United Airlines approaches a 20-year high at O'Hare, and I'll talk with Crane's residential real estate reporter Dennis Rodgen about an anti-gentrification ordinance that gives rare power to tenants over building sales. These anti-gentrification ordinances are trying to strike a very delicate balance. You want to keep people who have been living in these neighborhoods, able to live in these neighborhoods, but you also don't want to say nobody can come in who wasn't already here. I'm Amy Gooth, and this is Crane's Daily Jist for Wednesday October 2nd. Wanna dive deeper into the topics you've heard here? Read the full stories and get access to all of Crane's award-winning coverage with the Crane's Chicago Business subscription. Crane's Daily Jist listeners can get 20% off a one-year Crane's Chicago Business digital subscription by visiting ChicagoBusiness.com/Gist and using promo code Jist at checkout. Once again, to redeem this offer, visit ChicagoBusiness.com/Gist and enter code Jist to get this deal while it lasts. I'm joined by Crane's residential real estate reporter Dennis Rodgen here to talk about an anti-gentrification ordinance that gives rare power to tenants over building sales. Okay, that is not usually the story that we hear when we're talking about tenants V developers. Tell me about this ordinance. This is fascinating, Amy. It's a very complicated ordinance and it covers other aspects of slowing gentrification, and we'll probably talk about those a little bit. But to me, the primary difference between this and past efforts, the city has been trying for years now to slow gentrification in places like Avondale, Humboldt Park, Pilsen. And so now we have sort of an updated and expanded ordinance that just passed in late September and takes effect October 9th when the city clerk publishes it. In that ordinance, a very notable newish thing happened. And that is that renters, in a lot of these gentrification hotspots, get a lot of control, as you said, get a lot of control over the future of their buildings. This is not the first place in the city. This has happened in the protection ordinances that were passed for Woodlawn, trying to slow gentrification around the Obama Center. Renters also got a right-of-first refusal, which is what this is called, over the sales of their buildings. Nobody has exercised it yet, and that's a smaller piece of the city. So this is a big, rather significant step. This is six square miles of the city covered by this new, expanded ordinance. And essentially, what it comes down to is if I live in a rental building in some of these zones, in, again, Pilsen, Avondale, Humboldt, Logan, my landlord has to inform both me and the Department of Housing in advance of trying to sell the building. I'm not going to put all the timelines in here, but they're all in the story and they're all in the ordinance. But the landlord has to give advance notice quite a bit about two months before putting it on the market. And then we tenants have the right to organize a tenants union or any other entity that might be able to buy the building. Then when the landlord has a contract to sell the building to an outside party, the landlord is obligated to come to the tenants, the tenants union, whatever it is, and say, "I've got an offer. Do you want to match it?" The tenants have the right to first refusal. They can say, "No, go ahead and sell it." Or what this ordinance allows them to do is spend a prescribed amount of time, a limited amount of time, putting together their own offer. They have to match the terms of the offer that the seller got from this outside party. And then if they are able to match those terms, then the seller is obligated to sell to them the tenants, not to this outside party. If selling to them, there has to be a guarantee, a covenants placed on the property that keeps it as affordable housing for 30 years minimum. One other piece of this is the tenants can try to buy the property themselves. They also can assign their right of first refusal, their right to match the outside offer to another entity, to a governmental or private entity, a housing trust or any other group like that. And that group can try to match the offer the seller has. It's kind of complicated, but basically what it comes down to is I'm a renter in a building where it's called naturally occurring affordable housing, right? It's relatively low-cost housing, not built with subsidies from the city or state or otherwise. I'm renting in one of those and my landlord wants to sell, and I have the opportunity, because of the power I'm given by this ordinance, to try and buy the building, or we have the opportunity to buy the building. There are different standards for two flats versus 20 flats, and that sort of thing, it's very complicated. But really what it represents is giving a lot of power over where my rental property is going to go over the course of the next 30 years, whether into the hands of a private owner who may be trying to buy it to tear it down and build a new single-family home or another market-rate landlord. Primarily the goal here is to stop two flats, three flats, etc, from being torn down and replaced with