recovery, funding for infra-structure investments needs to include a forward-looking vision for transportation,

maybe starting with the deploy-ment of electric buses.

Adopting these clear priorities below can guide those invest-ments so our transportation system comes out even stronger than it is now.

w Upgrading: First, we all depend on Chicago’s transit systems, one way or another, so they must be prioritized. People who rarely or never ride CTA, Metra or Pace buses and trains still depend on those systems to get fellow Chicagoans to jobs in hospitals, grocery stores and other essential businesses.

Parts of the CTA and Metra systems are more than a century old. Updat-ing them with new and expanded tracks and stations, touchless entry and exit systems instead of decades-old manual turnstiles, and other improvements would ensure that Chi-cago’s transit systems better serve residents, businesses and visitors for decades to come.

w Transforming: �e U.S. transportation sector, with its heavy reliance on gasoline and diesel fuel, emits more global warming

pollution than any other part of our economy. We need to drive all facets of our economy toward zero carbon emissions, including transportation.

Shifting to electric power for cars, buses and trucks cuts global warm-ing pollution and simultaneously reduces the local air pollutants that gasoline and diesel engines spew into our communities. Already, Paris, London, Los Angeles and dozens of other cities have com-mitted to phasing out all gasoline- and diesel-powered vehicles on their streets, often beginning with all-electric transit buses.

Dramatically expanding electric vehicle �eets should be a core

part of the Chicago region’s post-pandemic transportation agenda. �is could be accom-plished through smart deployment of federal transportation funds and through innova-tive state policies, such as the clean energy legislation that Illinois lawmakers were set to consider when the crisis erupted.

And there’s precedent for success: Stimulus money after the Great Recession and targeted federal tax credits fueled much of our renew-able energy gains.

w Leveling: When making these improve-ments, Chicago should take advantage of ways to eliminate some of the devastating health and economic injustices revealed by the COVID-19 crisis.

For example, the CTA could prioritize put-ting pollution-free electric buses on the routes that travel through areas on the South and West sides with the worst air pollution and highest levels of respiratory disease. As with the successful Illinois Solar for All program, recovery investments could be paired with tar-geted job training for people from historically marginalized communities.

w Saving: �ese improvements will require upfront spending, but it would be a solid in-vestment, generating signi�cant cost savings.

Many electric buses and cars already have lower lifetime costs to operate than the diesel and gasoline vehicles they replace, with sav-ings both from low-cost charging and reduced maintenance. �at cost advantage will only grow as battery technologies improve and prices drop.

Planning for the long-term sustainability of our transportation system must start now. We should not miss this moment to make Chicago a healthier, more livable, more competitive global city.

RECOVERY PRIORITIES

Ed Miller is director of the environment program at the Joyce Foundation. �e Joyce Founda-tion is a sponsor of Crain’s Forum.

gan on new runways, the Federal Aviation Administration was ex-pecting O’Hare to hit 60 million boardings by 2025, but the 2008-09 recession quickly spoiled those projections.

�e O’Hare 21 project is only partly a growth story. �e replace-ment of Terminal 2 and two new concourses will increase the space for arriving and departing planes and passengers by about 25 per-cent, allowing airlines to make use of the new runways. Another goal is to allow international travelers to �y in and out of the same termi-nal, something most can’t do un-der the current airport setup.

“�ey’re still in the warm-up phase, so there are a lot of op-tions,” Schwieterman says. “In two to three years, the pace dramati-cally quickens. Hopefully, air trav-el recovers by then.”

Even if the recovery lags, as some fear, O’Hare and big airports such as Atlanta’s Harts�eld-Jack-son, New York’s trio of LaGuardia, John F. Kennedy and Newark Lib-erty, and Dallas/Fort Worth stand to bene�t more than others.

“�e megafortress hubs are go-ing to be best positioned coming out of this,” says Earl He�ntrayer, a senior analyst at Moody’s Inves-tors Service, a bond-rating agency. “Airlines will have to rely on hub-and-spoke operations to continue to serve the markets they want. Given our opinion that domestic travel is going to return �rst, that puts the airports that are central geographically in the U.S. at a bit of an advantage.”

�at’s when the competition for O’Hare begins anew.

“It’s even more important than before to have a new terminal to keep up with other airports,” says Salmi, who came to Chicago from Brazil in 2015 and travels to 20 countries in a normal year. “I’m a believer that those who are invest-ing are well-positioned to grow. If we don’t invest in the airport, it will hinder the city.”

O’Hare’s $6.1 billion plan to build a new terminal and two new concourses, shown in this rendering, is still in the early stages.


continue the pursuit of ful�lling the city’s vision for improved gates, streamlined passenger connections, better surface transportation connections, and improved customs and international processing. Speci�c elements of the current terminal projects should be revisited and improved by the lessons we are learning from the worst health crisis in more than a centu-ry. We have a unique opportunity to be the �rst airport designed with pandemic

TAKING FLIGHT

O’Hare key to Chicago’s post-pandemic recoveryMuch of the strength of

Chicago’s economy rests on its vast trans-

portation network —and O’Hare International Airport is our region’s single most important transportation asset.

COVID-19 has dealt a serious blow to the aviation industry and the nation’s busiest airport, but both have recovered from seem-ingly overwhelming setbacks in the past. Indeed, the Chicago business community’s laser focus on improving aviation has helped our region survive tough economic times and emerge stronger than ever before. We can do so again with a strategic approach to position our airports to recapture the revival of aviation.

Chicago is the intermodal transporta-tion hub of North America, and our airports play a major role in maintaining that status by keeping us the most connected aviation city in the United States. OAG, a leading aviation data analytics company, found O’Hare to be the No. 1 airport in the nation for domestic �ight connectivity in 2019, the fourth year in a row it earned that title. O’Hare also was named the second most connected airport for international travel, second only to London’s Heathrow Airport.

�is connectivity is a key reason Chicago is the metro area with the second-largest number of Fortune 500 companies in the United States. It also plays a direct role in attracting over 1,800 foreign companies

to Chicago, accounting for more than $140 billion in foreign direct investment, leading the nation in FDI seven years running. Even if reliance on remote working grows, having an airport where an employee can easily travel, often nonstop, to nearly anywhere in the world to conduct business in person is a competitive advantage that will help Chicago attract and retain major employers.

Today’s robust connectiv-ity was made possible by the modernization and expansion of runways at O’Hare via the O’Hare Modernization Program.

�e Civic Committee of the Commercial Club of Chicago was the �rst major civic organization to call for an expansion of O’Hare in 1989. We produced important analyses and led advocacy e�orts that helped pass the OMP in 2003. Since that program began, four parallel runways have opened or been extended and tra�c delays have been reduced dramatically, with the full buildout of the OMP expected in late 2021.

Making O’Hare and aviation a key com-ponent of our economic recovery in the late 1980s was instrumental in our region’s growth and helped create a jobs jugger-naut at O’Hare, which supports 403,000 jobs—1.2 percent of regional employment is connected to the airport—and produces

$39 billion of our annual GDP. We need a similar focus on our region-

al aviation assets to jump-start a strong economic recovery in the years ahead. A strategic plan should have the following components:

w Finish what we started: We should complete the OMP and terminal construc-tion already underway and support the Department of Aviation’s current plans to do so. Slowing down or stopping these es-sential O’Hare initiatives would add costs, decrease safety and fumble an oppor-tunity to regain air tra�c as it inevitably comes back. In fact, Denver International Airport last month announced plans to accelerate a gate expansion project during this period of reduced airport activity. �e additional capacity, e�ciencies and im-proved safety from OMP will give Chicago an airport where airlines can hub and connect better than anywhere else in the

country—a strategic advantage we should not concede.

w Promote our existing strengths: O’Hare and Midway

are already great airports to travel to and through. We are the only city with both airports connected by rail transit, and the only city with a large dual-hub airport at O’Hare and another major airline hubbed at Midway. O’Hare also has an import-ant role in moving cargo—it is the No. 1 airport for cargo by value, processing over

$200 billion in freight annually. �ese con-nections are playing, and will continue to play, a critical role in our response to the COVID-19 pandemic. w Continue to modernize, smarter: O’Hare needs to deliver on its vision for a 21st-century terminal infrastructure as soon as possible, but revenues from air-lines and the airport will not be enough to ful�ll all our plans right away. We should

To �x transit, think outside the fareboxThe coronavirus pandemic

brings a busload of bad news to public transit.

Many trains and buses are running nearly empty. Shifting employment patterns—including more work-from-home jobs—and a desire to avoid crowded places will likely dampen the recovery once the pandemic ends. Government agencies face looming budgetary shortfalls, which could put some transit ser-vices at risk.

Transit must adapt—and step on the accelerator when it comes to testing new ideas. Our three primary transit providers—the Chicago Transit Authority, Metra and Pace Suburban Bus—now bene�t from strong leadership. But when the crisis subsides and normal-cy returns, it is imperative that our region adopt strategies that make our transit system more e�ective, including testing new ways to get people to their destinations

quicker and with less hassle. With the COVID crisis giving people another reason to drive, there is—bluntly stated —a “need for speed.”

How can that be done without enormous outlays? Let me o�er three ways.

1. Experiment with more ex-press bus service. We’ve fallen behind Los Angeles, New York and other cities in rolling out express buses. Pace’s “bus-on-shoulder service” using the Edens and Stevenson express-ways and its other timesaving of-ferings are doing well, but more such enhancements are needed. Express buses could also shave well over an hour from many o�-

peak trips from, say, the Magni�cent Mile to outer suburbs like Naperville, where time-consuming transfers and all-stop train schedules compel most to drive. Funding for such express services could be struc-

tured to mutually bene�t all three agencies. Regional express bus service to O’Hare

and Midway airports (which will gradually bounce back) is another priority. �e vast majority of �yers not traveling to or from places near the CTA’s Blue or Orange lines end up making airport trips by car. Transit can take upward of 90 minutes longer than Uber when traveling to Midway or O’Hare from Downers Grove, Glenview, Tinley Park or even some city neighborhoods, depend-ing on when and from where you leave. We should take a lesson from Massachusetts, which has an entire system of remote park-and-ride facilities encouraging passengers to travel by bus to Boston Logan Internation-al Airport. More pilot programs to determine the situations in which express buses are most viable are clearly a priority.

2. Test timesaving trains. Metra is deliver-ing faster trips without large capital outlays with its reverse commute service to Lake County (an experiment �nancially sup-ported by Lake County Partners enjoying much success) and the agency’s enhanced

express schedules on the Union Paci�c Northwest line through Arlington Heights. If commuting patterns evolve due to more �exible work arrangements, more such outside-the-box thinking will be needed to o�er customers faster trips, particularly outside of rush hour. Of course, with addi-tional capital funding from Capitol Hill or Spring�eld, true high-speed rail opportuni-ties beckon.

3. Form strategic partnerships with ride-sharing operators like Lyft, Uber and Via. �is idea isn’t as controversial as it may seem: �ese private operators are proving to be reliable partners across the country. Our new study shows they are supporting programs that run the gamut, from dis-counts for ride-shares to certain bus or train stops, to eliminating “transit deserts,” to catering to disadvantaged populations.

In greater Dayton, Ohio, the regional transit provider o�ers free Lyft service to transit stops in areas a�ected by reduced bus service. �e city of Detroit o�ers discounted Lyft trips to and from certain

Kelly R. Welsh is president of the Civic Committee of the Commercial Club of Chicago.

BETTER TRANSIT

Joseph P. Schwieterman is a professor and director of the Chaddick Institute for Metropolitan Development at DePaul University.

transit stops during the wee hours of the night. Jersey City contracts with Via to run 14 six-seat vans, priced at just $2 a ride, to allow for faster trips when bus and rail service is poor.

Such partnerships require trial and error, political buy-in and sta� commit-ment, but they help agencies gradually reinvent themselves —and move beyond a

Laser focus on improving aviation has helped the region survive tough times.


continue the pursuit of ful�lling the city’s vision for improved gates, streamlined passenger connections, better surface transportation connections, and improved customs and international processing. Speci�c elements of the current terminal projects should be revisited and improved by the lessons we are learning from the worst health crisis in more than a centu-ry. We have a unique opportunity to be the �rst airport designed with pandemic

lessons about space needs, passenger tra�c patterns and a host of other design ideas in mind, helping spur innovations and infrastructure that will make Chicago the best place to visit or travel to and from anywhere in the world.

Air travel and aviation have repeatedly recovered from major challenges. Mod-ernization of O’Hare and Midway should be our guiding light to economic success in the years ahead.

$200 billion in freight annually. �ese con-nections are playing, and will continue to play, a critical role in our response to the COVID-19 pandemic.

w Continue to modernize, smarter: O’Hare needs to deliver on its vision for a 21st-century terminal infrastructure as soon as possible, but revenues from air-lines and the airport will not be enough to ful�ll all our plans right away. We should

To �x transit, think outside the fareboxexpress schedules on the Union Paci�c Northwest line through Arlington Heights. If commuting patterns evolve due to more �exible work arrangements, more such outside-the-box thinking will be needed to o�er customers faster trips, particularly outside of rush hour. Of course, with addi-tional capital funding from Capitol Hill or Spring�eld, true high-speed rail opportuni-ties beckon.

3. Form strategic partnerships with ride-sharing operators like Lyft, Uber and Via. �is idea isn’t as controversial as it may seem: �ese private operators are proving to be reliable partners across the country. Our new study shows they are supporting programs that run the gamut, from dis-counts for ride-shares to certain bus or train stops, to eliminating “transit deserts,” to catering to disadvantaged populations.

In greater Dayton, Ohio, the regional transit provider o�ers free Lyft service to transit stops in areas a�ected by reduced bus service. �e city of Detroit o�ers discounted Lyft trips to and from certain

New transit priorities for a post-COVID worldTransit has been the

backbone of transpor-tation for the Chicago

region for 125 years. But COVID-19 has upended our world, with massive impacts on transportation and mobil-ity. While everyone who can is working from home and limiting travel to essential trips, many fewer people are riding.

However, transit’s value to society is measured by much more than ridership num-bers. We are seeing with full clarity how many essential workers rely on transit —and how the rest of us depend on them to keep food on the grocery shelves, hospitals clean and running, and essential retail available. Transit keeps society functioning.

Once the stay-at-home order ends, movement will resume; however, it will be gradual. In the short term, transit will be limited to less than one-third of capacity on rail cars and buses to enable social distancing.

During this tran-sition, it is critical to make sure there are enough buses and trains running on key routes, most of which are in black and brown communities, to ensure that vehicles are not overcrowded. �e CTA has rightly maintained nearly full service during the stay-at-home order to en-sure su�cient service for the many essential workers it serves.

At the same time, we must plan for the future. Prior to COVID-19, CTA, Pace and Metra were carrying nearly 2 million passengers per weekday. �e limited capacity of our highways remains unchanged—there is only so much space available for transportation. And climate change is still bearing down on us. Until there is a reliable treatment or vaccine, many who have the choice may con-tinue to work from home or use other forms of transportation. But we also need to strategically plan for the long term, expecting that social distancing will eventually come to an end. Here are three key perspectives for how we can move forward:

1. We need to build back a system that prioritizes the needs of riders who rely on transit.

We must �rst support those who play a critical role in our society, many of whom are black and brown riders with low- to moderate-wage jobs. Our transit system will need to evolve, which may result in di�erent routes, schedules or vehicles.

