Crain's Chicago Business by crainschicago

GREG HINZ: Staffing at Chicago police stations declines amid rising crime. PAGE 2

DAVID GREISING: It’s time for our crime-fighters to stop fighting. PAGE 2

CHICAGOBUSINESS.COM | JANUARY 10, 2022 | $3.50

Lori Lightfoot, then and now

Chefs Ian Rusnak, right, and Eric Safin, owners of Elina’s

How the mayor has changed as she nears the end of her term and considers seeking another one

BUZZWORTHY RESTAURANTS THAT OPENED DESPITE COVID Openings remained down in late 2021 from pre-pandemic levels, likely in part because of labor issues BY ALLY MAROTTI

Government reform

Lightfoot campaigned heavily on a reform agenda, laying

ALYCE HENSON

As she enters the final calendar year of her term, Chicago Mayor Lori Lightfoot is no longer a fresh face swept into office as a champion of long-overdue reform. She’s now a familiar figure whose positions on major issues don’t always match her campaign promises of 2019. Of course, a pandemic nobody expected has dominated Lightfoot’s tenure. But if she seeks re-election next year, as she appears likely to do, she’ll have to explain some policy reversals and unkept promises. Here’s a look at how the record of Mayor Lightfoot squares with the words of candidate Lightfoot in some key areas:

THIS FAR INTO THE PANDEMIC, even the operators of new restaurants know they must plan months in advance, not weeks. They know construction issues will plague them, as will supply chain problems. Want to launch brunch this spring? Order the cutlery now. Thinking about an outdoor space next summer? Don’t wait. Workers are still hard to come by, too. Staffing issues are the biggest inhibitor for restaurant owners trying to execute plans, and that includes opening new establishments, says Mark Brandau, analyst at market research firm Datassential. In Chicago, about 110 restaurants opened in the last four months of the year, according to Datassential. During the same period in 2019, 465 restaurants opened. Closures are up, too. About 280 Chicago See RESTAURANTS on Page 21

JOHN R. BOEHM

BY A.D. QUIG

Lori Lightfoot out a nine-point ethics plan. Key promises included ending aldermanic prerogative, expanding the powers of the city’s inspector general, and shifting ward redistricting from the City Council to an independent citizen’s commission. On aldermanic prerogative, See LIGHTFOOT on Page 20

Higher power charges zap Illinois businesses Nonresidential customers to pay $70 million of electric utility ComEd’s $100 million increase BY STEVE DANIELS Commonwealth Edison’s latest electricity rate hikes will hit business customers much harder than households, a sharp change from past practice that ratchets up the cost pressures squeezing local companies. Nonresidential customers will pay $70 million of $100 million in rate hikes that take effect this

year, the Chicago-based utility confirms. That’s not typical. In the past, ComEd has allocated higher charges more evenly between businesses and household customers, who account for 54% of the company’s total revenue. The disproportionate increase comes at a time when businesses face higher costs for everything See COMED on Page 18

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MANUFACTURING

LAW

Reshoring trend is boosting small local companies. PAGE 3

Theranos verdict may reverberate in high-profile case here. PAGE 8

1/7/22 4:06 PM

2 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

Here’s one reason for rising crime

A woman was badly mugged near Melrose Street and Broadway. A couple of days later, another gang of people in a car robbed people just to the north, forcing one to literally run from building to building pushing doorbells to beg for help. Then two similar incidents occurred just outside the Belmont Red Line stop, the latest in a series of attacks there in the past couple of years. Mayor, I’m tired of words. If you really want a new term, it’s time for real, effective action. Now, let me say up front as I’ve said before that I heartily THE DECLINE IN COPS AMOUNTS TO approve of Lightfoot’s effort to attack some of the DEFUNDING BY ANOTHER NAME. root causes of crime by promoting social equity, things like jobs and investments pened in my formerly pretty quiet in poor neighborhoods, to give neighborhood in Lakeview: people hope. I also have cited her A man walking on North legitimate gripes that too many Fremont Street was accosted by a dangerous folks are out on elecgang of young people who popped tronic monitors and that it’s far out of a car, waved a gun and detoo easy to obtain illegal guns. manded his phone and wallet; he But a few other things need was able to run away to the nearby saying, too. Town Hall District police station. ust before Christmas, Mayor Lori Lightfoot gave a big speech in which she asserted that she feels the pain of Chicagoans who have had it with soaring violent crime, and said she has a plan to do something about it. Two weeks later, just after New Year’s, Lightfoot and Police Superintendent David Brown made a joint appearance at a press conference in which they pretty much said the same thing—help is on the way. In between, here’s what hap-

At the top of the list is the slow stripping of police from neighborhood stations like Town Hall, something that amounts to police defunding by another name. According to data the Chicago Inspector General’s Office obtains from police payroll records, Town Hall had 393 assigned sworn officers in May 2020 after hitting a peak of 416 in August 2019. As of this month: 304. For those who wonder, this isn’t a case of moving police from a well-to-do white neighborhood to a crime-plagued Black area. Few parts of Chicago have more crime than the West Side’s Harrison District. Yet, again according to IG records, the number of sworn personnel assigned there has dropped like a rock during Lightfoot’s tenure, from 485 in January 2020 to 324 this month. You don’t think the gangbangers and other bad guys know that? Why the drop? Some of it is due to police retirements and other

GREG HINZ ON POLITICS

departures, something expected to get worse this new year. But a big chunk likely has to do with Brown’s decision to pull 1,000 officers into citywide units, units that veteran police watchers tell me end up standing in groups along Michigan Avenue doing little, rather than actively patrolling neighborhoods. I asked Lightfoot’s office and the department about this and some other matters. After three days, they finally got back to me— well after my normal deadline— and said Lightfoot “categorically rejects” defunding. But they also confirmed that the number of sworn personnel in the department has dropped steadily, from 13,263 shortly after Lightfoot took office in June 2019 to 11,913 now. Brown at that press conference

said he’s going to promote more officers to detective next year, something that should help boost the city’s recent improvement in the homicide clearance rate. But unless that changes, they’ll come from a shrinking pool of front-line officers. I also asked the mayor’s office why, if judges are releasing alleged murderers and other dangerous types on electronic monitors, as Lightfoot says, why the city doesn’t begin publicizing the cases—and the judges—so voters know who to hold responsible. The response: The city doesn’t have access to case files kept by the state’s attorney or clerk of the circuit court. Sigh! It’s easy to point fingers. Chicago has a right to expect more.

A key step in fighting crime: Stop the squabbling

standing in the way. Lightfoot cites several reasons Chicago saw more than 800 homicides in 2021. But she has mounted a bully pulpit over the last few weeks, hurling scorn at the Cook County Courts’ use of pretrial release and electronic monitoring of accused criminals, a court-reform effort by Evans that Lightfoot sees as a root cause of the city’s violence. At a Jan. 3 press conference, Lighftoot enumerated more than 1,700 people released with ankle bracelets despite charges of murder, sex crimes, carjacking, kidnapping and more. “Do you feel safer knowing these numbers?” Lightfoot asked. “No sane person does. I’m sorry, but murderers, rapists, people who are carjacking with guns should not be out on the street.” Evans pushed back. In PUBLIC OFFICIALS’ FOCUS ON a statement responding to Lightfoot’s petition for BLAME-LAYING ISN’T HELPFUL. a moratorium on pretrial release of people accused of violent crimes, he said ankle Mayor Lori Lightfoot, Cook bracelets aren’t the problem. County State’s Attorney Kim And it would be unconstitutionFoxx and Chief Judge Tim Evans al, Evans argued, to deny bail are making so little progress in to people based solely on the part because they can’t get past charges they face. And Evans their differences and just get to previously supplied data that work on coordinating efforts to implies the number of people on address what’s going wrong. early release aren’t materially Presumably, Lightfoot, Foxx contributing to the recent crime and Evans all want what the wave. people want: a safer city and Foxx has been spared Lighta more just criminal justice foot’s public scorn lately. But system. But their egos, politics Lightfoot has promoted a narand just plain stubbornness are here are no easy answers when it comes to solving Chicago’s troubles with violent crime. That much is obvious. Are there any answers at all? So far, few have emerged. A particularly violent 2021 ended without any meaningful sign of progress toward peace on the streets. And it doesn’t help that we are headed into the new year with Chicago’s mayor, the Cook County state’s attorney and the chief judge of the criminal courts bickering about who is at fault. It’s not a good look for the public officials. Their focus on blame-laying does nothing for people across the city who just want the homicides and shootings to stop, along with the carjackings and outrageous larceny.

rative that Foxx’s reluctance to bring charges, even in the wake of shootings and other crimes that terrorize neighborhoods, is emboldening criminals and feeding the rise in violence. Foxx parries Lightfoot’s critique by pointing back at Chicago’s police. They can’t close nearly enough cases, in Foxx’s view, and without the cases, she can’t charge people with crimes. The Lightfoot-Foxx acrimony flared in October, when they held dueling press conferences following a gang shootout in the

DAVID GREISING ON GOVERNMENT

Austin neighborhood. Lightfoot blasted the state’s attorney’s refusal to bring felony charges in a broad-daylight gun battle caught on video and witnessed by police—and especially Foxx’s finding that those involved were “mutual combatants.”

An emotional Foxx countered, explaining the evidence just wasn’t there. She broadened the defense of her office’s approach, directing reporters to the state’s attorney’s online dashboard, See GREISING on Page 14

97% OF OUR CURRENT C U STO M E R S R A N K T H E I R S AT I S FAC T I O N W I T H U S A S “ E XC E L L E N T ” O R “A B O V E AV E R AG E .” B E Y O U R B A N K E R ’ S T O P P R I O R I T Y. W I N T R U ST.CO M / P R I O R I T Y

CORRECTION The profile for attorney Amy Manning that appeared in Notable Gen X

Leaders in Accounting, Consulting and Law in the Nov. 22 and Dec. 13 issues incorrectly reported that she currently serves on the Negaunee Music Institute Board of the Chicago Symphony Orchestra. Manning is on the board of the Chicago Bar Foundation.

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Banking products provided by Wintrust Financial Corp. banks. Source: 2021 Coalition Greenwich Market Tracking Program

1/7/22 3:52 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 3

JOE CAHILL ON BUSINESS

The ties that bind Rivian to Amazon start to pinch

BLOOMBERG

There’s an upside to supply chain snarls—for some Small local manufacturers win business back from overseas rivals BY JUDITH CROWN Specialty metal stamping company Domeny Tool & Stamping is starting to see the benefits of reshoring. The family-owned company in Wauconda is doubling production of a specialty steel stamping used in auto brake cylinders as its customer—a top automotive supplier—consolidates a portion of its worldwide sourcing in the U.S. “For the first time in 25 years, we’re in a period of growth,” says Executive Vice President Steve Smith. Original equipment manufacturers, or OEMs, and their larg-

est suppliers that outsourced their supply lines, largely to Asia, are suffering as the pandemicinduced breakdown in supply chains lengthens lead times and drives up prices. With their cost-driven business strategy backfiring, OEMs are beginning to return sourcing to the U.S., a process known as reshoring. The trend helps small and midsize manufacturers like Domeny, which were hit hard by lower-cost foreign competition during the past few decades. If it continues, reshoring also could partially rebalance the U.S. economy’s shift from production to services, cut the trade deficit and add

good-paying manufacturing jobs. But will big companies revert to their Asian supply chains when the last of the container ships waiting off the West Coast are unloaded? Reshoring surged 38% nationally to 224,213 jobs in the first half of 2021, according to the nonprofit Reshoring Initiative, which tracks data on the domestic supply chain. The initiative tracks job announcements attributable to reshoring or foreign direct investment. (Reshoring accounted for 62% of the 224,213 jobs.) Still, that’s a small fraction of the 6.7 million manufacturing jobs the U.S. lost See RESHORING on Page 22

Byline Bank stock tops charts as dealmaking heats up again A potential buyer or seller, the midsize lender outpaced all other local financial stocks in 2021 BY STEVE DANIELS Stocks of local financial firms performed well in 2021, but the king of them all is a relative peewee. Investors in Chicago-based Byline Bancorp saw an eyepopping 77% return last year—far outpacing larger, better-known local banks like Rosemont-based Wintrust Financial (up 49%) and Chicago-based Northern Trust (up 28%). With $6.6 billion in assets, Byline is at a size that would make a digestible acquisition for a larg-

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er bank looking to enter the fragmented Chicago market or bulk up here. Investors appear to be betting at least in part on a takeover premium should Byline’s leadership decide to seek a buyer. Byline CEO Roberto Herencia in an email said he believed Byline’s stock was undervalued before the pandemic arrived: “I do not believe we have a ‘sale premium’ embedded in our price, and do not think we are perceived as a seller but rather a disciplined builder. Banks which are showing above average organic loan growth, avoiding pricey

acquisitions or acquisitions at all, and which are asset-sensitive, command higher valuations in this environment. We check all of those boxes. Our specialty (Small Business Administration) See BANKS on Page 18

ealmakers with unequal bargaining power make unequal deals. That truism has real consequences for the party on the wrong end of the power imbalance, consequences that are easy to ignore in the flush of excitement over a new relationship with a high-profile partner. Take the partnership between web behemoth Amazon and fledgling electric-vehicle maker Rivian. Amazon’s support has been crucial to Rivian, helping the startup position itself as a leading player in a new technology poised for explosive growth. Amazon provided capital that Rivian needed to retrofit a former auto plant in downstate Normal to produce electric delivery vans, pickup trucks and SUVs. It gave Rivian an order for 100,000 delivery vans that would jump-start production. Perhaps as important, Amazon’s backing gave the unknown startup credibility in a market where it will compete with established automakers. Thanks in no small part to Amazon, Rivian pulled off a boffo initial public offering late last year. Rivian stock peaked at $172.01 on Nov. 16, a week after debuting at $78. The stock later retreated as production challenges emerged. But a steep sell-off came last week, when the downside of Rivian’s relationship with Amazon became clear. Rivian closed Jan. 6 at $87.33, down 14% since Amazon the previous day announced an agreement to buy electric delivery vans from Stellantis, which owns such major auto brands as Chrsyler, Ram, Jeep and Fiat. Apparently the news alerted Wall Street to an unsettling aspect of the Rivian-Amazon partnership: Amazon can buy electric trucks from Rivian’s competitors, but Rivian can’t sell trucks to anybody but Amazon. Diversifying your supplier base is smart business. So is diversifying your customer base. Amazon just diversified its supplier base. Rivian can’t diversify its customer base. Rivian gave Amazon exclusive rights to all its electric delivery van production for the next four years. For two years after that, Amazon has right of first refusal on any vans Rivian wants to sell. Nobody should have been surprised. Rivian’s IPO document lays out the terms of its deal with Amazon. But the disclosures made little impression on investors rushing to get in on the next big thing.

