Why Alderman Reilly is cut out to lead real estate against Chicago transfer tax hike

Brendan Reilly couldn’t get a satisfactory answer.

During a November committee meeting of the Chicago City Council, the fifth-term alderman whose 42nd Ward encompasses much of the Loop and River North, pressed representatives from Mayor Brandon Johnson’s office about how, precisely, the city had spent $200 million his predecessor had allocated for homelessness programs the prior year.

Reilly wasn’t happy with the answers — or non-answers — he was getting. He read a press release from former Mayor Lori Lightfoot to the Council, noting that she said the funding would include, among other items “the development of permanent supportive housing, non-congregate housing programs and rapid rehousing programs.”

Permanent supportive housing is one of the main items that would be funded by a new real estate transfer tax promised by Johnson on the campaign trail en route to his upset mayoral victory this spring. Since his swearing in, the newly elected mayor has spearheaded the proposal’s progress in the Chicago City Council, which recently approved putting a ballot initiative to put a proposal to quadruple the property transfer tax on commercial and residential deals of $1.5 million or more on the citywide ballot in March.

Reilly looks to be staking a claim to a voice of reason from the real estate industry’s point of view, calling past performance with public funds into question as a riposte to the “soak-the-rich” appeal that promises another $100 million in annual funding for homelessness programs.

“That’s my concern here,” Reilly said. “We’re going to ask folks to pay more taxes for another $100 million, yet I still can’t get a straight answer on where the $200 million we allocated for this year has gone, where it’s been spent, and if there’s been a return on investment. Those are all very rational questions for anyone to ask, because we’re talking about the taxpayers’ money.”

It’s the latest tiff in a fight between Chicago’s progressive mayor and the River North alderman. Reilly endorsed Johnson’s runoff opponent, former Chicago Public Schools CEO Paul Vallas, in the mayor’s race. He’s also recently skirmished with Johnson over housing for the wave of migrants that have arrived in Chicago lately, and previously squared off with Lightfoot over matters ranging from the Bally’s Casino project to privatizing parking meters.

The probing questions about the public purse point to another avenue Reilly appears to be taking toward a role as a voice for business and real estate interests within a city council now governed by a progressive coalition. And, with the backing of key real estate figures in the form of campaign cash, he appears to have the relationships to assume the mantle at a time when  industry trade groups fear a tax hike on deals would hammer commercial real estate values at perhaps the most vulnerable period ever for urban office markets, and as surging interest rates are hurting property owners of all asset classes.

Reilly, who didn’t return requests for comment, has few of the sorts of local ties that many Chicago pols wear on their sleeve. His official bio doesn’t mention where he was born, he attended Hobart College, a small Episcopal college in Upstate New York, started his career in Springfield as a staff in the Illinois House of Representatives, and “misses sailing” these days.

He’s not without some experience that suggests Chicago-style political moxie, including using campaign funds to pay $47,000 in bar tabs at Boss Bar in River North since 2013, according to disclosures Reilly’s campaign has made to the state.

Originally elected in 2007, Reilly hasn’t faced an opponent in his four re-election campaigns. He seems sufficiently secure to work in the minority on key issues in the City Council, standing as one of 16 aldermen who voted against sending the transfer tax measure to voters. He keeps an ear to the ground, too: His fight over migrant housing with the mayor’s office started when he heard a rumor the Johnson administration planned to house migrants at publicly traded hotel landlord Pebblebrook’s Hotel Chicago in Reilly’s district. While that turned out not to be totally accurate, with the mayor’s office denying Reilly’s claim, the alderman was upset when he found out the Johnson administration was considering a migrant housing plan for another property steps away from Pebblebrook’s.

And he hasn’t always been friendly to developers. He turned down some proposals in his ward over the years, including in 2018 when he ordered Related Midwest to remove a 175-room hotel component from its proposed two-tower development on the former Chicago Spire site. The developer in that case implemented Reilly’s suggestions into its proposal and is moving forward on the first tower of the plan, set to rise 72 stories.

Another development plan Reilly wouldn’t sign off on years ago is still having a ripple effect in Illinois courts, where Chinese investors have won a class action ruling to be paid back around $28 million by a firm called Symmetry Property Development that once tried to build a 60-story housing and hotel project at the northeast corner of Wabash and Superior streets. However, the firm, which is tied to developers Jeffrey Laytin and Jason Ding, never got Reilly’s blessing, and they’ve been accused of improperly moving money and missing court-ordered payments back to the investors who raised the funds for the project that never came to fruition.

Those appear to be exceptions, however.

In its latest quarterly report, Citizens for Alderman Reilly recorded a donation from Jaime “Jay” Javors, a frequent donor over the years who’s given the organization $11,000 since 2013, state campaign finance records show. The campaign organization also pays $1,500 a month in rent for a WeWork space inside the Javors-owned building at 448 North LaSalle Street, but its headquarters is listed at 372 West Ontario Street, campaign finance records show.

Reilly’s campaign also took in $500 from The Prime Group’s Michael Reschke last quarter, and the alderman also previously received $1,500 from an entity that owned 830 North Michigan Avenue controlled by real estate giant Brookfield, and $2,500 from an LLC controlled by JBS Properties that owns the retail portion of 871 North Rush Street.

In total, Reilly has gotten nearly $160,000 in donations from the real estate industry since 2013, according to data from the Illinois State Board of Elections.

Those donors include Magellan Development Group CEO David J. Carlins, Lee Golub, who is managing principal of Golub & Company, James Letchinger, founder and CEO of JDL Development, and Jason Friedman with Friedman Properties.

Despite Reilly’s apparent relationships with real estate pros, trade organizations contacted by The Real Deal declined to discuss their legislative strategy or how they approach lobbying City Council for the upcoming transfer tax battle.

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