We should carry forward positive changes that have emerged from COVID-19 response such as rear-door boarding of buses to protect operators,

which can evolve into all-door boarding to speed up bus oper-ations long-term.

Is now the time to think about Metra in a new way? In-stead of focusing on a likely di-minished suburb-to-downtown commute, could it function like regional rail serving trips in both directions throughout the day and on the weekends? We need to reinvent transit for the post-COVID world.

2. We need to aggressively build trust as we rebuild our transit system.

A signi�cant part of the transit evolu-tion will be providing comprehensive, accurate and real-time information to riders. When people can depend on reliable information, they can make the best decisions on how they get around daily, balancing economic and health priorities.

Transit is a huge contributor to our economy, as shown in our “Transit

Means Business” report, and we will need it to keep our dense region func-tioning as we rebuild economically. We must ensure our core transit system is retained as we rebuild for the long term and especially when medical advances allow ridership to increase again.

3. We will need to develop new funding and operational structures.

Transit funding is currently based largely on ridership, a model assuming full trains and buses.

�e Chicago region’s legislatively required farebox recovery ratio of 50 per-cent means half of operating costs must be paid by fares. Funding in the Chicago region also comes from sales tax reve-nues, which �uctuate with the economy.

If either ridership or sales tax revenue drops—and both have—this can result in service cuts. If we view transit as a back-bone of a functioning economy that not only provides essential transportation, but also makes signi�cant contributions to environmental sustainability and public health, then we need to seriously examine restructuring how it’s funded and operated.

Yes, money’s tight everywhere, but there are few investments that generate as many societal bene�ts as transit.

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Audrey Wennink is director of transportation for the Metropol-itan Planning Council.

MOVING FORWARD

transit stops during the wee hours of the night. Jersey City contracts with Via to run 14 six-seat vans, priced at just $2 a ride, to allow for faster trips when bus and rail service is poor.

Such partnerships require trial and error, political buy-in and sta� commit-ment, but they help agencies gradually reinvent themselves —and move beyond a

two- sizes-�ts-all approach to transit that centers on conventional buses and trains.

All of these ideas require adequate funding for our established bus and rail system—which is the top priority. But agencies must also recommit to working together and testing new ideas. In a world forever changed by COVID, we need more innovation—and need it fast.

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services such as Uber. Among area transit agencies, Metra was hit hardest because its core of subur-ban o�ce workers was more able to work remotely.

Ridership at Metra declined 9.3 percent to 74 million passenger trips in 2019 from 81.6 million trips in 2015, with monthly pass sales falling nearly 15 percent and 10-ride ticket sales growing by more than 8 percent—an indi-cation that more commuters are becoming occasional riders rather than regulars. “I don’t think you can attribute all that to telecom-muting, but it would be a factor,” a spokesman for Metra says.

In the face of the pandemic, many employers are now ex-tending work-at-home policies through this summer and some through the rest of the year. But even after the immediate threat is over, telecommuting is destined to become more commonplace as formerly resistant employers see that it doesn’t impair productivity and saves money on o�ce space.

Remote work likely won’t elimi-nate the need to show up at the of-�ce for many employees. But even if they work from home one or two days a week, fare revenue will be greatly reduced, experts say.

Even as the economy begins to reopen, but with fewer crowds, the services have to o�er enough train cars and buses to enable people to spread out. “Because of social distancing requirements, the provision of service has to be greater,” says RTA Executive Di-rector Leanne Redden. “�at will

be with us for a long time.”Telecommuting turns out to

be bene�cial if it cuts down the crowds at rush hour, Shared-Use’s Feigon says. “People may work from home a third of the time,” she says. “Now your peak is gone. �at’s a huge number.”

One way to promote social dis-tancing would be to stagger the workday to avoid the morning and evening rush hour peaks. �at makes more e�cient use of buses, trains and their crews, says Rick Harnish, executive director of the High Speed Rail Associa-tion. Not every worker needs to hit their desk or station at 8:30 a.m.—teams could report in at 8 a.m., 9 a.m. and 10 a.m. �at’s not an issue the transit agencies can solve, but they can in�uence the business community by working through chambers of commerce and other associations.

Another strategy to help com-muters manage social distancing lies in technology. A new genera-tion of mobile apps will be able to help commuters make decisions on avoiding crowded trains and buses, just as the Waze app helps drivers avoid tie-ups on highways. An app simply called Transit of-fers information for bus, train and shared rides in Chicago and 200 other cities. It’s adding function-ality to make real-time crowding information available to riders by melding data from transit agen-cies, supplemented by crowd-sourced information, a spokes-man for the app developer says. �at functionality is available in

about two dozen markets but not yet in Chicago.

An app for Chicago transit could suggest not only the fastest or least expensive trip but the safest. If the Green Line is packed, the app could suggest taking a bus, Uber or Divvy bike to work, and even show the most convenient loca-tion to unlock a bike or scooter.

In spite of the city’s dismal win-ters, transit advocates say bikes and scooters could play a bigger role because they o�er that mea-sure of solo-riding safety.

Audrey Wennink, transportation

planning and policy director at the Metropolitan Planning Council, notes that more than 50 percent of car trips in Chicago are shorter than 3 miles. Cold-weather Euro-pean cities such as Copenhagen and Amsterdam have strong bike cultures. “You have to have pro-tected, well-lit bike lanes that are plowed in the winter,” she says.

THE BRUNT OF THE CRISISAvoiding crowds has been an

everyday challenge for essential workers on the front lines of the pandemic. A big concern is that the

�nancially strapped transit agen-cies will cut service or raise fares, a�ecting those workers handling jobs that can’t be done remotely: assisting in health care, stocking grocery shelves, or packaging food at a factory. Many are low-income, from black or Hispanic communi-ties and depend on mass transit to get to work. �ese groups have borne the brunt of the crisis, with death rates far outweighing their share of the population.

“You can envision scenarios where because of declining fare and sales tax revenue, agencies

are forced to cut service or in-crease fares,” says Kyle Whitehead, spokesman for Chicago-based transit advocacy group Active Transportation Alliance.

�e �nancial health of the CTA, Metra and Pace worries Rober-to Requejo, program director at Elevated Chicago, which pro-motes transit-oriented develop-ment with a�ordable housing and environmental sensibilities. “�e people in our neighbor-hoods —Gar�eld Park, Washing-ton Park, Little Village and Au-burn Gresham—have to get to work,” he says. “�ey don’t have cars because they are low-income. �e only way they have to move around is transit.”

His priorities: make sure emer-gency funding continues from Washington to keep transit viable and ensure that CTA, Metra and Pace work together rather than compete.

Indeed, experts say the COVID crisis will require a change in the way mass transit is funded, with a greater reliance on federal dollars. Previously, state law required the agencies to capture half of their operating revenue from the fare-box, with the balance from the state sales tax and other public and commercial sources.

“�e 50 percent recovery ratio is out the window,” former Trans-portation Secretary Blankenhorn says. “�ere’s no way our transit agencies are going to be able to cover 50 percent. It’s just not fea-sible, so why pretend?”

It’s a good time to look at how the money comes in and goes out, Blankenhorn adds, referring to the formulas that allocate the sales taxes raised in the city and suburbs to the three agencies. “Is there a smarter way so we’re not so siloed in the way we fund tran-sit?” he says.

In the past, federal dollars were to be used only for capital proj-ects. But the $1.4 billion in mass transit aid under the Coronavirus Aid, Relief & Economic Security Act, passed by Congress in March to alleviate economic fallout from the pandemic, marks the �rst fed-eral dollars used for operations. �ose funds more than compen-sate for a projected loss of $958 million in fares and sales tax reve-nue this year. But projections are a

THE SCRAMBLE Continued from Page 13

A big concern is that transit agencies will cut service or raise fares, a�ecting workers handling jobs that can’t be done remotely.

Metra was hit hard because its core of suburban o�ce workers is more able to work remotely.

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LOWER RIDERSHIP DECLINES, LOWER INCOMESWhile higher-income areas saw ridership plunge more than 50 percent, areas with lower incomes often had smaller drops, perhaps pointing to a higher reliance on mass transit. This map shows the percentage decrease at each CTA el stop in March compared to March 2019. The CTA reported an overall ridership decline of 40.7 percent.

CHANGE IN RIDERSHIP FROM PREVIOUS YEAR HOUSEHOLD INCOME PERCENTAGE OF WORKERS WHO WORK FROM HOME

=-55% to -49% =$90,000+ =10%+

=-49% to -44% =$35,000 to $90,000 =5% to 10%

=-44% to -38%

=-33% to -24%

=-38% to -33% =$0 to $35,000 =0% to 5%

The dark blue circles represent el stops that have seen the largest decreases in ridership in the city. The dark red circles are stops that had the smallest decreases.

Households in green census tracts on this map have the highest household incomes. Those in yellow had the lowest. Many of Chicago’s poorest areas saw the lowest level of ridership declines.

Before COVID-19 hit, people on the South and West sides were already less likely to work from home. Not being able to work from home, along with things like longer commute times, increases the risk of catching COVID-19 on public transit.

Note: Change in CTA ridership compared March 2020 ridership to March 2019 ridership. Source: 2018 U.S. Census 5-year American Community Survey, CTA


�nancially strapped transit agen-cies will cut service or raise fares, a�ecting those workers handling jobs that can’t be done remotely: assisting in health care, stocking grocery shelves, or packaging food at a factory. Many are low-income, from black or Hispanic communi-ties and depend on mass transit to get to work. �ese groups have borne the brunt of the crisis, with death rates far outweighing their share of the population.

“You can envision scenarios where because of declining fare and sales tax revenue, agencies

are forced to cut service or in-crease fares,” says Kyle Whitehead, spokesman for Chicago-based transit advocacy group Active Transportation Alliance.

�e �nancial health of the CTA, Metra and Pace worries Rober-to Requejo, program director at Elevated Chicago, which pro-motes transit-oriented develop-ment with a�ordable housing and environmental sensibilities. “�e people in our neighbor-hoods —Gar�eld Park, Washing-ton Park, Little Village and Au-burn Gresham—have to get to work,” he says. “�ey don’t have cars because they are low-income. �e only way they have to move around is transit.”

His priorities: make sure emer-gency funding continues from Washington to keep transit viable and ensure that CTA, Metra and Pace work together rather than compete.

Indeed, experts say the COVID crisis will require a change in the way mass transit is funded, with a greater reliance on federal dollars. Previously, state law required the agencies to capture half of their operating revenue from the fare-box, with the balance from the state sales tax and other public and commercial sources.

“�e 50 percent recovery ratio is out the window,” former Trans-portation Secretary Blankenhorn says. “�ere’s no way our transit agencies are going to be able to cover 50 percent. It’s just not fea-sible, so why pretend?”

It’s a good time to look at how the money comes in and goes out, Blankenhorn adds, referring to the formulas that allocate the sales taxes raised in the city and suburbs to the three agencies. “Is there a smarter way so we’re not so siloed in the way we fund tran-sit?” he says.

In the past, federal dollars were to be used only for capital proj-ects. But the $1.4 billion in mass transit aid under the Coronavirus Aid, Relief & Economic Security Act, passed by Congress in March to alleviate economic fallout from the pandemic, marks the �rst fed-eral dollars used for operations. �ose funds more than compen-sate for a projected loss of $958 million in fares and sales tax reve-nue this year. But projections are a

moving target, and advocates say federal funding likely is needed for 2021 and possibly beyond.

UNCERTAINTY OVER CAPITAL PROJECTS�e future of capital projects

funded under the $45 billion Re-build Illinois infrastructure initia-tive adopted by the Legislature last year is in doubt as of May. Rebuild Illinois, with $25.3 billion allocat-ed for roads, $4.5 billion for mass

transit and $1.1 billion for rail, had been a bright spot

as the COVID crisis set in. �e state was beginning to �nally tack-le a long punch list of road and mass transit projects, reviving ne-glected infrastructure. �e trans-portation portion of the package was forecast to create 430,000 jobs over �ve years, funded by state bond funds, federal funds and revenues from the gas tax, which was increased in 2019 for the �rst time in almost three decades from 19 cents a gallon to 38 cents.

RTA says 15 major projects funded by $3.7 billion under Re-build Illinois are moving ahead. At the CTA, this includes rehabs on the Blue Line O’Hare and For-est Park branches, Green Line improvements, including an over-haul of the Cottage Grove station, and rail car purchases and over-hauls. Pace has funds for new bus-es and garages.

Metra, which endured years of austerity without state funding and has decades-old rolling stock, is able to purchase new rail cars and locomotives and rehab worn-out stations. �e agency is ana-lyzing proposals for 200 new cars with an option for up to 300 more and will �nalize procurement later this year, a spokesman says.

In rail, work was continuing under the Create program, a coa-lition of railroads and government agencies to expedite freight and ease congestion with improve-ments such as �yovers and added track.

At the Illinois Department of Transportation, much of the fund-ing is slated for the long-awaited repair and upgrade of roads and bridges. More than 2,400 of the state’s bridges, about 9 percent of the total, are structurally de�cient, according to the American Road & Transportation Buildings Associ-ation’s National Bridge Inventory

for 2020. IDOT reported in April that it

had more than 100 active con-struction projects underway with no plans to curtail work. It went ahead with an April award of $570 million in contracts statewide. Mike Sturino, president and CEO of the Illinois Road & Transpor-tation Builders Association, ini-tially expected a busy summer construction season. Crews were even taking advantage of the emp-ty roads and accelerating some work.

However, road and transit ex-perts worry about the state’s frag-ile �nancial condition, its ability to �oat bonds and the loss of gas tax revenue and user fees. Tra�c vol-umes are down 30 to 50 percent, according to IDOT.

Moody’s Investors Service in April downgraded the state’s cred-it rating to negative from stable. Budget experts in Gov. J.B. Pritz-ker’s administration have project-ed at least a $6.5 billion shortfall in expected state revenues through the middle of 2021.

By late May, municipal and township governments were cut-ting budgets for construction and resurfacing projects, Sturino says. IDOT warned on its website that projects advertised for bid in June are subject to removal or change due to reductions in revenue. An IDOT spokesman says the June bid opening “is proceeding as normally planned at this time.” Sturino says it appears increas-ingly likely that the amount of work to be awarded on future bid openings this year will be less than anticipated due to reduced gas tax funds. “�ere’s a fair amount of uncertainty,” he adds.

With less funding available, the transit agencies should re-evalu-ate their capital spending priori-ties so it’s not the “same old, same old,” Wennink says. For example, CTA buses traditionally board from the front but are now board-ing from the back to protect driv-ers. But passengers are required to manually open the door from the outside since drivers can’t open the door automatically. �e driv-ers could use a button or switch to accomplish this, Wennink says.

And a modest investment add-ing and maintaining bike and scooter lanes could go a long way to expand that alternative mode, she says.

Transit advocates worry that the pandemic will set back the move-ment toward transit-oriented de-velopment and sustainable urban living. Will more people revert to the isolation of their cars and liv-ing in the suburbs or far exurbs?

�at would be unfortunate, they say, because the old model of sprawl fosters air and water pollu-tion, disruption of forests and wet-lands, and reliance on cars and long commutes.

“Busy urban centers like ours can’t function without transit,” Wennink says. “If we cut and never replace service, then we’re contracting ourselves for the long term, permanently constraining our economy.”

