The 40th Ward boss may have dashed the hopes of some neighbors who wanted the site transformed into a mecca for LGBT seniors.
But Vea Cleary, the champion of the proposal, said she was "encouraged" by the alderman's words.
"We have some really exciting stuff brewing right now," she said, hinting that she had begun working with a viable developer that has done work in the city similar to her project.
Cleary said she wouldn't reveal any details until later this month after a meeting with the alderman.
O'Connor said in the statement posted on his website that "unless the economics of such a development improve or become manifest, it is unlikely that any developer would have the capacity or ability to move forward with that project."
He added, however, that he was open to the idea.
O'Connor also revealed that the property management company overseeing the redevelopment of the site — Waveland Partners — had applied Wednesday for a zoning change that would allow them to start shopping a planned development, which includes a 12-story, 214-unit building and a one-acre park, to developers.
Cleary, a designer who holds a master's degree in interior design, turned her thesis project into much more when she drafted plans for an eight-story building that included a gym, health center, assisted living and affordable housing for seniors at the site of the former hospital that shut down in 2001 after investigations revealed Medicare and Medicaid fraud.
The site at 5700 N. Ashland Ave. has sat vacant since the owners went bankrupt and were eventually indicted on charges they didn't pay a court-ordered judgment of $188 million to creditors.
Chris Swan, one of the founders of Friends of West Edgewater Park, and other community members had originally demanded that the entire property be converted into a park early on in the process.
They settled on a third of the property being donated to the Chicago Park District.
"It’d be great to have a senior community LGBT-center type of facility — and the community would be supportive of that as long as it wasn’t restrictive to everybody," Swan said.
But like the alderman, he says finding the money to do it would take "years and years."
"It’s just not likely to pull a deal together on it," he said.