Now they seem to realize the deal ties Rivian’s hand at a time of great opportunity, as huge customers like UPS, FedEx, DHL and others convert to electric delivery vans. While rivals chase those orders, Rivian will have just one customer for electric trucks. Relying on a single customer is a big risk for any company, but especially for one that’s trying to ramp up in an industry full of powerful competitors. It gets worse. The IPO filing reveals that Amazon doesn’t have to buy 100,000 vans from Rivian after all. It can buy fewer than 100,000, or none. Rivian does have the right to terminate the deal if Amazon buys fewer than 10,000 vans in each of the first two years of the contract. Rivian’s deal with Amazon “does not include any minimum purchase requirements,” reads the filing, acknowledging that the company’s business could be “materially and adversely affected” if Amazon “purchases significantly fewer vehicles than we currently anticipate.” We don’t know how many vans Amazon will buy from Rivian. We do know this: If Amazon buys fewer than 100,000, Rivian won’t be able to make up the shortfall by selling to others during the next four years. That’s a serious handicap for a new company trying to establish itself. As Rivian stock plummeted, the company and Amazon rushed out reassuring statements. Rivian called its relationship with Amazon “intact, thriving and growing,” saying that it expected its only van customer to buy from others. Amazon said, “We continue to be excited about our relationship with Rivian,” adding the Stellantis deal wouldn’t affect the size or timing of purchases from Rivian. I’m not suggesting Amazon wants Rivian to fail. As a major shareholder with more than $1 billion invested in Rivian, Amazon has an interest in the company’s success. But Amazon’s own interests will come first in its dealings with Rivian. That’s evident in the decision to impose on Rivian terms that put it at a competitive disadvantage with rivals like GM, Ford and others. They’re free to grab as much market share as they can get. Those heavyweights aren’t so easy to push around. It would be interesting to know if Amazon got any exclusivity rights from Stellantis. Neither company would say.

1/7/22 4:04 PM

4 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

Upper-end home sales soar to triple digits Real estate agents say wealth generated by a bullish stock market is what’s primarily fueling the boom In 2021, 101 homes in the Chicago area sold for $4 million or more. That’s about twice as many as the norm of the past six years. A Lake Bluff mansion that sold Dec. 29 for slightly more than $4 million was the 101st sold last year locally in the upper reaches of the market. In the six years prior to 2021, the average year-end total was 51.5 sales, and the most sold in a single year was 73, in 2018. What’s primarily fueling the boom, real estate agents say, is wealth generated by a bullish stock market. “When you look at the incredible wealth gains in the stock market, I’m not surprised to see such an uptick in the uber-luxury real estate arena,” @properties agent Debra Dobbs said in a text message. Dobbs represented the sellers of the year’s highest-priced home, a Lincoln Park mansion that went for almost $12.6 million this month. Some people who’ve reaped big gains in the markets are “looking to diversify, and buying property feels like a good investment,” another @properties agent, Annika

Valdiserri, said in a text message. She represented buyers who paid $9.45 million for a lakefront Kenilworth mansion in October. Also contributing to the increased number of sales at $4 million and up: the growth in home prices. Some of the properties selling for $4 million or more in 2021 might have sold in the $3 millions seven years ago when Crain’s first started tracking sales at this level. On the other hand, both Dobbs and Valdiserri said Chicago’s prices are bargains relative to some of the other places their high-networth clients might have invested. “Chicago prices are still low compared to other cities,” Valdiserri texted. Dobbs concurred: Some of her recent buyers, she texted, “commented on the value of Chicago real estate compared to other markets, especially the cities from which they were moving.” Dobbs declined to identify those cities.

REAPING BIG GAINS

Like home buyers at all prices, the high-net-worth people buying at $4 million and up are trading up to homes that better suit their COVID-era lifestyle, whether that

VHT STUDIOS

BY DENNIS RODKIN

Michigan Avenue, there are nine at $4 million to just over $8 million. The all-prices market is also at a new high, surpassing the record year for local home sales—2005— in mid-December. The year’s final total won’t be released by Illinois Realtors until mid-January. Why is the $4 million figure significant? When Crain’s first compiled a list of the 50 highest-priced home sales in the metro area, in 2015, $4 million turned out to be the lowest rung on that list. In the years since, it has been mostly about the same:

This mansion on Shore Acres Road in Lake Bluff was the 101st property in the Chicago area to sell for $4 million or more in 2021. entails more rooms for working and schooling at home, a private beach or other desirables. There’s “an ‘I don’t care what I have to spend to get the house I want’ mentality,” @properties agent Emily Sachs Wong said in a text message. She has participated in several the high-end purchases, including a transaction in October, where she represented both the buyers and the sellers of a $6.6 million home on Orchard Street in Lincoln Park. The list of upper-end sales in part bolsters the idea that despite

a perception that crime has spun out of control in downtown neighborhoods, people continue to buy homes there. Of the 101 sales, 38 are in the downtown neighborhoods, an area Crain’s defined for this story as everything between North Avenue and Roosevelt Road north to south and Racine Avenue and Lake Michigan west to east. Nineteen of those are in two new condo developments. In the St. Regis Tower on Wacker Drive, there are 10 sales between $4 million and $8.4 million, and at the redeveloped Tribune Tower on

2015: 50 sales at $4 million or more 2016: 42 2017: 46 2018: 73 2019: 52 2020: 46 2021:

101

The 2021 total is likely to increase by at least a couple of sales. Some agents don’t report all their sales for the month until the early part of the subsequent month. Crain’s usually closes this list in mid-January, to get them all. As of now, the year’s 50 highest-priced home sales have a bottom rung of $4.945 million, up nearly $1 million, or 25%, since 2015.

Highland Park sale is latest sign of high-end market vigor BY DENNIS RODKIN In the latest sign of strength at the upper end of the housing market, a blufftop estate in Highland Park has sold for $6 million, the most anyone has paid for a home in the North Shore town since 2015. It was the 32nd home in the Chicago area to sell for $6 million or more in 2021. That’s more than were sold in that price range in the previous two years combined: There were 15 such sales in 2020 and 14 in 2019. In 2018, 26 homes sold in the Chicago area for $6 million or more. In one recent week, homes sold for nearly $8.7 million in Glencoe, $8 million in Winnetka, and $12.55 million in Lincoln Park. In Highland Park, the 3.6-acre estate on Crescent Court, with more than 400 feet of private beach, sold to a buyer who plans to demolish the house and build new, according to both Jennifer Ames, the Engel & Völkers Chicago agent who represented the seller, and Margie Brooks, head of the team at Baird & Warner whose agent, Lanny Brooks, represented the buyers. The buyers are not yet identified in public records. Brooks would

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say only that they are moving from within Highland Park. Brooks said she does not know the size or design of the new home the buyers plan for the site. The house now on the property is 13,800 square feet, but zoning might allow for something larger. That’s suggested by the fact that in 2017, the seller, Lorry Lichtenstein, offered the property cut into three pieces, each of which could hold an 11,000-square-foot house. The existing house, built in the early 1980s, was designed by prolific modernist architect Tony Grunsfeld, and later was expanded by Lichtenstein. Lichtenstein could not be reached for comment. He has owned the property since 1991, according to the Lake County Recorder of Deeds.

PRICE CUTS

Although the $6 million price tag is big for Highland Park, it’s less than half the $13.5 million Lichtenstein initially wanted for the property. He quietly listed the property for sale in the fall of 2015, just after another blufftop mansion, on 4.5 acres less than one-tenth of a mile north, sold for $10.88 million. That sale is what Crain’s believes

ENGEL & VÖLKERS CHICAGO

The blufftop estate designed by architect Tony Grunsfeld sold for $6 million, the most paid for a home in the North Shore town since 2015

The 3.6-acre estate on Crescent Court in Highland Park includes a swimming pool, tennis court and more than 400 feet of private beach. to be the third-highest price in town. Here’s why that’s not certain: The highest is the $19 million that a homebuilder paid for a 17.5acre estate in 2006, with a plan to subdivide it. The next year, he sold the property intact as a single estate, but the price of that transaction was not recorded in land records. It is likely the secondhighest home price ever paid in Highland Park, followed by the

$10.88 million purchase at third. Lichtenstein’s asking price for the Crescent Court property was down to $7.5 million by the time of the sale. The property includes a swimming pool and a tennis court. In the six years since the $10.88 million sale, the highest recorded home sale price in Highland Park was another Grunsfeld house, on 2.4 lakefront acres, that went for $4.7 million in 2019.

IN ONE RECENT WEEK, HOMES SOLD FOR NEARLY $8.7 MILLION IN GLENCOE, $8 MILLION IN WINNETKA, AND $12.55 MILLION IN LINCOLN PARK.

1/7/22 3:11 PM

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6 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

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601W lands huge loan for the Old Post Office The developer’s new $830 million in debt is one of the largest loans ever for a Chicago office building

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BY DANNY ECKER The New York developer that turned the dilapidated Old Post Office into a modern office building and has nearly filled it with tenants has refinanced the behemoth with one of the largest loans ever for a Chicago office building. A venture led by 601W last month took out an $830 million mortgage from JPMorgan Chase on the cavernous property at 433 W. Van Buren St., according to Cook County property records. The loan replaces $611 million in debt the developer borrowed for the property in mid-2019, according to property records and Bloomberg data tied to the 2019 mortgage, which was packaged with other loans and sold off to commercial mortgagebacked securities investors. Willis Tower and the Merchandise Mart are the only Chicago office properties that have landed larger loans, according to data from research firm Real Capital Analytics.

MODERN BEHEMOTH

The massive refinancing reflects the value that 601W has injected into the building with an impressive roster of new tenants, defying a broader leasing slowdown with the COVID-19 pandemic accelerating the rise of remote work. After inking recent deals with heavy-duty tool maker Milwaukee Tool and health care management consultant Vizient, the building is now about 95% leased, according to leasing brokerage Telos Group. 601W has reportedly spent close to $1 billion redeveloping and leasing up the building, which sat vacant for close to two decades until the developer bought it for $130 million in 2016 and began a gut rehab the next year. The developer took out a $500 million construction loan from JPMorgan Chase and privateequity giant Blackstone Group in

PROMINENT TENANTS AT THE OLD POST OFFICE CURRENTLY INCLUDE CISCO SYSTEMS, FERRARA CANDY, PEPSICO AND THE PARENT COMPANY OF THE CHICAGO BOARD OPTIONS EXCHANGE. 2017 and said at the time it was putting up $250 million in equity for the project. After signing its first major tenants, such as Uber and Walgreens Boots Alliance, more quickly than it expected, 601W put more debt on the property with the 2019 loan. The building was appraised in October 2020 at $913.5 million, according to Bloomberg data tied to the 2019 loan. Prominent tenants at the Old Post Office currently include Cisco Systems, Ferrara Candy, PepsiCo and the parent company of the Chicago Board Options Exchange. A 601W spokeswoman did not provide a comment on the new loan. Public records show that, similar to the debt that 601W paid off last month, the new loan is also tied to a 250,000-square-foot annex building adjacent to the Old Post Office at 358 W. Harrison St., as well as a parking lot at 527 W. Clinton St., immediately west of the main building. With tenants starting to move in and pay rent in 2020, the Old Post Office generated net cash flow of just $4.3 million, less than 601W’s $5.7 million in debt service for the year, according to Bloomberg data. The lender in 2019 projected that net cash flow would grow to a stabilized figure of $64.6 million by late 2023, loan documents show. The new loan is also expected to be sold off to CMBS investors, according to CoStar News, which first reported 601W had landed the loan.