Mass transit adjusts to social distancingAs COVID-19 took hold in Chicago, Regional Transportation Authority Executive Director Leanne Redden faced the greatest challenge of her career. How do you run Metra, CTA and Pace with only a fraction of riders? Redden has headed RTA since 2014. In a re-cent interview, she re�ected on how the transit operators have adapted to a changed world. �e following is an edited transcript of the conversation.

CRAIN’S: Which service was hit hardest?

REDDEN: Metra lost the most ridership because it’s a commut-er-oriented and student-oriented service. �e Metra Electric and Rock Island lines serve the Univer-sity of Chicago hospitals and other teaching hospitals, so they’ve seen less of a decline. �ey’ve been able to tag on extra cars so passengers can maintain social distancing.

What about CTA?

CTA is more diversi�ed. �ey serve people going to school and to work, and work isn’t 9 to 5. As a result, CTA hasn’t scaled back service. �ey are still serving essential work-ers at 250,000 trips a day (versus 1.5 million riders pre-COVID). �at’s still a signi�cant number of people they’re moving around. Some say, “You’ve lost all this ridership, you should be shutting down.” No, the paradox is that to maintain social distancing, you have to maintain service. We probably won’t need to add extra service.

Suburban bus and paratransit service Pace had the least de-cline in ridership. Why is that?

Pace has shown strength in the suburbs, carrying health care workers and those supporting the hospitals and regional health care facilities such as janitors. Pace serves some of the warehouse fa-cilities in Will County. One of the strongest performing routes is the one that serves the UPS facility o� I-294. Pace has been able to pull resources from connections to Metra routes, where there’s basically zero ridership.

How do you see mass transit functioning as the economy begins to reopen?

People are just starting to pick heads up and think about day zero when we start to ease up. What is the business community wanting to do? Are they going to bring peo-ple back to o�ces, or are they go-ing to stretch the limits of �exible work? Whom do we talk to, how do we talk to them? Corralling the entire business community across di�erent sectors and the six-coun-ty region, that’s a big task for us. �e working assumption is that it’s

a phased approach. But how fast, how slow? We will have scenari-os and have to be �exible within those, modify and adjust.

The transit agencies received emergency funding of $1.4 billion from the CARES Act, o�setting the projected loss of $958 million for this year. That seems not so bad.

We’re incredibly grateful to the federal government and the con-gressional delegation for helping us with this money. It’s allowing us in the short term to keep run-ning buses and trains. Our hope is that a portion carries us into 2021, which will be a tough year. �ere is talk about additional relief, but it may not come transit’s way. We’re operating on the assump-tion that CARES is the only relief dollars we have.

What is the status of Rebuild Illinois projects?

We are working, even through the stay-at-home orders, and moving forward on 60 projects. We’re using the bond funding that was autho-rized in Rebuild. A �rst round of bonds were issued earlier this year; there will be tranches of debt.

Some of that is supposed to be funded from the increase in the gas tax, right? But no one is driving.

We were happy to have the funds from the gas tax increase, but it’s a much smaller piece of the pie for us ($1.1 billion over �ve years as compared to $2.6 billion in state bond funds and $3.4 billion in federal funds).

Transit advocates say the Illinois law that requires 50 percent of revenues come from the farebox is obsolete. Do you agree?

�e recovery ratio in Illinois is high—other cities have lower fare requirements, some single digits or in the teens. I don’t think we’ll elim-inate the requirement, but we do need to talk about relief. Ridership can’t be the only metric. What is the broader economic bene�t that mass transit o�ers in supporting and underpinning the economy?

BY JUDITH CROWN

We can learn from this.

A big concern is that transit agencies will cut service or raise fares, a�ecting workers handling jobs that can’t be done remotely.

Metra was hit hard because its core of suburban o�ce workers is more able to work remotely.

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LOWER RIDERSHIP DECLINES, LOWER INCOMESWhile higher-income areas saw ridership plunge more than 50 percent, areas with lower incomes often had smaller drops, perhaps pointing to a higher reliance on mass transit. This map shows the percentage decrease at each CTA el stop in March compared to March 2019. The CTA reported an overall ridership decline of 40.7 percent.

Before COVID-19 hit, people on the South and West sides were already less likely to work from home. Not being able to work from home, along with things like longer commute times, increases the risk of catching COVID-19 on public transit.

Source: 2018 U.S. Census 5-year American Community Survey, CTA


Transit deserts limit job prospectsIn parts of the city and suburbs, getting to work can be as big a chore as a job itself, limiting income and upward mobility

BY JAMES O’SHEA

Amorita Falcon lives in the south-ern Chicago suburb of Lansing, about 22 miles from her job in the Loop. But when it comes to getting to work, she might as well live in Au-rora, almost twice as far away.

�e reason? Chicago’s byzantine and precarious transportation sys-tem makes jobs for people like Fal-con who live in the less prosperous southern parts of the metropolitan area far less accessible than they are for most residents of the region.

“�e funny thing is it’s not like I live in the boondocks of Illinois,” she says. “It’s really not that far, but it’s far when it comes to tran-sit. Some people I work with live in Aurora.”

Falcon is just one of thousands of Chicagoans who are victims of what social scientists call the “spatial mis-match,” which, roughly translated, means available jobs are in di�erent places than available job seekers.

In Chicago, most of the bet-ter-paying and upwardly mobile jobs are downtown or on the north and northwest sides of the metro-politan area, often beyond the reach of more than 3 million citizens who live on the South Side and the southern suburbs.

It’s almost as if fate, bureaucracy and circumstance have walled o� the South and West sides. Sure, they have a network of trains and buses, but the routes and schedules make it much harder for workers to im-prove their economic lot in life.

“I’m going to be honest,” one job coach told researchers working on a Metropolitan Planning Council study of the problem. “You got to get out of the South Side in order to get work at a decent wage.”

Falcon, 24, �rst experienced the e�ects of the mismatch in 2017 when she began working down-town at the Chicago Community Loan Fund. �at commute was ac-tually harder than it is today, even considering the challenges posed by the COVID-19 pandemic.

Fresh out of college, she spent more than four hours a day and $5.50 round trip on a patchwork commute of transfers and lots of-waiting.

She walked three blocks from her home to pick up the 355 Pace bus, which took her to the South Shore Line’s Hegewisch Station, a 25- to 30-minute trip including her walk. �en she boarded the CTA No. 30 bus and rode it 15 to 20 minutes to 106th Street and Ewing Avenue, where she boarded the CTA X26 ex-press bus for a one-hour trip down-town, where she got o� the bus and walked four blocks to her o�ce.

She says it often took her more than two hours to get to the bank’s Loop o�ces.

Why no New Deal 2.0 in recovery mix?FDR’s jobs, infrastructure programs left a lasting legacy. Today’s polarization is blocking a repeat.

BY A.D. QUIGIn 1937, during the depths of

the Great Depression, Chicago se-cured a multimillion-dollar grant through President Franklin Roos-evelt’s New Deal to help build the State Street subway, the �rst rapid transit tunnel under the Loop.

It cost about $7 million a mile, an enormous sum back then, but con-struction put thousands to work at a time of steep joblessness and left the city with a critical piece of infra-structure that is still in use today as a core of the Red Line.

�e coronavirus pandemic has now left the city, the state and the nation with a whopping economic problem: tens of millions of jobs lost and the threat of even more disruption if a second virus wave strikes in the fall or winter.

While Congress has authorized trillions of dollars in relief for lost business and paychecks, infra-structure spending has so far been left out. �at’s despite the legacy of job creation from decades ago, a crying need today to �x crum-bling roads, bridges, electrical grids, transit and water systems, and President Donald Trump’s on-again, o�-again advocacy for a big national construction push. Even before the pandemic, his administration’s sporadic an-nouncements of “Infrastructure Weeks” had become a running national joke.

In modern parlance, infrastruc-ture spending is a “twofer” in tough times that can be used to both put people to work and cre-ate a lasting, needed public good. So why is it such a big lift in these troubled times?

“It’s surprising under the circumstances that there wouldn’t be a big push in that direction,” says historian Robert McElvaine of Millsaps College in Mississippi and au-thor of “�e Great Depression: America, 1929-1941.” “On the other hand, the fact there isn’t one coming from Trump isn’t particularly surprising.”

Given all the Infrastructure Week declarations, that might seem a counterintuitive conclu-sion. But Trump’s inaction is a nod to the polarized climate of Wash-ington and fallout from the tea party movement of a decade ago that led conservatives to complain loudly about infrastructure spend-ing under former President Barack Obama.

“Republicans are torn on this issue,” explains E.J. Fagan, an ex-pert on how parties in�uence pol-icy and an incoming member of

the political science faculty at the University of Illinois at Chicago. “Republicans developed an ideo-logical objection to distributive federal spending in general —tak-ing money, bringing it out to dis-tricts and doing projects,” begin-ning in the mid-2000s.

It was, in part, a reaction to pub-lic outrage over high-pro�le pork barrel projects such as Alaska’s “Bridge to Nowhere,” a propos-al to build a $400 million span to replace a ferry that connected Ketchikan to an island with an air-port but just 50 residents. Repub-licans backed the project before they came to oppose it, and that opposition only grew by the time of Obama’s stimulus push to re-spond to the Great Recession.

Cost, regional jealousies and disagreements over what is and isn’t worthy of public expenditure also hamstring any agreement.

Many Democrats want green projects like a national renewable energy grid and a de-emphasis on fossil fuels to aid in the �ght against climate change, some-thing Trump and many Republi-cans consider a hoax.

“�ose priorities are highly partisan and there is intense dis-agreement,” Fagan says.

�ere were also intense regional and partisan divides in the 1930s, but Roosevelt’s New Deal man-aged to bridge them by giving something to everybody—some-times alienating conservative Democrats and partnering with a now-extinct breed of progressive Republicans.

Rural areas were electri�ed and received new post o�ces, art and park beauti�cation. Big cities like

Chicago got that, too, but also public transit and airport money. A modern compromise might in-clude similar spending on needed schools, hospitals or communi-ty centers and the expansion of broadband access to digital des-erts.

But Fagan says massive in-frastructure spending might be ill-suited to address some of the sudden unemployment shocks of the current recession.

“I think it’s implausible (hos-pitality workers) are going to go

build highways in two months” like Works Progress Administra-tion workers might have in the ’30s, he explains.

Historians and economists still debate whether credit for ending the Depression belongs to New Deal spending or World War II. But there’s no argument the al-phabet soup of public programs created under Roosevelt left a last-ing impact.

African American and immi-grant workers laid o� from Chica-go’s meatpacking plants and steel and rail yards became part of the 2.5 million-strong Civilian Con-servation Corps, planting trees, conserving soil and building trails across the country.

Meanwhile, the WPA employed tens of thousands of Chicagoans building highways, bridges, parks, public buildings and transit proj-ects.

Midway Airport, then known as the Municipal Airport of Chicago, used WPA funds to expand and add new runways and move rail-road tracks. �e Skokie Lagoons were the product of a 10-year con-servation program split between the CCC and the WPA.

Dozens of pieces of art—from murals at Chicago public schools and post o�ces to sculptures at West Side medical buildings—were New Deal-funded, as was the early radio career of legend-ary Chicago author Studs Terkel through the WPA’s Federal Writ-ers’ Project.

Chicago’s once independent parks, insolvent in the early 1930s, were consolidated as part of the New Deal to become the district we know today, helping to expand Lincoln Park sixfold and improve Palmer Park, Portage Park and Northerly Island.

New Deal emergency relief wasn’t perfect. Wages were ex-tremely low. “�ey had to pay less than they’d gotten if they were em-ployed privately, and in the midst of double-digit unemployment, wages in the private sector were very low,” historian McElvaine says. African American workers faced discrimination and were often given the most menial jobs. �e national WPA declared non-citizen workers should be dropped from the rolls in 1939.

In January, back when the econ-omy was still booming, Congress held hearings on proposed fund-ing mechanisms to chip away at the U.S. Department of Transpor-tation’s estimated $900 billion in-vestment backlog for highways, bridges and transit alone.

Potential solutions included a

hike in the federal gas tax or a new charge for vehicle miles traveled, a controversial proposal that would help raise more revenue from drivers of fuel-e�cient and elec-tric vehicles that sip no gas.

Many Republicans, especially those who signed a no-tax-in-crease pledge, are wary of both. �ey say they are loath to drive up the national de�cit, despite back-ing a $2 trillion tax cut package in 2017 and $3 trillion in COVID-re-lated stimulus in recent weeks.

“I think it’s been analogized by (Treasury Secretary Steven) Mnuchin: �e federal govern-ment’s response to COVID is nine innings. We might be at inning four or �ve right now,” says U.S. Rep. Darin LaHood, a Peoria Re-publican.

Any Republican support for in-frastructure spending will come only if Trump signals how to pay for it, LaHood says. “�e president hasn’t come out and said he sup-ports an increase in the gas tax. He hasn’t said he supports some kind of user fee,” or been speci�c about how public-private partnerships might help largely rural districts like LaHood’s.

LaHood also says, in his district, skepticism is high that infrastruc-ture money will go where it’s prom-ised. “You go back to, ‘�e lottery is going to fund education,’ ” he says. “�at hasn’t happened. Or ‘We’ll raise your income tax and solve your pension problems.’ ”

LaHood’s father, Ray, also a Re-publican, previously served the same district for seven terms be-fore Obama reached across the aisle to tap him as U.S. transporta-tion secretary in 2009.

In the absence of a federal infra-structure push, the elder LaHood says many states, Illinois included, have been trying to �ll the gap lo-cally. In Spring�eld, the Democrat-ic-controlled Legislature last year approved a hike in the state gas tax and a casino expansion to help pay for infrastructure spending.

“�ey’re �xing up roads and bridges because they’re not wait-ing for the federal government. You don’t see people in the states

complaining about that,” Ray LaHood says. “�is is kind of a no-brainer.”

U.S. Rep. Sean Casten, a Dem-ocrat from Downers Grove, says Republicans uncomfortable with de�cits should not have backed Trump’s tax cuts. As Casten sees it, the biggest reason Trump hasn’t been able to nail down an infra-structure plan is his lack of focus.

“One of my colleagues de-scribed conversations with the president as a conversation with a super bouncy ball,” Casten says. “It doesn’t focus on anything. It just �ies around the room. If we’re going to have discussions about a seven- to 10-year infrastructure plan, it takes focus.”

�e economic tumult caused by the coronavirus is all the more rea-son to be willing to spend big now, Casten argues, including on green infrastructure.

“�e only historical precedent we have is the Great Depression, and the only historical precedent we have from the Great Depression is massive infrastructure programs. (Federal Reserve Board Chairman) Jay Powell tells us we have zero to negative interest rates as far as the eye can see—this is exactly the time we should be much more ambi-tious on infrastructure.”

While it’s di�cult to know the future of transit, air and highway use post-COVID, Joseph Schofer, a professor of civil and environmen-tal engineering at Northwestern University, says any infrastruc-ture project must �rst address the infrastructure backlog but then ponder a more resilient future. He says modern lawmakers need to pay attention to the third “R” in the New Deal after relief and recovery: reform.

“Look at the stories in the me-dia about the inequity in the in-cidence of COVID-19 and the se-vere illness and death: A lot has to do with economic development, segregation and racial divide,” Schofer says. Housing should be part of that solution. “It seems to me that housing is really import-ant for people’s safety, security and happiness.”

Cost, regional jealousies and disagreements over what’s worthy of public expenditure hamstring any agreement.

