Governor Pritzker calls on Stellontis to get moving on the Belvedere reopening. And I'll talk with Crane's reporter Justin Lawrence about CPS City Council and the mayor. Some other sister agencies like the Park District and CTA. When the mayor appoints a board member to that the city council has to approve it. But that is not true of CPS. What's being carried out right now is my authority as mayor of the city of Chicago. If you want to know, I am fulfilling the executive responsibility that is given to me by the state law. I'm Amy Guth and this is Crane's Daily Jist for Monday, October 14th. When I 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 a 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 GIST at checkout. Once again, to redeem this offer, visit Chicagobusiness.com/gist and enter code GIST to get this deal while it lasts. I'm joined by Crane's reporter Justin Lawrence to talk about all the things that have been happening with CPS and city council, not a short list by any stretch, but talk me through the latest of what's been happening in terms of these two bodies and how they're clashing right now. Yeah, so this is kind of the continuation of a drama that's been happening all fall, really. Since news broke that Mayor Brandon Johnson had asked, CPS CEO Pedro Martinez to resign, Martinez refused, essentially dared the mayor to go to the board of education to fire him, remember the board of education actually has that power. The mayor has to rely on them to actually terminate his contract. And the former, I guess, still current board for now, you know, they had refused to do that. And it also refused to take on a $300 million loan that Johnson says was needed to cover the cost of this pension payment that covers non-teacher positions within the district that the city wants the district to pay rather than traditionally the city has made that contribution. So they've kind of been bucking the mayor. And on October 4th, it was kind of a stunning day. The entire seven member board announced that they would be resigning and Johnson would be replacing them. And then, you know, that was on a Friday the following Monday, he announced six members, you know, that he's going to put on the board that is supposed to take place at their October meeting later this month. That led to a 41 Aldermen signing on to a letter, a kind of expressing outrage of where all this and and even though the city council really has no legal authority oversight over CPS. So let me if I just could indulge me for a second. The power doesn't have to be flexed. The power is just is because I have it by state law. So this is not a flex. This is just power. CPS is a sister agency of the of the city. Some other sister agencies like the park district and CTA, when the mayor appoints a board member to that the city council has to approve it. But that is not true of CPS. They don't have that authority. So they've been trying to kind of insert themselves into this and say we need we need to have a hearing and we need to bring in all the players here to kind of sort out this drama. So that brings us up to speed this week. And then on at the city council meeting or not at the city council meeting, but on the same day as the city council meeting, Martina has kind of made public a plan that he says he's been advocating for since April 30th. Pressing the mayor, this gets a little complicated in the weeds, but pressing the mayor to essentially go into the city's huge pool of money that that's pulled away in the tax increment financing districts. These are special taxing bodies that have kind of been controversial in the city. They're meant to spur economic development. They fund capital projects infrastructure, affordable housing. They also provide capital projects for CPS schools and park district facilities. So his plan would be to more than double the size of the annual surplus that the city takes from those funds and then redistribute them back to the taxing bodies. That is CPS, that's Chicago, that's CTA, the park district. And that's where we are now. He is advocating for that. He's somewhat in alignment, but not not fully with the CTU, the Chicago Teachers Union on that. They unveiled their plan this week to essentially abolish all tips to take all of the money that is not currently been agreed to and signed an agreement to fund a development project and take all of that money out in the tips and return all the money to the schools in the city and everyone else. I think that idea is something they've pushed for and talked about for a long time. If it was realistic, it would have been done a long time ago. I don't think there would be support in the city council. Mayor Johnson himself doesn't support that. And so that's where we are now. I think I caught you up to speed and I'm sure something else will happen in the coming week to up end all of that. I'm sure something's happening right now while we're recording this conversation. It seems like it has just been like every time I've looked up, there's been a kind of another shoe dropping here on this. I mean, to me, this really started to emerge as this focal point when we first started talking about the budget, right? Because there was this piece missing on the CPS budget and it was not in the city budget, the preliminary look at it anyway, because there was, you know, still such a huge gap in the city budget that the mayor was trying to fill. And to me, that's when it really started to kind of crystallize it. This, hey, this is coming to a head. Eventually, someone needs to figure out where this funding is coming from. Where's this kind of heading? I mean, I realize I'm asking to sort of speculate and read the tea leaves here, but how does