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CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 7

Deal values Wacker Drive skyscraper at $1 billion BY DANNY ECKER A New York investment firm is buying a controlling interest in the 55-story tower at 110 N. Wacker Drive in a deal that values the skyscraper at around $1 billion, one of the biggest transactions on record for a Chicago office building. Oak Hill Advisors has an agreement to purchase the stake in the property from Dallas-based Howard Hughes, according to sources familiar with the deal. Howard Hughes and Chicagobased Riverside Investment & Development co-developed the 1.5 million-square-foot building, which opened in 2020 with Bank of America as its anchor tenant and is now more than 85% leased. The price of the purchase and size of Howard Hughes’ stake is unclear, but the $1 billion full valuation of the tower would make it the second-highest valuation on record of Chicago office building being sold, behind only Blackstone Group’s $1.3 billion purchase of Willis Tower in 2015, according to research firm Real Capital Analytics. The pending Wacker Drive sale is another signal of investor ap-

petite for new and high-quality office properties, despite the COVID-19 pandemic fueling the rise of remote work and eroding demand for office space overall. Investors have completed or lined up pricey deals for other Chicagoarea office buildings in recent months, including the tower at 35 W. Wacker Drive and 1K Fulton, best known as Google’s Midwest headquarters.

‘BROADER PLAN’

Howard Hughes has been looking to sell its stake in 110 N. Wacker since late 2019, when it announced a broader plan to sell off $2 billion of “non-core” assets. Real estate services firm Eastdil Secured began formally marketing the Howard Hughes stake last year. Howard Hughes said in 2019 that the tower would cost around $722 million to build, and its joint venture with Riverside increased its construction loan at the time to $558 million. Howard Hughes said in 2019 that its stake in the building’s estimated stabilized net operating income would be about $14.4 million and that it expected an 8% yield on the cost of the building.

Riverside and Howard Hughes were on a leasing hot streak at the tower before the pandemic, especially with big law firms looking to upgrade their office space. Jones Day, Morgan Lewis & Bockius, Perkins Coie, King & Spaulding and Cooley have all inked deals to move their Chicago offices to the tower. A spokesman for Howard Hughes couldn’t be reached. Oak Hill and Riverside declined to comment. Oak Hill has placed other bets on the post-pandemic recovery of the office market. The company, which had $53 billion worth of capital under management as of July, led a $326.5 million investment in August in suburban office company Workspace Property Trust. Oak Hill in October announced it had reached a deal to be acquired by Baltimorebased T. Rowe Price Group for $3.3 billion. The valuation of the Wacker Drive property is a good sign for Riverside on another bankanchored tower it is developing next to Union Station at 320 S. Canal St. That 50-story tower named for anchor tenant BMO

COSTAR GROUP

Howard Hughes’ agreement to sell its controlling stake in the Bank of America Tower illustrates investor appetite for new and high-quality office properties, despite eroding demand and the rise of remote work during the COVID-19 pandemic

The 55-story tower at 110 N. Wacker Drive opened in late 2020. Harris Bank is slated to open this year and is being co-developed with Chicago-based Convexity Properties. Howard Hughes, which was spun out of mall owner General Growth Properties in 2010, paid $12.3 million in 2014 for the 43,000-square-foot parcel of land beneath what was then a squat General Growth building at 110

N. Wacker. It described plans at the time to redevelop the property, but first had to resolve a dispute with its joint venture partner in the land acquisition before teaming with Riverside to propose the current tower. The Wall Street Journal first reported that Oak Hill Advisors had reached a deal to buy the controlling stake in 110 N. Wacker.

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8 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

How the Theranos conviction may reverberate here BY JOHN PLETZ A Silicon Valley jury’s decision to convict Theranos founder Elizabeth Holmes on fraud charges could change the calculus in a similar high-profile case in Chicago. Rishi Shah and Shradha Agarwal, co-founders of Outcome Health, are charged with committing a $1 billion fraud by secretly overbilling their pharmaceutical-advertising customers and misleading investors and lenders with inflated results. Shah, Agarwal and former chief financial officer Brad Purdy are scheduled to be tried a year from now in federal court. Since they were charged two years ago, the three have pleaded not guilty and have been preparing for a trial that’s expected to take three months. “A criminal defendant in an analogous case—certainly Outcome Health is analogous—really has to look hard at cases like the Theranos case and say: Do we have any chance of prevailing at trial?” says Ron Safer, a former federal prosecutor and white-collar defense attorney at Riley Safer Holmes & Cancila. “The odds are

heavily stacked against you—especially when you have insiders who are narrators for the prosecution. And the Outcome Health (case) has that, as the Theranos case had.” Three Outcome Health employees have pleaded guilty and agreed to cooperate with prosecutors. Shah, Agarwal and Purdy face up to 30 years in prison if convicted. “The Holmes/Theranos verdict is totally irrelevant to the Outcome Health case,” said Ted Poulos, an attorney for Purdy. “Every prosecution rises and falls based on the unique facts and circumstances of each case. The facts and evidence in the Holmes case have nothing whatsoever to do with the facts and evidence in our case. Therefore, the Holmes verdict is a total nonfactor for me.” Attorneys for Shah and Agarwal did not respond to requests for comment. If any of the Outcome defendants decides to plead guilty, there’s no incentive to do it anytime soon, Safer says. “They are out on bond. There is little to be gained by pleading early in that they lose

BLOOMBERG

After Elizabeth Holmes was found guilty, former Outcome Health execs may want to rethink their odds

Theranos founder Elizabeth Holmes, center, leaves federal court in San Jose, Calif., on Jan. 3 with her mother, Noel Holmes. their freedom. That’s why you see in these types of cases, when there are pleas, they typically come late in the ballgame.” Outcome Health was one of Chicago’s most high-profile young companies, raising nearly $500 million in early 2017 from investors that included Goldman Sachs and the Pritzker Group Venture Capital fund, before it was stung by revelations by the Wall Street Journal that the company had deceived its pharmaceutical company customers about the amount and effectiveness of the advertising they were buying. Two years later, the company reached a $70 million settlement with the Justice Department and

attempted a turnaround before it merged last with PatientPoint, a Cincinnati-based competitor.

A SOBERING REMINDER

The lessons of the Theranos trial aren’t lost on investors, either. In hindsight, many have been glad to have missed out on the losses of money and reputation experienced by Holmes’ investors. Nonetheless, it’s a reminder of the importance of doing your homework before jumping on a hot deal. “It’s triggered a few jitters about, ‘Where is it we have been willing to cut corners to get into deals?’” Erik Gordon, a professor at the University of Michigan’s Ross School of Business, says of his conversations with

venture capitalists about Theranos. The Theranos trial played out as venture-capital firms raised and deployed record amounts of money last year. Valuations of venture-backed companies have soared, and many deals are being done virtually, thanks to the COVID-19 pandemic. “With more money available than ever, there is a lot of pressure on VCs to make decisions quickly, before they can do thorough due diligence,” says Steve Kaplan, a professor at the University of Chicago’s Booth School of Business. “So, the risk is not that VCs do not want to do the due diligence; it is that market pressures are forcing them to decide more quickly than they would like.”

Distressed Evanston hotel hits the market BY DANNY ECKER Nearly a year after being hit with a $50 million foreclosure lawsuit, the owner of Evanston’s most prominent hotel has put the property up for sale, hoping to find a buyer looking to bet on the inn’s post-COVID recovery. In a consensual short sale offering meant to resolve the foreclosure complaint, a venture of New York-based real estate firm Olshan Properties and its lender have hired the Chicago office of Jones Lang LaSalle to sell the 269-room Hilton Orrington in downtown Evanston, according to a marketing flyer and Bloomberg data tied to Olshan’s loan on the building. The listing comes more than 10 months after Olshan was sued for allegedly defaulting on its $40 million loan, which was packaged with other mortgages and sold off to commercial mortgage-backed securities investors. When the foreclosure complaint was filed, Olshan indicated to special servicer Midland Loan Services—which is overseeing the mortgage on behalf of CMBS bondholders—that it planned to

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hand over the keys to the property to resolve the matter. Instead of putting the property on its books through a deed-in-lieu of foreclosure, Midland is now working with Olshan to try to sell it to recoup as much of the lender’s investment as possible.

NO ASKING PRICE

There is no listing price for the property, but sources said it’s likely to trade below the balance of the outstanding loan. As of February, the loan balance was just under $39 million. A sale below that amount would mark a hefty loss for Olshan, which bought the hotel in 2015 for $60 million. The hotel performed well prior to the COVID-19 pandemic, with net cash flow of nearly $3 million against less than $2.6 million of debt service, according to Bloomberg loan data. But the pandemic hammered its operations, with net cash flow during the 12 months ended in June 2020 falling below $1.3 million, or less than half of its debt service liability over that period. Olshan stopped making loan payments in August 2020, according to

the foreclosure complaint. Olshan is one of many Chicago-area hotel owners dealing with financial distress as the pandemic has brutalized their operations. In downtown Chicago, the owners of the Palmer House Hilton, JW Marriott Chicago and the Hotel Felix have been hit with foreclosure lawsuits. Some hotel owners have been able to work out agreements with their lenders to try to buy time until the pandemic subsides. Some banks have been flexible or don’t want to take control of hotels during the public health crisis. But trustees for CMBS loans have less wiggle room, since they oversee mortgages for many properties that are tied together. Olshan worked out a deal early in the pandemic with a master servicer overseeing the loan that allowed it to make lower mortgage payments for several months, Bloomberg data shows. The hotel turned to renting rooms to Northwestern University undergraduate students in fall 2020 to generate some business before the foreclosure complaint was filed. Spokesmen for Olshan and Midland couldn’t be reached.

JONES LANG LASALLE

The Hilton Orrington’s owner and its lender aim to sell the 269-room property to resolve a $50 million foreclosure lawsuit filed last year; a hefty loss looms

The Hilton Orrington hotel in Evanston JLL is framing the hotel as an opportunity to add value by renovating the property and potentially rebranding it under one of Hilton’s lifestyle hotel brands, such as DoubleTree or its Tapestry Collection. The hotel includes almost 20,000 square feet of meeting space, including the 5,848-square-foot Grand Orrington Ballroom, which was heavily damaged from a roof leak during the pandemic and is now in “shell condition,” according to the JLL flyer. The flyer portrays

that space as a “blank slate renovation opportunity.” The hotel’s ground floor is home to the Farmhouse Evanston restaurant, and the building includes over 3,000 vacant square feet of street-level retail space in two spaces, one of which features a full kitchen, according to the flyer. The property also includes an adjacent 178-space parking garage. JLL brokers Adam McGaughy, John Nugent and Mark Jindra are marketing the property for sale.

1/7/22 2:33 PM

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10 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

It c

EDITORIAL

he formula for effective leadership is not a mystery. All the books written on the subject, stacked one on top of the other, could stand as tall as Willis Tower. Articles on management are the stuff of publications ranging from Forbes to the Wall Street Journal to Crain’s. Courses on leadership are only as far away as the nearest university or as close as your laptop. Even those of us who merely skim the droves of literature on the subject know the basics: That leadership is the art of social influence, designed to maximize the efforts of others toward the achievement of a goal. Effective leaders encourage strategic thinking, innovation and action. They motivate. They communicate. They include. And, equally as important: They anticipate problems and strategize solutions before those problems materialize. Unfortunately for parents with students enrolled at Chicago Public Schools, leadership at all levels has utterly broken down yet again. For the third time in three years, students and parents are left struggling with a school shutdown that could and should have been avoided. There’s plenty of blame to go around. Let’s start with the administration operating under the new CEO, Pedro Martinez. The pandemic has turned every person reading this into an amateur epidemiologist—for better and for worse. So when word emerged in November that a new, more highly transmissible variant of the coronavirus was detected in South Africa, most reasonably observant people understood that it was a fairly likely that this iteration, omicron, would be responsible for another devastating wave of global contagion. The Martinez administration correctly anticipated that wave, but its response could be most charitably called a dud: The district sent out 150,000 COVID tests to parents in the middle of the holiday season without any real plan for getting those tests returned in time to be meaningful. Only 36,000 tests were completed, and the majority of the samples were ruined. Over the holiday break, with COVID cases skyrocketing, it was not difficult to imagine

NEWSCOM

Mismanagement 101

that a return to in-person instruction in the first week of January was going to be problematic. Was there a comprehensive “test to stay” protocol in place that would allow students and teachers to feel relatively safe in classrooms? Was there enough protective equipment available—face masks, eyewear, cleaning supplies, adequate ventilation? And what sort of conversations were going on with the Chicago Teachers Union to ensure their cooperation in the effort to deliver effective education to students while mitigating the risks of infection? Sadly, we now know the answers to most of these questions. After staggering through two days of in-person instruction in the first week of January, the CTU said its members refused to work in person. Schools, in turn, shut down for the remainder of the week. Parents were left scrambling to find ways to care for their children at home, putting many in jeopardy of losing

income or even losing their jobs altogether. Children, whose learning has already been dramatically disrupted by the pandemic, were once again left in the lurch. Both sides report that negotiations late in the week over the terms of reopening schools were productive. But it has to be asked: Why weren’t negotiations over these sticking points—testing, vaccines, equipment, etc.—held before students were expected to return to classrooms? The relationship between the union and the administration is beyond toxic. The personal animus between Mayor Lori Lightfoot and the CTU brass, Jesse Sharkey and Stacy Davis Gates, is palpable. Their various disputes have become personalized to the point that it’s fair to wonder if the mayor needs to stand down and let Martinez and the board chair handle this dispute. The mayor’s remarks on the situation at nearly every turn seem only to raise the temperature.