A mix of grants through President Franklin Roosevelt’s Works Progress and Public Works programs helped build the State Street subway in Chicago. Here’s the �rst trip in October 1943.

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Transit deserts limit job prospectsIn parts of the city and suburbs, getting to work can be as big a chore as a job itself, limiting income and upward mobility

BY JAMES O’SHEA

Amorita Falcon lives in the south-ern Chicago suburb of Lansing, about 22 miles from her job in the Loop. But when it comes to getting to work, she might as well live in Au-rora, almost twice as far away.

�e reason? Chicago’s byzantine and precarious transportation sys-tem makes jobs for people like Fal-con who live in the less prosperous southern parts of the metropolitan area far less accessible than they are for most residents of the region.

“�e funny thing is it’s not like I live in the boondocks of Illinois,” she says. “It’s really not that far, but it’s far when it comes to tran-sit. Some people I work with live in Aurora.”

Falcon is just one of thousands of Chicagoans who are victims of what social scientists call the “spatial mis-match,” which, roughly translated, means available jobs are in di�erent places than available job seekers.

In Chicago, most of the bet-ter-paying and upwardly mobile jobs are downtown or on the north and northwest sides of the metro-politan area, often beyond the reach of more than 3 million citizens who live on the South Side and the southern suburbs.

It’s almost as if fate, bureaucracy and circumstance have walled o� the South and West sides. Sure, they have a network of trains and buses, but the routes and schedules make it much harder for workers to im-prove their economic lot in life.

“I’m going to be honest,” one job coach told researchers working on a Metropolitan Planning Council study of the problem. “You got to get out of the South Side in order to get work at a decent wage.”

Falcon, 24, �rst experienced the e�ects of the mismatch in 2017 when she began working down-town at the Chicago Community Loan Fund. �at commute was ac-tually harder than it is today, even considering the challenges posed by the COVID-19 pandemic.

Fresh out of college, she spent more than four hours a day and $5.50 round trip on a patchwork commute of transfers and lots of-waiting.

She walked three blocks from her home to pick up the 355 Pace bus, which took her to the South Shore Line’s Hegewisch Station, a 25- to 30-minute trip including her walk. �en she boarded the CTA No. 30 bus and rode it 15 to 20 minutes to 106th Street and Ewing Avenue, where she boarded the CTA X26 ex-press bus for a one-hour trip down-town, where she got o� the bus and walked four blocks to her o�ce.

She says it often took her more than two hours to get to the bank’s Loop o�ces.

All for a job as an unpaid intern. A year after the internship, she

landed her current job —a paying position with bene�ts as a portfo-lio management associate at the nonpro�t community development �nancial institution. She began taking the South Shore Line train downtown and gets assistance from her employer to o�set a $14 round trip. She bought a car to get to the train station, but sometimes she has to rely solely on public transit.

Like many others, her transpor-tation challenges were eased by the pandemic. She is working from home and can be on the job just by walking into her home o�ce and

signing on to a com-puter.

But she expects her Loop o�ce to reopen in mid-June. Her com-muting challenges will

return then, possibly with a ven-geance.

“With the pandemic on every-one’s mind,” she says, “I have the option of driving to work every morning, which can take less than an hour. But then I have the price of parking. �e cheapest I can �nd is $20 a day.”

Her round-trip commute that will resume once the o�ce reopens is a lot better than the four-hour grinds she endured as an intern. But there are complications

“I don’t know if that is safe. And with COVID, the trains are operat-ing on a modi�ed schedule. So, let’s say I’m at the o�ce one day and I miss the last train at 5:30. �e next train is at 9 p.m. �ankfully, the CTA (bus) can get you to the Hegewisch Station, but that’s less safe for me, and I’m going to be on the CTA, which has more riders and more chances of coming into contact with people and less social distancing.”

Falcon was not part of the mis-match study sponsored by the MPC and Equiticity, an advocacy group for racial equity. But the comments of the Chicagoans interviewed by Kate Lowe, an associate professor at the University of Illinois at Chicago, and Chelsie Coren, a graduate stu-dent there, had a familiar ring.

In contrast to many transpor-tation studies, Lowe and Coren sought feedback from users of the city’s transit system. �ey conduct-ed a series of focus groups of job coaches and job seekers at employ-ment centers on the South and West sides.

“Results demonstrate that dis-advantaged workers experience a complex web of transportation and intersecting barriers that make it di�cult to travel and retain em-ployment,” the report says. “In fact, almost three-quarters of (those interviewed) indicated that trans-portation was a barrier to getting or keeping a job.”

�e racism and ethnic tensions that simmer beneath almost every issue in Chicago also surfaced in the focus group study. And the sugges-tion that there is a disconnect be-tween major employment centers and economically disconnected ar-eas clustered on the South Side and southern suburbs mirrors studies done by the Chicago Metropolitan Agency for Planning.

An interactive online job and transportation map built by Nebi-you Tilahun, an associate professor of urban policy and planning at UIC, vividly displays the disparities. Although it was not part of the MPC study, Tilahun says his map, which relies on updated U.S. Census Bu-reau jobs data, allows users to deter-mine how many jobs they can get to within a given amount of time using various modes of transportation.

“You can see (the mismatch) in the map because those jobs are part of the computation. If you chose to look at 30 minutes by transit,” Tila-hun says, “the map shows you how many of the region’s jobs you can get to on public transit within a half-hour’s travel time.”

“If you are on the North Side, the

accessibility of the jobs would be higher and you can get to most of them in short travel times, but if you are on the South Side, the accessi-bility of the jobs is lower because it is harder to get to them,” he says.

Audrey Wennink, director of transportation at the MPC, says some elements of the report the or-ganization co-sponsored surprised her, particularly comments about how fear of violence inhibited use of public transit. “�is was not some-thing I was unaware of, but I think the scale to which violence and per-sonal safety a�ects people’s mobili-ty stood out.”

Several respondents interviewed in the focus groups recall abandon-ing the use of public transit to get to work after hearing about or witness-ing violence on the CTA.

“It could really a�ect you men-tally, at night,” says one focus group participant. “I saw somebody get their ear bit o� on the bus. I had never seen (anything like that). It was devastating. So, I quit that job because I was afraid.”

“You have to acknowledge that more people make decisions based on emotions than on paychecks,

and perception is reality,” Wennink says. “Even if something only hap-pened once, it’s enough to scare you into not wanting that to happen again and put yourself into a situa-tion where it could.”

Falcon says she, too, has wit-nessed violence on public transit and fears waiting at night for a bus or on a CTA train platform. But her experiences and frustrations with public transit also involve more mundane problems.

She says she often thinks about her days as a student with little in-come and a commute that added four hours to her workday. “I think of people who have to do all of that all the time. For me, there was a means to get out of that. But for many people, that’s not the case.”

She recalls being delayed in the morning by as much as 25 minutes when her Pace bus had to wait for a freight train to clear an intersection.

“I don’t understand why they have to move so slow in rush hour. And that’s where the personal ex-perience comes in. I remember being on the bus and hearing peo-ple talking about, ‘Oh yes, that one lady, she used to be on this bus. But she’s not anymore. We think she got �red for being late to work so many times.’ She was late to work because of the freight trains. It wasn’t her fault.”

Wennink won’t say it’s “impossi-ble” for residents on the South Side to land work up north.

“I mean nothing’s impossible,” she says. “People might try to do it. You can say, ‘I really want work and I’m going to try this job that pays $15 an hour.’ But once they take it, they �nd they have to take the Red Line to the Blue Line and the Blue Line all of the way to O’Hare and then a shuttle bus to a manufacturing fa-cility, and it takes them one to two hours each way.

“Soon they �nd it’s so stressful and taxing that it may not be sus-tainable. And then if something goes wrong outside of their control three times, they get �red.”

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A company using technology to elevate media and

journalism Leg 1: The Pace 355 bus to the CTA 30 bus.Leg 2: The CTA 30 to the Red Line 69th St. Station.Leg 3: The Red Line to downtown.

Leg 1: The Pace 355 bus to the CTA 30 bus.Leg 2: The CTA 30 to the CTA 26X bus.Leg 3: The 26X bus to downtown.

Leg 1: The Pace 355 bus to the South Shore Line’s Hegewisch Station.Leg 2: The South Shore Line to downtown.

Leg 1: Drive and park to take the South Shore Line from Hegewisch.Leg 2: The South Shore Line to downtown.

Route 12 hours and 4 minutes,

$5.50*

Route 22 hours and 6 minutes,

$5.50*

Route 31 hour and

42 minutes, $16.50*

Route 41 hour and

10 minutes, $14.00*

*Round trip

AMORITA FALCON’S WORK COMMUTE OPTIONS

When Lansing resident Amorita Falcon �rst began working downtown, she spent more than four hours a day getting to and from her job in the Loop.

complaining about that,” Ray LaHood says. “�is is kind of a no-brainer.”

U.S. Rep. Sean Casten, a Dem-ocrat from Downers Grove, says Republicans uncomfortable with de�cits should not have backed Trump’s tax cuts. As Casten sees it, the biggest reason Trump hasn’t been able to nail down an infra-structure plan is his lack of focus.

“One of my colleagues de-scribed conversations with the president as a conversation with a super bouncy ball,” Casten says. “It doesn’t focus on anything. It just �ies around the room. If we’re going to have discussions about a seven- to 10-year infrastructure plan, it takes focus.”

�e economic tumult caused by the coronavirus is all the more rea-son to be willing to spend big now, Casten argues, including on green infrastructure.

“�e only historical precedent we have is the Great Depression, and the only historical precedent we have from the Great Depression is massive infrastructure programs. (Federal Reserve Board Chairman) Jay Powell tells us we have zero to negative interest rates as far as the eye can see—this is exactly the time we should be much more ambi-tious on infrastructure.”

While it’s di�cult to know the future of transit, air and highway use post-COVID, Joseph Schofer, a professor of civil and environmen-tal engineering at Northwestern University, says any infrastruc-ture project must �rst address the infrastructure backlog but then ponder a more resilient future. He says modern lawmakers need to pay attention to the third “R” in the New Deal after relief and recovery: reform.

“Look at the stories in the me-dia about the inequity in the in-cidence of COVID-19 and the se-vere illness and death: A lot has to do with economic development, segregation and racial divide,” Schofer says. Housing should be part of that solution. “It seems to me that housing is really import-ant for people’s safety, security and happiness.”

A mix of grants through President Franklin Roosevelt’s Works Progress and Public Works programs helped build the State Street subway in Chicago. Here’s the �rst trip in October 1943.

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Many in Chicago’s bike community are both optimistic and con-

cerned about the increase in bike sales and bike riding during the pandemic.

Widespread desire for social distancing is likely to reshape our transportation picture signi�cant-ly as businesses reopen and more people return to commuting. Many who previously relied on public transit for their commute will shift to biking or driving.

Accounts from local bike shops and news sources note a signi�cant increase in bike sales. A recent New York Times piece cited March increases of 66 percent for commuter and �tness bikes, 121 percent for leisure bikes, 59 percent for children’s bikes and 85 percent for electric bikes. I’ve heard from owners and employees of several local shops who say they’ve sold out most bikes that sell for less than $1,000. Because of sup-ply chain and transportation issues related to the pandemic, shops are having trouble get-ting more in stock. Many manufacturers have no lower-priced options available to ship.

Increased demand is also a�ecting the availability of bike shop mechanics. My neighborhood shop has a sign on the door saying that they’re not accepting customers’ bikes for tuneups and repairs because they are completely overwhelmed. I’ve heard

similar accounts from elsewhere in the city.

Many buyers of new bikes have not been on a bicycle in years. Some are learning to ride for the �rst time. Chicago needs to im-prove our bike route network to ensure that riders of all abilities can get to their destinations safe-ly, regardless of whether they are commuting, shopping or visiting other destinations.

Recon�guring streets as safer bike routes can have other ben-e�ts. Vincennes Avenue previ-

ously had serious problems with speeding, lane weaving and crashes. After bike lanes were added and lane widths were reduced, speeding and crashes dropped signi�cantly and it became a safer place to ride.

Our South and West Side communities have been largely left behind as bike lanes have been built in other neighborhoods. �e city has an existing plan for a citywide network that was developed several years ago with community input. Unfortunately, aldermanic resistance has been a road-block to building any bike infrastructure in too many wards, leaving large portions of the city with none at all.

During the pandemic, I have witnessed an increase in speeding tra�c and more drivers running red lights and stop signs. Local cy-clists I know have seen the same problems. I

hear similar reports from other cities. Many cities have instituted Slow Streets programs, closing streets to through tra�c to create safe spaces for walking, biking and running. �is is ideal for people who are learning to ride or getting reacquainted with riding.

Chicago has started a Slow Streets pro-gram, although it chose the somewhat am-biguous name Shared Streets. Many of us in the local bike community are concerned that uninformed people may confuse this with Share the Road, which isn’t necessarily help-ful in improving safety. �e �rst location is Leland Avenue in the 47th Ward. �e Leland closure is getting a positive response. Having Slow Streets in more neighborhoods across the city, with local input on where they might be helpful, is good for families and for people working on their bike riding skills.

Meanwhile, some in the federal govern-ment seek incentives to encourage driving.

More driving will result in an increase in crashes and injuries. �is is not a welcome prospect at any time, much less during a pandemic. Police and EMS resources are stretched thin right now, so response times may be longer than normal if emergency forces are able to come at all. Creating a better bike route network where streets are modi�ed to reduce speeds and crashes is a safer, healthier option than encouraging more driving.

In the turmoil of recent days, interruptions to transit service have meant that biking is the only a�ordable, reliable commute option for many essential workers. We don’t know how much transit may be disrupted in the coming weeks, or how long the turmoil or the pandemic might continue. Creating a com-prehensive bike route network, with as many protected lanes as possible, is a smart invest-ment in the future of a healthier Chicago.

Fare relief will ease South Side transit woesIt is clear that we were not

prepared for the COVID-19 pandemic, which has turned

the world upside down. During the quarantine, we should take some time to reflect on the mistakes of the past so that we do not repeat them.

One of those mistakes that for decades has harmed residents of the South Side and south suburbs is inadequate access to equitable, a�ordable and seamless public transportation, a shortcoming that makes it hard for many to get to good-paying jobs and keep them.

Even before the pandemic hit, the Cook County Department of Transportation & Highways had proposed a plan to increase and improve service to the South Side and south sub-urbs. �e centerpiece of the three-year pilot project included subsidies to lower fares and transfers, bringing ridership costs in line with the CTA. It is imperative that post-COVID-19, this initiative is enacted and that all transit agencies work together to make transportation equitable and a�ord-able throughout the city of Chicago.

�e Coalition for a Modern Metra Electric, a group of transit, business, community and faith-based organizations, has been working diligently to break the impasse to promote

interagency collaboration. �is project will provide greater ac-cess to much-needed resources such as jobs, schools, shopping, medical facilities and other vital resources, and will improve the quality of life in these areas where transit service is spotty.

Getting from here to there on public transit is more convenient in other parts of the city. �e CTA runs two rapid transit lines, the Red and the Purple, from downtown up to Evanston. �ere are also two rapid transit lines from downtown to Oak Park, the Green and the Blue. During rush hour on North LaSalle Street, you often see buses lined up one be-hind the other. �ere is no such

thing as missing a bus because another bus is about �ve minutes behind the other. As well, there are various rapid transit choices that allow people to travel to their various destinations with ease.

