CHICAGO SUN-TIMES

Thursday, November 17, 2005

$125 mil. Pilsen development.  Ex-Cabinet member behind housing plan on Near South Side.

By David Roeder and Fran Spielman

Former U.S. Housing Secretary Henry Cisneros and co-investors have secured control of 6.5 acres in Pilsen and want to build 391 homes on the two-block stretch of mostly industrial land.

The final investment could be around $125 million, said Bill Purcell, president of Kimball Hill Suburban Centers, a partner in the deal.  It would be the biggest housing development in Pilsen in years and would try to feed off success of the upscale University Village complex a few blocks north.

As such, the project could stir criticism that developers are carving up the largely Mexican community for wealthy white buyers and pushing out current residents.. Cisneros said he has countered that charge by keeping community groups apprised of the plans and by holding his home prices relatively low.

“The hope is that the economic momentum around the University of Illinois will continue into the South Side, but that it doesn’t change the character of Pilsen,” said Cisneros, chairman of a development and housing finance company called City-View.

He said he’s looking at similar investments in “work force housing,” which is priced to be affordable to middle-income families, within Chicago and in East Chicago, Ind.  CityView has a  $250 million funding commitment from the California Public Employees Retirement System for such projects across the country.

“We expect to be a major force in central Chicago work force housing,” Cisneros said.  CityView is building several such developments in California and, with Kimball Hill, is discussing a deal in Detroit that could involve more than 1,000 new homes.

The Pilsen project extends about a block each way along Peoria from 16th to 18th streets.

Purcell said the standard home prices will range from $250,000 to about $700,000, with most in  $300,000 to $350,000 range. That's well below the prevailing rate in University Village, a 930-home complex on the southern edge of the University of Illinois at Chicago campus.

In addition, the Cisneros group has agreed to call 82 units “affordable,” which in this case would price them for buyers with 60 percent to 90 percent of median Chicago income.  Most “affordable,” designations price homes for buyers within 80 percent to 120 percent of the median.

A source said the investors have paid $6 million to $8 million to secure sales contracts with the land’s multiple owners.

Another partner is Chicago-based Mota Construction Co. Inc, a Hispanic-owned company.  Mota has agreed to hire mostly Hispanic workers for the project said David Betlejewski, executive director of the neighborhood business group Eighteenth Street Development Corp.

Purcell said plans call for Cisneros’ company and Mota to own 55 percent of the venture, and Kimball Hill to have the rest.

Pilsen’s alderman, Danny Solis (25th), said the Hispanic ownership and hiring commitment “are good indicators of something that could support.”  The investors have applied with the city for a zoning change to convert the property from  industrial to residential use, a step that typically needs the local alderman’s blessing to succeed.

Solis said the plan will be the subject of more community meetings.  “They have filed for a zoning change, but that doesn’t mean this is a done deal,” he said.

Betlejewski’s group works to preserve Pilsen’s industrial jobs, but in this case, supports converting an old factory site into homes, he said. Tool and Engineering Co, which made prototypes for the Chicago Auto Show, closed the operation years ago.

“We did everything we could to market it, and had no luck,” Betlejewski said.  He said the new homes should generate about $15 million for a tax subsidy district in Pilsen that can be used for other projects within the industrial corridor

“The largest pieces in the development would be two 10-story condo buildings along 16th Street, Purcell, said.  He said, five-story buildings along 18th Street, a commercial, artery, would include stores on the ground level and condos above.

The rest of the site would have a mix of townhouses and three-to 12-flats.

“We are designing this so the buildings look like they belong there,” Purcell said. “We don’t believe in trying to drop in a design from other places.”

Cisneros is a former mayor of San Antonio who was President Bill Clinton’s secretary of housing and urban development from 1993 to 1997.  Cisneros resigned under scandal and eventually admitted he lied in a FBI background check to conceal payments to a former mistress.