Chicago Agreement at Risk Amid Lincoln Yards Distress

The city of Chicago isn’t ready to pull the plug on a distressed slice of a riverfront redevelopment.

The northern stretch of Chicago’s $6 billion Lincoln Yards megaproject is in limbo after developer Sterling Bay handed the 27-acre parcel back to its lender, Bank OZK. City officials say the move violates its agreement with the city and jeopardizes the broader redevelopment plan, Crain’s reported.

The transfer of the property, located between Lincoln Park and Bucktown, resolved a $126 million maturing loan and triggered a formal notice of default from the city’s planning department on April 1.

The notice cites a breach in the 2019 redevelopment agreement, which lays out how public tax-increment financing dollars are to reimburse private infrastructure investments at the site.

But the city is not rushing to scrap the deal, Planning Commissioner Ciere Boatright said. The city is prioritizing vertical development across the site and the TIF-backed agreement remains intact for now.

Bank OZK has said it will begin seeking a “new sponsor with sufficient capital and development expertise” to fulfill the site’s vision. The approved plan includes 14.5 million square feet of development, supported by more than $490 million in infrastructure improvements eligible for TIF reimbursement, including new roads, bridges and an extension of the 606 trail.

Sterling Bay and partner J.P. Morgan Asset Management still control the southern half of Lincoln Yards, but splitting the site across two ownership groups could complicate the current structure.

A future developer of the northern parcel could scale back the development or seek a fresh redevelopment agreement with the city, changes that could unsettle the balance underpinning the project’s infrastructure commitments.

Those commitments must be met before any construction can begin. For example, Sterling Bay had to extend Concord Place just to build its eight-story life sciences lab building, which hasn’t been occupied.

With $79.3 million in TIF funds sitting idle, primarily from expiring nearby districts, the city is waiting to see whether Bank OZK can attract a developer willing to meet the agreement’s terms, or if the deal needs a full reboot.

— Judah Duke