old post office acquistion authority cdc staff report final

8/19/2019 Old Post Office Acquistion Authority CDC Staff Report FINAL

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City of Chicago

Department of Planning and Development

STAFF REPORT

TO THECOMMUNITY DEVELOPMENT COMMISSION

REQUESTING ACQUISITION AUTHORITY

March 8, 2016

I. PROJECT IDENTIFICATION AND OVERVIEW

Property Address: 401-439 W. Van Buren Street; 324-430 W. Harrison Street;

and 401-535 S. Canal Street

Ward and Alderman: 25th Ward, Alderman Daniel Solis

Community Area: 28, Near West Side TIF Redevelopment Project Area

TIF District: Canal/Congress

Requested Action: Acquisition authority

Type of Property: The Site is approximately 484,000 square feet (11.1 acres)

of land. The Site is improved with the Old Post Office

Building, which is a multi-story, approximately 2,500,000

sq. ft. former post office building on parcels consisting ofapproximately 289,000 sq. ft. (6.6 acres) of land. The Site

is also improved with the Annex, which is a multi-story,

approximately 250,000 sq. ft. former annex building to the

Old Post Office Building on parcels of approximately

195,000 sq. ft. (4.5 acres) of land.

II. PROPERTY DESCRIPTION

Refer to the exhibit entitled Acquisition Parcel Profile Table for a detailed description of the

property proposed for acquisition.

Address: 401-439 W. Van Buren Street (Main Address); other

addresses included in this action are: 324-430 W. Harrison

Street; and 401-535 S. Canal Street

Location: W. Van Buren Street on the north, W. Harrison Street on

the south. S. Canal Street on the west and the South Branch


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of the Chicago River on the east

Property Identification Numbers: 17-16-130-001, 17-16-130-002, 17-16-130-007 (Old Post

Office Building); and 17-16-130-004 and 17-16-130-006

(Annex)

Land Area: Total size: Approximately 484,000 square feet (11.1 acres)

of land; the Old Post Office Building occupies

approximately 289,000 sq. ft. of the total Site area.

Current Use: The Old Post Office Building was built in two phases

between 1921 and 1933. The building has been vacant since

approximately 1995. Based on a 1998 study of the

conditions of various buildings in the area, the Old Post

Office Building was categorized as deteriorating, below

minimum City Code standards, excessively vacant and

suffering from deferred maintenance.

Zoning: Waterway Business Planned Development No. 1065, as

Amended

Environmental Condition: A complete environmental assessment is not available for

property not owned by the City. The Bureau of

Environmental Management of the Department of Fleet and

Facilities Management (2FM) has conducted a preliminary

screening of the acquisition property. 2FM recommended a

Phase I Environmental Site Assessment (ESA) is completed

prior to acquisition. Based on the results of the Phase IESA, a Phase II ESA may also be required. Based on the

age of the building and asbestos-related records, a

hazardous materials survey is also recommended prior to

acquisition.

III. PURPOSE OF ACQUISITION

The Site is generally bounded by W. Van Buren Street on the north, S. Canal Street on the west,

W. Harrison Street on the south and the South Branch of the Chicago River on the east. The Site

is approximately 484,000 square feet (11.1 acres) of land. The Site is improved with the Old Post

Office Building, which is a multi-story, approximately 2,500,000 sq. ft. former post office

building on parcels consisting of approximately 289,000 sq. ft. (6.6 acres) of land. The Site is

also improved with a the Annex, which is a multi-story, approximately 250,000 sq. ft. former

annex building to the Old Post Office Building on parcels of approximately 195,000 sq. ft. (4.5

acres) of land.


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The purpose of this action is to achieve the redevelopment objectives of the Canal/Congress Tax

Increment Financing Redevelopment Plan. One of the primary objectives is the elimination of

those blighting conditions which qualify the Project Area as a conservation area under the TIF

Act. Another primary objective is rehabilitation and enhancement of historically significant

buildings in the Project Area. The Old Post Office Building and Annex exhibit blighting

conditions. The Old Post Office Building is a historically significant building. Based on theforegoing, achievement of primary redevelopment objectives requires redevelopment of the site,

beginning with the renovation and reuse of the Old Post Office Building. The Site is one of the

City’s most prominent riverfront redevelopment sites and the lack of development progress has

prompted the Department to take action.

The United States Postal Service sold the Old Post Office Building in 2009 to International

Property Developers North American, Inc. (“IPD”) for $25 million, and in 2013 sold the Annex

property to IPD for an additional $14 million. IPD envisioned a $3.5 billion phased mixed-use

development that would eventually include three towers and 16 million sq. ft. of residential,

retail, entertainment, and office spaces. In July 2013, City Council approved an amendment to

the PD# 1065 for an additional $1.5 billion worth of investment, including 2,150 additionalresidential units in the Old Post Office Building along with hotel rooms and commercial spaces

on adjacent land.