�e story is very di�erent on the Far South Side. �e city limits stretch past 130th Street, but the Green Line ends at two branches on 63rd Street, and the Red Line stops at 95th Street. A resident of the Alt-geld Gardens area trying to get downtown has to board a No. 34 bus at 131st Street and South Ellis Avenue and then ride more than 30 minutes up Michigan Avenue just

to reach the 95th Street station.�e Metra Electric is an underutilized

rapid transit line running through the south region that, with service improvements, could provide a more convenient option for many residents without drawing away ridership from the CTA.

Mayor Lori Lightfoot has launched the city’s Invest South/West initiative to promote development in economically distressed neighborhoods, and the pro-posed Cook County Pilot Project would only enhance that e�ort. Now more than ever it is necessary to “ignite the pilot” to move forward by changing and improving transportation in areas that have su�ered for far too long.

Igniting the pilot will help move these overlooked communities progressively

forward to a brighter future and will change the trajectory of communities that have su�ered without access to equitable and a�ordable transportation.

�e COVID-19 shutdown has created an avalanche of despair: Businesses had to shut down, which caused layo�s that led to record numbers of people having to apply for unemployment, and we witnessed mile-long lines of people seeking food to feed their families. Our �rst responders, doctors and nurses have put themselves on the front lines to do all they can to save lives.

Many are wondering after the quarantine is over if they will return to their lives as they were before the quarantine. I pray that we will seriously keep in mind that what happens to one of us can and does have a direct impact on all our lives.

IGNITE THE PILOT

Andrea D. Reed is executive direc-tor of the Greater Roseland Cham-ber of Commerce and co-chair of the Coalition for a Modern Metra Electric.

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A double-edged sprocketCYCLING BOOM

Anne Alt is president of the Chicago Cycling Club.

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As the impact of the coronavi-rus continues to ripple through the local economy, one key sym-bol of progress will become hard-er to �nd on the Chicago skyline: the construction crane.

�e Chicago-area construction boom ground to a halt in April, according to data from research �rm Dodge Data & Analytics. �e total value of nonresidential con-struction starts in the Chicago area fell to $269.4 million in April, down 58 percent from a year ear-lier, according to Dodge. Residen-tial construction fell 20 percent, to $419.1 million.

Gov. J.B. Pritzker classi�ed con-struction as an essential business under his March stay-home or-der, allowing crews to continue work on apartment, o�ce and other projects. But the health and economic crisis has created such uncertainty that developers and lenders have put many new projects on hold, hoping they can move forward when the future be-comes more clear.

Nationally, nonresidential con-struction starts totaled $170 bil-lion in April, down 37 percent from a year earlier, according to Dodge. Residential starts fell 25 percent, to $245 billion.

“�e April starts data is de�-nitely sobering, but also very much expected,” Richard Branch, Dodge’s chief economist, says in a statement. “�e near shuttering of the economy during April had a signi�cant negative e�ect on the construction industry, leading to delays in both ongoing projects as well as those about to break ground.”

STRONG STARTConstruction companies here

have �ourished over the past sev-eral years amid a strong economy that boosted demand for apart-ments, warehouses, o�ces and other space. It’s one of the area’s most important industries, em-ploying about 130,000 people here.

But even before the coronavi-rus hit, Dodge had forecast that 2020 would be a weak year for the Chicago area, projecting a 10 per-cent decline in starts from 2019.

Business got o� to a strong start this year, with local starts up 16 percent through the end of March, according to Dodge. But with the big drop in April, con-struction starts here were down 4 percent in the �rst four months of the year versus the same period in 2019.

“Even though parts of the coun-

try are beginning to reopen, and some areas that had paused con-struction are now restarting, it will be a very long road back to normalcy for the construction in-dustry,” Branch says in the state-ment. “Continued fear of a resur-gence in the virus will lead to a continued reduction in economic activity over the coming months, a�ecting construction projects

across the country. �e economic and construction recoveries will remain sluggish until a vaccine or viable treatment becomes avail-able.”

Dodge has not released a re-vised Chicago-area forecast yet, but the �rm projects that sin-gle-family construction starts in the Midwest will drop 8 percent this year, while multifamily starts

will decline 3 percent. Commer-cial construction in the Midwest will decline 13 percent in 2020, and total nonresidential building, which includes education, health care and public sector projects, will drop 21 percent, according to Dodge.

One bright spot: warehouse construction, which Dodge fore-casts will rise 2 percent.

Paylocity’s former Arlington Heights headquarters is on the market after its previous owner walked away from the property, potentially teeing up another big o�ce redevelopment in the north-west suburbs.

A venture of Overland Park, Kan.-based Midland Loan Ser-vices is looking to unload the pair of four-story buildings at 3800 and 3850 N. Wilke Road after taking control of the property in August through a deed-in-lieu of foreclo-sure.

�ere is no listing price for the mostly vacant buildings, known as Commerce Point I & II, but High-land Park-based brokerage Front-line Real Estate Partners is framing them as an opportunity to revive the o�ce space or potentially re-develop the 16-acre site at state Route 53 and Interstate 290 into a new type of use.

�e o�ce buildings, which to-tal 186,000 square feet, are among many in the northwest suburbs that struggled to land new tenants in recent years after being left be-hind by a big corporate user. Most of the companies that abandoned the suburbs moved downtown,

though payroll software �rm Pay-locity announced a deal in 2016 to move its main o�ce from Com-merce Point to the former Zurich headquarters building in nearby Schaumburg.

�e company vacated the 126,000 square feet it leased at Commerce Point in phases, but its landlord—Palatine-based First American Properties—couldn’t land a new tenant amid a dearth of demand for suburban o�ce space. First American eventual-ly defaulted on a $15 million loan it had taken out on the property in 2015 before giving up control of the buildings last year. A First American spokesman declines to comment.

Now the property is on the books for Midland, which oversaw the mortgage after it was packaged with other loans and sold o� to commercial mortgage-backed se-curities investors.

WORTH LESS�e loan has a remaining bal-

ance of $14.5 million, but the property is likely worth far less than that with menial income in place, according to a Bloomberg report tied to the mortgage. �e buildings were appraised at $7.8

million in 2018, according to Bloomberg data. Paylocity’s lease expired at the end of May, leav-ing only one small medical o�ce tenant that leases less than 5,000 square feet through April 2021.

Frontline is casting a wide net to �nd a buyer as Midland looks to recover as much of the lost value as possible. O�ce demand in the far northwest suburbs has been meager—the submarket’s o�ce vacancy is near its all-time high at 30.3 percent, according to data from brokerage Jones Lang LaSal-le—suggesting it may �nd new life as something else.

“We’re engaging with a number

of end-users from owner-users to investors who are considering uses from o�ce to light industri-al to multifamily, and a variety of other uses,” says Frontline Ex-ecutive Vice President Matthew Tarshis.

Other abandoned suburban o�ce headquarters have created a blueprint for redevelopment. In one high-pro�le example, the 225-acre former Motorola Solu-tions campus is being turned into a mixed-use development includ-ing a Topgolf venue, luxury apart-ments and an assisted living and memory care facility.

First American had put Com-

merce Point I & II up for sale be-fore Paylocity announced its de-parture. It was seeking around $20 million when it put the buildings on the market in 2014, an increase from the $13.2 million it paid for them in 2005 and 2006, according to Cook County property records. But the �rm opted to re�nance instead with the 2015 loan, when the property was appraised at $23.9 million.

�e buildings, which opened in 1989 and 1990, include four-story atrium lobbies and more than 700 surface parking spaces combined, according to a Frontline market-ing �yer.

Construction starts plunged in April

Former Paylocity headquarters up for sale

With the economy in a recession, developers and lenders are hesitant to proceed with new projects

The Arlington Heights o�ce property is on the market after its previous owner handed over the keys to its lender

BY ALBY GALLUN

BY DANNY ECKER

Apartment projects, like this one underway at Randolph Street and Wabash Avenue in a photo from March, have kept construction companies busy in the Chicago area, but the market is slowing.

3800 N. Wilke Road in Arlington Heights.

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Crowe LLP, Chicago Crowe, a public accounting, consulting and technology firm with offices around the world, would like to announce the following newly elected partners. Amar Gandhi, CMA, PMP, was named principal in consulting. Gandhi leads enterprise application implementations and develops technology solutions for manufacturing and distribution industry clients.Mike Grob, MCP, was named principal in consulting. In this role, he leads cloud transformation services and assists clients in modernizing their IT services. He is a Microsoft certified professional in Azure and Dynamics.

ACCOUNTING / CONSULTING

Gandhi

Grob

Crowe LLP, Chicago Crowe, a public accounting, consulting and technology firm with offices around the world, would like to announce the following newly elected partners. Giulio Camerini, CRC, was named principal in consulting. He serves as a leader for Crowe’s loan review services, which provides outsourced/co-sourced loan reviews, credit technology and analytic solutions to U.S. and international financial institutions. Eric Ference, CPA, was named partner in advisory services. In this role, he is responsible for leading buy and sell-side due diligence engagements as well as deal structure consulting.


Camerini

Ference

Crowe LLP, Chicago Crowe, a public accounting, consulting and technology firm with offices around the world, would like to announce the following newly elected partners. Kyle Owens, CPA, was named partner in firm risk management services. As part of the Crowe assurance professional practice group, he focuses on implementation of new audit standards and audit methodology. Doug Sayad, CPA, was named partner in audit services. As an audit leader for the retail services group, he leads teams through internal control over financial reporting (ICFR) and financial statement audits for public and private companies, while managing market strategies.


Owens

Sayad

Crowe LLP, Chicago Crowe, a public accounting, consulting and technology firm with offices around the world, would like to announce the following newly elected partners. Tamara Kolb was named principal in consulting. In this role, she’s responsible for assisting community banks to top global financial services companies in the areas of risk management consulting, Bank Secrecy Act regulatory compliance and financial crime program development.Dave McKnight, CISSP, was named principal in consulting. In this role, he works with mid-sized financial services organizations to refine their cybersecurity capabilities by providing increased organizational awareness, cybersecurity maturity discussion and executing real-world attack simulations.


Kolb

McKnight

Schaumburg Bank & Trust, Schaumburg

Christopher Woelffer has been named the new CEO of Schaumburg Bank & Trust, a member of the Wintrust Community Bank family. Previously, he was president and CEO of STC Capital Bank in St. Charles, Illinois, a bank he helped organize and lead since 2006. He is a graduate of Saint Mary’s University of Minnesota and the ABA Stonier Graduate School of Banking. Chris currently serves as the president of the St. Charles Business Alliance.

BANKING / FINANCE

Beverly Bank & Trust, Chicago

Daniel Harvey has been appointed president of Beverly Bank & Trust, part of the Wintrust Community Banks family. He previously served as senior vice president at Wintrust and has directly contributed to Wintrust’s significant growth since joining the company in 2010. Dan’s financial career includes experience in high yield, private placements, and middle market commercial banking, and he has a marketing and finance degree from Marquette University.

BANKING / FINANCE

Wheaton Bank & Trust, Wheaton

Kam Kniss has been appointed CEO of Wheaton Bank & Trust, part of the Wintrust Community Banks family. Since joining Wintrust in 2010, he has developed deep relationships and become a trusted advisor to numerous middle market businesses and private equity sponsors. Kam has played a critical role in the growth of Wintrust Commercial Banking through his leadership, organization, and business development efforts.

BANKING / FINANCE

State Bank of The Lakes, Antioch

Michael Deney has been appointed president of State Bank of The Lakes, part of the Wintrust Community Banks family. He has more than 20 years of banking experience and holds a bachelor’s degree in business administration from Canisius College. Michael is a member of the Economic Development Committee for Gurnee and the treasurer for the Warren Area Lacrosse Association. He also serves on the board of the Special Education District of Lake County Foundation.

BANKING / FINANCE

Village Bank & Trust, Des Plaines

Michele Petrie has been appointed president of Village Bank & Trust, part of the Wintrust Community Banks family. She also serves as branch president of Wintrust Commercial Banking in Rockford. Michele has more than 24 years of industry experience, and she also owned her own consulting business, Diversitel Consulting LLC. She has a bachelor’s degree in finance with a minor in history from Indiana University.

BANKING / FINANCE

Wintrust Community Banks, Wheaton

Pamela Sharar-Stoppel has been appointed to market head for Wintrust Community Banks in the western and southern suburbs. She is the former CEO and president of Wheaton Bank & Trust, part of the Wintrust family, where she will continue to provide leadership and support. Pam has a bachelor’s degree in business from Western Illinois University and a master’s degree in finance and international business from the Kellogg School of Management at Northwestern University.

BANKING / FINANCEFifth Third Bank, Chicago

Ray Redlingshafer is a Wealth Management Advisor with over 10 years of wealth management experience. In this role, he is responsible for providing wealth management solutions to high net worth clients. Prior to joining the firm, Ray was an investment advisor for CIBC PWM, where he advised high net worth clients and had a role on the investment committee. Previously, he worked at Robert W. Baird. Ray received his B.S. in Finance from Marquette University and his M.S. in Finance from Notre Dame.

BANKING

Wheaton Bank & Trust, Wheaton

Robert Hutchinson has been appointed president of Wheaton Bank & Trust, part of the Wintrust Community Banks family. He joined Wintrust in 2006 and has 33 years of experience in the banking industry. Bob is a member of the board of directors of Choose DuPage. Bob also serves as a trustee of the Conservation Foundation and the Wetlands Initiative. He has a bachelor’s degree in economics from Illinois State University and an MBA from Benedictine University.

BANKING / FINANCE

Village Bank & Trust, Des Plaines

Russ Larsen has been appointed CEO of Village Bank & Trust. In addition to this new role, he also manages Wintrust’s middle market banking efforts in the northwest suburbs. Russ has a bachelor’s degree from Northern Illinois University and an MBA from DePaul University. He serves on the Board of Executive Advisors of the Northern Illinois University College of Business and as a board member for the American Cancer Society. Guy Eisenhuth continues as Chairman of VBT and Market Head for NW suburbs.

BANKING / FINANCE

Schaumburg Bank & Trust, Schaumburg

Ursula Moncau has been promoted to president of Schaumburg Bank & Trust, a member of the Wintrust Community Bank family. She will continue to serve as head of the Wintrust Commercial Real Estate Group in the northwest hub. She is on the board of the Chicago Architecture Center and is a member of the Wintrust Women’s Leadership Council. A graduate of the University of Illinois at Urbana-Champaign, she also earned her MBA from the University of Chicago.

BANKING / FINANCE

PEOPLE ON THE MOVE Advertising Section


To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / [email protected]

Molto Properties, Oakbrook Terrace

Kevin Mohoney has joined as Vice President/Central Region and will focus on sourcing and executing new development and investment opportunities in the U.S. Central Region including Chicagoland, Indianapolis, Louisville, Nashville, Cincinnati and Columbus. He was formerly at Transwestern Development, where he was involved in the successful development of over 4 million SF of industrial projects.

REAL ESTATE


�e murder of George Floyd and the nationwide protests again show the black experience in America, where minority communities su�er at the hands of institutions claiming to protect and serve them.

�ese communities face unequal treatment from law enforcement, but also from government policies that foster a signi�cant gap in employment rates with their white peers. �is gap was widening throughout 2019, as Illinois’ economy began

showing weakness. It became a chasm when state-mandated closure of businesses dispropor-tionately forced minority workers out of jobs.

