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Loop Alliance Wants to Revamp Wabash Avenue: Business Owners Balk at Price

 One of the Chicago Loop Alliance’s annual projects to activate vacant storefronts is the Pop-Up Art Loop gallery walk.
One of the Chicago Loop Alliance’s annual projects to activate vacant storefronts is the Pop-Up Art Loop gallery walk.
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D. Eric Murphy

THE LOOP — The Chicago Loop Alliance wants to give Wabash Avenue a facelift.

"We asked the question: 'Could Wabash be cleaner, safer and better?' and 87 percent of people said yes," said Mike Edwards, executive director of the independent organization which works to service State Street from Congress Parkway to Wacker Drive independently of city-funded services.

"Jewelers Row is, in my opinion, an underutilized asset on Wabash, and we could really amplify that," Edwards said Wednesday.

Amplifying Downtown destinations is the Loop Alliance's specialty.

Since it took over responsibility for managing Special Service Area 1 (SSA 1) in 2005, the collective — staffed mostly by Loop business owners — has levied its own property taxes on businesses lining State Street to fund services like street cleaning, panhandler management and "activation" events.

But to expand on its mission statement to "create, manage and promote high-performing urban experiences" from Michigan Avenue to parts of Dearborn Street, it means buildings that previously managed their own street maintenance will be forced to buy into the Loop Alliance's service pool.

Some existing downtown business owners aren't happy about it. Under the Loop Alliance's proposed budget for 2015 — $6.3 million, up from this year's $2.6 million for the current, smaller area — business owners will be charged an additional $163.95 per linear foot to buy into SSA services.

A building with a property value of $10 million would pay an extra $24,520 annually to the Alliance.

"We've done a rough back-of-the-envelope calculation of what it would take ourselves to maintain the streetscape. ...It's somewhere between about [$7,000] and $13,000 annually," said Mark Davids, general manager of 131 S. Dearborn St.

"The amount that we're charged presently is about $300,000 annually" for the portion of the building that's already within the boundaries of SSA 1. "This proposal has us paying over a million dollars annually. So that's a million dollars for what would potentially would have cost us about $10,000 to perform ourselves."

Ron Tabaczynski, director of government affairs at the Building Owners and Managers Association of Chicago (BOMA/Chicago), says his group's members overwhelmingly oppose being absorbed into SSA 1.

But several BOMA members, including Paul Fitzpatrick of Joseph Freed & Associates, spoke of the benefits to expanding the Loop Alliance's service area at Wednesday's meeting.

"It would be about 5 percent of your total tax bill," said Fitzpatrick, whose company owns and manages the Sullivan Center at 1 S. State St. He's both a member of BOMA and a commissioner for the SSA. "On a per-linear foot basis...this would be less than it is today."

Aside from the two public meetings held May 1 and May 21 to hear questions and comments, the decision to expand the SSA's boundaries will be entirely in the hands of City Council.

After the Loop Alliance submits its application to renew its 15-year management contract to the Department of Planning and Development by the mid-June deadline, there will be a public hearing in the fall, and by December, City Council will approve or reject the bid.

South Side business owner Tom Stepanek wouldn't be affected directly by the proposed SSA expansion, but attended Wednesday's meeting to state his opposition to the process, which he feels steamrolls business owners.

"It's pretty much a done deal...If the alderman's on board, it's done," Stepanek said. "I don't think the business owners have enough input in the voting process. Fifty one percent of [business owners] have to vote against it to have it not expanded, I don't think that's right."

Ald. Brendan Reilly (42nd) and his office didn't respond to requests for comment on his position.

Michael Prussian, president of Chicago-based General Parking Corporation who manages two garages on Wabash Avenue, said he'd rather continue to manage his street cleaning and snow-shoveling privately than pay for improvements to the neighborhood, which he doesn't think will help his business.

Steve Hennessey, general manager at 225 N. Michigan Ave., said his building's tax increase would be about $500,000 if it's included in SSA 1's new boundaries.

"I'm not saying that the SSA doesn't do the job or that it's not needed, but I can't see the value of us paying this much money, that my tenants are getting $500,000 worth of value," he said.

"My competitors are right around the corner at 233 N. Michigan, which is not even included in the SSA. All of a sudden my taxes go up while I'm trying to get to a competitive rent, and they don't have a tax increase. Other people are going to benefit from not paying anything."

But the Chicago Loop Alliance argues that its improvements to State Street have historically boosted property values.

"If we can make this the kind of desirable area that we think it ought to be, what happens to the value of your building?" said Martin Stern of U.S. Equities, a member of the SSA advisory board.

"It doesn't take much movement to make up for everything that this will cost."

The Loop Alliance said its top priorities for 2015 will be sidewalk cleaning, snow and graffiti removal, and its street team, which works with the police and support agencies to manage homeless individuals and aggressive panhandlers.

The group claims that since 2002 in SSA 1, retail rent per square foot has increased 200 percent and retail vacancy has declined by 18 percent.