Chicago mayor’s Invest South/West initiative gets slow start - Crain's Chicago Business

Mayor Lori Lightfoot and city planning officials last month held a ceremonial groundbreaking for a $43 million pair of affordable housing projects in Auburn Gresham, though actual construction has yet to begin.

When developer A.J. Patton surveys the empty storefronts, vacant lots and crumbling facades lining a 3-mile stretch of Chicago Avenue between Humboldt Park and Austin, where nearly a third of residents live below the poverty line, he sees a nascent showcase for Mayor Lori Lightfoot’s signature initiative to spur investment in blighted South and West Side neighborhoods.
It starts with a proposed $27.1 million mixed-use complex with 44 apartments at Chicago and Central Park avenues, one of several projects induced—and heavily subsidized—by Invest South/West. Then there’s the $39 million, 60-unit apartment building with a grocery store Patton seeks to build five blocks west of there. Farther west, a prominent Austin developer plans a 20-unit condo project with a vegan restaurant on the ground floor, while other developers expect to begin work by the end of the year on a $40 million project that will put new commercial space in the landmark Laramie Bank building and build mixed-income apartments next door.
Though none of those projects have won final city approval or broken ground, “that’s arguably $130 million of (planned) investment in a section of the city that hadn’t seen it in 40 years,” says Patton, CEO of 548 Capital, one of the most active developers in the city’s poorest communities over the past couple of years. “That is game-changing.”
Patton’s optimism is the prevailing sentiment among neighborhood-focused developers nearly three years after Lightfoot launched what she called her “Marshall Plan” for investment-starved South and West Side corridors. Prompted by city-solicited bids, housing and commercial projects totaling almost $500 million in costs—most of which is slated to come from public funding and incentives—are moving through various city approvals, some in areas that have gone decades without meaningful investment. Neighborhood developers say Lightfoot’s strategy of directing $750 million in public money and resources into targeted, vacancy-ridden commercial districts differs sharply from the lip service those areas got from previous city administrations, which focused mainly on downtown.
Yet so far, the initiative is short on tangible results. None of the city-spurred projects in the Invest South/West corridors has put shovels in the ground, well behind the goal set more than two years ago by the city’s planning head to have the first few buildings fully financed and under construction within 18 months. The slow pace raises big questions about Invest South/West’s effectiveness and ability to generate the broader, long-term ripple effects that Lightfoot hopes for.
Some developers and neighborhood residents also worry any projects that actually get built will only add to the list of developments that rely on public funding for life support while failing to reverse depopulation trends that have driven away a long list of national retailers. Whole Foods’ April announcement that it would close its Englewood store—even as the city commits millions of dollars to an Invest South/West site on the same block—illustrated the persistence of long-standing problems plaguing the neighborhoods Lightfoot hopes to revitalize.
“Some real planning took place, and (the program) has drawn attention to these underinvested neighborhoods,” says Rachel Weber, a professor of urban planning and policy at the University of Illinois Chicago. “The concern is that we’re going to end up with (several) Whole Foods” that require ongoing public funding, “and as soon as that support is withdrawn or it’s clear that is not forthcoming to other developers, that will be the end.”
Still, city officials have earmarked hundreds of millions of taxpayer dollars for the effort, hoping to lure private investors and philanthropic groups to help restore economic health to once-vibrant blocks. But with construction work yet to begin on a single Invest South/West project, residents may not see Lightfoot’s initiative as an improvement on past city efforts—potentially a key factor in how much voter support the mayor can muster as she seeks re-election in February.
Most investors and real estate developers say it’s too soon to fairly judge the impact of Invest South/West, which is meant to overturn decades of disinvestment. The COVID-19 pandemic has also slowed the process of gathering community feedback on projects, and rising construction costs and inflation have made it even harder to finance them.
Evaluating the program is also difficult because Lightfoot hasn’t laid out specific economic growth targets for her massive outlay of public funds. She never said how many jobs Invest South/West should create, how much private investment it should induce, how many housing units or new businesses it should spawn, or how long it should take to produce any such gains.
The city’s spotlight alone on neighborhood investment has given local businesses a noticeable boost, says Elizabeth Lockhart, whose family has run a series of small businesses in Austin for the past 45 years and owns 18 properties there today.
During a ceremonial groundbreaking last month for a $43 million pair of affordable housing projects near 79th and Halsted streets in Auburn Gresham—ceremonial only, since the developers are still in the process of obtaining permits to begin work—Lightfoot boasted that by the end of this year, there will have been $2 billion in combined public and private investment commitments across the 10 Invest South/West neighborhoods since the initiative began. But that figure includes private projects like a $50 million redevelopment of old Humboldt Park warehouses backed by billionaire Morningstar founder Joe Mansueto and a $100 million Northwestern Medicine outpatient facility in Bronzeville that may have moved forward regardless of the city’s Invest South/West effort.