Case in point: The Chicago Tribune reports the CTU has called for a negative test result to return to school buildings and an expansion of the weekly testing program that’s mandatory for unvaccinated staff members and voluntary for students. Lightfoot says she opposes the idea of making the program mandatory for all but those whose parents opt out, arguing that it’s “morally repugnant” to take the decision out of parents’ hands and likening the nasal swabs involved to a “quasi-medical procedure.” “Morally repugnant” isn’t helpful language. Also unhelpful: objecting to expanding a reasonably unobtrusive testing regimen, especially if parents can opt their kids out if they like. Other districts do it. Why can’t Chicago? And the teachers union, meanwhile, has made its intentions clear through actions if not words: While wanting the world to believe its every move is meant to serve the children of the district, its primary objective is actually to protect its members at all costs. Not wanting to be exposed to COVID risk is fair enough and understandable, but let’s keep the situation in some perspective. Yes, there’s evidence that omicron is more dangerous for children than previous variants may have been. But we do have vaccines now. Testing technology is available. And children need to be in school. Students do better when they’re in classrooms. Their families do better, too, as parents are then able to do the work necessary to provide for their children. So, Chicago’s schools are now shut down and we’re left to argue about the relative merits of in-person vs. remote learning. That debate, however, misses the point. Even if omicron wasn’t the variant currently grabbing headlines, it would have been sensible to expect that a mutation like it would come along eventually—and to map a strategy for keeping schools open if and when that mutation arrived. Instead, CPS was left flat-footed, and the school closure has become national news, delivering yet another black eye to the city’s already battered reputation. How much more of this sort of mismanagement can one city take?

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YOUR VIEW

Here’s how the city can revive the south lakefront

he 1997 film “Love Jones,” set on the South Side of Chicago, has long been a cult favorite among Black people. It explores life and love among Black professionals, artists, and intellectuals—a group rarely seen in movies or on television. Many Black professionals yearn for the kind of neighborhood and lifestyle shown in the film. The 2020 census gives us reason to think such a neighborhood—a diverse but predominantly Black community of middleclass professionals—is now emerging on Chicago’s south lakefront. In a cluster of neighborhoods extending from the Near South Side to South Shore, the population is growing, the percentage of college graduates is increasing, home values are rising,

and crime, despite recent upsurges, has fallen substantially over the past 20 years. We believe the south lakefront is where the north lakefront was in the early 1980s and, given modest assistance, will follow the same path. This is a historic opportunity for Black people and Chicago. In our view, the simplest way to ensure the continued revitalization of this promising area would be to invest in better transportation. We propose that the Metra Electric’s lakeshore service—local operation on the main line from downtown to 67th Street plus the South Chicago branch to 93rd Street—be integrated into the Chicago Transit Authority’s el system. Investment in the lakeshore line would

go a long way toward putting the south lakefront on an equal footing with the North Side: It would stimulate neighborhood revitalization. Most professional workers on the South Side live in lakefront neighborhoods with recreational and cultural amenities but no el service—those headed downtown on CTA must take the bus. Integrating the lakeshore line with the el would give these neighborhoods an excellent combination of amenities and boost their attractiveness. It would provide opportunities for transitoriented development—mixed-use projects around rail stops that would add people and retail businesses the south lakefront

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Chicago Business, 150 N. Michigan Ave., Chicago, IL 60601, or email us at letters@chicagobusiness.com. Please include your full name, the city from which you’re writing and a phone number for fact-checking purposes.

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urgently needs. The line is a natural fit with existing CTA rail service, serving neighborhoods and destinations where the el doesn’t go, including Soldier Field, McCormick Place, the Museum of Science & Industry and the University of Chicago. It would make it easy for, say, a South Shore resident to transfer to the Green Line to reach a job in the Fulton Market district. It would align with other initiatives, including the Obama Presidential Center, Invest South/West projects in Bronzeville and South Chicago, and several large real estate ventures on the corridor’s north end. Continued on next page

Sound off: Send a column for the Opinion page to editor@ chicagobusiness.com. Please include a phone number for verification purposes, and limit submissions to 425 words or fewer.

1/7/22 4:03 PM

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CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 11

YOUR VIEW Continued It could be largely self-financing.

If a transit TIF district were established encompassing the lakeshore line’s service area, the megaprojects on the north end would provide an expanding tax base to support the entire corridor. The revival of the south lakefront could fundamentally change the narrative for Chicago’s Black community and be the starting point for revitalization of the South Side, just as the north lakefront was for the North Side. With the passage of federal infrastructure legislation, the city appears to have a reasonable prospect of funding its top priority, the

CRAIN’S CHICAGO BUSINESS

Chief executive officer KC Crain Group publisher/executive editor Jim Kirk Associate publisher Kate Van Etten

Red Line extension to 130th Street on the Far South Side. We respectfully suggest the south lakefront should be next on the list. A more detailed version of this piece, along with maps and graphics, is at ChicagoBusiness.com/ south-lakefront-rail. Ed Zotti is a Chicago journalist, author and transit consultant. Pete Saunders is a city planner and director of community and economic development for the village of Richton Park. Mike Rothschild is a data scientist who works in the financial services industry.

The answer to property taxes: Simplify the game Re: “Ignoring reality: Inside the property tax appeals game,” Dec. 23: Why not simplify the whole assessment game and start assessing the real estate tax based on square or cubic footage? A property’s square or cubic footage is easily calculated from blueprints and property surveys. Once that number is established, only a building or demolition permit or accident report would change that number of square footage that would be used as

the base. Each government entity would assess property on a footage basis. No need for appeals; everyone’s business and residential property would be treated and assessed the same. You could have a rate for the land value from the property survey and an amount for the building’s square or cubic footage. A 10,000-square-foot building with the same sized lot and building would be assessed the same amount of tax for, say, the Cook County Forest Preserve District,

whether it is in Wilmette or Ford Heights. The only difference in the tax bills would be what units of government below the Cook County level would be charging. This system would also make it easier to evaluate the efficiency of the units of government below the county level. At the present time, we have a shell game going on with too many subjective variables: assessed valuation, multiplier, local tax rates, cap rates, etc. RAYMOND BUSCH Palos Park

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12 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

YOUR VIEW

What Ben & Jerry’s and the West Bank have to do with Chicago’s economy

ust when you thought the worst that could happen from indulging in Ben & Jerry’s Cherry Garcia or Rocky Road ice cream was a few extra pounds, an obscure Illinois government body has branded this popular treat off-limits. So far off-limits that on Dec. 22 the seven unelected men and women who comprise the Illinois Policy Investment Board voted unanimously to bar the state’s employee pension funds, representing the diverse interests of hundreds of thousands of people, from investing in Unilever, Ben & Jerry’s parent company. The company’s crime? Ben & Jerry’s announcement last summer to no longer sell its ice cream in the West Bank, or as it also known by both its residents and rest of the world, the “Occupied Palestinian Territory”—occupied by Israel since 1967. The board’s little-noticed decision derives from an equally obscure (and unnoticed by most) Illinois law passed in 2015 that prohibits state employee pension funds from investing in any company that boycotts Israel.

WHILE SOME MAY FIND THIS A TEMPEST IN AN ICE CREAM CONE, THE DANGER THE LAW AND BOARD POSE TO ILLINOIS IS REAL. What’s wrong here? Where to begin? Leaving aside the First Amendment issues involved, there is the fact that Ben & Jerry’s is not boycotting Israel. As Ben & Jerry’s, and its parent company Unilever, have repeatedly stated, their ice cream is still available in Israel, just not in Israeli settlements outside the state of Israel. This, of course, raises the question, where exactly is Israel? While Israelis have occupied and ruled this territory since 1967 and have created “settlements” (from two trailers to places with 30,000 settlers) on the occupied lands, no nation, including Israel and the United

States, has considered the West Bank part of the state of Israel. While controlled and surrounded by Israel, the Palestinians living in the West Bank (as they have for centuries) are not Israeli citizens, cannot vote in Israel’s elections, cannot travel to Israeli cities (or even to the beaches a few miles from their homes) without permission from Israeli military authorities, are subject to Israeli military (but not civil) courts, and do not have Israeli passports nor access to the Israeli airport. The only persons in the West Bank with full Israeli rights are Jewish and live in the settlements that are considered illegal by all international bodies and treaties, including the Geneva Conventions.

DISTINCTIONS

Finally, if the West Bank were part of Israel, then Israel would have to treat all residents equally—from free movement and access to vaccines, to passports and travel protocols, and a singular court system—none of which is the case. By applying the same standard to both the settlements in the occupied territories and the state of Israel, both the board’s action and the underlying Act wrongly ignore the legal and practical distinctions between the two. Adding insult to injury is that this tiny unelected body has taken this outsized action with little or no input from those most knowledgeable or affected. It failed at the most basic of its responsibilities—to seek knowledgeable testimony to inform its decision. Members or staff did not reach out to any of the dozens of active Jewish organizations in the state or any organization representing Palestinian Americans, even though Illinois boasts the largest Palestinian community of any state. While some may find this a tempest in an ice cream cone, the danger the law and board pose to Illinois is real. While this specific decision may have little impact on Illinois or Ben & Jerry’s sales, other upcoming

Jim Klutznick is a developer and board president of Americans for Peace Now.

Bill Singer is an attorney and board member of J Street.

Marilyn Katz is president of MK Communications and a board member of Americans for Peace Now.

ill-conceived actions might. For its meeting in March, the board has now trained its sights on Morningstar, the Chicago-based company responsible for thousands of jobs in Illinois (and throughout the nation). In the board’s view, Morningstar’s crime is that it purchased two European companies that do not purchase products produced in the occupied West Bank, which in the eyes of the board makes the company also guilty of “boycotting” Israel. In a city and state where too many individuals and companies are already reconsidering their location, raising the specter of McCarthy-like scrutiny of legitimate corporate decisions may provide them with yet another reason to find a more welcome clime. If ever there were a law that needed immediate repeal, it is the 2015 Illinois law that penalizes companies that “boycott Israel.” If ever there were a governing body that needed dismantling, it is this tiny board known by and accountable to virtually no one. If there were ever a time for action, it is now.

Let’s tell the truth about Illinois’ anti-boycott law

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The law states that “’Boycott he guest op-ed above Israel’ means engaging in acfrom Jim Klutznick, tions that are politically motiBill Singer and Marilyn vated and are intended to peKatz mischaracterizes nalize, inflict economic harm Illinois’ anti-Boycott, Diveston, or otherwise limit commerment and Sanctions Law. cial relations with the state of I know because I wrote that Israel or companies based in law. the state of Israel or in territoIllinois has a storied histories controlled by the state of ry of ensuring that our public Israel.” The July 2021 announcepension investments align with State Sen. Sara ment from Ben & Jerry’s/Uniour state’s public policy objec- Feigenholtz replever violated this Illinois law. tives. For example, Illinois law resents Illinois’ The Illinois Investment Policy prevents public pension funds 6th District. Board is tasked with ensuring from investing in companies that assist Iran’s pursuit of nuclear weap- an investment of public money adheres ons, companies that contract to shelter to the law, which is precisely what the detained migrant children, companies members did. They are not empowered that seek to avoid Illinois taxes by mov- to make policy decisions. The authors imply in their op-ed that ing their headquarters offshore and, in the past, companies that did business this was some clandestine meeting held with apartheid South Africa. In addition, in the dark behind closed doors in a in 2015, the Illinois House and Senate smoke-filled room. This could not be unanimously passed and Gov. Bruce farther from the truth. The policy board Rauner signed a law that prevents Illinois complied with timely posting requirestate pension funds from investing in ments, complied with the Open Meetings Act, and heard from 14 Illinoisans during companies that boycott Israel. Israel is the singular democracy in the the public comment session. Their beMiddle East that has historically been smirching the integrity of the appointed a consistent ally to the United States. members of the Illinois Investment PoliTherefore, it is in the best interests of the cy Board is wholly inappropriate and an United States, Illinois and Israel that Isra- example of what’s wrong with today’s poel remains a strong, vibrant and healthy litical discourse. Moreover, the tacked-on reference to democracy. Boycotts of Israel, like the one conducted by Ben & Jerry’s/Unilever, Morningstar misstates the facts. Morningstar recently authorized an indepenare intended to harm and weaken Israel.

dent external investigation to determine whether or not a recent business acquisition is inappropriately slapping companies with negative ratings because they do business with or in Israel. Morningstar launched this investigation because, in a letter to Morningstar, the Illinois Investment Policy Board asked the company to establish whether it was boycotting Israel, as defined by Illinois law. Hopefully,

Morningstar’s internal investigation is thorough and transparent and demonstrates that they are not boycotting Israel, or if they are, that they will take immediate corrective action. The Illinois law is well thought out and carefully crafted. No one’s free speech is curtailed; no one is prevented from eating Cherry Garcia, and Ben & Jerry’s is free to boycott whomever they wish.

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CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 13

Former CME Chairman Robert O’Brien dies at 103 His trading firm, R.J. O’Brien & Associates, grew into the largest nonbank futures broker BY STEVEN R. STRAHLER Robert J. O’Brien Sr., a former chairman of the Chicago Mercantile Exchange who helped prepare the transformation of an agriculture-based commodities trader into a financial futures pioneer, died Jan. 4 at his home in Sea Island, Ga. He was 103. His firm, R.J. O’Brien & Associates, the last functioning founding member of the Merc, now known as CME Group, announced his death. Along with Leo Melamed and other Merc directors, O’Brien set out in the 1960s to make over an institution then in the shadow of the Chicago Board of Trade, with a shady reputation for fixing markets and a male-only membership. “It was the Wild West when Bob and I inherited the place,” Melamed recalled in a video for the firm’s centennial in 2014.

“Bob and I formed a tie to take over from the old guard completely. He genuinely wanted to remake this institution to give it standing, to give it hope.” O’Brien joined the board in 1964. He served two years as chairman in the late 1960s before Melamed succeeded him and, starting in 1972, pursued financial futures listings that currently dominate CME trading.