luxury single-family homes. Sure, and what has support been like for it? Did it clear City Council pretty easily or was it a lot of back and forth? Yes indeed it did clear the City Council pretty easily. The vote was 44 to 3. There are 50 members of the City Council, 3 did not vote. That was in late September. We have been losing a lot of naturally occurring affordable housing over the years, especially in these areas around the 606 in Pilsen hot neighborhoods where older housing has been torn down and replaced with, in many cases, luxury single-family homes. There's a lot of support for this. However, the development community real estate people I spoke to are kind of horrified. I said as when we started talking, I wasn't going to put all the timelines in, but when you add them up, according to some of these developers I spoke to, the time that the seller has to spend first notifying tenants and then waiting for tenants to make an offer and those kinds of things. According to these real estate development people will dramatically lengthen the time that it takes to get a building sold. That makes it harder for a seller, a property owner, who really needs to get rid of it in order to, just as an example, fund their retirement. It makes developer buyers less interested because they may have clients ready to build a house and they want to get the lot to build it on and it takes longer. They're not happy about this. They feel that this is adding governmental control to private property and the argument has continued. On Twitter, I have seen the arguments just go on and on, both below my story and around other mentions of this ordinance. These anti-jetrification ordinances are trying to strike a very delicate balance. You want to keep people who have been living in these neighborhoods, able to live in these neighborhoods, but you also don't want to say nobody can come in who wasn't already here. Some of the developers are saying that that's what you're doing with this ordinance, that you will buy intention, stop investors from coming into the neighborhood. One real estate person said, "Well, the people who are living in those neighborhoods will consider that a win because what we want, according to this person, is for a lot of that affordable housing that has been around to stay around." It's a difficult sort of a balancing act. Yeah, it definitely is. Too soon to say what result it'll have, but it will be interesting to track that and watch that. How many tenants say, "Oh, actually, yeah, we will buy the building. We're going to do that. That's exactly what's going to happen. It'll be interesting to see how often that ends up being the case." The one thing we do know is that, as I said, it's been in place in Woodlawn for a few years since that set of protections organized around gentrification coming out of the Obama Center were put down. Nobody, as far as I can tell, no buildings have gone through this process. We don't know. Is that because gentrification isn't moving as fast in Woodlawn as it is in Humboldt Park? Is it that nobody has really been able to avail themselves of creating a housing trust and that sort of thing? Don't know, but what we can say is it hasn't been taken advantage of there in Woodlawn. We might see more of it happening in some of these other places. There are very active housing activists and things like that in those neighborhoods that may be ready to pounce. We'll see. Yeah, indeed, we will. All right. Well, thanks so much, Dennis. Always a pleasure to talk things through with you. Thank you, Amy. Coming up, Byline Bank and the Wertz family's first security announced some merger. We'll talk about that and more right after this. Thanks for listening to Crane's Daily Gist. Remember, we provide a daily news brief that drops right in your inbox. It's our newsletter called the Crane's Morning 10. They're the 10 stories that will fuel a smarter work day. To subscribe, visit Chicago Business dot com slash morning 10. This is the Crane's Daily Gist with Amy Guth. Byline Bankorp, one of Chicago's largest community banks has entered into a merger agreement with a smaller banking group controlled by the Wertz family of Chicago Blackhawks fame. Byline and first security bankorp jointly announced on Monday, they agreed to merge in a cash and stock deal valued at approximately $41 million based on Byline's closing stock price as of September 27th. Chicago based Byline led by CEO Roberto Herrencia has $10 billion in assets and operates 45 Chicago area branches. First security headquartered in Elmwood Park has total assets of $335 million operates one branch and offers commercial as well as community banking services. Byline ranks number five on Crane's 2024 list of Chicago's 25 largest banks. First security didn't make that ranking. Byline executives emphasized First Security's commercial loan portfolio as one of the key drivers of the merger. Byline president Alberto Pericini said in a press release announcing the deal that was co-signed by first security CEO Danny Wertz that the deal quote aligns with our strategy of being the preeminent commercial bank in Chicago. The statement continued quote "First security