CTPF Stays Silent on Lincoln Yards Investment
The Chicago Teachers Pension Fund made waves recently by discussing the possibility of investing in a project that the Chicago Teachers Union protested against back in 2019 when the city gave over a $1 billion in taxpayer money to a private developer on the Northside.
Several teachers including the CTU Vice President Jackson Potter who helped found CORE were arrested for protesting the massive TIF giveaway to Sterling Bay and other Tax Increment Financing District recepients in rich areas like Lincoln Park rather than the South or West Sides.
But CORE Trustees voted at an Invesment Committee meeting earlier this month to look into investing into the massive Sterling Bay project.
The day after we ran a story when I questioned this deal at the May 31, 2023 House of Delegates meeting, Crains reported that Sterling Bay is looking to Chicago teachers and their pension money to “bail out Lincoln Yards.”
The developer suffered massive losses after its investors pulled out of the $6 billion deal, they wrote.
“Real estate firm Sterling Bay is trying to strike a deal with the Chicago Teachers Pension Fund to bail out Lincoln Yards, a move that could help jump-start the stalled North Side megadevelopment, inflict hefty losses on the original backers of the ambitious $6 billion project and offer the developer a lifeline amid a financial storm that threatens its control over major pieces of its high-profile local portfolio,” Crain’s reported.
The Lincoln Yards developers will build 6,000 apartments, condominiums and townhomes, and include plenty of park space and commercial property.
But investing in commercial real estate is highly problematic as empty storefronts line city streets following the invasion of Google and Amazon where more and more people shop online.
So why would the Chicago Teachers Pension Fund jump into this controversial mega development they onced vowed to kill when its original investors are pulling out?
Sterling Bay executives pitched the idea that this project will benefit the city with potentially billions of dollars in future tax revenue. They also said that there will be plenty of affordable housing.
The issue of affordable housing could be at the heart of why investors are pulling out of this development. Sterling Bay did not answer a Pension Trustee’s question about why they had problems with former Mayor Lori Lightfoot to get the project on track. They said instead that they are talking to new Mayor Brandon Johnson on a regular basis who they claim has their support. Sterling Bay backed losing candidate Paul Vallas in the last mayor election.
Lightfoot ran on a pledge to axe corrupt TIF deals like Lincoln Yards in the election and she forced Sterling to double the amount of affordable housing, which probably scared away its investors who need to see their investment returns guaranteed, not the city’s social obligations honored.
Many alderpeople threatened to vote against the TIF if the deal did not include a lot more affordable housing after the candidates in 2019 Lori Lightfoot and Toni Preckwinkle told them to not back the deal unless there was more afforable housing.
Sterling Bay made this point loud and clear at its presentation to the Investment Committee. This project will have a lot more affordable housing, and the lower housing costs will be guaranteed for a long time, they said. This is in contrast to other “affordable housing” projects such as the one in Lincoln Square where Alderman Matt Martin agreed to go against the wishes of many small businesses on Lincoln Avenue when he decided to take the city parking lot their customers use and give it to another connected developer. While mainstream media like Block Club Chicago touted a certain percentage of the units being affordable, a closer look showed the discounted rates to rent would only be guaranteed for up to six or seven years, before the rent would revert to market rates. The developer turned out to be backed by Wall Street funds with ties to the Chicago Machine.
I told one Trustee who has a fiduciary responsibility to ask why did the other investors pull out of this Lincoln Yards deal.
The June CTPF Board Meeting did not discuss the deal. The Investment Committee would have to make a recommendation to the Board of Trustees to invest in this project, and the Trustees then vote on whether or not to invest. They say this process could take months.
Hopefully, this deal that is looking uglier and uglier for the Chicago Teachers Pension Fund and the Chicago Teachers Union will be dead by then.