TRANSFORMATION

At mid-century, O’Brien had joined a butter-and-egg trading firm founded by his father-in-law, John McCarthy, an Irish immigrant. A decade after O’Brien was named president in 1959, the firm assumed his name. Five years later, it took delivery of the first live (cattle) contract traded on the Merc floor. “He was very much aware of the fact that his name, his

Building Business. Growing Wealth. Since 1868.

history was hugely meaningful,” Melamed said of their teamwork in revamping exchange governance, which included reducing a meeting quorum from a prohibitive 300 among about 500 members. “And also he recognized I had the ability to verbalize who we were. The two of us would dominate the first two years of the (restructured) exchange.” R.J. O’Brien & Associates is the largest nonbank futures broker, according to industry observer John Lothian. CEO Gerald Corcoran said it has more than $500 million in annual revenue and 500-plus employees. Despite marrying the boss’s daughter, after serving in the Navy during World War II, O’Brien “built his own legacy,” Corcoran said. “Bob never traded for himself (as did McCarthy). He built a brokerage business.” In 1966, before the Merc permitted women to become members, O’Brien caused a stir (and photo coverage by the Chicago Daily News) when he

Robert J. O’Brien Sr. invited his secretary, Sandra Stephens, onto the trading floor as a phone clerk amid heavy trading volume. Melamed said the Merc loosened its rules after debating minimum lengths for women’s skirts. O’Brien served as chairman of his firm from 1975 to 2000. His son, John, was named CEO in 1986 and chairman in 2000, when Corcoran became CEO. Paul Georgy, a longtime customer as president of Allendale, an agricultural advisory firm in McHenry County, recalls O’Brien’s personal touch: “He’d show up and always have an Irish joke of sorts.” At golf

outings, “he knew how to make the lost balls reappear again.” Melamed said, “He was a strong, good-looking, tall guy.” Just before the financial crisis, in 2007, two private-equity firms acquired an 80 percent stake in R.J. O’Brien, which turned out to be fortuitous when the O’Brien family was able to regain control in 2010 at fire-sale prices. Another collapse also was advantageous for the firm. When derivatives broker MF Global floundered in 2011 on misplaced bets on European sovereign debt, O’Brien grabbed the most MF accounts.

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14 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

A barbecue brand with roots in slavery The family of a man who came to Illinois after he was freed from bondage in the 1860s is keeping his legacy alive The first part of Arthur Watts’ life revolved around an open barbecue pit. Born in 1837, Watts’ job on the farm where he was enslaved in Kansas City, Mo., was to tend the barbecue. He had little instruction on how to cook, but he knew he couldn’t afford to mess up. He began to tinker, creating rubs and sauces from ingredients he could get his hands on. Arthur Watts was in his late 20s when the Emancipation Proclamation freed him. He moved to central Illinois, started a family and got a job. He kept barbecuing. “The only thing of value he had to take with him out of bondage were his recipes he had been crafting and his skills at open-pit barbecuing,” said his great-great grandson, Eudell Watts IV. Five generations later, sauces and rubs based on Watts’ recipes have hit Mariano’s shelves as Old Arthur’s Barbecue Sauce. Eudell Watts and his father started selling the sauces about 10 years ago, hoping to use the company to help tell their patriarch’s story. Besides Mariano’s 44 locations, Old Arthur’s is available on Amazon and the company’s website. Locally, it is also sold

declined to disclose revenue. He runs the company out of his Evanston home with his father, who is based in the Quad Cities. He also ropes in his three children, ages 14 to 21, to help.

LOCAL APPEAL

The family business aspect appealed to Mariano’s, said Director of Strategic Brand Development Amanda Puck. The grocery store chain often features local products on its shelves and brings the vendors in for sampling and programming with customers. She declined to comment on Old Arthur’s sales. “This particular brand has a remarkable story—such a family legacy—that was very appealing for us,” she said. These days, consumers gravitate toward brands from family businesses, said Jennifer Pendergast, executive director of the John L. Ward Center for Family Enterprise at Northwestern University’s Kellogg School of Management. People believe family-run businesses treat their employees better, and create higher-quality products since they’re honoring their own legacies. “It used to be that people looked at family businesses and said, ‘Oh, they’re unprofessional,’ ” she said. “The truth is, people actually trust families more because their name is on something.” AFTER ARTHUR WATTS WAS FREED, Similarly, the investment landscape HE DEVELOPED A REPUTATION AS A is shifting in favor of family-run operations, PITMASTER IN CENTRAL ILLINOIS, Pendergast said. FamMANNING COMMUNITY BARBECUES ily investment firms are looking for comTHAT FED THOUSANDS. panies with similar values to invest in. at Paulina Market in the Lakev- Unlike with some private-equity iew neighborhood, Homestead or venture-capital firms, which Meats in Evanston, Al’s Meat sometimes bring in outside manMarket and the Backyard agement to help with growth, Barbecue Store in Wilmette, and many are happy to leave foundWannemaker’s Home & Garden ers in place and provide necessary expertise. in Downers Grove. Maintaining control as the Old Arthur’s is small but profitable, Eudell Watts said. He brand grows is critical for Old

PHOTOS PROVIDED BY EUDELL WATTS IV

BY ALLY MAROTTI

Eudell Watts IV of Evanston runs Old Arthur’s Barbecue Sauce with his father, who is based in the Quad Cities. Arthur’s, Eudell Watts said. Besides Mariano’s, he has had conversations with other multistate retailers interested in carrying the products, including Hy-Vee. The company faces growth challenges, such as predicting demand as it expands, and Eudell Watts has a day job. He said he’s having conversations with investors to help fuel the growth. “We’re at a point now where we’ve got to look at some very real upgrades in our business structure,” he said. “We’re trying to learn how we would work with potential investors and retain integrity of our brand, retain the things that are critical to us: the quality, the history, the look and feel.” Arthur Watts lived to be 108. He could not read or write, but he passed his recipes down to his children, who wrote them down as Arthur tweaked them over the years. The open-pit barbecuing skills were passed down as well. After Arthur Watts

Arthur Watts manning a barbecue in 1916 in downstate Kewanee. was freed, he developed a reputation as a pitmaster in central Illinois, manning community barbecues that fed thousands. His descendants carried on those traditions at their own

gatherings. Old Arthur’s is meant to “give people a taste of what happens when one man has their hands in a set of recipes for almost a century,” Eudell Watts said.

Fighting crime? Maybe our top crime-fighters should stop fighting first. GREISING from Page 2 a public data tool that shows Foxx’s lawyers approved nearly 75% of the felony cases presented by Chicago cops last year. Back and forth it goes. And that leaves the people of Chicago with little hope for a better result in the new year. The dissonances cloud the rosy picture these public officials paint of their efforts to crack down on crime, while also reforming racial biases and other problems in the Chicago-area criminal justice system. Police Superintendent David Brown did just that at Light-

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foot’s stormy press conference, saying he’ll get enough new detectives to substantially reduce each detective’s caseload. Applications to join the police force are up, which could help reduce demands for overtime work that are burdening police officers. Federal agents will bolster the CPD push to seize illegal guns. And one of Brown’s signature initiatives—“positive interactions” between police and community members— should more than double this year, to 1.2 million, he said. If that sounds like good intentions, but not nearly enough, you’re hearing it right.

The surge in violence is more powerful than these measures, and there’s scant evidence that merely reinforcing tactics that haven’t worked will solve the city’s crime problem. Worse still, the chances of success are undermined by the fact that the city’s chief public-safety officials simply can’t get along. Lightfoot, Evans and Foxx each have their points, but they all need to step back from their disputes and coordinate their efforts for the greater good. Evans’ push for bail reform is rooted in a push for justice, but it’s difficult to countenance a program in which 5% of

those released were identified beforehand as presenting a risk of committing a new violent crime. Foxx needs to double down on efforts to clarify her standards for bringing criminal charges, so cops know what they need to make a case. Brown’s police force needs to close more cases, and faster, while continuing the progressive reforms the police chief values and a courtmonitored consent decree demands. As for Lightfoot, her passion is sincere, but her aggressive approach is backfiring yet again. A productive middle

ground with her public-safety colleagues can be found, if only she can tone down her rhetoric and open her mind. The year is starting, which resets the tally of crime statistics that has risen sharply for two consecutive years. Lightfoot, Foxx and Evans have each had their say. The time is long overdue to stop throwing brickbats, join forces, and just get to work. Crain’s contributor David Greising is CEO of the investigative watchdog Better Government Association in Chicago.

1/7/22 4:22 PM

SPONSORED CONTENT

CRAIN’S EVENT RECAP

Crain’s Middle Market Webcast: Forecasts, Challenges, Opportunities Executives Share Their Insights

upply chain and labor issues are among the top challenges facing middle market companies. The materials logjam is causing delays, stretching customer patience. Executives want to create the right office environment, acknowledging the new realities of virtual work amid serious competition for top talent. There’s also a recognition that the economic jolt of the pandemic has provided unforeseen opportunities heading into 2022. A panel of leaders from a range of middle market industries recently discussed these and other issues at webcast hosted by Crain’s Chicago Business in partnership with Bank of America. Panelists included: Stan Pepper, chairman and CEO, The Pepper Companies, a commercial construction company; Andrea Diquez, CEO, DDB Chicago, an advertising agency; and Natalie Brown, president, Mesirow, a financial services firm. The discussion was led by Jim Kirk, publisher and executive editor at Crain’s Chicago Business. In opening remarks, Kirk noted that Bank of America is invested in Illinois and works with entrepreneurs and business owners to provide the resources and capital they need to manage their businesses. Kirk kicked off the discussion asking about the biggest areas of uncertainty looking ahead to 2022.

“Our biggest challenge is supply chain management,” Pepper said. “Every piece of the supply chain seems broken.” The upshot is higher prices and delivery problems for everything from roofing insulation to steel. The materials slowdown creates project scheduling difficulties. He keeps clients informed about the problems but thinks it could take 18-24 months for supply chain disruptions to improve. Another big issue is talent, acquiring and retaining good workers. “We are seeing a battle for talent,” Mesirow’s Brown said. Workers are looking for new roles with more flexibility. As head of an advertising agency that relies on creative people and ideas, DDB Chicago’s Diquez emphasized the importance of culture. The goal is to create an environment that people want to be in and stay in.

MODERATOR

JIM KIRK Publisher Crain’s Chicago Business

PANELISTS

NATALIE BROWN President Mesirow

that the model can succeed. Brown has chosen a middle course. She feels an in-office presence is important to maintain the firm’s culture and to help mentor younger workers. She’s

and highlight the importance of the relationship. “Nothing beats personto-person meetings when you’re talking about ideas,” Diquez noted, underscoring the difficulty of getting

EXECUTIVES WANT TO CREATE THE RIGHT OFFICE ENVIRONMENT, ACKNOWLEDGING THE NEW REALITIES OF VIRTUAL WORK AMID SERIOUS COMPETITION FOR TOP TALENT. “What does the future of work in an office look like?” Kirk asked. Employees are split, Brown said. Some want to return to the office full time. Others note that the company had a record year working remotely, proving

asked her team to develop a transition plan to get workers back into the office three days a week starting in January. DDB Chicago opened its office and expects each team to come in 2-3 days a week. “Collaboration in creativity is important,” Diquez said. She also worries about the burnout factor of remote work with employees are always on call. The Pepper Companies never went 100% remote. “You can’t build a building from home,” Pepper said. “You have to be on the job site.” The office opened full time after Labor Day, though the administrative staff has the option to work remotely one day a week.

A LOOK AHEAD The panelists expect to have more face-to-face contact with clients in 2022. Zoom meetings will continue. But after a long physical separation, in-person client visits will have a special feel

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ANDREA DIQUEZ CEO DDB Chicago

feedback when presenting a campaign to 30 people on a video call. Kirk asked whether any pivots the companies had to make for the pandemic have become a standard part of business now. The executives said the pandemic prompted them to communicate more with staff and clients, a positive change they plan to continue. The Pepper Companies held a town hall every week for 400-500 workers. “People want more information and that is something we are keeping,” Pepper said. At Mesirow, Brown held a meeting at 10 a.m. every day with her direct reports. “We really became touchstones for each other professionally and personally,” she said. The meetings have continued in person back in the office too. DDB Chicago was able to leverage technology to create diverse teams, drawing people from different offices with varied backgrounds. Diquez also pulls talent from other offices now if a certain skill set is needed in Chicago.

STAN PEPPER Chairman and CEO The Peppers Company

leadership considering its key role over the last 18 months. “People first,” Disquez said. “Happy people make the world move.” Her advice: Check in with employees and keep listening. Let them know you’re available. Reach out. Mesirow’s Brown said, “Connect.” Make sure folks are heard, an especially important practice during times of uncertainty. Have empathy and be flexible, Pepper said, adding that we’re all worn out by the pandemic. “Keep everyone on an upward beat.”