brings a solid core deposit base that further enhances balance sheet flexibility while its loan mix adds valuable diversification to our portfolio." Under the terms of the deal Byline will issue nearly 2.2 shares of its common stock for each outstanding share of first security common stock or approximately 1.5 million shares to first security common stockholders. That also according to the bank's press release. Outstanding first security preferred shares will be redeemed in cash at closing with an estimated total value of about $2.6 million. Crane's John Platt's reported that a Kankakey judge ruled against a citizens group that is fighting to stop the opening of an electric vehicle battery plant in Mantino but left the door open for the lawsuit to continue. Platt's noted in reporting that Chinese battery maker Goshan announced a year ago that it would convert a vacant Kmart distribution center into a $2 billion factory that would eventually employ 2600 people. It was a signature victory in Governor J.B. Pritzker's plan to put Illinois at the center of the move to electric vehicles but the plan immediately sparked opposition from some residents and politicians including former gubernatorial candidate Jeannie Ives who questioned whether Goshan has ties to the Communist Party of China. A similar backlash occurred over the company's plan to build a factory near grand rapids. Platt's reported that after the plant was approved by the Mantino Village Board a group called Concerned Citizens of Mantino filed the lawsuit. Among other things, the group claims the village violated its own rules in allowing the project, says the plant will use toxic chemicals that are not allowed under local zoning provisions and worries that truck traffic will cause health problems to residents and decrease the value of homes nearby. Platt's noted that Kankakey's circuit court judge Lindsey Parker's ruled in favor of the village to dismiss several counts because the suit, as she put it, is convoluted and, quote, reads like a novel or a thesis. That did not properly state claims with specific facts showing violations of law or injury by plaintiffs. Nonetheless, she allowed the group to refile its suit within 45 days because on several counts she could not find there wasn't a potential set of facts upon which they could be successful. The judge, however, also warned the group's attorneys, quote, "If I get another complaint like the one I got, it's going to be dismissed." Robby Dude of Minneapolis law firm Eklund and Blando, which also filed suit against the Goshen Project and Grand Rapids, said he intends to refile the complaint in Kankakey. Platt's further noted that Goshen, meanwhile, continues work to convert the former Kmart distribution center into a battery assembly plant. The company initially had hoped to begin production within a year and admittedly ambitious goal on such a large project, but it has encountered delays in zoning and obtaining the right-of-way for power transmission lines. Krain's Brandon Dupre reported that Nick Coconas, co-owner of the Elinia Group, the team behind three Michelin-starred restaurant Elinia, announced the sale of his ownership stake in the restaurant group in a post on Monday on social media platform X. Coconas, who co-owns the Elinia Group with chef Grand Agates, said he sold to an investor group led by Chicagoan Jason Weingarten, co-founder of the recruiting startup Yellow. According to the post, he said he will, quote, "remain a minority passive investor." Also writing, quote, "I look forward to seeing Grant and Jason build on the amazing organization and experiences the Elinia Group has in place." Also writing, quote, "personally, I'm excited to work on new ventures and stay as uncomfortable as I dare." That usually leads to the best results. Dupre noted that Coconas declined to comment further on the transaction, and terms of the deal were not disclosed. Elinia, the flagship of the Chicago restaurant group, is one of only two restaurants in the city to have three Michelin stars. Coconas is also the architect behind Tock, a reservations company he launched in 2014 with former Google engineer Brian Fitzpatrick. Website hosting service Squarespace bought Tock in 2021 for more than 400 million dollars. Dupre reported that Agates and Coconas founded Elinia in 2005, which put the group on the map. The restaurant group has since opened five other establishments according to its website. And as Dupre further noted, this deal is investor Weingarten's latest move in the restaurant and food industry, following the launch of his meal kit company, Entre, and recently opened South Loop restaurant, Oliver's. That's cranes daily just for now. Check in on our continuous news feed at Chicago Business dot com. Thanks so much to today's guest, cranes residential real estate reporter, Dennis Rodkin. You can follow all of our conversations on Apple podcast, Spotify, or wherever you like to get your audio on demand. Don't forget to subscribe and please rate and review cranes daily gist. Our show is produced by Todd Manley at earsight studios. I'm Amy Goof. Thanks so much for listening and I'll meet you right back here next time.
