Stalled Chicago skyscraper project may start again

AP News
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Posted: Dec 08, 2009 5:42 PM

Construction of what would be North America's tallest building may move forward thanks to unions that not only want their workers to build it but are trying to put together a deal to help pay for it.

A group of union pension funds _ eager to provide work for union workers _ are in talks to loan $170 million to Irish developer Shelbourne Development Group so construction of the twisting 2,000-foot-high Chicago Spire can resume as soon as early next year.

The Spire, which won city approval and saw workers break ground in 2007, has sat dormant for a year since the global financial crisis triggered various fights involving bankers, the architect and the developer, bringing work to a standstill.

The loan would pay off the estimated $64 million loan made by Anglo Irish Bank and satisfy various liens to firms that have worked on the Spire, including one by a firm associated with architect Santiago Calatrava, who stopped working on the project, claiming the developer owed him more than $11 million.

Tom Villanova, president of the Chicago and Cook County Building and Construction Trades Council, said the money would come from an AFL-CIO pension fund and Union Life Insurance Co., and perhaps pension funds from various locals.

The reason, he said, is simple.

"This would be 7.5 million man-hours for my members and I have locals that have 30 percent unemployment," said Villanova, whose group represents two dozen unions with about 100,000 members. He said the project _ which Shelbourne said would take about four years to complete _ would mean work for as many as 1,000 union workers.

Villanova said the opportunity to invest comes at a good time for his group _ in large part because the city lost its bid to host the 2016 Olympics.

"We were interested in funding part of the Olympic Village," he said. But when the city lost the games, "This (the Spire) jumped into first place as a project we focused on."

Villanova didn't know exactly when an agreement could be reached. But he said he is "very optimistic and hopeful" that it'll happen.

He downplayed the risk of investing in a skyscraper that will house nearly 1,200 condos in a city that has been flooded with so many new condos that owners in some parts of the city have struggled to sell them.

For one thing, he said, unions have been making these kinds of loans for years. He said, for example, the AFL-CIO fund has invested more in Chicago _ about $1 billion _ than in any other city in the country.

Also, the project is years away from completion, meaning there's plenty of time for the market to improve. Besides, he said, the deal now being considered would make the trusts the property's first mortgage holder, meaning the trusts would be "first in line" to take possession of the lakefront property if the project failed.

Shelbourne doesn't think it will come to that. In March 2008 the company said more than 30 percent of the units had been sold. And while spokeswoman Kim Metcalfe said the company continues to use that figure, she said there have been more sales since then and that because of "a little loosening up on the lending side" recently, Shelbourne is confident sales will pick up.

The condominiums start at $750,000 each, with most costing between $2 million and $15 million, she said.

One analyst said the project being at least a few years away from completion could work in the Spire's favor.

Gail Lissner, vice president of Appraisal Research Counselors, a Chicago real estate consulting firm, said after next year _ when 900 downtown condos are expected to be completed _ and 2011, when 86 are slated to be finished, there is little on the horizon.

"The pipeline is empty and there are no proposed projects," said Lissner.

The CN Tower in Toronto, at 1,815 feet, is North America's tallest freestanding structure. Chicago's Willis Tower, formerly called the Sears Tower, is the tallest U.S. building at 1,451 feet.