�e pandemic-induced eco-nomic downturn took the security

of a paycheck from nearly 1.2 million Illinoisans. But job losses hit unequally. Low-income fami-lies, women and minority workers were disproportionately harmed by the lockdown measures.

Employment fell by 22 percent for black women—meaning more than 1 of 5 black women lost her job in the lockdown’s �rst month. �e same was true for Hispanic women. White women’s employ-ment decreased 17 percent.

Individuals whom our state leaders deemed “nonessential”

lost their jobs at a higher rate than other work-ers. �e �rst workers to lose their jobs were less white and less likely to have a college degree. �ey are also workers who tend to take longer to �nd stable jobs.

�is atop decades of disin-vestment in black neighbor-hoods and deteriorating health associated with fewer economic opportunities. �ose led to more COVID-19-related health compli-cations among black Americans.

Unfortunately, much of the discussion in Illinois failed to ac-knowledge the evidence of unem-ployment harming physical and mental health. Research shows unemployed workers are more likely to develop stress-related conditions such as obesity, stroke, heart disease and hypertension. �ose underlying conditions led to more COVID-19 deaths, but that link between economic and health outcomes was absent from Illinois’ public health conversa-tion.

A labor market recovery can signi�cantly reduce racial economic and health gaps. But political polarization and racial tensions are bad for economic growth—as exhibited when some protests devolved into riots and mass looting. Disparate economic and health outcomes will contin-ue to harm lives and livelihoods unless the country overcomes its di�erences, unites and changes course.

�at will require dealing with how we got here. Illinoisans deserve a criminal justice system

that works for everyone. �at starts by dealing with why black and Hispanic people are more than 50 percent more likely than other Americans to experience force in interactions with police, and continues by exploring other racial disparities in the criminal justice system.

Secondly, state leaders should lift the lockdown sequentially, using science to give our econo-my a �ghting chance. As monthly bills come due, many families cannot a�ord much more of the pandemic and protests keeping businesses curbed or closed. Mass business failure will leave Illinois families without jobs to return to. It will take a decade to recover from the pandemic losses, the Congressional Budget O�ce predicts.

Lastly, the state of Illinois is facing a potential record bud-get de�cit. Economists argue against increasing taxes during a recession, but Gov. J.B. Pritzker champions a progressive tax that will increase taxes up to 47 per-cent on more than 100,000 small businesses—the same businesses that create roughly 60 percent of all Illinois jobs every year.

�ese massive threats to Illinoisans’ economic well-be-ing will cause long-term harm to those who su�er the most already. Whether fear of unrest or increased human su�ering drives the conversation, they must be addressed.

Crain’s contributor Orphe Divounguy is chief economist at the Illinois Policy Institute.


In an impassioned speech in a pivotal moment of her mayoral-ty, Mayor Lori Lightfoot on June 2 sought to mend the city and set a hopeful path forward.

Her words carried a heavy burden. Even before COVID-19 created an economic crater, well before the rioting in the after-math of George Floyd’s death in Minneapolis, Lightfoot’s Chicago already faced serious challenges.

In the speech, her call for po-lice reform was automatic. And her 90-day deadline for a �rst wave of new initiatives spoke to

the urgent need for reform. But Lightfoot knows the root cause of the riots goes to the very heart of Chicago’s urban illness—a legacy of inequity and bias that has plagued the city for gener-ations. A new $10 million fund for rebuilding businesses from the riots and looting will be just a start.

“�ere is no shortcut to get to our better place. It is not one thing, it is not one program. It is not one event, it is not one per-son. It is everything. And it will require all of us,” the mayor said.

It took a citywide record of unequal investment to get here. �e Urban Institute last year studied all public and private investment in Chicago neigh-borhoods from 2011 to 2017. �e �ndings: Majority-white neigh-borhoods received triple the rate of investment that went to majority-black neighborhoods. Low-poverty neighborhoods attracted investment at 2.6 times the rate for high-poverty neigh-borhoods.

Data like that speaks to the larger inequities Lightfoot has set out to address, in just about every aspect of our civic life: in-vestment, crime, health, educa-tion, environment and more. It’s no wonder the new $10 million business rebuilding fund will be allocated, she says, “with an equity weighting that focuses on the South and West sides.”

�e city investment will barely make a dent in the broader need. And the scale of the challenge has Lightfoot relying heavily on the private sector to redouble and reinforce the expenditure of city funds.

Last fall, she redirected $750 million in city funds toward an economic development program called Invest South/West. She has persuaded banks to plunk down tens of millions more, and as COVID-19 took root, philan-thropic foundations stepped up in ambitious new ways, too.

To get a sense of how much work remains to be done, consid-er one of the larger investment projects of recent years: the $40

million devoted by JPMorgan Chase in 2017 to economic development in the South and West sides.

�e money has made some progress. According to the bank, the inve stment has helped create or retain 2,300 jobs, provided capital or technology assistance to 3,300 businesses and led to the construction of 48 new housing units.

Progress needs to start some-where. �e new jobs and homes are welcome. But the numbers from Chase speak to the scale of Chicago’s problem of underin-vestment. In a city of 2.7 million people—and roughly half a mil-lion living in poverty—2,300 new jobs and 48 new homes leaves a long way to go.

City and private investment are �ghting a tide of inequity that has built up over generations. Lightfoot didn’t need the Urban Institute study to tell her this. And that’s why she has assigned her deputy mayor for neighbor-hood and economic develop-ment, Samir Mayekar, to squeeze all he can from any new resourc-es that come in.

“�e real challenge is how do you deploy investment in a way that creates a multiplier e�ect,” Mayekar told me.

A coalition of 100 companies has committed to go beyond philanthropy and seek prof-it-making investments. �e city is targeting 10 areas and seeking to coordinate public and private investments there. A lot of this happens within the framework established by Invest South/West, and more needs to be done.

“We will clean up our broken windows, but we can’t stop there,” Lightfoot said in her speech. “We must also clean up and repair our broken systems.”

Lightfoot is seeking systemic approaches to address the vio-lence and poverty that plague the city. It’s the right way to frame the problem. It also reveals the di�culty of the task she faces: Systemic change will be di�cult, and cost a lot.

Whether Lightfoot can devel-op the resources and strategy needed to succeed remains to be seen. At the very least, she is putting the challenge front and center as no mayor has done before.

Crain’s contributor David Greising is president of the

investigative watchdog Better Government Association.

New $10M fund for rebuilding businesses just a start

Racial gaps stymie economic growth

DAVID GREISING ON GOVERNMENT

ORPHE DIVOUNGUYON THE ECONOMY

DISPARATE ECONOMIC AND HEALTH OUTCOMES WILL CONTINUE TO HARM LIVES AND LIVELIHOODS UNLESS THE COUNTRY UNITES.

ALAM

Y


I was out running a few weeks ago. I usually jog 3 miles down 79th Street, but this day, I set out to run 2.23 miles in honor of Ahmaud Arbery, the young black man who was murdered at the hands of two white men. On this particular day, I got a little past the �rst mile, and I just decid-ed to stop. I wanted to use his death as motivation to be healthy and be a part of the people around the country who were running in solidarity, but I could not. A run I typically do with relative ease was damn near impossible, because it was attached

to so much weight. I wore a hoodie

for Trayvon, took a knee for Philando, held my breath for Eric, walked for Laquan and cried for Bettie Jones. I’m tired of all these slogans. I’m tired of running around in metaphorical circles, though now it has become more and

more a reality. Enough is enough. �ere’s a real problem in this country. It’s danger-ous being black. �e darker your skin, the realer your problems, and the students in my program notice.

I run an after-school Explorers Pro-gram for students from divested Chicago community areas. One day, I was dropping o� a student at home out west and a police car came across Harrison Street. �e car wasn’t chasing us—it just happened to zoom past—but when the student saw the squad car, she jumped up. Now, we weren’t being pulled over; the police o�-cer was doing his job, probably heading to an emergency. Still, the student’s reaction was to jump up in fear. �at, to me, was disheartening. I asked the student why she was frightened, and she said, “I’m afraid of the police. Police will kill me, no doubt in

my mind.”Who am I to tell her di�erent? One

thing I’ve noticed is that this isn’t the same reaction I see when I drop o� white students in my program up north. �ey don’t jump up in fear when they see a police car. �ey are more at ease, they’re relaxed. I can see it in their posture.

It makes me believe we’ve done some-thing fundamentally wrong in this country. We’ve empowered the white children to feel safe, protected and equipped to bear arms in times when they feel “threatened” under the veil of being a good citizen. We start these lessons at a very young age. White people are taught to stand up for yourself. Fight for your rights. Do what’s right. You have freedom of speech.

We’re not teaching black kids to stand up. We’re teaching black kids to stand down. Stand down when they see police, don’t run. Make sure you narrate every-thing that you do when they ask for a piece of information. “I’m reaching for this” when you go to retrieve your wallet. “I’m taking my hands o� the steering wheel. I’m gonna press this button, letting down the window.” Stand down when you see someone clutch their purse as you walk by or follow you in a store. Do not appear aggressive or angry. It’s all out of fear.

THE WORLD WE LIVE IN�is is the world we live in. �is is what

has been created. A divisive, fear-based world. Everybody scared of everybody. Black people fear police because they’ve shot us down in broad daylight. White peo-ple in fear of black people and that gives them the right to bear arms, make citizens arrests and be the neighborhood watch.

Where does this begin? �ere’s a strange irony about the police department. To un-derstand this, you have to understand, my great uncle was one of the �rst black cops in Houston in the 1940s. He joined the police force at a time when racial discrimi-

nation was systemic—and I mean outright discriminatory, not like today’s discrimina-tion, cloaked up in fancy words.

My great uncle worked as a foot patrol in a mostly black neighborhood, because black o�cers were not allowed to drive a squad car; they had to ride the bus. He had to ask for a supervisor’s permission before arresting a white person. If he arrested a black person, they’d have to ride the bus back to the station.

Now, I know that there are hundreds of thousands of brave o�cers who make the ultimate sacri�ce to protect us every day, with integrity. I love y’all, and I sincerely appreciate y’all. �is ain’t about y’all. �is is about the larger system and it might be hard to hear, but it’s time someone actually acknowledge that there’s racism within the police department that needs to be addressed.

We’ve lost so many people, I can’t even count. So many people don’t make the headlines.

It’s exhausting to go through the same thing, year after year. �ere’s a murder. �ere’s a protest, which incites an arrest. �en, there’s a trial. �ey send it to a jury “of their peers.” �e jury lets them go. We make a Go Fund Me page. We make a T-shirt. We’re outraged, but resume our lives as usual until the next time.

WHAT CAN BE DONE?A wise person once said, “�e de�nition

of insanity is doing the same thing over and over and expecting di�erent results.” We gotta do something di�erent if we want to put an end to these killings.

How about marching proactively, in-stead of waiting until there’s a social media campaign about death?

Let’s support a local nonpro�t that sup-ports youth, while people are alive. You know, give them the roses while they’re alive.

Let’s work with the police chiefs to make sure they put o�cers in communities where they support its members and build bridges of connection.

Support businesses that support you. If black people are being treated poorly, those businesses should not get a dime of your money.

Vote! Vote in the primary elections. Vote in the presidential elections. Show up and make your voice heard.

�en, �nd out how to contact your local representatives and holla at them about issues that matter to you. Make sure they are advocating for equal resources in your community. �ey’re all on social media and have o�ces all around the city. Let’s start talking on a regular basis.

Our schools look like prisons with police cars and metal detectors. I’m in and out of schools around the city, and sometimes I walk up and think, “Wow, how is a young person supposed to walk in here and

be inspired to change the world?” �ey deserve better, and we can do better. If you think it’s acceptable that your kids have all this stu� in their community and black kids’ communities are divested, then you are a part of the problem. It’s time to do something.

We’ve marched and organized for black lives and better black futures. We’re tired, but despite the fatigue, repeated loss and the trauma, we forge ahead. We must con-tinue to run, walk, vote, �ght and defend ourselves against white supremacy and its deputies until we’ve created a society worthy of our children, because that’s what they deserve.

A surreal pall hangs over the city today. People are in shock, reeling, re-evaluating everything they believe about the city they live in. �e central core of our city was sacked and looted from end to end, like something out of ancient Rome. It’s a disaster that leaves our city scarred and weakened. Even worse, we were forewarned by the example of Minneapolis.

At this point fair-minded op-ed writers will skip ahead to a discussion of “root causes.” Of course we have to address root causes—racial segregation and discrimination—if we will ever want to have civic peace. �is is what the legitimate protesters want and we must stand with them in demanding real change. Many wise and good people have toiled for many years to pull out that bitter root.

Right now, however, Gov. J.B. Pritzker, Mayor Lori Lightfoot and State’s Attorney Kim Foxx need to forcefully impose order. Without order and safety, we will lose our

In a world of fear, here’s what we can do

Jahmal Cole is the CEO and founder of My Block, My Hood, My City, which provides programs to give underprivileged youth an aware-ness of the world and opportunities beyond their neighborhood. VOTE! VOTE IN THE PRIMARY ELECTIONS.

VOTE IN THE PRESIDENTIAL ELECTIONS. SHOW UP AND MAKE YOUR VOICE HEARD.

It is hard to put into writing the devastation and heartbreak I felt when I saw the business I’ve worked so hard to build over many years be vandal-ized, looted and destroyed.

I come from a Mexican immigrant family who have experienced their own discrimination since the 1920s. We worked hard to build what we have today. But the last 90 days, starting with the COVID-19 closures, knocked the wind out of myself and my family.

Just when we saw a glimpse of hope to move into Phase 3 of Chicago’s

reopening plan and bring many of our employees back to work, our restaurants, Moe’s

Cantina at 155 W. Kinzie St. and Old Crow Smokehouse at 149 W. Kinzie, were broken into, vandalized and destroyed.

Due to safety concerns, we were forced to close our takeout and deliv-ery services at 8 p.m. on May 30. My staff and I went home to ensure our safety, not knowing that two hours later, I would be looking at my camer-as from home and witnessing a mob knock out all of our windows, break in and start trashing both of my restau-rants. The individuals looted most of our liquor, our sound systems and our art. They used hammers to destroy our computers, cash registers, equipment, furniture and televisions.

The next morning, I found myself in front of my restaurants with a knot in my throat. For me, it was not about


JOHN

R. BO

EHM

Jahmal Cole People and property must be protected

Sam Sanchez is CEO of restaurant group �ird Coast Hospitality.

Help the hospitality industry recover


Let’s work with the police chiefs to make sure they put o�cers in communities where they support its members and build bridges of connection.

Support businesses that support you. If black people are being treated poorly, those businesses should not get a dime of your money.

Vote! Vote in the primary elections. Vote in the presidential elections. Show up and make your voice heard.

�en, �nd out how to contact your local representatives and holla at them about issues that matter to you. Make sure they are advocating for equal resources in your community. �ey’re all on social media and have o�ces all around the city. Let’s start talking on a regular basis.

Our schools look like prisons with police cars and metal detectors. I’m in and out of schools around the city, and sometimes I walk up and think, “Wow, how is a young person supposed to walk in here and

be inspired to change the world?” �ey deserve better, and we can do better. If you think it’s acceptable that your kids have all this stu� in their community and black kids’ communities are divested, then you are a part of the problem. It’s time to do something.

