Madison-Racine, LLC, a venture between Thrush Co.'s real estate and construction companies, will get the city-owned property for a minimum bid of $3.1 million. The city set that floor assuming the parcel, which was appraised at $3.9 million, would eventually see 20 new affordable units.
However, Madison-Racine, LLC is setting aside 32 units—20% of the project—to buyers paying prices deemed affordable by the city's department of housing. While market rates for the one-, two- and three-bedroom units in the seven-story building will range from $233,000 to $404,000, the affordable units will be priced from $95,000 to $220,000.
"The market today is oversupplied," says Thrush Co. president and chief executive officer David Chase, whose company has built 350 units in two projects nearby, and has plans for a second phase immediately west of the Madison-Racine site. "We're expecting this project to take nine months for pre-sale and two years to sell out."
Fifth Third Bank and Cole-Taylor Bank are both interested in financing the $43-million cost of the development, Chase says, but only if a 40% pre-sale is hit. Department of planning and development officials note 55% of the money to build the project is coming from unit sales, with bank financing paying 41%. The developers are putting in $1.7 million.
Chase is optimistic about finding up to four tenants for the 8,000 sf of first-floor space, indicating not all of it could be used by retailers. "Historically, retail follows residential," Chase says. "There's a huge surge of new residents coming to the neighborhood. It may be office space, it may be some tenants from the medical center…I'm very confident this type of space will be filled."
Madison-Racine, LLC was the only developer to answer a city request for proposals and turn in a bid. However, the project has generated some opposition because of a lack of green space, traffic problems, and grouping of the affordable units on the second through fifth floors with none on the top two floors.
"This project is one that is long overdue," says 27th Ward Alderman Walter Burnett Jr. " This property has been abandoned since I was an alderman, and now it's going to allow a myriad of people to live in the community."
The city-owned parcel, located along what was once considered "Skid Row," includes a former streets and sanitation department office. Chase says his group is attempting to square off the L-shaped parcel by acquiring a neighboring vacant parcel and another containing a restaurant, but have been unsuccessful.
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