“Bank of America” and “BofA Securities” are the marketing names used by the Global Banking and Global Markets divisions of Bank of America Corporation. Lending, other commercial banking activities, and trading in certain financial instruments are performed globally by banking affiliates of Bank of America Corporation, including Bank of America, N.A., Member FDIC. Trading in securities and financial instruments, and strategic advisory, and other investment banking activities, are performed globally by investment banking affiliates of Bank of America Corporation (“Investment Banking Affiliates”), including, in the United States, BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp., both of which are registered broker-dealers and Members of SIPC, and, in other jurisdictions, by locally registered entities. BofA Securities, Inc. and Merrill Lynch Professional Clearing Corp. are registered as futures commission merchants with the CFTC and are members of the NFA. Investment products offered by Investment Banking Affiliates: Are Not FDIC Insured · May Lose Value · Are Not Bank Guaranteed. | © 2021 Bank of America Corporation. All rights reserved. #3948132

Looking toward 2022, Kirk asked the executives for their advice on

1/7/22 10:50 AM

16 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

Chicago school bus companies pocketed ‘good-faith’ payments BY MILA KOUMPILOVA Chicago Public Schools shelled out millions in federal pandemic relief dollars for good-faith payments to busing vendors during school closures—even as some laid off employees and received paycheck protection loans from the federal government. Despite the district’s payments, which came to total more than $53 million, bus companies struggled to ramp up operations this past fall, stranding thousands of students without transportation. The findings of misused goodfaith payments come from the district’s Office of Inspector General annual report, which provides an overview of investigations conducted in the 202021 fiscal year. The report trains a special spotlight on the $2.8 billion in federal COVID relief dollars the district has received, highlighting the need for close monitoring and transparency in how the money is spent. The inspector general office said it will track that spending closely and remain on the lookout for any instances of misuse or fraud. “For its part, the OIG will continue to investigate evidence of potential waste and abuse in pandemic relief aid spending, as well as advocate for increased transparency and effective internal controls,” the report said. The district is not tracking expenses in real time or breaking down expenses by campus, the report noted, echoing reporting

last month by Chalkbeat Chicago. Officials have said they would have a fuller accounting of spending at the end of the year.

CHALLENGES

The bus company investigation is of particular interest given the challenges the district and its busing vendors have faced in standing the transportation program back up amid national school bus driver shortages this fall as schools reopened for full-time in-person learning. Staffing hurdles left thousands of students without rides to school—issues that have persisted months into the school year and forced the district to forge emergency agreements with alternative providers, such as taxi companies. The inspector general’s office, led by William Fletcher, reviewed $28.5 million in “goodfaith” payments to 14 district busing vendors from the spring of 2020. With the blessing of the state, the goal of the payments was to ensure that bus companies would continue to pay their drivers and bus aides so they would be “mission-ready” when school buildings reopened. The state urged districts to clearly spell out expectations for keeping staff on the payroll, but Chicago Public Schools did not put these conditions in writing or make any effort to verify that vendors were using the money as intended. “We assumed the businesses would do right by their people if

the district did right by the companies,” the report quotes one district official as saying. In fact, 10 of the 14 bus vendors receiving payments laid off more than 600 bus drivers and bus aides that spring. Some of them had already laid off their workers when they first started receiving these payments, but district officials never checked if employees were still on the payroll before they started subsidizing them. Nine district vendors—including eight that laid off workers—also received a total of $13 million in federal Paycheck Protection Program loans, forgivable if a portion of the money went to payroll expenses. The report notes that the laid-off workers were eligible for enhanced COVID unemployment benefits, resulting in “triple-dipping” into taxpayer dollars all intended to cover the same bus worker wages. One vendor pocketed “goodfaith” payments from the district, obtained a federal PPP loan, and laid off all its drivers and bus aides within a week of school closures, spending only 0.5% of normal payroll costs that spring. The inspector general’s office alerted the district to the issue in the fall of 2020, and the district conducted its own audit. It eventually signed a written agreement with bus vendors to repay about $3 million. The district also amended its contracts with companies to require them to retain their employees.

STACEY RUPOLO FOR CHALKBEAT

CPS paid millions in federal pandemic relief dollars to busing vendors during school closures—even as some of the firms cut workers and later stranded pupils

The school district’s pandemic relief payments to bus companies totaled more than $53 million. Some vendors told the inspector general’s office that once their employees started receiving unemployment checks including an extra $600 a week in COVID relief, they struggled to get these workers to return to work. In all, the district has reported almost $65 million in “goodfaith” payments during the pandemic, with the bulk going to bus vendors.

OTHER PROBES

Other investigations that the report highlighted include: Thirty-eight charter schools received more than $42 million in Paycheck Protection Program loans even though they also continued to get their regular public funding from the school district—an issue first reported by the Chicago Sun-Times. Security guards at 22 schools purposely cut their work hours to make them eligible for state unemployment benefits. A school dean secretly opened his school’s gym to host a men’s basketball recruiting event in July 2020 in violation of pub-

Mayhem returns to Allstate’s ad roster BY ADRIANNE PASQUARELLI

More than a year after being sidelined from Allstate’s advertising, Mayhem, the insurer’s trickster character long played by actor Dean Winters, is back. He first appeared in ads that ran during the Rose Bowl and Allstate Sugar Bowl football games on Jan. 1, an Allstate spokeswoman said. “There’s still lots of Mayhem in the world, so he could pop in when you least expect it,” the Northbrook-based insurance brand said in a statement. In one 30-second spot, May-

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hem joins the stationary exercise bike craze. “I’m a fancy exercise bike noobie and I’ve gone from zero to obsessed in like, three days,” he proudly exclaims, pedaling furiously on a bike that while not a Peloton, certainly resembles one. “After riding 12 miles to nowhere, I’m taking a detour,” Mayhem says, before falling out a glass door. A voiceover says that Allstate home insurance can protect consumers from such “mayhem.”

ON HIATUS

Mayhem last appeared in ads in June 2020, just after Allstate

ALLSTATE

The trickster character played by actor Dean Winters appears in new commercials from the Northbrookbased insurer for the first time since June 2020

Mayhem, the character played by Dean Winters, is currently running in three spots. appointed Droga5 its creative agency of record after a decades-long relationship with Leo Burnett, which created Mayhem in 2010. When the Accenture Interactive-owned shop rolled out new Allstate branding later that year, Mayhem was

nowhere in sight. At the time, Allstate executives were vague about the marketing future of the mischievous mascot. His reappearance certainly took fans by surprise, and many applauded the new effort. “Wow man!!!! Where have you

lic health orders at the time; a player collapsed and died of indeterminate causes during that event. The office’s special unit investigating sexual misconduct struggled to keep up with the volume of cases, the report suggests. Through November, the unit, which was launched after a 2019 Chicago Tribune investigation into the mishandling of sexual misconduct complaints, had closed 756 investigations, substantiating misconduct by employees in 63 cases. Notably, the OIG investigated multiple instances of sexual abuse and other misconduct at Marine Leadership Academy though these findings were published in a separate report late last year. Another 175 investigations showed that staff violated other policies, such as ones governing communications with students and district-sanctioned travel. Mila Koumpilova writes for Chalkbeat Chicago, a nonprofit news site covering educational change in public schools. been? Love all the “Mayhem” commercials!!!! Welcome back!!!! Hope your staying!!!!!!,” commented Spen For1 on Allstate’s YouTube account page. “My boy is back. So happy,” wrote Rule of Three T.A.G. An Allstate spokeswoman confirmed that there are three Mayhem spots running. In addition to the exercise bike commercial, the character appears in a french fry-related car spot and a hashtag challenge video. “I’m trending so hard that hashtag common sense can’t keep up,” Mayhem says before expected disaster occurs. Allstate’s spokeswoman noted that the new work was wholly produced by Allstate’s in-house creative department. For the year ended 2020, Allstate spent $930 million on total U.S. advertising, a 9% rise over 2019, according to Ad Age’s Datacenter. Adrianne Pasquarelli is a senior reporter for Crain’s sister publication Ad Age.

1/7/22 3:20 PM

CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 17

PEOPLE ON THE MOVE

Advertising Section To place your listing, visit www.chicagobusiness.com/peoplemoves or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com

ARCHITECTURE / DESIGN

LAW

NON-PROFIT

REAL ESTATE

Hoerr Schaudt, Chicago

Benesch Law, Chicago

Chico & Nunes, P.C., Chicago

Century 21 Affiliated, Skokie

Stan Szwalek, PLA has been elevated to Principal at Hoerr Schaudt Landscape Architects. As a registered landscape architect with 20 years of experience working on complex institutional and municipal projects, his portfolio includes extensive campus, commercial, and corporate work, including projects at Northwestern University, the University of Chicago, and the new Meadow atop the Old Chicago Post Office. Stan is dedicated to positively impacting as many people as possible through design.

Benesch is pleased to announce that Michael E. Bloom has been promoted to partner in the Litigation Practice Group. Michael focuses his practice on Bloom commercial litigation and has a diverse practice. He has represented clients operating in a wide array of industries, including private equity funds and their portfolio companies, networking technology, telehealth, Frey and commercial aviation. Benesch is pleased to announce that Timothy M. Frey has been promoted to partner in the Litigation Practice Group. Timothy has over 10 years of complex commercial litigation experience. During that time, he has represented public and private companies, as well as individuals, in a wide array of litigation.

Chico & Nunes, P.C. welcomes Timothy M. King as a partner leading its state and local government, land use, zoning and real estate practice. Tim was most recently General Counsel to the Chicago Park District since 2014. He has advised three Chicago mayors, several boards and numerous elected and appointed officials over his career. Tim brings 27 years of experience, problem solving and advocacy resulting in quality and effective solutions for his clients.

Chinese Mutual Aid Association, Chicago

CONSTRUCTION Lendlease, Chicago Phil Lazarus has been appointed as the Head of Virtual Design & Construction (VDC) for Lendlease Americas. In this national role, Phil is tasked with unifying Lendlease’s digital technology to drive consistent enhancements in project delivery, risk mitigation, quality assurance and customer experience. A licensed architect with 25 years of industry experience, Phil merges his understanding of design and construction technology with a deep knowledge of real estate and capital project fundamentals.

SHARE YOUR C O M PA N Y ’ S JOURNEY Feature your latest milestones, launches, partnerships, awards and more in Crain’s

LAW Benesch Law, Chicago Benesch is pleased to announce that Trevor J. Illes has been promoted to partner in the Litigation Practice Group. Trevor has experience representing large publicly traded and Illes privately held companies in federal and state court in connection with a variety of litigation matters and government investigations. Benesch is pleased to announce that Helen M. Schweitz has been Schweitz promoted to partner in the Intellectual Property/3iP Practice Group. Helen focuses her practice on technology transactions, licensing, online contracting, and data privacy and security. She drafts and negotiates business-critical intellectual property (IP) and information technology (IT) agreements.

LAW Fox Rothschild LLP, Chicago Fox Rothschild LLP is pleased to announce Claudette P. Miller has rejoined the firm as counsel in the Chicago office. Claudette helps clients in highly regulated industries, particularly cannabis, gaming and alcoholic beverages, navigate the complex laws and regulations governing them. She regularly counsels clients on licensing and compliance and represents them before agencies, boards and commissions, as well as in judicial and administrative proceedings.

CMAA, a major and growing pan-Asian, immigrant social services agency serving metro Chicago, welcomes Chettha Saetia and Rhea Yap. Chettha Saetia joins as Director Saetia of the Small Business Development Center at CMAA, the only AAPI-led SBDC in the state. He has over 20 years of entrepreneurial and management experience having founded McKlein luggage company, Yap obtained multiple domestic and international patents, and developed 2500+ products. Rhea Yap joins as the Director of Strategic Initiatives, overseeing fund development and special projects. Previously, she served as senior philanthropic advisor and grantmaker for OPRF Community Foundation, as well as development director at Erie House.

Century 21 Affiliated, the largest global franchise of the iconic CENTURY 21® brand, is pleased to announce the return of Alex Chaparro in his new role as Vice President of Growth and Business Development. Chaparro, who will focus on growing the franchise footprint within the Chicagoland market, previously served as Director of Business Development. He has served as President of the National Association of Hispanic Real Estate Professionals and the Chicago Association of REALTORS®.

LAW Nixon Peabody LLP, Chicago

PROFESSIONAL SERVICES

REAL ESTATE

Nixon Peabody LLP is pleased to announce that Katie Mallon has joined our Complex Commercial Disputes practice group. She has experience in a variety of areas, including commercial, copyright, trademark, and employment litigation. Previously, Katie served as an associate at a New York City law firm and as a judicial law clerk at the U.S. District Court for the Southern District of New York, the U.S. District Court for the District of Connecticut, and the New York State Supreme Court.

Aon, Chicago

Elmdale Partners, Skokie

Lisa Barra has joined the Aon Chicago leadership team as Health Solutions Chicago Practice Leader. Lisa joined Aon in 2002 working in benefit administration and health consulting. Lisa has spent her career in client service, most recently as a Senior Vice President consulting and leading client relationships. In her new role, Lisa be responsible for leading consultant teams in developing benefit strategies for global, national, and local clients and ensuring outstanding client service.

Elmdale Partners, the Skokie based real estate investment firm with brokerage operations, is pleased to announce the appointment of Michael Mazur as Managing Director of Acquisitions and Growth. Mazur, former Vice President of Acquisitions for Westminster Capital and Head of Business Development for American Postal Infrastructure, will lead Elmdale’s acquisition and growth initiatives, which includes a multi-state expansion of its self-storage portfolio.

LAW Benesch Law, Chicago

For more information, contact Debora Stein at dstein@crain.com or submit directly to

CHICAGOBUSINESS.COM/ COMPANYMOVES

P017_CCB_20220110_v2.indd 1

Katie Burnett has joined Benesch as an associate in the firm’s Litigation Practice Group. Katie represents businesses from a diverse range of industries, Burnett including health care, pharmaceuticals, financial services, and commercial real estate. She often manages and coordinates multijurisdiction litigation across both state and federal courts. Louis Constantinou Constantinou has joined Benesch as an associate in the firm’s Litigation Practice Group. Louie focuses his practice on IP litigation and is experienced with litigating patent and trade secrets disputes in district courts throughout the United States, as well as drafting patent applications and conducting clearance searches for new technologies.

