City, developer to share profits in W. Side accord - Metropolitan Planning Council

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City, developer to share profits in W. Side accord

City officials have struck an unusual bargain with developers by agreeing to provide land for new homes on the Near West Side in exchange for a share of the sales proceeds.

The agreement with New West Realty owners Ted Mazola and Gus Mauro in effect makes City Hall a financial partner in an initiative to bring new housing stock to a onetime depressed neighborhood.

John Markowski, Mayor Daley's housing commissioner, said the program benefits both the city and developers and will be adapted for use in other neighborhoods. Officials project that the 43 vacant lots provided to New West's venture could produce aggregate sales revenue to the city of at least $4.17 million.

The amount could be greater, depending on sales prices. All the properties are city-owned and fall within an area bounded byMaplewood, Damen, Warren and Flournoy that is just west of the United Center.

Markowski emphasized that the project carries little risk to taxpayers because the city is laying out no cash. New West is securing private financing for construction and will bear all those costs.

Mazola said his agreement calls for the city to be paid once all home sales close on a particular parcel. His company has agreed to build 110 homes on the 43 lots, mostly as three-flats or two-flats.

The program differs from other housing efforts involving city-owned land, which typically call for the city to be paid upfront through bond proceeds. In other instances, the city will donate land to developers that put up affordable housing.

Mazola, a former alderman, said he suggested the new arrangement because developers typically face red tape when the city issues bonds. "It's much more easy for me to get my own financing," he said. "I'm willing to share the profits down the line."

Ground was broken Wednesday at 2112 W. Madison for the first building to be constructed under the program. Some of the parcels require zoning changes from classifications that require retail space on the ground floor. What's planned is exclusively residential.

The agreement takes advantage of acute demand for housing on the Near West Side, with development activity pressing westward beyond the United Center and Western Avenue. The property involved is among some 10,000 city-owned lots, often acquired through foreclosure to satisfy the city's demolition costs. The city also gains title to properties with delinquent property taxes.

"Let's get these properties back on the tax rolls," said Peter Skosey, vice president at the Metropolitan Planning Council. He praised the new program as an example of "good creative thinking."

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