A group of union pension funds eager to provide work for union workers are in talks to loan $170 million to Irish developer Shelbourne Development Group so construction of the twisting 2,000-foot-high Chicago Spire can resume as soon as early next year.
The Spire, which won city approval and saw workers break ground in 2007, has sat dormant for a year since the global financial crisis triggered various fights involving bankers, the architect and the developer, bringing work to a standstill.
The loan would pay off the estimated $64 million loan made by Anglo Irish Bank and satisfy various liens to firms that have worked on the Spire, including one by a firm associated with architect Santiago Calatrava, who stopped working on the project, claiming the developer owed him more than $11 million.
Tom Villanova, president of the Chicago and Cook County Building and Construction Trades Council, said the money would come from an AFL-CIO pension fund and Union Life Insurance Co., and perhaps pension funds from various locals. The reason, he said, is simple. "This would be 7.5 million man-hours for my members and I have locals that have 30 percent unemployment," said Villanova, whose group represents two dozen unions with about 100,000 members. He said the project which Shelbourne said would take about four years to complete would mean work for as many as 1,000 union workers.
Villanova didn't know exactly when an agreement could be reached. But he said he is "very optimistic and hopeful" that it'll happen.
He downplayed the risk of investing in a skyscraper that will house nearly 1,200 condos in a city flooded with so many new condos that owners in some parts of the city have struggled to sell them. For one thing, he said, unions have been making these kinds of loans for years. He said, for example, the AFL-CIO fund has invested more in Chicago about $1 billion than in any other U.S. city.
Also, the project is years away from completion, meaning there's plenty of time for the market to improve. Besides, he said, the deal now being considered would make the trusts the property's first mortgage holder, meaning the trusts would be "first in line" to take possession of the lakefront property if the project failed.
Shelbourne doesn't think that will happen. In March 2008 the developer said more than 30 percent of the units had been sold. And while spokeswoman Kim Metcalfe said the company continues to use that figure, she said there have been more sales since then and that because of "a little loosening up on the lending side" recently, Shelbourne is confident sales will pick up. Ltd.