this end? We have this letter kind of asking for a hearing. What are the next steps here and how does this even begin to get resolved? Yeah, yeah, I should have mentioned. So the city council actually supporters of Pedro Martinez, they called for a special city council meeting after the regularly scheduled October meeting to, you know, bring in the proposed board members that Johnson announced and the current board members to talk about all this. When they realized that none of them were going to show up, they worked with the mayor's office, they said, and they spoke to some of these board members, and they believed that they had a commitment that the city council scheduled a hearing of the education committee, which is chaired by Jeanette Taylor, who, you know, nominally is an ally of Johnson, definitely politically she is, you know, she is a democratic socialist. She went on a hunger strike to save diet high school, you know, and from the elevators of city hall taking arrests, when Jeanette Taylor could not continue on the hunger strike, I joined it to keep a school open on the south side of Chicago. They've been in this fight together, but she is one of the 41 Aldermen who signed on to that letter kind of criticizing everything going on. So she is going to hold this meeting. It's on October 18th. She believes that she has a commitment that these board members will show up when another Aldermen kind of told this the city council of this plan during the meeting, the mayor interjected and clarified, hey, I want to make clear that the board members have been invited. That does not mean that they automatically show up. So you kind of put some doubt on whether that they would, that this gets into the whole the city council is now debating and trying to figure out whether they have subpoena power, which they don't explicitly, like in the city's municipal code, but there is a statute, a state statute that, depending on how you read it, would give them the authority. So that's kind of where we are. I mean, it could not be more contentious between the mayor and the city council over this. Now, look, there's been talks about, you know, state takeover, Bruce Rauner tried that already. He did and we rejected it. Let me just ask this question out loud, not for you to answer. So you have a black man who's a parent, a teacher, and the mayor of Chicago with the authority that the state gave me. And now they have concerns that I'm expressing those authority. But yeah, you brought up the pension payment. You know, all of this is happening while CPS is in contract talks with the CTU. So that's also part of this. But it's really been about, you know, the finances, right, that $175 million payment. That goes into a city, run municipal pension fund for municipal workers, most of whom are non teacher positions within CPS. And historically and legally, the city has always made that payment, had always made that payment. And then in 2019, going into 2020 year, former mayor Lori Lightfoot said, Hey, these are CPS workers, they should be making this payment. And she came up with an agreement that is not like legally binding, but was a kind of a memorandum between the district and the city that the district would start taking on this payment and the payment itself would ramp up over the years. Johnson supported that last year. He he wants the district to do it again. And they they refuse to include that in the school budget that was approved in July. So that caused a hole in the city's 2024 budget. It increases the shortfall for the 2025 budget, which is at 982 million. And legally, the city has to make that payment by the end of the years. So that's, that's why there's so much urgency to this. That's why it's kind of coming to a boil, and there's really no, no way to kind of simmer tensions, right, because it has to be made. And that's kind of where the that TIFF funding came from, too. You know, every year, the city declares a surplus. Last year, the record surplus was 434 million, 52% of that goes to CPS. About 23% comes back to the city. So the the kind of surplus that Martinez is calling for would be, I believe it's pegged at like right at 932 million. That really goes above and beyond what what they've done in the past. And what that would mean is the city has hard commitments that they've made. They've signed contracts with the developer or a school or a park to to provide funding, bridge, you know, capital and infrastructure projects to provide funding out of the TIFF funds for those projects within the various tips around the city. And then they also have kind of soft commitments. These are things that we know that we would like to do that are in the pipeline, but they've just not reached a stage where there's a hard commitment that we've signed an agreement with someone allocating that money. So to get to where Martinez is calling for, you would essentially have to call through all those soft agreements, pull some of them back, maybe cancel them, maybe just delay them by a year or two. And that's where dollarmen that I spoke to say, you know, hey, wait a second, like we don't want CPS to take on that loan. We we support declaring another large surplus but to to get to where he's talking about that means, you know, a bridge that my community has been calling for for the needs of repairs for 10 years and finally we got the funding for it. I don't think I'm comfortable delaying that or, you know, there are other priorities of the city beyond funding the school district, you know, affordable housing is a is a real problem in the city. And TIFF provides a lot of money towards that. So I think that getting a, you know, 900 plus million dollar surplus would be really difficult. But