Q&A: Back of the Yards RFP

The Department of Planning and Development (DPD) hosted a public review on Thursday, May 13, of the three proposals for the INVEST South/West Request for Proposals (RFP) in New City. The following is a select list of questions from the event that were asked by the public. 

Some of the questions have been combined or edited for the sake of brevity or clarity. Additional questions can always be directed to DPD staff at dpd@cityofchicago.org

General Questions

The questions in this section were reviewed and answered by DPD staff. 

How many RFP submissions were there total? 

DPD received a total of three submissions, from 1515 W. 47th St. LLC, Back of the Yards Works, and United Yards.

Will the recording of this meeting be posted publicly afterward?

Yes, it is available now on YouTube, as are the pitch videos created by all three development teams.

What happens if the community determines these proposals are not what they need? 

DPD is seeking feedback on the appropriateness of both proposals from stakeholders and residents. Community input will be vital to the selection process and the City’s formal review and approval process that follows. 


1515 W. 47th Street, LLC Questions

The questions in this section were reviewed and answered by members of the 1515 W. 47th Street, LLC team. The team’s pitch video is available for review

Can you talk about the mix of unit sizes?

The project would include studios, one bedrooms and two bedrooms. The team tried to fit as many three bedrooms as possible, but the site is tight. More two and three bedrooms are planned at the Aronson site, which the development team is also working on. 

How do developers plan to document all the work that has happened?

The team plans to have a video live streaming on the general contractor’s website, and there will be phone numbers and contact points posted on the site fence that will allow residents to get in touch with the team throughout construction.

How will this construction impact schools like Hamline and Chavez?

It should not.

What do you consider to be affordable housing for this community?

The model that we are using is 60 percent Area Median Income, so rents are capped, and it is based on a HUD calculation.

Considering that the median income of Back of the Yards is lower than 60 percent of the area median income, how will this be accessible to current residents? 

The financial modelling is be based on rent just below the caps related to 60 percent AMI, which the team does believe is appropriate. Based on the market study, this cap fits the area and demographics. That said, the goal is to rent the units as fast as possible and if those rents are too high, the team can lower the rents to get to stabilization as fast as possible.

How will tenants be selected for apartments?

The team will begin marketing the units for rent approximately six months prior to completion of construction. The only criteria on tenant selection will be income as it relates to affordability requirements.

What is the timeframe for completion? 

Assuming the project is selected in late summer, the team plans to start construction in February 2022, and open by December 2023.

How many units are you delivering? 

There are 50 units, per the RFP requirements.

Will you offer private parking on site?

Yes, in the basement level.

What will you do for residents who already own homes in Back of the Yards?

The community space is not just for the building residents, and it’s not just for Precious Blood Ministries. It’s for anyone that lives in Back of the Yards. The development team will not turn anybody away seeking to develop or attend programming in the space.

With this proposal, how many jobs will be created and how many will be for local people?

The team anticipates 380 jobs, of that amount, 325 will be construction, 15 will be during the planning and design phase, and 30 full-time jobs between the hydroponics farm and the anticipated commercial entity that will be there. The team aims to hire locally.

Are any of the developers from the Back of the Yards?

No.

Will there be a partnership with CHA? 

No.

If this proposal is selected, how will the owners of this development ensure safety is maintained for its residents?

The building will be keyed entry with cameras placed throughout the development. The parking garage will also be gated and secured. The project will provide private security and anticipates one guard on site.

What wages will you be paying for each category of job? 

ALL Construction is a union shop, for the construction piece it would be union wages. As far as the commercial entities that would go in, they would not be owned by the development team, that would just be dictated by the market. 

Would you please speak to concerns about gentrification?

By making the units affordable, the team believes they are helping to preserve affordable housing and preventing gentrification.

How will you engage both Latinx and African American business owners and neighbors in this project?

The team has already started the engagement process with African American and Latinx businesses and neighbors. Of the firms in the development team, two are certified MBE firms, one has a majority partner that is a minority, and the community partner, Precious Blood Ministry of Reconciliation, works primarily with African American individuals.

In addition to these steps, if selected, the team will work with Ald. Taylor, Ald. Lopez, and Back of the Yards Neighborhood Council to reach as many individual neighbors and other local businesses as possible to get them involved with the project.


Back of the Yards Works Questions

The questions in this section were reviewed and answered by members of the Back of the Yards Works team. The team’s pitch video is available for review.

How will you ensure that folks in the neighborhood are hired for the construction jobs this project would generate?

The team values working to ensure that the community is reflected in the project. There are several community job training programs the team works with to make sure that the community is being trained and part of that process.

Could you talk about the choice not to include a housing component and are there partnership opportunities with other proposals to include housing?

