Former Chicago Rail Yard Is Site of Mixed-Use Project
By A. J. Johnson & Caitlin Jones
6 min read
A massive mixed-use development with two big retailers, two apartment buildings, and commercial tenants is taking shape in the Uptown neighborhood in Chicago’s North Side.
The $150 million Wilson Yard project, scheduled to open in 2010, will contain two low-income housing tax credit buildings, a Target discount store financed in part with federal new markets tax credits, a supermarket, and other commercial tenants.
The six-acre site was created from the aggregation of four parcels, one of which was the location of a former Chicago Transit Authority (CTA) train yard and repair facility.
The master developer for the project, Chicago-based Holsten Real Estate Development Corporation, has promised to maintain the multi-cultural, mixed-income nature of the surrounding Uptown neighborhood.
Linda Brace, Holsten’s vice president of development, said the Wilson Yard project was envisioned to bring new retail and employment opportunities as well as much-needed affordable housing to a rapidly gentrifying community.
“In addition, because of its proximity to the “˜L’,” she said, “Wilson Yard is promoted as a transit-oriented development – a destination point for both residential and shopping needs. It’s anticipated that one of the major CTA stations flanking the site will be upgraded in the near future, entirely due to the new Wilson Yard.”
Chicago Ward 46 Alderman Helen Shiller said the Wilson Yard project will breathe new life into the city’s North Lakefront area, creating new jobs and new housing. “I’m confident the project will spur future commercial and retail development in the Uptown area of the ward,” she noted.
The project had its genesis with a city task force that explored the possible redevelopment of the site in 1997. A tax increment financing (TIF) district was formed in 2000 to foster redevelopment of the area, and in 2002 the city of Chicago selected Holsten as the master developer to purchase and redevelop the site. CTA transferred ownership of its site to the city in December 2004, prior to its sale to the developer.
Not everyone is excited about the Wilson Yard project, however.
Neighborhood groups have criticized it, saying it will concentrate housing for the poor in one location like the infamous Cabrini-Green public housing project.
One vocal opponent group, which bills itself as FixWilsonYard, has circulated petitions and says it plans to file a lawsuit to try to stop the development. The group on its Web site asserts that Wilson Yard will be dominated by densely packed low-income housing that will “poorly serve its residents and undermine the safety and economic progress of the neighborhood surrounding it.”
City officials strongly deny that charge.
Multiple Components
When completed, the Wilson Yard project will contain multiple components. These will include an 180,000-square-foot Target department store, ALDI supermarket, two affordable apartment buildings, roughly 21,000 square feet of miscellaneous retail, office and restaurant space, and 700 parking spaces. The ALDI supermarket, already operational, opened in May 2007.
The entire development, which also involves the remediation of a brownfield, is expected to achieve certification under the Leadership in Energy and Environmental Design (LEED) green building rating system. A few of the project’s energy efficiency and sustainable elements will be green roofs, a solar-reflective roofing system for the residential buildings, high efficiency mechanical and insulation systems, and use of recycled content in building materials.
The two apartment buildings will contain a total of 178 units, all assisted by the low-income housing tax credit (LIHTC) and affordable to households making 60% or less of the area median income (AMI). Sixty percent of AMI for a one-person household is currently $31,680.
One building, restricted to seniors, will contain 98 one-bedroom units. The second, family building will contain 78 units – eight one-bedrooms, 58 two-bedrooms, and 12 three-bedrooms. The developer didn’t provide proposed rent levels.
According to information on a Chicago Housing Authority (CHA) meeting in early 2006, the developer is expected to lease 16 units to holders of Section 8 Housing Choice Vouchers referred from CHA’s waiting lists. CHA relocatees and families affected by the city’s senior designated housing plan will be given priority status on the project-based voucher waiting list, according to CHA.
Funding Sources
The project’s schedule has slipped and its projected cost has increased, due to rising construction costs and architectural development delays.
Holsten officials gave limited details about the overall costs of the project or the tax credit and loan financing.
A major source of funding for Wilson Yard is a city commitment of $51 million in tax-increment funds. The balance is from loans and other sources.
Under TIF funding, a city lends funds to help finance real estate development projects within a designated geographic district. The city is subsequently repaid from the increased property taxes generated by properties within the district resulting from the increase in the value of those properties. Cities utilize TIF financing to provide economic incentives to private developers to build in blighted or underserved neighborhoods.
According to a spokesperson for the Illinois Housing Development Authority, a single housing credit allocation of $1.9 million was awarded for both apartment buildings. The housing credits were syndicated by Alliant Capital, Woodland Hills, CA.
In addition to tax credit equity, other funding for the family apartment building included a $2.75 million trust fund loan from the Illinois Affordable Housing Program, Federal Home Loan Bank funds, city TIF dollars, and a deferred developer fee, according to Brace. Besides equity, other funding for the senior apartment building included a $750,000 grant from the city, a tax-exempt bond-financed mortgage, federal HOME program funds, TIF dollars, and a deferred developer’s fee. Bank of America is providing construction financing for both the family and senior buildings.
Brace indicated that there will be a single overall marketing strategy targeted to prospective residential and retail tenants.
Development of the ALDI supermarket was self-funded and assisted with TIF dollars. Construction of the small retail spaces is being financed by a Bank of America construction loan.
New Markets Credit
The Target department store is being financed in part by funds generated by the federal new markets tax credit. Enterprise Community Investment, Inc. is providing $10 million in NMTC financing for the new Target store. Target’s investment in the Wilson Yard store is reportedly $33 million. The store will also be funded in part by TIF monies, said Brace.
Suzanne C. Brown, director of structured finance for Columbia, MD-based Enterprise Community Investment, said the Wilson Yard development is a pretty significant project for the community because it will create jobs in an area of high unemployment and high poverty. Holsten officials estimate that the Wilson Yard project will generate 250 construction and 325 permanent jobs.
Wilson Yard will mark Enterprise’s first NMTC project in Chicago, Brown said. Enterprise just opened an office in Chicago about a year ago.
– Stephen K. Cooper