Public funding, private brewing

By The Columbia Chronicle

The construction of a microbrewery in the Motor Row District has been approved by the Community Development Commission, a group that allocates tax increment financing funds. The brewery is the leading edge of the effort to cultivate a nightlife district on Chicago’s Near South Side.

The Broad Shoulders Brewery is slated for 2337 S. Michigan Ave., one of many vacant buildings in the area. Construction of more restaurants, bars and nightclubs to attract convention-goers from McCormick Place is planned as well.

The $2.5 million project will be funded using $628,000 of TIF money   distributed by the city government to promote public and private investment. Funding for these programs comes from Chicago property taxes and privately funded investments.

Members of the City Council, including Alderman Robert Fioretti (2nd Ward), believe the project will be a major step towwward establishing a nightlife area around the convention center.

“The brewery is the first entity that has taken steps near McCormick, and it shows that things are starting to move in the area, and the economy is starting to turn,” Fioretti said. “People are headed to more of a convention district, and it will become a commercial entertainment area.”

In recent years several projects on the South Side have encountered problems, including a privately built 94-unit condominium building at 2300 S. Michigan Ave. that has sat vacant since 2008 when its developer left the country because of financial problems.

Along with the area’s vacant buildings, the brewery project itself is

facing a gut job.

“The building was in need of serious repair work,” Fioretti said. “The brewery has a good financial model, but the building knocks it off the charts in terms of what repair work is needed down there.”

Creating a nightlife district could be risky in the area, according to Robert Hunden, president of Hunden Strategic Partners, a Chicago-based real estate consulting firm.

“If the market is not there, in the case of the area south of Cermak Road, it is hard to convince people to risk their money to fund an already risky venture in an unproven area,”  he said.

While developers aim to increase patronage in the area, Hunden worries that the lack of foot traffic will hinder the brewery’s success.

“When you have two full blocks on both sides of the street that are essentially vacant and there isn’t a lot going on at the street level even though its one block from McCormick Place, it’s a challenge to be the first developer in the area,” Hunden said.

As real estate developers and investors ponder the economic risks of the project, others question the legitimacy of the  TIF program.

The Grassroots Collaborative has been working to expose what they believe to be the misuse of TIF funding. The group has drafted a document called the Responsible Budget Ordinance, which seeks to address the budget crisis facing Chicago by examining the  distribution of property tax dollars that go into TIF funds.

According to Amisha Patel, executive director of GRC, the organization was able to force the mayor’s hand in returning $60 million to the original taxing bodies.

“The larger question is how is this money being spent, and why is the money being pulled out of the neighborhoods?” Patel said. “The community also has a very small voice in these TIF decisions and how the allocated money gets used.”

By taking money from the public and placing it into funds for subsidized ventures, TIF projects do not allow for adequate public input, Patel said. Aside from contacting their alderman, community members do not have a direct way to voice their ideas or concerns for certain projects.

According to Patel, all of the LaSalle Central TIF money goes to members of the Chicago Mercantile Exchange.  The LaSalle Central TIF is located adjacent to the South Loop TIF and Patel believes these funds are organized into a corporate slush fund to prevent public access to the money.

“By saying they will subsidize a brewery over basic needs in neighborhoods here in Chicago … is all the evidence the public needs to see that TIF projects are exclusive and hurting the integrity of the city,” Patel said.