Housing is affordable in Back of the Yards, and the housing issue lies more in the quality of the housing. Much of the housing is old, and needs to be reconstructed or fixed. Many residents aim for home ownership. Given that, the team feels the building and this location is best suited for commercial space and for job training.

Does the majority development team and local businesses have the experience to complete this project and run it?

Every member of the development, design and construction team have over 20 years of experience each and over 200 projects completed on the South and West sides of Chicago.

Will the community share in the profit from this project?

All of the commercial tenants will be signing a community benefits agreement in order to ensure they are hiring local, meeting sustainability goals, and paying above minimum wage. There will also be an education and workforce development center that will train and match community members with jobs in the food and beverage production sector.

Regarding the funding of this project: almost 74 percent of this nearly $15 million project is publicly funded in one variation or another. Has the remainder of the funding been secured and are there letters of intent by banks to make up that difference?

The team is estimating around $750,000 of equity will be provided into this project. There are several sources that have expressed interest in investing not only in the property but investing in the businesses themselves.

If selected, how will the owners of this development ensure safety is maintained?

The development team does include CSC Consulting Group which will design, spec, plan and implement an IP security surveillance system to monitor the premises, both inside and outdoors. An IP security surveillance system offers peace of mind knowing you have an “eye” in the sky to protect people, property and data. Example of features include motion-detection cameras with night vision, 24/7 recording and playback capability, remote viewing, and mobile device access.

What is the revenue stream to maintain the project long term, repay the debt, and provide the services listed in the video?

The rents paid for by the commercial tenants will cover the debt obligations for the building. Furthermore, 10 percent of the rent in excess of covering debt and operating obligations of the building will go toward seed funding for the Education and Workforce Development Program. The program will also be funded through existing funding sources available through private, federal, state, county and city initiatives to drive workforce development in low income BIPOC communities. In order to accomplish this, the team will partner with the Illinois Manufacturing Excellence Center, the Chicago Cook Workforce Partnership, the City of Chicago Office of Workforce Development, and World Business Chicago in order to leverage those funds.

If there is not currently an allocation or commitment of New Market Tax Credits, how can you be confident this financing will come through?

New Market Tax Credits are available to all proposals for this site, and at least one of the other projects mentioned it would be seeking these funds if awarded the project. No project will be able to secure this funding until the project is awarded. However, the team is working with a partner, Shah Capital Advisers, who are experts in New Market Tax Credits and who have secured over $1 billion in this funding for more than 60 other real estate projects, including INVEST South/West projects.

Will there be any exclusions from applying for jobs such as people with petty criminal records?

No. On the contrary, the Education and Workforce Development Center is designed specifically to work with this population. In Back of the Yards alone, there are over 4,500 young people between the ages of 16 and 24 that are out of school and unemployed, some of whom may have petty criminal records. However, the team understands that the best way to reduce recidivism is by providing opportunities to those individuals seeking reintegration to our community. The EWDC will be prepared to work with these individuals, as well as community members that may be undocumented and other community members looking for opportunities in sectors that provide living wages, within the building and with other partners.

How will you engage both Latinx and African American business owners and neighbors in this project?

Almost the entire Back of the Yards Development, Design and Construction team, including 100 percent of the building's tenants are BIPOC. The team includes black and brown firms, as well as women, LGBTQ+ and Veteran owned firms as well. Seventy-five percent of the building will be owned by Back of the Yards Coffee which is locally, woman and Latinx owned. Back of the Yards Coffee also works with BIPOC owned local businesses as vendors and will continue to do so at this location. It is an important part of its mission. 


United Yards Questions

The questions in this section were reviewed and answered by members of the United Yards team. The team’s pitch video is available for review. 

Will all units be affordable housing?

Yes. 

How many apartments will be available, and what will rent be?

In total, 87 affordable apartments are planned, 30 in the Rainbow building for seniors over 55 and the balance will be in the 1515 building and in the two three-flat building. Rents will be at a maximum of 60 percent of the area median income. 

Can you break down the unit sizes?

There are 10 three-bedrooms, 12 two-bedrooms and the remainder are one-bedrooms. 

Who are you partnering with for the youth community center?

The community center is proposed as an opportunity hub, which is a technology training startup support and venture capital-focused initiative. The team is working with Chicago Neighborhood Initiatives right now in the early stages, but intends to work with a local partner to operate and own that space at a zero-dollar rent. 

If this proposal is selected, how will the owners of this development ensure safety is maintained for its residents?

While the team has not yet finalized its security plan, it will have security staffing and other provisions to ensure the safety of residents and of those in the surrounding community. At present, Celadon, the co-developer, owns and operates the New City Supportive Living property at 4707 S. Marshfield Ave. This property includes 100 units of low-income senior housing and provides security from 6 p.m. to 6 a.m. seven days a week. The facility currently has 32 high-definition cameras that cover the entry and common areas of the building.  Additional cameras will be installed at the new facilities that will add additional coverage. The proposed development will increase security staffing at both the 1515 W. 47th St. and the 4701 S. Ashland Ave. sites as necessary. 

