The Real Deal Chicago

In Q&A, Alderman Brian Hopkins makes it clear Sterling Bay’s $5B project won’t start without his blessing

Hopkins also discusses aldermanic prerogative and public financing
By Alex Nitkin and John O’Brien | August 03, 2018 10:01AM

Clockwose from top left: Alderman Brian Hopkins (2nd, the former Finkl steel site, and a panorama of the Finkl Steel site (Credit: Facebook and Daniel X. O’Neil via Flickr)

Alderman Brian Hopkins (2nd) sent an unmistakable message to Sterling Bay last week when he asked City Council zoning committee chairman alderman Danny Solis (25th) to hold up discussion of the Lincoln Yards project: Not one brick will be laid in the $5 billion development without Hopkins’ personal say so.

Hopkins was elected in 2015, succeeding two-term Alderman Bob Fioretti after Fioretti launched a bid for mayor. He represents a ward known for its bizarrely-drawn boundaries: It’s shaped like a spindly crab, with one claw brushing the lake at Streeterville and the other reaching all the way to Ukrainian Village on the Near West Side. The crab’s head straddles the north branch of the Chicago River, covering most of Sterling Bay’s 53-acre property.

Thanks to the unwritten rule of “aldermanic prerogative,” City Council members flex de facto veto power over any new development inside their ward boundaries. And since last month, when Sterling Bay’s principals offered their first public look at Lincoln Yards during a ballyhooed presentation, all eyes are on the freshman alderman for a signal on where the development goes from here.

Hopkins sat down with The Real Deal this week and dove into what Sterling Bay will need to do before he lifts the gates on Lincoln Yards. He also made the case against a growing movement that’s challenging aldermanic prerogative, offered a direct message to NIMBYs and explained why “private developers don’t have an incentive to do the right thing.”

This conversation has been edited for length.

You said Sterling Bay’s public presentation on Lincoln Yards was “the first step” in a longer process. What comes next?

The first thing that I decided to do after that initial meeting was to issue a very clear directive to Sterling Bay that they were to make themselves available immediately with the different community groups. We’ve got six of them in my advisory council, selected due to proximity, in addition to Friends of the Parks and Friends of the River. So I said to Sterling Bay that they are to be available immediately and in full with their entire team to meet with these groups, no excuses. And we’ve communicated to the groups as well that this is where their work begins. They’re expected to roll up their sleeves and do their due diligence as a community, and that means a careful examination of what is contained in the initial [Planned Development] applications, to go over it line-by-line in detail, to prepare their probing questions based on what they’re seeing, and — since we didn’t see a fully baked cake in the presentation — put their list of priorities for what they want to see in the next refined version of the PD amendment that’s going to be offered. So, what are the more glaring omissions? What are the burning questions that were not answered by the initial submission? They’re going to present those to Sterling Bay and say, “If you guys come back and there’s still holes in the donut in these areas, it’s going to go badly for you.”

What specific details did Sterling Bay leave out of their presentation that you were expecting to see?

Well, it’s a glass half-full half-empty scenario. The glass is half-full because I insisted early on that the two PD areas, Lincoln Yards North and Lincoln Yards South, be adequately divided into sub-area parcels. So we told them, sit down with your designers and cartographers and design this map down to small parcels so we know exactly what we’re talking about when we look at this whole almost 60-acre area. We’re not going to have a conversation about a 60-acre area, that’s just never going to happen. We’re going to have a conversation about a small corner in that area, multiplied by however many times. [Sterling Bay CEO] Andy Gloor in his presentation talked about a blank slate, and it kind of is. There’s nothing there. So they had to envision all these little lots, which are lettered and labeled. And they did it, in my opinion, adequately. There’s an adequate number of sub-parcels in that area where we can talk about what’s going to be on each one — like, where’s the residential building going to be? Where’s the restaurant going to be? Where’s the hotel going to be? All those kinds of things. Except they didn’t really show us what the hotel would look like. We don’t know. And they talked generally about height limitations and stuff like that, but they didn’t distill that down to each individual parcel. So they put the framework out there for us, but they didn’t really construct onto it. It’s obviously incomplete. So it’s a good beginning, but there’s a lot more work to do. And going back to my directive to the community groups, that’s a good place for them to start as well. Start by telling us what they think works and doesn’t work in different areas of this large parcel of land.

Has height been the biggest concern for those neighborhood groups? Is it more about traffic? What are they going to be focusing on most closely?

I think as we go forward, part of my job and part of the job for some of the advocates on this development will be to shift the more vociferous argument away from height, and have it land on density instead. Because height becomes sort of a substitution for an argument against density. People get this idea that “Oh my God, it’s tall,” and then they react strongly to that. But we want people to look a little more closely at density. In other words, what’s the adequate amount of density to support this development economically, and what is the maximum amount of density that this area can support based on an infrastructure build-out that we’re just now getting into the details of. And once you answer that number, to get to a point where you’re satisfied that the infrastructure build-out can support a density variable X, how you get to that variable shouldn’t matter as much, whether it’s tall, short, fat, long, wide — what difference does that make, really? It’s the population and its support for it, it’s the traffic, the public transit and all those types of things.

