Editorial: Brandon Johnson should heed Lori Lightfoot’s plan for LaSalle Street

When the LaSalle Chicago hotel opened last year at 208 S. LaSalle St., it seemed like a long shot. The LaSalle Street Corridor has become emblematic of the downtown area’s struggle to recover from a pandemic that emptied offices as workers went remote.

Making matters even riskier from a business standpoint, the LaSalle is a luxury hotel, expensively renovated, with a high ratio of service staff to guests. Room rates start at about $300 a night and go up from there, making it more upscale than most other nearby hotels.

Here’s some good news, courtesy of Stefan Gruvberger, the LaSalle’s general manager: Business is better than anticipated.

The LaSalle, he said, has exceeded its revenue projections as business travel slowly revived and leisure travel expanded. Workers freed from their offices are increasingly treating Fridays as a part of the weekend, Gruvberger noted, an observation he made as a family of four checked in at midday on a recent Thursday.

What’s next for 208 S. LaSalle is anyone’s guess, however. This historic skyscraper is one of three LaSalle Street Corridor projects in line for massive public funding to turn some of its remaining empty offices into 1,000 new apartments.

Set to cost $130 million, the 208 S. LaSalle rehab would rely on $74 million in tax-exempt housing bonds, $33 million in tax increment financing (TIF) proceeds, $10 million in low-income housing tax credits and $13 million in equity via The Prime Group, a Chicago developer that already owns the building. That’s a huge public investment for just 280 new apartments on floors 13 through 17: That’s close to $500,000 per unit. Get your head around that level of subsidy.

Outgoing Mayor Lori Lightfoot championed these projects mostly because they include 30% affordable housing units in a part of the city that has practically none. Without public support, renovating obsolete skyscrapers into new apartments only makes sense if the residences can sell for far more than families seeking affordable housing could ever pay.

Confronted with a downtown that COVID-19 turned from vibrant to desolate during her tenure, Lightfoot went all in. A newly constituted Chicago City Council may not, and the same goes for her successor, Mayor-elect Brandon Johnson, who gets sworn in on May 15. Asked about the LaSalle Street Corridor projects, a Johnson spokesperson did not comment.

Johnson ran to the left of Lightfoot, herself a progressive and, to us, these projects seem like a proposition only a progressive could truly love. Many on the far left would relish the chance to spend government money to benefit hundreds of needy Chicagoans at a site known for its wealthy traders, bankers and real estate tycoons.

At the same time, this page has advocated for Chicago’s beleaguered downtown. During the pandemic, we urged Lightfoot to get busy reviving this economic engine of the city. Hard times in the Loop threaten to curb commercial property tax revenues just as a new mayor takes over after promising expensive social programs aimed at Chicago’s neighborhoods.

Without strong city leadership, downtown’s recovery will be slow and spotty. As it stands, pedestrian traffic is finally starting to tick up, while theater, concerts and other cultural events downtown are drawing bigger crowds: “Hamilton” makes an ideally timed return this fall, likely selling out shows for several months, just as summer tourists exit. The Loop’s residential population is increasing, too.

But crime is still a terrible drag on progress, as illustrated by last weekend’s violence in the Loop, where youth broke car windows, fired off shots and torched vehicles. Johnson compounded the damage with his amateurish statement about a scene of mayhem that made downtown look awful on the news and social media.

Meantime, older commercial buildings in the Loop that rely on missing office workers remain in deep trouble. Landlords can’t afford to keep making loan payments indefinitely on buildings worth less than the amounts of their debts. The LaSalle Street Corridor has an estimated 5 million square feet of vacant commercial space weighing down the market.

Anyone serious about reviving the city’s central core must consider what is politically feasible under a far-left Johnson mayoral administration. While a city drowning in pension obligations can ill afford to earmark big bucks for elaborate developments, it also can’t afford to ignore the Loop.

We’re skeptical about the cost of the LaSalle Street Corridor projects, their reliance on much-abused TIF financing and their insistence on a high percentage of affordable housing in a location not ideally suited for it. But even considering those drawbacks, they still have a good shot at reviving a dead zone and serving as a catalyst for future private investment.

Gruvberger, for one, thinks the time is right for the development in his hotel’s building, and said he welcomes the 30% affordable housing component.

Successes like the LaSalle Chicago hotel give us hope that investing now could pay off for a downtown struggling to recover from the pandemic’s aftermath. Chicago must take care of its beating heart.

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