LAW Nixon Peabody LLP, Chicago Nixon Peabody LLP is pleased to announce Daniel Perlin has joined the firm as Counsel in the Affordable Housing & Real Estate group. Dan focuses his practice on complex commercial real estate transactions and negotiates the acquisition, development, sale, and leasing of commercial and industrial buildings, retail sites, and warehouses, including cannabisrelated properties. He has extensive experience in sectors such as retail, entertainment/restaurant, commercial/industrial, and Cannabis.

PROFESSIONAL SERVICES Aon, Chicago Kristin Kahn has joined the Aon Chicago leadership team as Commercial Risk Solutions Account Executive Practice Leader. Kristin joined Aon in 1998 and has spent the entirety of her career in account management, most recently as a Strategic Account Manager and Team Leader, supporting and leading client relationships. In her new role, Kristin will work on all aspects of the account management process, providing the highest level of client satisfaction and value.

To order frames or plaques of proﬁles contact Lauren Melesio at lmelesio@crain.com or 212-210-0707

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18 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

Businesses bear the brunt of ComEd rate hikes—and they should get used to it COMED from Page 1

w LOSING AN EDGE The healthy advantage Illinois has had over neighboring states in terms of power costs is eroding. AVERAGE ELECTRICITY RATES FOR INDUSTRIAL USERS

In cents per kilowatt-hour Through October of each year Illinois 2019

6.56

2020

6.67

2021

7.24

Indiana 2019

7.34

2020

7.00

2021

7.28

Wisconsin 2019 2020 GETTY IMAGES

from raw materials to labor. It also threatens one of Illinois’ few cost advantages over rival states vying for business investment and jobs: relatively low electric rates. “What we’ve seen is our prices are creeping up,” says Mark Denzler, president of the Illinois Manufacturers’ Association. “(Illinois’) advantage is narrowing.” Businesses should get used to it. The cause of the unusually high burden for commercial customers in the most recent round of hikes isn’t going away and will have a bigger effect in the future. ComEd’s charges for delivering power to customers are divided between households and businesses via a formula that is reset every three years but nonetheless has remained relatively stable. But 2017 brought a new wrinkle that appears to have altered the balance. That’s when lawmakers gave ComEd authority to raise rates each year to pay for energy-efficiency programs and make a profit on them. Those energy-efficiency charges have risen about $50 million annually since then. Under the landmark Climate & Equitable Jobs Act, signed into law in September by Gov. J.B. Pritzker, the yearly increases will be at least $75 million. ComEd allocates those charges to different sets of customers depending on which type benefits from the programs in a given year. With energy savings from households largely already accomplished through subsidized sales of power-saving lightbulbs, the programs now are aimed mainly at the commercial sector. As a result, businesses pay the bulk of the costs even if they don’t participate in the utility-run programs. This will con-

7.75 7.35

2021

7.73

Source: U.S. Energy Information Administration

One of the few cost advantages for businesses operating in Illinois over the past decade has been the relatively low price of electricity. as a result of energy efficiency investments have exceeded the costs of these investments to C&I customers, and we forecast that this will be the case through 2030. This forecast will be updated in the first quarter to reflect the impacts of the clean energy law.”

FUTURE HIKES

While the exact apportionment between business and residential customers in future years can’t be predicted, it’s certain that energy-efficiency programs will rise by $75 million every year. Delivery rate changes, on the other hand, fluctuate. So it seems likely that businesses will “WE EXPECT THIS PROPORTIONAL shoulder the majorof increases in SPLIT—OR SOMETHING NEAR TO IT— ity most years. That’s bad news TO CONTINUE.” for Illinois’ econoShannon Breymaier, ComEd spokeswoman my. One of the few cost advantages for tinue for the foreseeable future. businesses operating in this state “We expect this proportion- over the past decade has been al split—or something near to the relatively low price of elecit—to continue,” ComEd spokes- tricity. Illinois is surrounded by woman Shannon Breymaier says states with fully regulated power in an email. “(Commercial and industries; the deregulation of industrial) customers’ benefits power generation here in 1997

led to substantial decreases in the cost of electricity itself, which ComEd acquires from generators and passes along to customers at cost. The lower power prices benefited customers, blunting the effect of substantial ComEd delivery rate hikes over the last 10 years. That advantage already is shrinking, data from the U.S. Energy Information Administration shows. For the first 10 months of 2021, average electricity rates in Illinois for industrial users were essentially even with Indiana rates. Wisconsin’s were 7% higher. Over the same period in 2019, average power costs for industrial customers were 12% more in Indiana than in Illinois and 18% higher in Wisconsin. A manufacturer deciding whether to locate in Wisconsin, Missouri, Indiana or Illinois considers a range of costs, including wages, workers’ compensation, taxes and energy. The manufacturing sector accounts for onethird of power consumption in the U.S., so energy is among the top cost factors for companies. “Costs and reliability are critically important for the manufacturing sector,” Denzler says.

The IMA opposed the clean-energy law, in part over concern that the statute’s substantial rate hikes would fall most heavily on businesses. The association also was dismayed that the largest companies in Illinois—huge manufacturers like Caterpillar—will lose an exemption from paying into the utilities’ energy-efficiency programs unless utilities allow them to opt out via an involved application process. With energy such a critical cost component for those mammoths, most if not all already have their own multifaceted and self-funded efficiency programs. Now, they’ll have to pay the higher rates unless utilities like ComEd determine the companies’ programs are sufficient.

NUKE CHARGES

In addition to the energy-efficiency increases, the law authorizes a new charge on all ratepayers to subsidize nuclear plants owned by ComEd parent Exelon. It also imposes new surcharges for a statewide “energy transition fund” meant to help communities whose economies suffer from the closure of coal- and

natural gas-fired power plants. The average manufacturer in Illinois will pay an extra $1,900 a month or so just for that, Denzler says. The Illinois Commerce Commission, which regulates utilities and will implement much of the new law, is likely this year to recalibrate what percentage of ComEd’s future delivery rate hikes are allocated to residential and nonresidential customers. It’s expected, too, to take up a multiyear plan of rate hikes, to be filed by ComEd and taking effect in 2024. With concerns growing about how the rising energy costs are hitting low-income households and senior citizens, the commission also will consider whether for the first time to require businesses and residents above a certain income threshold to pay higher rates in order to reduce the electric bills of low-income households. Somebody has to pay the hundreds of millions of dollars in additional annual charges the new law prescribes. It seems clear that ComEd’s business customers can expect to pay more than their traditional share.

Byline could make a digestible acquisition for a larger bank looking to enter Chicago BANKS from Page 3 lending business has also done extremely well given the environment and generated record fee income.” Investor speculation is understandable, though, given how bank deal-making roared back to life in 2021 following a pandemic hiatus in 2020. Several major deals were struck for Chicago institutions, including the pending buyout of Chicago-based First Midwest by Evansville, Ind.-based Old National.

P018_CCB_20220110.indd 18

Other noteworthy sellers in 2021 included large, privately held banks like Glenview State Bank and West Suburban Bank based in Lombard. With one of the nation’s most fragmented banking markets quickly consolidating, Byline appears to be one of the best options for larger out-of-state players. Herencia, a veteran Chicago banker who led the $207 million recapitalization of the former Metropolitan Bank Group in 2013 and redubbed it Byline, has been an active buyer rather

than seller since he took over. But Byline wasn’t the winner in any of the deals that took place in 2021. His investors include ultra-wealthy Mexican nationals whose investment time horizons are unclear. If nothing else, the high stock price gives Herencia a currency with which to go shopping.

ACTIVITY

“It’s safe to assume acquisition activity in and around Chicago continues in 2022,” Stephens analyst Terry McEvoy wrote in

a Dec. 6 report on the Chicago banking market. Local banks that participated in last year’s round—whether as buyers or sellers—didn’t perform particularly well on a relative basis. Stock of Aurora-based Old Second, which doubled its size with the $297 million buyout of West Suburban, rose 25%. First Midwest saw its stock price rise 29% in a year in which one of the choicest takeout targets in Chicago chose a low-premium “merger of equals” with an Indiana bank about its size.

Those look like great returns, and in a normal year they would be. But 2021 was not a normal year; the KBW Regional Banking Index returned 33%. The other standout financial stock locally was Enova International, the Chicago-based online lender focused on small businesses and consumers with subprime credit. It gained 65% last year as consumers came through the pandemic in far better financial shape than expected and nonbank lenders focused on their needs performed extremely well.

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Ahead of the February 2023 election, Mayor Lori Lightfoot will have to sell her handling of the pandemic and address her campaign pledges.

How mayor’s record squares with her promises

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LIGHTFOOT from Page 1 giving aldermen veto power over development projects in their wards, she took away council members’ power to block affordable housing developments, certain small-business grants and special event permits. But she didn’t follow through on a campaign commitment to directly attack the prerogative by altering the zoning code. As for the inspector general, she gave the city’s ethical watchdog a broader role but didn’t keep her campaign promises to give the IG subpoena power or authority over other municipal agencies. Her tenure was marked by a public falling-out with the last IG, Joe Ferguson. She criticized him for the slow pace of an investigation into the events that led to former Chicago Police Superintendent Eddie Johnson’s firing. Ferguson in turn blasted Lightfoot’s response to the sexual assault scandal at the Chicago Park District and her pushback on a new police misconduct database. In an interview with Crain’s, he implied that her administration was incompetent. Rather than push to fulfill her pledge on ward remapping, she’s let the council hash out new boundaries, perpetuating a longstanding custom that has been criticized for protecting incumbents at the expense of fair representation for voters. Reform group Change Illinois expressed “disappointment” in a letter to the mayor, warning that “Chicagoans will remember if you fail to deliver on . . . foundational promises.” She’s gone part way on other major campaign promises, boosting transparency around the city’s tax-increment financing program and backing legislation that bars aldermen and city employees from doing outside work that conflicts with the city’s interests but allows them to continue holding other side jobs. The mayor’s office didn’t provide responses to Crain’s request for comment for this story.

Police reform and public safety

Connect with Claudia Hippel at claudia.hippel@crain.com for more information.

P020_CCB_20220110.indd 20

Perhaps the two toughest issues for Lightfoot now were her campaign strengths: public safety and police reform. In 2019 ads,

she pledged to make every city neighborhood safe. Lightfoot also pledged “full and swift compliance” with a three-year-old consent decree requiring the Chicago Police Department to end civil rights abuses. And she called for a new civilian oversight board with broad powers to determine Police Department policy, set budgets, and hire and fire superintendents. Yet Chicago ended 2021 with levels of homicides and shooting incidents not seen since the mid1990s and a surge in carjackings. At a Jan. 4 event with CPD Superintendent David Brown, Lightfoot admitted Chicago “fell short,” even by comparison to other cities where crime is up. This year’s violence came despite Lightfoot delivering on pledges to expand staffing in her own public safety office, boost funding for street outreach and violence interruption groups, and launch a multidepartment effort to treat gun violence as a public health crisis. She also tapped federal partners for help on gun trafficking and prosecutions, and launched a dedicated gun investigations team focused on interrupting the illegal flow of guns into the city. Consent decree compliance has come up short of her campaign rhetoric, too. Through the end of June, Chicago had reached full compliance on only 19 of 519 required reforms, “secondary” compliance on 65 and preliminary compliance on 182. Lightfoot and Brown heralded headway on use-of-force policies and other consent-decree requirements like mental health support for officers. But two parties to the decree, the ACLU of Illinois and state Attorney General Kwame Raoul, blasted a lack of progress on community engagement and new foot-pursuit policies for CPD. The fully empowered civilian oversight board Lightfoot vowed to create within 100 days hasn’t come to pass. After two years and several breakdowns in negotiations, aldermen did authorize a new body, but with fewer powers than Lightfoot envisioned as a candidate.

City finances and economic development

Lightfoot’s campaign focused lit-

tle on the city’s grim fiscal picture, instead emphasizing economic development in depressed areas. She promised to steer investment to the South and West sides and to spur construction of more affordable housing. Lightfoot was forced to confront Chicago’s deteriorating finances soon after taking office. As 2020 began, the city faced a projected budget deficit of $1 billion, thanks to pension obligations and expensive bond repayments. She closed the gap with shortterm fixes like refinancing debt and a TIF surplus, as well as new taxes on restaurant bills and ride-hailing trips downtown. Since then, a one-time influx of federal COVID relief money helped stabilize city finances. The mayor delivered on her promise of programs to lift up areas that have suffered from a lack of investment for decades. Lightfoot’s signature Invest South/West program has attracted $575 million in corporate and philanthropic commitments and $300 million in planned mixed-use projects in neighborhoods like Humboldt Park, South Shore and Englewood. She’s also made strides on affordable housing. She recently announced a $1 billion plan for 2,400 rental units, the city’s biggestever affordable housing package. Other moves include a fix to the oft-criticized Affordable Requirements Ordinance, protections for residents near the coming Obama Presidential Center, slowing demolitions near the popular 606 trail and allowing “accessory dwelling units” like coach houses to boost housing stock.