Celadon owns and operates over 1,500 units of housing and understands how to effectively manage security for properties such as United Yards. The team works closely on an ongoing basis with community leaders and aldermanic offices to identify issues should they arise and effectively and thoughtfully address them.

The team’s philosophy is that police should not be the frontline to address security issues at its properties. Instead, the team properly vets its tenants and prioritizes having trained specialists in place who can address most issues before they become larger problems requiring the involvement of the criminal justice system. 

How will you engage both Latinx and African American business owners and neighbors in this project?

The team includes a female-, Latinx-owned small business, Stockyard Coffee, owned by sisters who are from Back of the Yards/New City. United Yards will place other locally owned small businesses in all of its retail spaces. As a part of the pre-development process, the team met and will continue to meet with as many entrepreneurs and business owners as possible to identify the local retail tenants.

In addition, the Opportunity Hub will be managed by a local community-based organization and specifically targeted to local entrepreneurs and young people of color. All of the services, resources, investment capital, and staffing are intended to create racial equity and will be targeted to the African American and Latinx population to the Back of the Yards/New City community. 

Please explain how the $50M funding breaks down across the four sites? These include the RFP site at 1515 W. 47th St., the Rainbow building at 4707 S. Marshfield Ave., and the New City Assisted Living and two three-flats at 1641 W. 47th St.

United Yards has separate sources and uses budgeted for each property, which the team is happy to discuss in further detail to demonstrate the viability of the proposed financing structure. The sources break out by site as follows: 

1515 W. 47th St.

City of Chicago TIF:    $4,500,000

First Mortgage:           $4,000,000

LIHTC Equity:             $11,100,000

IAHTC Equity:             $720,000

Com Edison Grant:     $250,000

GP Equity:                   $2,800,000

Total:                          $23,370,000

 

4701 S. Ashland Ave. (“Rainbow Building”)

City of Chicago TIF:    $1,800,000

First Mortgage:           $2,300,000

LIHTC Equity:             $8,200,000

IAHTC Equity:             $3,400,000

Historic Equity:           $4,500,000

Com Edison Grant:     $145,000

GP Equity:                   $1,000,000

Total:                          $21,345,000

 

4707 S. Marshfield Ave.

City of Chicago TIF:    $0

First Mortgage:           $1,200,000

LIHTC Equity:             $0

IAHTC Equity:             $540,000

Com Edison Grant:     $0

GP Equity:                   $260,000

Total:                          $1,800,000

 

1641 W. 47th St.

City of Chicago TIF:    $0

First Mortgage:           $480,000

LIHTC Equity:             $1,850,000

IAHTC Equity:             $675,000

Com Edison Grant:     $30,000

GP Equity:                   $1,270,000

Total:                          $3,873,000

 

Would you commit to redeveloping the Rainbow building with or without 47th and Justine and if not, why not?

No. While the team does have an exclusive option to purchase the Rainbow store property, they cannot guarantee the ability to develop this property without public support and the ability to pair the property with a larger redevelopment effort. The reason for this is that affordable housing transactions need to have a certain scale to be able to attract private financing, such as the approximately $50 million projected for this property. The Rainbow building requires extensive renovation and the cost of that plus the additional cost of adding the residential units is significant. 

If this proposal goes through, what will happen to the residents of the Ashland Hotel and how will you accommodate them?

At present, the Ashland Hotel is not a part of the development plan. Any resident of the Ashland Hotel that is income-eligible would be welcome to apply for apartment units at United Yards, just as anyone would from the Back of the Yards/New City community. 

Would there be a partnership with CHA?

The proposal does not anticipate any engagement with the Chicago Housing Authority, nor does it have any project-based section 8 assumed in its financing or red structure. 

How would tenants/families be selected for apartments?

During construction, the development team would begin soliciting applications for potential tenants. Residents will be selected based on the approved Tenant Selection Plan that consists of income eligibility, the order that their application is received, and their ability to move in on schedule and be a positive addition to the community. Marketing will be targeted on the primary market area for this property, which is the Back of the Yards/New City community. The property management company, 5T Management Inc, a Chicago-based, woman minority-owned business, has managed the New City Supportive Living property for four years successfully and will oversee this process.

United Yards will work with local organizations and aldermanic offices to make sure that information about the property and applications are reaching everyone who is interested in the properties. The team is currently going through a similar process with a new construction development in the Albany Park neighborhood and have been successful serving the needs of the Back of the Yards/New City community in its lease up process at the New City Supportive Living property.