When you’re talking about the “maximum amount of density the neighborhood can support,” the city’s planning and transportation departments would probably come up with different numbers than neighborhood groups would. How do you balance those? Who do you listen to?

That’s my challenge: to sift through those competing voices from the community. Because the area I represent here actually has a high concentration of families who are involved in real estate and have an economic stake in the city that goes beyond concerns about traffic and their backyard. I’m hearing constantly from people in the neighborhood who have just said, “This is great, build it.” Conversely, I hear from people who express the classic NIMBY argument that they’re not terribly interested in anything that’s going to be there, and once they hear that there’s going to be more traffic, they stop listening and decide they’re against it. So I’ve got these polar extremes represented in my constituency, and I have to sort through all these voices and come up with a reasonable approach. It’s a very challenging thing to do. It’s about balance, it’s about compromise. We look at this blank slate, and my message to the NIMBYs is that we will not simply be able to prevent any development. There will be something built there.

But you have to get involved in negotiating and fighting for the type of development that actually can work, that can be sustainable and that can have a positive impact on the city overall. Once you just say “no” to everything, you take yourself out of the negotiating game. There’s no point in anyone having a dialog with you if you’re never going to support anything. And my message to the people who after this first community meeting said “give [Sterling Bay] carte blanche,” you really can’t do that, because private developers don’t have an incentive to do the right thing. They have an incentive to increase their bottom-line net profit. That’s what drives them. So you need brakes on that car. And I recognize fully that everything I successfully negotiate on the part of the community comes right out of their net profit, so they’re not going to willingly just offer it up. You’ve got to take it to the mat, and you’ve got to tell them “You’re about to realize a nice profit for your investors, and that’s fine, but you have to meet the social cost of it.” So I need people with me. I need people to stand with me on behalf of these neighborhood groups and back that up, which is exactly the opposite of the classic NIMBY argument, which is to say no to everything.

You mentioned false starts, and it seems like this typically isn’t how the development process goes. Usually the developer presents their full plan to the alderman, and then the community process starts. Have you been frustrated by the way the process has played out so far?

I would say the frustration I’ve experienced so far is relatively mild compared to the potential for a much greater level of frustration in the future, depending on where this thing goes. I am a freshman alderman in my first term, and I’m standing up to one of the most powerful real estate interests in the city right now. That’s not an easy thing to do. There’s a power imbalance there. Everyone talks about aldermanic prerogative, but it doesn’t exist on paper. It’s not an official law. It’s an informal arrangement. And much of my power as an alderman is derived from that informal arrangement, which, by the way, is under attack right now by some of my colleagues who seem to want to abdicate this decision-making authority that we’re vested in by virtue of being elected. So I disagree, as a side-note, with this idea that aldermanic prerogative is somehow bad and should be discarded. I’m relying on it now to gain additional leverage on behalf of the people I represent, and to sit down against very powerful, well-capitalized interests who may not be amenable to suggestions I’m going to put forward, and we’re going to have to fight for those things. And this isn’t even factoring in Amazon. If Amazon does decide to choose Chicago and they do come to Lincoln Yards, I as a freshman alderman would be up against this corporate behemoth that will be trying to dictate everything they want. So there’s an element of adversity in this transaction that’s unavoidable, and I’m trying to marshal all the authority and all the resources that I can to increase my bargaining power on behalf of the community.

How will you know when it’s time to let the Chicago Plan Commission start processing Sterling Bay’s planned development applications? Before the community meeting you said you were looking for “consensus,” but that seems pretty much impossible, especially considering everything you’ve told us so far.

There’s a science to what I do, and there’s an art. That’s the art: to know when to declare that you’ve reached the point of maximum consensus. There’s no way to objectively determine that. You have to rely on instinct, experience, you have to be open to all channels of communication. My office is open at all times to unfiltered input, and I’m proud of the way we accept information. We accept it from all directions. And to be able to sort through that and give emphasis and weight to the more credible points, and to allow for the people who may be simply venting, we do that normally. So we’re going to use that skill that we’ve refined in this moment to really digest all of the feedback that we’re getting. We’re in the process of making a survey, and making it as accessible as possible, to increase the chances that the average person out there will tell us what they think, instead of just grumbling over the water cooler. We’re constantly monitoring the pulse of the community, which will help us when we get to the point of saying, “This is as good as it’s going to get in terms of the community’s support.” And that’s the moment that you want to focus on the community benefits, and seize on the positive aspects.