Education

Lightfoot campaigned on many of the Chicago Teachers Union’s central demands, notably endorsing a fully elected school board. But Lightfoot changed her mind as relations soured with a union that has engineered two work stoppages during her tenure. She urged the Illinois Legislature to authorize a board with a mix of appointed and elected members. In a stinging defeat for the mayor, the Legislature and Gov. J.B. Pritzker enacted a union-backed measure establishing an all-elected board.

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CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 21

Here’s the scoop on some of the city’s most buzzworthy new restaurants

AMAN

1742 W. Division St. Aman serves up food with “a heavy dose of South Indian flavors,” offering a tasting menu in the evenings and a more casual atmosphere during the day. The fivecourse vegetarian tasting menu is $65 per person, and BYOB, according to Tock. The chef, Zubair Mohajir, notes on his website that his palate was influenced by his childhood in Qatar, where his Indian parents were expats. He worked at the Pump Room in Chicago, Michelin-starred Bouchon in California and at Gaggan, a now-closed restaurant in Bangkok.

ARMITAGE ALEHOUSE

1000 W. Armitage Ave. This Lincoln Park pub is from Hogsalt Hospitality, the owners of famed burger spot Au Cheval. The theme is 1920s London, and the menu ranges from hearty pub grub like pot pies to Indian dishes like chicken tikka masala. The vibe is decidedly cozy, with oversized leather chairs next to fireplaces, big booths and hand-carved woodwork.

Segnatore CARLUCCI

400 E. Randolph St. The name of this Italian joint will be familiar to longtime Chicago-area diners: Owner Joe Carlucci opened his first namesake restaurant in 1984 at Halsted Street and Webster Avenue. Carlucci has since owned restaurants throughout the city and suburbs, but this new location in the East Loop neighborhood is now his only spot in the city. Located on the street level of a condo building, the restaurant is open six days a week for dinner only. Carlucci plans to add a seventh day plus weekend brunch this spring. First, he’s gearing up for delivery service to the surrounding buildings in the Lakeshore East development. Those residents largely “don’t like to cook,” Carlucci says. “They like to either go out or get food delivered.”

Pigtail French-inspired a la carte menu. Teich says fine dining is springing back. “It’s fine dining, the revenge,” he says.

CLAUDIA

ELINA’S

1952 N. Damen Ave. Teich first launched Claudia as a pop-up in 2013, so it already had a following when the restaurant opened in its Bucktown home in October. Teich has Michelin-starred chops, having worked previously at now-closed seafood restaurant L20, Acadia and Nomi. Claudia guests can book an eight- to 10-course dinner for $225 per person or a 10- to 15-course chef’s tasting menu for $265 per person. Wine pairings or cocktails are available for both threehour experiences. The bar offers a

1202 W. Grand Ave. Chefs Ian Rusnak and Eric Safin were both working for big dining companies in New York when the pandemic hit. After the two friends were laid off, they started doing pop-ups and private dining for people in their homes. They’d offer three options: Italian-American, classic French bistro, and a steakhouse-type of menu. “Everybody always gravitated toward Italian,” Rusnak says. When they decided to open a permanent restaurant in Chicago, the Italian concept won. Elina’s is named for Safin’s mom, and serves classics such as homemade pastas and calamari. Rusnak and Safin do all the cooking. “We’re not here trying to make something that somebody’s never heard of,” Rusnak says. “We wanted to create something crave-able that people want to come back for.”

P021_CCB_20220110.indd 21

BARRY BRECHEISEN

PIGTAIL

Sushi Boutique

REGAN BARONI

restaurants permanently shuttered in the last quarter. In 2019, just 23 closed during the same period. Restaurants that did open in the later part of 2021 were greeted with omicron, which caused many to temporarily close just before Christmas. The city put a new rule in place requiring them to check vaccine cards or negative COVID tests, and none of the labor issues are expected to subside soon. Still, operators that opened new restaurants are hopeful. Throughout the pandemic, optimists have talked of the opportunities that would spring up in the wake of pandemic closures. Those are starting to manifest. Below are nine buzzy Chicago restaurants that opened in the fall. Among them is an Italian spot from two industry veterans who got laid off from their New York restaurant jobs in 2020. There’s also a tale of new life in a space vacated by a beloved bistro that didn’t make it through COVID. Pop-up restaurants are finding permanent homes. Hiccups are normal for operators now. What matters, they say, is keeping the pipeline moving. Besides, as Trevor Teich, the chef and owner of Claudia, mused: “Does a restaurant ever open on time?”

MARISA KLUG-MORATAYA

RESTAURANTS from Page 1

500 N. Clark St. This underground cocktail bar is one of five establishments from Michelin-starred chef and humanitarian José Andrés that opened in Chicago in 2021. Pigtail is located underneath Spanish tapas restau-

rant Jaleo in River North. The first half of Pigtail’s name is a nod to Spanish jamón, or ham, which dominates the menu. The second half is for cocktail. The selection here includes twists on Spanish favorites, plus signature options that feature even more jamón. ROSEBUD

130 E. Randolph St. Rosebud Restaurants’ ninth location replaced Tavern on the Park, near the intersection of Randolph Street and Michigan Avenue. It opened Dec. 2, and has three floors. The first has a trattoria menu, with pastas and other offerings. The second floor offers white tablecloths, steaks, and the like. The third—the rooftop—is set to open this spring, with a bar and lighter fare. Rosebud founder Alex Dana is smitten with the high-traffic location. “When I get up on that rooftop and I look down Michigan Avenue looking south … it’s beyond everything I’ve ever seen,” he says. “The area is beautiful.” With the food, Dana is aiming for consistency with other Rosebud locations. The company has a commissary in Lakeview where workers make the pasta and desserts served at its restaurants.

SEGNATORE

1001 N. California Ave. Italian restaurant

Segnatore

replaced Café Marie-Jeanne, a French restaurant that shuttered in late 2020. Since CMJ was so cherished—particularly among restaurant industry workers—Segnatore owner Orbit Group “wanted to be very intentional” with what replaced it, says beverage director Kristina Magro. The result, Magro says, is an Italian restaurant that evokes the “same feeling, just serving you pasta instead of duck livers.” Segnatore is named for community healers in Italian folklore. The wine list features female producers or makers from Italy, and cocktails are inspired by Italian drinking and local spirits. Orbit Group also operates Good Measure, a bar and restaurant in the Near North neighborhood, and plans to reopen California Clipper, a bar and music venue across from Segnatore that also shuttered last year. SUSHI BOUTIQUE

1244 N. Dearborn Parkway One of the latest installments from a New York-based company that opens sushi restaurants inside of hotels, Sushi Boutique is in the lobby of the Claridge House in the Gold Coast neighborhood. It’s sister to omakase sushi restaurant Sushi Suite 202, which is in a 750-square-foot suite in the Hotel Lincoln. Sushi Boutique opened in October and offers sushi and cocktails.

1/7/22 4:02 PM

22 JANUARY 10, 2022 • CRAIN’S CHICAGO BUSINESS

Reshoring trend boosts small U.S. manufacturers RESHORING from Page 3 between 1979 and 2019, according to the Bureau of Labor Statistics. Some of the gains are coming from products being pushed by the Biden administration, including semiconductor chips and electric vehicle batteries. Tensions with China could convince U.S. manufacturers to source more parts domestically and reduce their risk, says Reshoring Initiative founder Harry Moser. “They could start reducing what they import from China by 20% to 30% and see what happens,” Moser says. “Then, maybe, they take another 20% to 30%.” The recent uptick has benefited Midwestern states, including Ohio, Indiana and Michigan. But Illinois doesn’t rank in the top 20 states for jobs gained from reshoring and foreign direct investment in the first half of 2021, according to Reshoring Initiative data. The data shows that for the decade 2010 to 2020, Illinois ranked No. 21 of 50 states, with a gain of 16,277 jobs. That’s less than 5% of the 360,000 manufacturing jobs Illinois lost since 1990, according to the Federal Reserve Bank of St. Louis. Still, recent announcements are encouraging. For example, U.S. Medical Glove, the only domestic maker of nitrile glove machines, last year leased a former Caterpillar factory in Montgomery

to make gloves and the machinery that produces them. The company says the facility will employ more than 3,000 workers. Because all nitrile gloves had been imported, Moser says, any new domestic production is reshoring. Smaller Illinois manufacturers say they are getting more orders as OEMs and high-tier suppliers recalibrate their supply chains. In the 1990s and 2000s, Domeny lost about 15% to 20% of revenues as customers outsourced suppliers, especially for commodity products like the clips on clipboards, water pump seals and dust covers to car starters. “Customers would pull most of their jobs and just leave us with two or three,” Smith says. But this year, the customer that supplies brake cylinders to automakers and sources worldwide boosted orders for two stampings that has Domeny ramping up production to 70,000 parts a week, and 90,000 slated for early 2022. It had been shipping 30,000 to 50,000 of the parts weekly for much of the past five years, Smith says. Domeny also is seeing growth through a joint venture with an Oregon manufacturer of metal casters—equipment that’s used to support machines producing semiconductors. Sales of the stamped part that serves as the chassis of the industrial caster have nearly doubled since 2018 to 24,848. The

joint venture’s sales have doubled in the past two years to $5 million, Smith says. Domeny’s sales are more than $3 million. Waukegan manufacturer Mighty Hook also lost business to China during the 1990s and 2000s, says CEO Scott Rempala. The company produces hooks that are used in industrial production—for hanging parts on a conveyor line, for example. Sales are in the $6 million range. But recently, it’s enjoyed an uptick in orders from appliance manufacturers, contributing to a 16% increase in volume, Rempala says. “We’ve seen an increase in the pipeline from manufacturers who are increasing investment in domestic facilities in order to avoid some of these supply disruptions.”

WINNING BUSINESS

Moline Forge has won business from a West Coast maker of grinding and crushing equipment that was buying forgings from China. “They’re telling us that China is raising prices and can’t get the product here in time,” says President Vic Almgren. The century-old company, with revenue in the $10 million to 20 million range, lost 30% to 50% of its business as auto, truck and agricultural equipment manufacturers shifted supply lines to China over the years. The new orders, for about $500,000 in 2022, could boost sales

WHO’S BENEFITING FROM RESHORING? The states that gained the most jobs from reshoring and foreign direct investment in the first half of 2021. Jobs

1. Ohio

Companies

12,423

2. Arizona

10,158

3. Tennessee

10,094 7,065

4. Oklahoma

49 10

6,330

5. California 6. Georgia

5,802

7. North Carolina

5,664

8. Alabama

37 28

5,243

9. Indiana

4,147

10. Kentucky

3,756

55 33 68 12 28 32

Source: Reshoring Initiative

by more than 5%, Almgren says. New orders are starting to generate new jobs at the small manufacturers. Almgren says Moline added five to eight employees in the past year, bringing total headcount to 50. Mighty Hook, which employs 40, plans to hire five more production workers in the next month. Domeny, with 25 employees, hired five people in recent months and is looking to fill four more positions. Finding qualified candidates isn’t easy. “The skills gap has been the conversation point, that’s absolutely the challenge,” says David Boulay, president of Illinois Manufacturing Excellence Center, which assists small and midsize manufacturers in training and other projects. He blames the phasing

out of vocational education at public schools and pandemic-related labor shortages. There may be limits to how much Illinois can benefit from reshoring. The largest manufacturers are more likely to plan expansion in states such as Texas, which offer lower taxes and “right-to-work” laws. For example, Deerfield-based Caterpillar’s joint venture with Mitsubishi in forklift trucks invested in the Houston area. At least for now, the nascent reshoring trend is stemming long, painful declines for manufacturers. “Companies are rethinking their supply chains,” Almgren says. “And while they don’t like paying more, they realize there’s value outside of price.”

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CRAIN’S CHICAGO BUSINESS • JANUARY 10, 2022 23

This condo in a former Catholic nuns’ college is unconventional Pillars, cherubs and ceiling vaults surround the living spaces in the unit, which occupies a part of the old convent’s chapel BY DENNIS RODKIN community and plans to put the condominium, 2,150 square feet with two bedrooms and an office, on the market in February. Priced at $749,500, it will be represented by Harry Maisel of @properties. The building is reserved for owners age 55 and up. Originally built for the Sisters of Christian Charity, the 180,000-square-foot convent on Ridge Road was designed by Hermann Gaul, the Chicago-based architect of numerous Catholic churches in a territory stretching from Indianapolis to Minnesota. In Chicago, his work includes Immaculate Conception in Bridgeport, St. Benedict’s in North Center and St. Philomena in Hermosa. The convent later became Mallinckrodt College, and in 1999, it was sold to Loyola University Chicago. In 2002, Loyola sold the building to developers, who after sales sputtered sold the project to another set of developers. That’s the group that the Walshes bought their condo from, paying $448,500 in November 2011.

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hen a handsome landmark convent in Wilmette went condo in the early 2000s, even the sumptuously pillared and arched sanctuary turned residential. Marion Walsh bought one of those units and says that ever since, she’s enjoyed living among the columns and the “fat little German cherubs” carved into them. The condo that Walsh and her now-deceased husband, Robert, bought was a former side aisle of the chapel at Mallinckrodt College, which was built in 1916. But to call it a “side aisle” is to slight the grandeur of its stately carved pillars, groined ceilings and arched window niches. “There’s a lot of detail to look at,” Walsh says. “I like it. I never get tired of it.” Nor do visitors like the upholsterer who showed up to pick up some furniture and exclaimed “Firenza!” because it called to mind the Renaissance architecture of Florence in his native Italy. Walsh is moving to a retirement

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