April 16--The proposal to redevelop the old Cook County Hospital that board President Toni Preckwinkle delivered to commissioners earlier this month could result in a pair of added expenses in the short run.
The county's initial costs could rise if it buys a small parcel of land near the 13-acre redevelopment site or later agrees to pay for potential ground cleanup costs that rise above the $5 million limit the county has set.
Even so, commissioners who have reviewed the plan say they support it, in part because the cost of any environmental remediation eventually would be covered by rent that developers would pay to lease the land.
"I'm very bullish" on the agreement, said Commissioner Bridget Gainer, D-Chicago, who noted the Near West Side neighborhood that includes the old hospital is seeing other significant development. "I think it's very doable."
The board could vote on the plan as early as next month. Preckwinkle first revealed the proposal to the Tribune, saying it would be a way to restore the facade of the 102-year-old Beaux Arts building that's on the National Register of Historic Places but has been shuttered since Stroger Hospital opened more than 13 years ago.
The old hospital building would be converted into a hotel, apartments and shops during the first phase of a more expansive development of the overall site that could take 15 years. Three other phases include a technology and research center, medical office building, additional apartments and parking decks.
Construction costs, estimated between $550 million and $700 million, would be paid by a development team led by MB Real Estate Services. Financing has yet to be secured, however, because the developers must obtain county and city approval for the plans, as well as federal income tax breaks for historic developments that would reduce the project's overall costs. But that chain of requirements is typical for historical rehabilitation projects.
The 257-page redevelopment proposal states that the last phase of the project -- which includes residences, offices and shops at both ends of Pasteur Park north of the old hospital -- could include buying a triangular parcel that covers one-sixth of an acre bounded by Harrison Street, Wolcott Avenue and Ogden Avenue.
That property, where a vacant building now sits, is owned by the agency that oversees the Illinois Medical District, a 560-acre area just south of the Eisenhower Expressway that includes Stroger Hospital, Rush University Medical Center, the University of Illinois medical campus and Jesse Brown VA Medical Center.
The triangular parcel is included in the Illinois Medical District's planned $300 million, 9.7-acre IMD Gateway Center, a development in the final stages of approval that includes a hotel, housing, offices and parking. But the parcel is detached from the rest of that project, and how it would be used is still being negotiated with the development team, said Ryan Gage, Medical District spokesman.
So it's not clear whether the county could even strike a deal to buy the property. If it were possible, the proposed redevelopment agreement does not detail whether the county or the developers would pay for it. That's something that would be negotiated later, if a purchase were pursued, said Jessica Caffrey, the county's director of real estate.
As for environmental cleanup costs, the proposal spells out that the developer would be responsible for removing asbestos or other toxic materials from the hospital building, but costs to remediate ground contamination would be shared.
At each phase, the developer would pay the first $750,000 in costs, and the county up to $1.5 million more. Total county costs for the entire project would be limited to $5 million. But if costs top more than $2.25 million for any one of the four phases, the two parties would sit down and decide whether and how to proceed, according to the agreement.
The proposal also lays out what the developers would pay the county in rent during the 99-year lease of the land. Annual rent would be $520,000 for the first phase of the project, starting two years after it got under way or "substantial completion" of that phase, whichever came first. Rents would increase with each phase, until they reached $2 million -- with annual increases equal to the rate of inflation plus a half percentage point.
The developers also would have to pay a deposit of $250,000, half of which the county can use for costs like legal fees, with the rest going toward the developers' lease costs.
hdardick@tribpub.com