It’s true that if you take the best idea in the world and put it in front of any legislative body in the country, you’ll have a group formed immediately to protest it, stop it, call it horrible. There’s just no such thing as universal agreement in America today. So if that’s the goal, you’re never going to get there. You have to build into the system an allowance for reasonable dissent and arguments against whatever you want to do.

And going back to aldermanic prerogative, there’s probably no one better to make those kinds of [zoning] judgment calls than the alderman. We all do feedback-collecting and information-gathering from voters. Our jobs depend on that. That’s why aldermanic prerogative is a very democratic function. Our jobs depend on being responsive to the will of the majority. And it’s often unclear what the will of the majority is, so we have to interpret it. And we do our best trying to peer through cloudy waters and try to determine that. And the stakes are very high.

But how do you respond to critics of aldermanic prerogative who say it’s effectively prevented affordable housing from being built in wealthier wards?

Well then, let’s make the case that affordable housing is an essential part of a healthy society, and that giving people the ability to live close to where they work is best for all of us. It makes for a sustainable urban environment. In largely affluent areas where you have a high percentage of workers in service industry jobs and restaurant jobs, they simply aren’t going to be able to buy a home in the neighborhood they work in, but they should still be able to live in the neighborhood where they work if they want to. That’s good for all of us. So we have a job to do to make that case, and if we do, aldermen will encourage construction of affordable housing. It’s that simple. If the people want it, we will deliver it for them. So let’s make the case for people to embrace this idea — that affordable housing is necessary and needed, and that the private economic conditions that exist today in the housing market make it unlikely to happen without support from a public policy of some kind. If a private developer has a choice to build luxury housing or affordable housing, they’re going to choose luxury housing every time, because they make more money doing that. So unless we intervene in some way and help tip the scales, it’s never going to happen. But we won’t do it if our voters tell us not to. We will do it if our voters tell us that it’s necessary. So we have to make the case to our voters, and they’ll understand, and they’ll support these decisions.

Do you support the proposal that’s taking shape to designate a 24-acre park along the North Branch Corridor? Is that something you’ll require of future developments near Lincoln Yards?

Yes. I support the plan for the park on the east side of the river, east of the current Lincoln Yards footprint. None of that land is currently owned by Sterling Bay, so it wouldn’t be appropriate for me to ask them to somehow build a park on land they don’t own. But now that it’s out there that we have this plan for the 24-acre park on the North Branch Preserve, any potential buyer who might come along to acquire some of that land, whether from General Iron or some of the other property owners, they are now on notice that this concept is out there and it’s gaining support. So they’ll have to take their own risk if they’re willing to spend money on this land where the public is asking for a park. We’ll have to negotiate with whoever ultimately owns the land. But right now, for Sterling Bay, the focus is on maximizing the amount of recreational space and open space on the land they currently own. Dealing with the potential park on the other side of the river is out there, but it’s in the future. None of that land is currently for sale. So we’re obviously a little bit farther removed from that part of reality than we are from making a park in Lincoln Yards a reality, and I don’t want Sterling Bay to think they can punt this idea, and say “Well, we’re not going to build a park on the land we own now because someday there might be a park on the other side of the river.” We’re not going to allow that. To the extent that talking about the North Branch Park and Preserve could potentially get them off the hook today, we have to draw a line and make sure that doesn’t happen.

After Sterling Bay’s presentation, some people seized on a reference to public funding that would end up going toward new infrastructure inside the development. What kinds of taxpayer money are you prepared to help leverage to make Lincoln Yards’ plans for roads and public transit a reality?

My mind is open to all types of creative financing. I’d like to see our bond rating continue to improve. We’re sort of clawing back from non-investment-grade status, so some of this will be traditional capital bonds, some of it is likely to be TIF [tax increment financing]. It’s so unpredictable what’s going on in Washington, so we don’t know about federal money. But we do know that there really won’t be any source untapped when it comes to the public infrastructure that’s needed here. It’s going to require a very dynamic mix of sources, and I’m open to all with the exception of any type of a [special service area]-type structure where local property taxpayers will be burdened with some special tax to support this, simply because it happens to be in their backyard. Sterling Bay is predicting Lincoln Yards will bring $80 million a year in net new property tax revenue to the city of Chicago, but that won’t be spent exclusively in the Lincoln Yards area. That will be for the entire city. So it would be unfair to go to the property taxpayers in the immediate area and say, “You have to pay for a new bridge.” This came up in the course of the discussion of how to fund that 24-acre park. Because everybody wants it, everyone thinks that’s a great thing. It’s a question of how we get to $200 million, and Alderman [Michele] Smith [43rd] has suggested some kind of local property tax surcharge like an SSA to help pay for that, and I reject that out of hand. It has to be a citywide base, because it will be of a citywide benefit. So we can’t put special burdens on [local] taxpayers to help pay for this.