We’ve marched and organized for black lives and better black futures. We’re tired, but despite the fatigue, repeated loss and the trauma, we forge ahead. We must con-tinue to run, walk, vote, �ght and defend ourselves against white supremacy and its deputies until we’ve created a society worthy of our children, because that’s what they deserve.

A surreal pall hangs over the city today. People are in shock, reeling, re-evaluating everything they believe about the city they live in. �e central core of our city was sacked and looted from end to end, like something out of ancient Rome. It’s a disaster that leaves our city scarred and weakened. Even worse, we were forewarned by the example of Minneapolis.

At this point fair-minded op-ed writers will skip ahead to a discussion of “root causes.” Of course we have to address root causes—racial segregation and discrimination—if we will ever want to have civic peace. �is is what the legitimate protesters want and we must stand with them in demanding real change. Many wise and good people have toiled for many years to pull out that bitter root.

Right now, however, Gov. J.B. Pritzker, Mayor Lori Lightfoot and State’s Attorney Kim Foxx need to forcefully impose order. Without order and safety, we will lose our

population. It’s astonishing that the National Guard was not called in sooner and in vastly greater numbers. Out of 10,000 guards, the mayor only request-ed 375. Did the governor o�er more, sooner? We have a right to know.

Moreover, the police were ordered to stand down and not interfere with the looting. �ey were outnumbered, yes, but shackled, too. �is was instan-taneously shared among the looters, emboldening others to join in. For a few nights Chicago became “�e Purge.” Big stores, small boutiques, restaurants

and 7-Elevens were sacked and stripped. �e mayor stated that the looting was

coordinated, that “U-Haul trucks don’t just magically appear in front of stores.” Neither do the police or the National Guard. �ey need to be directed. Going forward, our leaders need to announce loudly and unequivocally that all looters will be arrested and jailed. And they need

to review surveillance camera records to identify and arrest perpetrators (some of them outside agitators) wherever possible.

Decisive action now might still salvage this mess and keep people from bolting. It might keep businesses from giving up. We must respect democratic protests but

halt wanton destruction and looting. �e government must protect both people and property. �at’s the deal we make when we pay taxes and follow rules. If our property is to be o�ered up to the mob, perhaps the city should stop collecting property taxes.

In a world of fear, here’s what we can do

VOTE! VOTE IN THE PRIMARY ELECTIONS. VOTE IN THE PRESIDENTIAL ELECTIONS. SHOW UP AND MAKE YOUR VOICE HEARD.

�ese past few weeks have been a time of hurt, anger, disappointment and feelings of hopelessness, ampli�ed by the recent killing of George Floyd in Minneapolis. We must acknowledge that these emotions are justi�ed at a time like this.

I began Sunday talking with my mother. We both watched the news reports of the civil unrest in the streets of Chicago and many other cities across the country. She said watching these protests and riots reminded her of the aftermath of Dr. Martin Luther King Jr.’s assassination. Chicago United was born out of his assassination and the subsequent pro-tests and riots across the country.

Dr. King called a riot the “language of the unheard.” Today, far too many people of color are still �ghting injustice, still being denied access and

opportunity, equity and fair treatment.Only after we’ve acknowledged these

inequities and their history, and resolve to collectively take action, can we bring about true change. Yes, of course we all want comfort and peace, and we must reject the destruction of communities. However, we must take authentic actions to continue addressing disparities and eradicate unfair treatment wherever it exists.

I ended the weekend by comforting my son, reassuring him that his father and I know that we will rise to the challenge of being a better society for everyone.

My heart is broken, but I still have hope.

It is hard to put into writing the devastation and heartbreak I felt when I saw the business I’ve worked so hard to build over many years be vandal-ized, looted and destroyed.

I come from a Mexican immigrant family who have experienced their own discrimination since the 1920s. We worked hard to build what we have today. But the last 90 days, starting with the COVID-19 closures, knocked the wind out of myself and my family.

Just when we saw a glimpse of hope to move into Phase 3 of Chicago’s

reopening plan and bring many of our employees back to work, our restaurants, Moe’s

Cantina at 155 W. Kinzie St. and Old Crow Smokehouse at 149 W. Kinzie, were broken into, vandalized and destroyed.

Due to safety concerns, we were forced to close our takeout and deliv-ery services at 8 p.m. on May 30. My staff and I went home to ensure our safety, not knowing that two hours later, I would be looking at my camer-as from home and witnessing a mob knock out all of our windows, break in and start trashing both of my restau-rants. The individuals looted most of our liquor, our sound systems and our art. They used hammers to destroy our computers, cash registers, equipment, furniture and televisions.

The next morning, I found myself in front of my restaurants with a knot in my throat. For me, it was not about

the theft itself, but rather the blatant disregard for and hateful destruction of my property and business.

We are a true family-run business. Both of my daughters work in the building, along with staff that has worked for me for over a decade. It was a violation of me, my partners and our families.

As a business owner, I care about the safety of our employees and custom-ers. These people intentionally de-stroyed my restaurants and prevented us from rehiring dozens of employees and reopening on June 3.

The overwhelming support of our neighbors and friends who came out with dustpans and brooms and helped us pick up furniture and clean up the streets sends a message: There is more good than evil.

I am asking Gov. J.B. Pritzker and

Mayor Lori Lightfoot to please help us recover and allow us and our employ-ees to go back to work. Let us work to begin to recover.

In our industry, a lot of our employ-ees are struggling to collect unem-ployment. We are talking about almost three months of struggling to feed families, not being able to pay for med-ical services or pay rent. I know many healthy and hardworking people ready to go back to work. If you’ve never had someone knock on your door to collect rent, you will never understand what our people are going through. Twen-ty-five percent of restaurants will never reopen, and another 20 percent will not have the money to survive past the end of the year.

Like the banks, airlines and auto in-dustry, the hospitality industry needs a bailout.

Douglas Van Tress has co-owned Gold-en Triangle, a River North furniture and antiques shop, for more than 30 years.

JOHN

R. BO

EHM

People and property must be protected

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Melaniphy & Associates, a Chica-go-based retail consulting �rm. “You can’t be all things to all peo-ple, and that’s what their depart-ment stores were.”

What about the hometown fa-vorite, Ho�man Estates-based Sears Holdings, which used to dominate retailing? After closing 10 mall-based department stores here since the beginning of 2018, it has just three left, at Wood�eld, North Riverside Park Mall and Chicago Ridge Mall.

�e culling of the herd was al-ready well underway before the COVID crunch. Of the 24 Chi-cago-area malls with multiple department stores during their heyday, eight local malls, includ-ing Hawthorn and Fox Valley, are down to two. If J.C. Penney liqui-dates, �ve of those malls will only have one department store.

Another seven local malls are already down to one. Stratford Square Mall in west suburban Bloomingdale has lost four de-partment stores—J.C. Penney, Carson’s, Sears and Macy’s—since 2014, leaving it with only a Kohl’s. �e mall’s owner, Great Neck, N.Y.-based Namdar Realty Group, is trying to turn the property around by adding a massive Woodman’s Market grocery store on the site of the former Macy’s store.

One local mall, Randhurst Vil-lage in Mount Prospect, which underwent a massive redevelop-ment about a decade ago, has no department stores after losing a Carson’s in 2018, when the chain went out of business. But it has strong anchor tenants including Home Depot and Costco.

NO LONGER A DRAWDepartment stores still repre-

sent about 60 percent of all an-chor tenant space at U.S. shopping malls, according to Green Street. But they are a shadow of their for-

mer selves. Decades ago, malls needed the big stores to attract shoppers to all the other retailers, o�ering the chains cheap land or low rents to open on their proper-ties. But the stores are no longer a big draw.

“�e department store is not the value to the mall that it was 30 years ago,” Levin says. “�at space is better utilized for something else.”

For Levin, that something else sometimes is apartments. At Haw-thorn, Centennial plans to raze a vacant Sears and build 250 apart-ments in its place. �e �rm also plans to develop about 300 rental units on the site of an empty Sears at Fox Valley.

BURDENSo for many mall owners, the

death of the department store is a blessing in disguise. A lot of the stores have become an obsolete burden, just a big obstacle stand-ing in the way of their ambitious redevelopment plans. Levin was happy to take the Sears space back so he could get to work on crafting the malls’ next it-eration.

Many big chains own their department stores, so a closing doesn’t have an immediate direct impact on a mall’s rental reve-nue. But the loss of a department store can cause collateral damage. Many smaller mall tenants have so-called co-tenancy clauses in their leases, which entitle them to reduced rent or even the right to terminate their lease when a de-partment store closes.

Mall owners have tried to �ll empty department stores with all kinds of tenants, from bowling alleys to medical clinics. But it’s not easy: Just 10 percent of Chica-go-area Carson’s stores have been re-leased since the chain went out of business two years ago, accord-ing to CBRE. Of all the local space

vacated by Sears over the past sev-eral years, just 12 percent has been re-leased.

While the coronavirus will ac-celerate the inevitable demise of the department store, it makes everything harder for mall land-lords. Government restrictions to slow the spread of the virus have crushed all kinds of retailers, not just department stores. They’ve also battered restaurants, ten-ants that had become popular with mall owners because they don’t face much e-commerce competition. Finding new ten-ants to fill vacant mall space will be a struggle.

Financing a major mall make-over will be even tougher. With the economy in a severe recession, many lenders and investors have retrenched, unwilling to back big, risky projects until the market shows signs of turning around.

Even optimists like Levin don’t expect shopping malls to make a

major comeback. �e country still has too much retail space, he says, predicting that more than half of the country’s 1,100 or so malls could close over time. But Levin is con�dent the malls that remain can �ourish if they adapt. Consol-idation will be good for the indus-try, he says.

�e shorter-term outlook will depend on the coronavirus. Many people won’t feel comfortable vis-iting a crowded mall until a treat-ment or vaccine becomes avail-able.

Once that happens, “my hope is that things will snap back and there’s a lot of pent-up demand,” Melaniphy says.

For many mall owners, that day can’t come soon enough.

MALLS from Page 3

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COVID only the latest plague to beset the mall

FOR MANY MALL OWNERS, THE DEATH OF THE DEPARTMENT STORE IS A BLESSING IN DISGUISE.

1. 900 North Michigan: 12. Chicago Ridge: 23. Evergreen Plaza: 14. Ford City: 15. Fox Valley: 26. Golf Mill Shopping Center: 37. Gurnee Mills: 28. Harlem Irving Plaza: 29. Hawthorn Mall: 210. Lincolnwood Town Center: 211. Louis Joliet: 212. North Riverside Park: 213. Northbrook Court: 114. Oakbrook Center: 315. Old Orchard: 216. Orland Square: 317. Randhurst Village: 018. River Oaks Center: 119. Shops at Northbridge: 120. Southlake Mall: 321. Spring Hill: 122. Stratford Square: 123. The Quad St. Charles (former Charlestowne Mall): 124. Water Tower Place: 125. Woodfield Mall: 426. Yorktown Center: 2

NUMBER OF REMAINING RETAIL ANCHOR STORES

ANCHORS AWAYEight local malls that used to have as many as five department stores are now down to two, while 10 malls now have only one.

= 4= 0 = 1 = 2= 3


�rms have begun evaluating busi-nesses that may soon be for sale, possibly as part of a restructuring or bankruptcy.

Ruhaak and others who work with private-equity �rms say that banks and other lenders are generally giving businesses until the end of the second quarter to steady their operations, but after June, they’ll have 30 to 45 days to meet credit agreements. �at means around mid-August, more enterprises will likely be forced to consider sales, divestitures, re-structurings or a bankruptcy �ling.

“I’ve never seen a downturn, or more of a con�uence of events, that people in power or smart people have no control over,” says How-ard Samuels, the septuagenarian founding partner at Rally Capital Advisors, a �rm that provides con-sulting services in the arena. “And it’s touched every level of com-merce and business, from supply chain situations to consumer to how we deal with basic services. We’re going to see failures.”

Some 88 companies globally with outstanding debt have de-faulted in some fashion so far this year, including Lake Forest based drugmaker Akorn, whether miss-ing an interest payment or �ling for bankruptcy, compared to 49 at this point last year and less than half as many at 43 in 2018, according to S&P Global Credit Market Research. Another S&P research arm, S&P Global Ratings Research, says 289 companies, or as many as 15.5 percent of com-panies with speculative grade ratings, could default by next

March, compared to 3.5 percent last March.

In the run-up to a potential Au-gust reckoning, companies in a wide range of stressed situations, where the COVID-19 outbreak or oil market volatility may have worsened prior trouble, are be-coming the �rst targets for invest-ments and acquisitions.

Wynnchurch Capital, which has carved out a niche in distressed buyouts, bought two industrial companies this year that had ex-posure to the petrochemical mar-ket and likely were impacted by U.S.-China tari� tension.

“We’re trying to be aggressive in deploying capital,” Wynn-church Managing Partner John Hatherly said after his �rm made the April acquisition of West-ern Forge & Flange, a Cleveland, Texas-based industrial company it’s merging with one of its other portfolio companies, Pennsyl-vania Machine Works, a forged �ttings manufacturer it acquired two months earlier.

‘VERY CHALLENGING’While the prices Wynnchurch

paid for the two acquisitions weren’t disclosed, there was ev-idence of recent complications. “�is was a very challenging trans-action for a number of reasons and took much longer than contem-plated (due to external, non-con-trollable factors),” Western Forge board member Gary Savadove said in a statement at the time the deal was done.

Oil prices fell in March to their lowest level in 18 years as inter-national cartel talks broke down and demand dropped because of

the pandemic’s travel slump. In the wake, the Chicago mega asset manager GCM Grosvenor said this month that it would provide $85 million in debt �nancing to sup-port Bakers�eld Renewable Fuels as it revamps its oil re�nery busi-ness to include a facility for re-newable diesel fuels. Such debt �-nancings can sometimes become ownership stakes if a company falls into creditors’ hands. Grosve-nor declines to comment.

On the other end of the spec-trum, some �rms spotted oppor-tunities in �nancial services, parts of which were also battered by the pandemic when stock markets

plunged. While the markets have largely recovered, many economic and investment advisers remain leery of volatility and economic headwinds.

Against that backdrop, Chica-go private-equity �rm GTCR this month bought a 25 percent stake in Raleigh, N.C.-registered invest-ment advisory �rm Captrust Fi-nancial Advisors, which has $390 billion in assets under advise-ment for clients in 21 states and in March made its own major pur-chase of Montgomery, Ala.-based Welch Hornsby.

GTCR declines to comment.Some private-equity �rms may

be pressed to shed enterprises hurt by the pandemic as well. Recently, Chicago-based Waud Capital Partners was in talks to turn over control of Dimensional Dental to a creditor controlled by mega Washington private-equity �rm Carlyle Group, according to a Debtwire report. Waud declines to comment.

While Rally’s Samuels says there will be opportunities for some �rms, he cautions that in-vestments will not be a cure-all for injured businesses as long as a coronavirus vaccine remains elu-sive and macroeconomic troubles persist.

Some industries have a higher likelihood of being impacted financially by the deadly coronavirus pandemic, with some having high exposure and others moderate or low.