The city-solicited Invest South/West projects are also almost entirely backed by public subsidies rather than private investment. Nearly 40% of the Auburn Gresham project is due to be funded with tax-increment financing dollars, for example, while grants and proceeds from low-income housing tax credits account for much of the rest, according to a planning department report. A planning department spokesman says public assistance—from the city and other taxpayer sources—accounts for at least three-quarters of the funds backing Invest South/West projects, noting that ratio is in line with other publicly subsidized mixed-use projects around the city.
Other markers of Invest South/West’s impact, such as economic growth in neighborhoods the city is targeting, don’t tell a clear story: In Austin, the number of small-business loans doled out and the value of residential real estate in the area surrounding the Laramie Bank building hit five-year highs in 2021, according to data from Mastercard’s Center for Inclusive Growth, which uses a mix of proprietary and publicly available data to track the economic health of U.S. census tracts. Yet Austin overall lost 1,100 jobs between 2019 and 2021, according to Illinois Department of Employment Security data.
IDES data shows employment has been steady in Auburn Gresham. But Mastercard’s hyperlocal data shows spending in the neighborhood’s environs last year fell to its lowest mark since at least 2017.
A rendering of the revamped Laramie Bank building in Austin, which a development venture plans to revive with a blues museum, bank branch, cafe and business incubator, as well as a 78-unit apartment project next door.
Neighborhood-focused real estate investors credit Invest South/West with boosting Black-owned developers and construction firms that rarely get larger downtown work. Bigger-name developers including Related Midwest and Farpoint Development have also taken on Invest South/West projects, something planning officials hope will spark more private investment in the neighborhoods. But several developers that declined to speak on the record for fear of political retribution say they have explored Invest South/West projects solely to score political points, not to make money.
Chicago Planning Commissioner Maurice Cox, who leads Invest South/West, says the 41 bids submitted for the first 11 city-solicited sites proves developers will take on projects in blighted corridors if the city provides various financial incentives and dedicates more staff from multiple departments to shepherd them forward. He also notes Patton’s Chicago Avenue project and a $31 million mixed-income housing project in Englewood proposed by veteran community developer DL3 Realty weren’t selected for city-solicited Invest South/West sites, but were hatched during that bidding process and are now seeking city approvals.
“Most developers would tell you that if it were not for the city’s menu of financial incentives, these deals would simply not happen,” Cox says.
Projects have also benefited from factors entirely separate from Invest South/West. The Neighborhood Opportunity Bonus program—a Rahm Emanuel creation that pooled fees from downtown development projects and redirected them into the South and West sides—has funded small businesses that are populating storefronts in some Invest South/West corridors.
Even the pandemic, a brutal setback for many neighborhoods, armed the city with federal relief money for development grants. Lightfoot recently announced a $13.5 million grant for Cleveland-based retailer Yellow Banana to revive a half-dozen South and West Side Save A Lot stores, including one just steps from the Auburn Gresham project.
The city’s spotlight alone on neighborhood investment has given local businesses a noticeable boost, says Elizabeth Lockhart, whose family has run a series of small businesses in Austin for the past 45 years and owns 18 properties there today, most of them along Chicago Avenue.
Plans to redevelop the Laramie Bank building—where her family had accounts before Citizens National Bank shut down in 1991—are helping Lockhart raise money for a 20-unit senior housing project she wants to develop four blocks east.
A rendering of Englewood Connect, a mixed-use Invest South/West project proposed at 63rd and Halsted streets in the South Side neighborhood.
“It makes it easier to go to the bank. The bank supports you differently (when the city is investing in the neighborhood), and funding has always been an issue, especially in our community,” Lockhart says.
But Invest South/West has also revealed how difficult it is to build consensus in a neighborhood about what development it needs, and the order of priorities. Winning bidders for the Auburn Gresham site encountered so much resistance from residents who wanted more commercial development and less density that the developers redrew their plans and spread them across two properties.
The pushback highlighted the glacial pace at which even modest development projects come together when they require multiple public subsidies, an array of financial partners, months of community review and approvals from several governmental bodies before they can begin moving dirt.
Brian Goldberg, whose Chicago-based LG Group is making its first foray into the South Side as co-developer of a $20 million residential building in Bronzeville, praises Invest South/West for helping spark new projects that might not otherwise move forward.
Yet more than a year after planning officials selected his firm for the project, he says he is still awaiting city approval for the subsidies needed to move forward.
“I hope if we do get approved, they can figure out how to accelerate the (zoning) process,” he says. “The easier they make it, the faster they’ll get (projects) out of the ground, and the more developers will follow.”
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