Winter Issue 2022 - 37

2021 ULI FALL MEETING
of almost 100 acres (40 ha) on Chicago's
Lake Michigan waterfront that was located
just south of the McCormick Place convention
center.
Goodman got his start years ago redeveloping
old cold-storage buildings in Chicago's
Fulton Market neighborhood, since grown
into a major destination for other commercial
development that followed. In Bronzeville, he
saw an even bigger opportunity.
" This is on the lakefront, next to the largest
convention center in the Western Hemisphere,
and we're not displacing anybody, "
he said in a concurrent session recounting
the process. " We have an amazing chance to
make an impact here. "
Not all the financing is lined up yet, so the
city is making it easy on GRIT by agreeing to
sell it the Bronzeville land in pieces. Phase
one, slated to break ground later in 2022
with construction continuing until 2026, will
encompass 13 acres (5 ha) anchored by the
ARC Innovation Center, with an Israeli-based
life sciences company called Sheba Medical
Center agreeing to be lead tenant in the
500,000-square-foot (46,500 sq m) building
to be delivered in two years or so. Nearby will
be senior housing, a public park, and a new
public transportation station.
Morgan Malone, a development director at
Farpoint, explained that eventually 20 percent
of the housing going up in Bronzeville will be
affordably priced, and 10 percent of all retail
space will be discounted 20 percent below
market rates. The goal is nearly two-thirds participation
from minority-owned firms in construction,
she said. The building will require
9,100 construction workers, and the finished
development will create 9,900 full-time jobs
with a $3.1 billion impact on the community.
Phase two of the development will span
38.5 acres (15.5 ha) with construction proceeding
between 2023 and 2041, Malone
said. It will include 6.8 million square feet
(632,000 sq m) of commercial space, including
offices, retail, residential, hospitality,
public open space, and even a data center.
Each of those uses got approval from local
citizens groups. " This wasn't just town halls
that we held, where we took input and
walked away, " Malone said. " The community
groups were totally integrated in the process. I
attended 70 meetings in one year myself. "
On the city's side, the process was streamKunal
Mody, Ryan Hoff, Cliff Kellogg, Mansoor Ghori
C-PACE Finance: A Critical New Tool in Financing
Sustainable Retrofits
In the age of global warming, practically
every builder and developer is being pushed
to put up structures that are environmentally
responsible. But can you do that and still
make money? And how about the building
owner who is seeking to invest in remodeling
and upgrading?
With the right kind of financing, the answer
has recently come to be " yes " for both builders
and owners of existing facilities. In a
concurrent session titled " Climate Change,
ESG Goals, CRE Retrofits: The Expanding Use
of C-PACE Finance, " a panel of four experts
explained how C-PACE, an acronym for commercial
property-assessed clean energy, has
come to be viewed as a critical instrument in
filling gaps in the traditional financing market.
For those unfamiliar with C-PACE, there are
at least a couple of reasons for its new high
profile. C-PACE has been around since about
2010. And it has only been approved so far
in about half the states, with new programs
recently launched in Chicago, New York City,
Philadelphia, and Pittsburgh. Municipalities in
much of the Sun Belt, from Florida and Texas
to California, have the most mature programs
going. As Cliff Kellogg, executive director of
the C-PACE Alliance, which provides technical
assistance to emerging programs from its
headquarters in Austin, told the audience at
the ULI event, " About the only government
role is in approving this kind of financing.
There are no public dollars involved. "
The financing is aimed at covering the
costs for either new construction or retrofit
projects related to reducing energy or water
consumption or generating renewable energy,
Kellogg added. In almost every case, the
program is devoted to erecting or rehabbing
structures far beyond basic municipal codes.
Even experienced, savvy developers in many
states still are not knowledgeable about the
program.
What is the C-PACE advantage? The principle
is that any investment in energy savings
will reduce the cost of ownership (utilities,
etc.) beyond extra investment in construction
over a period of 10 years and longer. The
financing is repaid in the form of an assessment
on the building owner's tax bill that also
involves a lien that is senior to most other
debt. Financed by investors such as pension
funds, C-PACE at 5 to 6 percent is typically
priced at about half the cost of traditional
mezzanine debt in any capital stack and thus
can significantly improve cash flow for the
building owner.
Monsoor Ghori, chief executive officer of
Petros PACE Finance in Austin, noted that
C-PACE is coming on fast. " It had grown
WINTER 2022
URBAN LAND
35
lined from the start. " It helped that we had a
clear vision of our priorities and goals for this
site, " said Tim Jefferies, deputy commissioner
for the city's Department of Planning and
Development. He and developers hit numerous
snags in planning. But " at the end of the
day it was about problem-solving, " he said.
Cynthia Roubik, the assistant commissioner
leading the Department of Planning
and Development's central planning region,
said the city was willing to be flexible on
everything from floor layouts to building
heights (capped, in the end, at 350 feet [107
m]). Staffers came equipped with experience
gained on other megaprojects. One is 78
Chicago, rising on 62 acres (25 ha) just south
of Chicago's downtown and developed by
Related Midwest on an investment of $7 billion.
Another is One Central, encompassing
more than 9,000 residential units and 22 million
square feet (2 million sq m) on a 35-acre
(14 ha) site near Soldier Field. Landmark
Development has pegged the cost at a titanic
$20 billion.
In the world of commercial real estate,
it turns out, Chicago makes no small plans.
-H.L.M.
Winter Issue 2022

Table of Contents for the Digital Edition of Winter Issue 2022