Source: Moody’s Investors Service Note: Does not include financial companies

Apparel

Automotive/auto suppliers

Consumer, durable goods

Gaming

Lodging/leisure

Restaurants

Cruise lines

Nonfood retail

Passenger airlines

Transportation and services, including shipping

Aerospace and defense

Business services

Chemicals

Construction and homebuilding

Consumer, nondurables

Consumer services

Health care and pharma

Manufacturing

Media and ad agencies

Mining and mining services

Oil and gas

Real estate

Steel processors

Tech hardware

Wholesale distribution

Food and beverage, including food retailers

IT software and services

Natural products processors

Packaging

Telecom

Waste management

HIGH EXPOSURE

VULNERABILITY TO THE VIRUS

MODERATE EXPOSURE LOW EXPOSURE

With businesses upended, PE firms adept in restructuring poised to clean up

A Chicago architecture firm is bringing energy-efficient affordable housing to Gary

BOTTOM FEEDERS from Page 3

break ground by early July, is Broadway Lofts, a 38-unit struc-ture at the corner of Broadway and Seventh Avenue, part of a �ve-block scar left by the �re.

Farr Associates, a Chicago ar-chitecture �rm with a focus on green building, has designed an a�ordable housing complex for the site that is “an energy-forward, creativity-forward step in the re-generation of downtown Gary,” Reaves says.

�e $11 million Broadway Lofts will be built super-tight to require as little heating energy as possible, according to Matt McGrane, the Farr architect leading the design, and its peaked roof will be lined with solar panels that will supply at least as much electricity as the building needs.

Dominating the upper part of the building’s facade and also capping carports out back, the solar panels are “environmentally expressive,” says principal Doug Farr, meaning “when you walk by, you immediately know the story of this building is sustainability.” �us, along with supplying power for the residents, the panels, a vis-ible sign that this is an innovative building, may supply something that long-disinvested Gary needs:

a bright spot.Since the state of Indiana

opened a new three-story of-�ce building at Sixth Avenue and Broadway in 2004, nothing has been completed in the arson’s swath. Immediately across Broad-way from the net- zero, or zero- energy, housing site is an apart-ment building that was launched in 2011 with almost $1.6 million in loans from the city but has stood un�nished for years.

�e new city hall and municipal services building is slated to be built three blocks north on Broad-way.

�e net-zero concept, already used on privately built structures including a house in Ravenswood and a Walgreens in Evanston, is a �rst for a�ordable housing in the Chicago region. Broadway lofts has a head start on a net-zero proj-ect in Chicago, a 77-unit project slated for a site on Kedzie Avenue in East Gar�eld that starts later this year.

In the past few years, Indiana has built net-zero a�ordable hous-ing in Fort Wayne and Lafayette, and this summer is launching two more, the Gary project and one in East Chicago, according to Sierra Latham, director of the Moving Forward Program at Indianap-olis-based Energy Systems Net-

work, an environmentally focused nonpro�t. A�ordable housing has been built to net-zero standards in Colorado, Pennsylvania and New Jersey.

“�is is really the direction to go for a�ordable housing,” says Pete Schwiegeraht, a senior vice president for development at Ohio-based MVAH Partners, the developer of the Broadway Lofts building. MVAH has about 6,000 units in 15 states, Schwiegeraht says, and has tried energy-reduc-tion strategies but never before a net-zero building.

LOWER RENTWith an estimated payback of

16 years, the net-zero construction methods give the developer a way to reduce operating costs measur-ably, and that bene�ts the tenants. Schwiegeraht says rents for the units “will de�nitely be lower” than in a comparable, traditional-ly built structure, but he can’t say how much lower until the building is complete and tested. �at’s ex-pected to be in 2021.

MVAH was compelled to try its �rst net-zero project by Moving Forward, a 2018 state program that fast-tracks a�ordable housing proposals that have higher energy standards as a priority. �e pro-gram is, in part, a product “of a

very unfortunate situation,” says Jake Sipe, executive director of the Indiana Housing & Community Development Authority.

In 2016, the 1,100 residents of the West Calumet a�ordable hous-ing development in East Chicago learned that their homes, built in the early 1970s on the former site of a lead smelting facility, were surrounded by soil with highly toxic levels of lead and arsenic.

“Because of that environmental

disaster, we put forth an initiative to develop clean, new a�ordable housing that is environmentally friendly,” Sipe says. �e Broad-way Lofts in Gary is a model of the program, he says, because in addition to its no-energy pro�le, it will include a health facility and a fresh produce outlet on the ground �oor, as well as other pro-grams considered part of an over-all approach to alleviating some of Gary’s challenges.

GARY from Page 3

Broadway Lofts, a mixed-use multifamily building on Broadway and Seventh Avenue in down-town Gary.

FARR

SIDE.C

OM


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The COVID slowdown is putting insurance agents and HQ on a collision coursesee their revenue fall along with the insurer’s rates. To cope, those agents, who pay �xed costs for the property they lease among other items, likely will have to reduce sta� or their workers’ hours.

For the 10,500 agents of Northbrook-based Allstate, the fourth-largest U.S. auto insurer, their woes are multifaceted, caused mainly by the home o�ce’s strategic decisions. At the outset of 2020, All-state agents saw their commissions reduced 10 percent when their pol-icyholders renew—the lion’s share of most agents’ income.

More recently, Allstate has con-�rmed to agents that consumers will be able to buy the same cov-erage at a cheaper rate when they purchase online or over the phone through Allstate Direct than when they buy from an agent, accord-ing to agent sources. Allstate is in the process of rebranding its on-line auto insurance unit Esurance as Allstate Direct. CEO Tom Wil-son hopes that will catalyze faster growth online, the sales channel by which Chevy Chase, Md.-based Geico and May�eld Heights, Ohio-based Progressive have overtaken Allstate in recent years in terms of market share.

�e pricing decision is raising concerns among agents that con-sumers will be able to get insurance for a reduced price and then get

assigned to a nearby agent for their future service needs. When that happens, agents are paid a sharply reduced commission for handling those accounts.

Additionally, Allstate recently launched an initiative in which it’s hiring agents to work from home and drum up new business. �ey are being paid an average of $50,000 in annual salary, with added com-missions for the business they cre-ate, and are receiving health and retirement bene�ts, according to an April 1 message from the company to agents.

Traditional agents, by contrast, aren’t employees. �ey are con-tractors responsible for having their own o�ces and sta�, and paying for bene�ts for themselves and their workers.

In the memo, the company wrote, “From the test, we hope to learn how customers respond to a local agent serving their community with service supported virtually by a back-o�ce Allstate team, and how changing the capital requirements, availability, location and sta�ng structure may in�uence the kinds of candidates interested in the role.”

AGENTS SPEAK OUTAllstate agents increasingly are

voicing unhappiness. “How come all the change needs to come at the agents’ expense?” Ted Paris, executive director of the National Association of Professional Allstate

Agents, says in an interview.Paris, who retired as an agent

three years ago and took over the agents’ association, recently wrote Allstate’s board. “Clearly, Allstate’s vision for its agents comes from a belief that they know what is right for them,” he wrote June 2. “But just as clear is the reality that thousands of agents’ businesses have been �-nancially harmed. Allstate agency owners are a very loyal group. �ey love Allstate, but they are struggling with the current direction manage-ment has taken them.”

Asked at Allstate’s May 19 virtual annual meeting about how his new strategies are hurting agents, Wil-son said agents need to be open to change to stay competitive. “What agents do locally needs to change,” he said, according to a recording obtained by Crain’s. “For example, there’s a lot of service work done locally that we can either dispense with by use of technology . . . or we can centralize it.”

“It’s about doing it cheaper and better for (customers),” he added. “One of the most important con-siderations for buying auto insur-ance is price. So we have to contin-ually reduce our costs to meet their needs. But we need to do it togeth-er. �at means both the company and the agents have to embrace change.”

�ere was little evidence that consumers were seeing more com-petitive pricing from Allstate in the

�rst quarter, when the commis-sion reductions took e�ect. All-state raised auto rates an average of 6.5 percent in 16 jurisdictions in the quarter, according to investor disclosures. �at was before the COVID-19 pandemic reduced driv-ing and Allstate began providing monthly rebates to drivers. But its underlying rates haven’t changed.

Wilson emphasizes to unhappy agents that the company boosted commission payouts for new cus-tomers as it cut pay for retaining existing ones. Agents running larg-er operations say there’s no way to produce enough new business to

make up for a 10 percent revenue hit on renewals.

An Allstate spokesman didn’t respond to a request for comment.

�e company can’t a�ord to lose agents’ production while it tests other means of generating growth. Allstate agents still generate the vast bulk of the company’s insur-ance business. Agent-sold auto policies alone last year accounted for 49 percent of total revenues, in-cluding investment returns.

Archrival State Farm’s agents are losing revenue because their cus-tomers are getting the savings. All-state can’t say the same. Yet.

AGENTS from Page 1

Allstate agents are voicing unhappiness. “How come all the change needs to come at the agents’ expense?” says Ted Paris, executive director of the National Association of Professional Allstate Agents.

ALLS

TATE


A long, glassy house that re-sembles a ship resting above a wooded ravine, the only home Frank Lloyd Wright designed in Lake Forest, came on the market June 3.

Built in 1954, late in Wright’s seven-decade career, the four-bedroom, 4,300-square-foot house on May�ower Road is priced at $2.275 million.

Sellers Megan and Frank Beidler are asking $100,000 more than they paid for the house in October 2007, although in their time there they have updated the kitchen and three baths, added air conditioning, redid the �oors and landscaped the lot, which is a little less than 2 acres. Megan Beidler, a Gri�th Grant & Lackie agent represent-ing the house for herself and her husband, declines to say what they’ve invested in updates. “It’s a lot.”

“We’re considering 13 years of enjoying it as worth something,” Beidler says. “We were realistic about pricing.”

Some Frank Lloyd Wright houses have sold at deeply dis-counted prices in recent years. In April, one of his designs in El-mhurst sold for about the value of the land.

“We’re hoping to avoid that,” Beidler says, acknowledging that “it could take a while to sell.”

�e house’s design might help: Coming late in Wright’s ca-reer, it doesn’t have some of the features of his early homes that don’t appeal to today’s buyers: low ceilings, dark wood interi-ors and �at roofs prone to leak-ing. �e airy, daylit design feels more like now-popular mid-century-modern homes than Wright’s Prairie Style homes from decades earlier.

�e house was originally built for investment banker Charles F. Glore Jr. and his wife, Dolores Mummert Glore. Charles Glore was a fan of yachts, the Beidlers have learned through their re-search, and Wright’s design re-�ected that, with its long, slen-der prow of glass. �e design is a departure for east Lake Forest, where the streets are lined with substantial Colonials, Tudors and other traditional styles.

Much of the south wall of the house’s main level is made up of glass doors that open onto a wide concrete terrace and an attached circular deck that juts out over the wooded ravine. A long balcony along the second �oor also provides views out over the ravine.

“It’s a very quiet spot,” Beidler says.

�e home’s interior is most-ly brick walls and wood trim, including built-ins that Wright designed, and a �oating stair-case. New wood cabinetry in the kitchen and baths was designed

to complement the original look of the house.

Now the parents of three chil-dren, in 2007 the Beidlers were engaged, living in Los Angeles and planning a move to Chicago when they visited relatives who lived near the May�ower Road house. It was on the market for a little under $2.5 million. �ey told Chicago magazine at the time that they got a real estate agent to show them the house on a whim.

“We really just wanted to see what it was like inside,” Frank Beidler said then, “but about midway through, we started looking at each other and realiz-ing, ‘Oh my gosh, this is quite a house. We could do this.’ ”

Megan Beidler says today they are selling now because “we think somebody moving up from the city might really like this house.”

�e former CEO of Cancer Treatment Centers of America and his wife have sold a Lincoln Park mansion for more than 45 percent below their original asking price.

Lisa and Stephen Bonner, who was CEO of the cancer care chain from 1999 to 2013, sold the sev-en-bedroom house on Dayton Street for a little over $4.27 mil-lion. �ey �rst listed the house in March 2019 at $8 million.

By the time of the sale, the ask-ing price was down to $4.9 mil-lion. �e buyers put the house under contract March 30, during the stay-home order, and closed

the deal May 29. It’s the 17th Chicago-area

home to sell for $4 million or more so far in 2020. Despite there being no sales in that upper-end price category in April, at the height of the COVID-19 shut-downs, the upper-end market appears to have stayed on pace: By this time in 2019, there were 18 sales at $4 million or more.

In 2008, the Bonners bought the Dayton Street site of nearly two standard 25-by-125-foot lots for $2.7 million, using a land trust that concealed their names. In 2011 they completed construction of the 9,200-square-foot house, but Crain’s couldn’t determine

what they spent to build it. Lux-ury-level construction starts at about $200 a square foot. At that price, construction would have run more than $1.8 million, bring-ing the Bonners’ total investment in the house to $4.5 million.

�e Bonners could not be reached for comment. Marie Campbell, a Berkshire Hathaway HomeServices agent who repre-sented the house along with Kev-in Snow of the same �rm, did not know what the house cost to build.

Cancer Treatment Centers of America opened its �rst facility in Zion in 1988. During Bonner’s tenure as CEO, it grew from two facilities to �ve, adding Philadel-

phia, Phoenix and Atlanta to its centers in Zion and Tulsa, Okla. At the time, the �rm was headquar-tered in Schaumburg. In 2015, the headquarters moved to Florida.

�e Dayton Street mansion, designed by Massey Associates, a Chicago-based architecture �rm, has a brick and limestone exterior beneath a mansard roof, what Campbell calls a “London facade.”

Inside, the house has a formal style, with a large foyer, a pillared doorway between living and din-ing rooms, and a wood-paneled o�ce. Adjacent to the rooftop terrace is interior space with a full kitchen “so you don’t have to

be carrying everything up to the roof,” Campbell says. �e home has an elevator.

�e buyers, represented by Je� Lowe of Compass, are not yet identi�ed in public records.

EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200

CUSTOMER SERVICE . . . . . . . . . . . . . . . . . . 877-812-1590

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Vol. 43, No. 23–Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the last week in December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2020 by Crain Communications Inc. All rights reserved.

HOW TO CONTACT CRAIN’S CHICAGO BUSINESS

BY DENNIS RODKIN

The design feels more like midcentury modern than the architect’s Prairie Style from decades earlier

Wright’s only Lake Forest house is now for sale

BY DENNIS RODKIN

Stephen Bonner sold the seven-bedroom house for a little over $4.27 million after �rst listing it at $8 million

Ex-Cancer Treatment Centers CEO sells Lincoln Park mansionGR

IFFITH

, GRA

NT &

LACK

IE PH

OTOS


Strengthening our commitment to Chicago

Paul LambertChicago Market President

Throughout our community, we see families, neighbors, businesses and teammates working together more than ever. To help, we added $100 million to our ongoing support to organizations making a difference — national and local nonprofits addressing critical needs here, including United Way of Metro Chicago and Chicago Community COVID-19 Response Fund. The funds will help increase medical response capacity, focus on vulnerable populations and address food insecurity. We’re also providing $250 million in capital to Community Development Financial Institution (CDFI) loan funds and CDFI- and minority-owned banks to extend assistance to more small businesses.

As your neighbors in Chicago, we are all in this together. Our thoughts are with all of you and your families.

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THE DEMAND FOR CHANGE CHICAGO AT A CROSSROADS · 2 JUNE 8, 2020 • CRAIN’S CHICAGO BUSINESS...

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Transcript of THE DEMAND FOR CHANGE CHICAGO AT A CROSSROADS · 2 JUNE 8, 2020 • CRAIN’S CHICAGO BUSINESS...