Higgins signs back on to medical district projectMedical District development clears key hurdle
Wednesday, March 04, 2015
Crain's Chicago Business
by Ally Marotti
A partnership including developer Jack Higgins signed a 75-year ground lease with the Illinois Medical District Commission, less than a year after Higgins caused the commission to reset their search for developers on a $300 million complex.
The lease, which was signed in October, commissions IMD Gateway Partners to develop 9.5 acres of land at 2020 W. Ogden Ave. into IMD Gateway, a complex that would include retail space, a hotel, apartments and parking areas.
IMD Gateway Partners includes Higgins Development Partners LLC, Thomas Samuels Enterprises, East Lake Management & Development Corp., which is headed by Chicago developer Elzie Higginbottom, and Isiah Real Estate LLC, which is headed by former NBA star Isiah Thomas.
The commission released the lease on March 2 and construction is set to begin in spring or early summer.
“The plan to develop 2020 W. Ogden Ave. is well underway,” said Illinois Medical District spokeswoman Health Tarczan in an email. “We have the right leadership in place and have been diligent in ensuring its financial stability and relevance in meeting the needs of our District partners.”
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The 9.5 acres at the north entrance of the medical district are divided into 11 parcels, each with permitted uses stipulated in the lease. A hotel will occupy one .3-acre parcel, for example. The project proposal called for a 10-story, 225-room hotel. The lease further stipulates that approved hotel tenants include the Hilton Garden Inn, Hyatt Place, Marriott Courtyard or other similar hotels.
The lease also allots space for several parking garages, retail, apartments, a laboratory, medical offices and a health club. Dozens of allotted retailers are listed in the lease, including companies such as Potbelly's, Walgreens, GNC, Lettuce Entertain You concepts and more.
Tarczan could not speak to whether any subleases have been signed for space in the complex. Higgins was not available for comment.
Base rent for the space is set at $191,000 for the first two years. It will increase to $1 million the third year. After the first 10 years, rent will increase three percent every five years.
Crain's reported in July that the four IMD Gateway Partners will put up 10 percent of the capital for the project, with Chicago-based Harrison Street Capital LLC adding the 90 percent balance.
The quest to secure a developer for the Ogden plot has been years in the making.
The Illinois Medical District Commission first selected Higgins Development Partners to build a $163 million complex on the plot in September 2013. Two months later, Higgins withdrew the proposal by “mutual agreement.”
The Chicago Sun-Times reported that the withdrawal came as a result of troubles Higgins and his wife had with the Internal Revenue Service dating back to 2005. County records show federal tax liens totaling $2.8 million against the couple.
The commission sought a new developer in January 2014, and within a few months had received four proposals from potential developers—one of which was the Higgins-affiliated IMD Gateway Partners.
IMD Gateway Partners secured the bid in July. An Illinois Medical District spokeswoman told Crain's in July that the agency was confident Higgins' tax situation would not affect funding for the project.