Initial occupancy for the first phase of the project was projected for early 2015; however no

significant redevelopment work has been completed to date. The initial phase of development

was expected to create up to 10,000 permanent and temporary jobs. To date, despite numerous

meetings with local representatives the property owner (the last such meeting being held in

November 2015) there has been little to no action or substantial financial investment by the

owner to redevelop the site.

In addition to the lack of progress on the redevelopment of the site, it is important to note that theCity filed a complaint in the Cook County Circuit Court in May 2012, alleging 18 violations of

the Municipal Code pertaining to fire-safety, security, interior junk and debris, elevators, and the

building’s façade. The case was emended in Nov. 2012 to add three more violations, bringing

the total to 21 violations. For the past several years, the complaint has been under case

management with regular hearing dates to track the amelioration of these violations. The most

recent court date was February 24, 2015.

From the initial filing date through today, International Property Developers North American,

Inc., (“IPD”) has struggled to maintain the vacant building in a safe condition. While IPD has

taken measures to stabilize the existing façade, they are only temporary and more permanent

repairs are needed. The massive size of the building poses a significant challenge to emergency

responders, should any crisis occur. Junk and debris within the Old Post Office present potential

fire hazards, and since much of the debris is full of asbestos, this could pose a significant health

risk to emergency responders and to the public if there were a fire.

In addition to the violations in the amended complaint, in late 2013 it was reported that concrete

was falling from underneath the Old Post Office Building over the train tracks and platforms.


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IPD was ordered by the court to submit a critical examination report to the City regarding the

underside of the building. As of the Feb. 24th hearing, IPD had only just received the necessary

permit from Union Station/Amtrak to access the underside of the Old Post Office to conduct the

critical examination.

Because the Old Post Office traverses the Congress Expressway, it is imperative that the building’s façade is in good condition and able to withstand Chicago’s winter freeze-thaw cycle.

Initially cited in 2012, IPD has only recently completed a critical examination, which includes

stabilization repairs to the building’s south elevation at Harrison St. However, these stabilization

repairs are only temporary, and permanent repairs to the façade are needed. IPD’s progress

towards permanent façade repairs has been completely insufficient to date.

DPD has no specific development proposal to present to the CDC at this time. However, if

authorized by the CDC in a related action, the Department intends to issue a Request for

Proposals seeking responses from qualified development teams who will agree to redevelop the

Site and to pay all of the acquisition costs incurred by the City. Upon selection of a successful

RFP respondent, DPD will return to CDC to seek approval of a negotiated sale andredevelopment agreement.

IV. ACQUISITION PROCEDURES

DPD requests that CDC recommend to the City Council the authority to acquire the indicated

property. Acquisition authority will allow DPD to begin researching the cost of acquisition by

ordering appraisals, and will allow DPD to issue a Request for Proposal. Should the Department

move to acquire the property, the City will offer to pay the owner no less than its fair market

value. Only if an agreement cannot be reached will the City consider exercising its power of

eminent domain.

In accordance with CDC policy established by the commission in 1998, a certified letter

describing today’s action has been sent to each taxpayer of record, and each known owner, two

weeks in advance of this commission meeting. DPD staff was available one hour before the

meeting to discuss the action in person with the affected property owner. CDC policy requires

that this staff report include a table profiling each of the acquisition parcels. The table can be

found as an exhibit to this report. A sample copy of the notification letter is also included as an

exhibit.

CDC policy also requires that an offer to acquire improved properties must be made within four

years of the date of publication of the ordinance approving the acquisition. It is DPD policy that

an offer to acquire vacant properties must be made within 10 years of the date of publication of

the ordinance approving the acquisition. These sunset provisions are stated in the attached CDC

resolution as required.

As the building is vacant there is no relocation assistance to be provided.


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V. CONFORMANCE WITH REDEVELOPMENT AREA PLAN

The acquisition property is located in the Canal/ Congress TIF Redevelopment Project Area. The

Illinois TIF Act empowers local governments to acquire property to achieve the goals and

objectives of the TIF plan. This action satisfies the following goals and objectives of the

Canal/Congress TIF Redevelopment Plan:

•

Reduce or eliminate those conditions which qualify the Project Area as a conservation

area;

•

Assemble or encourage the assembly of land into parcels of appropriate shape and

sufficient size for redevelopment in accordance with the Redevelopment Plan;

•

Rehabilitate and enhance historically significant buildings within the Project Area.

VI. COMMUNITY SUPPORT

25th Ward Alderman Daniel Solis endorses the action and has provided a letter of support (see

exhibits for copy).

VII. RECOMMENDATION

The Department of Planning and Development recommends that the CDC approve the authority

to acquire the property identified in this report.


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EXHIBITS

Redevelopment Area Map

Neighborhood Map or Aerial

Tax PlatSummary of Building Violations

Environmental Screening Report

Parcel Profile Table

Sample Acquisition Notice

Alderman’s Letter of Support


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old post office acquistion authority cdc staff report final

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