I do anticipate that it'll it'll break last year's record. Hmm, interesting. And you spoke with Martinez about this and in your reporting kind of noted that, yeah, I acknowledge this is really a difficult thing of what we're what we're trying to do. But but but kind of indicated that that seems like a much better outcome than taking out a loan to fill some of this, which is really what what kind of the mayor's pressure is about. Right. Yeah, he's he's I mean, he's not naive to, you know, he's essentially asking the city and aldermen to to put aside projects that they're really excited about. But yeah, I mean, when you put it into his perspective, hey, it's we we have to pay our bills somehow, right, we have to cover the cost of this pension payment that you want us to take on. We have to cover the costs of the anticipated contract with CTU and another contract with the principles association, like those are all costs that we will have next year that we have to cover. And we understand this is difficult, but isn't it better than taking on this loan that comes with higher interests that that no one, well, not no. And I mean, clearly the mayor's the mayor has said it's a it's a better alternative, but that, you know, 41 members of the city council aren't jazzed about. Right. I mean, still, though, it just doesn't seem like there's a quick and easy resolution to any of it. So what kind of timeline are we looking? I mean, I know there's kind of a there's a clock running on this. It's got to get resolved by the end of the year. What are kind of the next things you're going to be watching for? It's really that that October 18th meeting, where the current members stepped down and the replacements step into their position. I think we've all Johnson is, you know, repeatedly said he won't talk about personnel, but I you think the assumption is that the reason he's doing this is that these new board members would do his bidding that they would try to terminate Martinez's contract, that they would potentially approve this loan. So we'll see. I mean, it's all got to come to a head quickly. And again, whether or not the school district takes on that pension payment means this really impacts the city's budget, not only $175 million this year, but you know, if they can put that on to the school district budget, the $982 million gap for next year gets gets a little smaller. Yeah, well, we live in interesting times. So I'm sure there'll be plenty more to talk about here in the weeks ahead. But thanks so much for stopping by to talk it through today. Thanks, Amy. Coming up a Jones-Lang LaSalle unit caches out of a West Loop apartment tower for $76 million. We'll talk about that and more right after this. Thanks for listening to Crane's Daily Jist. 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 workday to subscribe visit chicagobusiness.com/morning10. This is the Crane's Daily Jist with Amy Guith. Crane's John Pletz reported that Governor J.B. Pritzker on Friday urged Stellontis to get moving on plans to reopen its Belvedere plant, where it plans to make electric vehicles and batteries. In a written statement, the governor said, quote, "I call on Stellontis to live up to the commitments it made a year ago to Illinois workers." Continuing, quote, "There is every opportunity to begin the restart at Belvedere, and there is no time to waste." The Belvedere plant just east of Rockford has again become a flashpoint for the United Auto Workers Union, which has threatened to strike because the automaker has indicated that it won't move ahead with reopening Belvedere as soon as originally expected. Stellontis responded by filing lawsuits against the union, and it hasn't publicly provided a timeline for Belvedere. Pletz noted in reporting that the decision by Stellontis nearly a year ago to reopen Belvedere and commit to continuing to making vehicles in Illinois as part of a new UAW contract was seen as a big win for Pritzker, as well as the Biden administration. Stellontis pledged to restart and expand its operations in Belvedere, creating 3,000 jobs and investing billions to retool a plant that opened in 1965 and employed 5,000 workers as recently as 2019. It had 1,200 workers when it idled in early 2023. Pletz noted in reporting that Pritzker has made EVs and manufacturing jobs a priority, working with legislators to revamp the state's tax incentives to convince automakers like Stellontis to ensure their Illinois factories make the transition to EVs. UAW President Sean Fain publicly called out Stellontis at the Democratic National Convention for slowing its timeline for Belvedere. While its relationship with the UAW has always been challenging, Stellontis also has unexpectedly run into some issues in its business. Pletz noted that with sales down 17% this year, the company is undertaking a major management overhaul, including a new CEO. Several Chicago hospitals are experiencing slowdowns in shipments of IV therapy products amid the hurricane-helene-related closure of a key healthcare supply manufacturing plant owned by Baxter International. Local health systems, such as Sinai Chicago, Northwestern Medicine, UChicago Medicine, and Cook County Health, confirmed to cranes they're each being affected by the smaller batches of products coming from Baxter since it had to shut down its North Cove, North Carolina plant on September 29th. Cranes' healthcare reporters John Asplund and Catherine Davis reported that despite a shrinking runway of supplies, health systems say patient care has not been impacted. At Sinai Chicago, the area's largest safety net hospital system, leaders have instituted various conservation and mitigation measures to optimize supply of 250 and 500-milliliter IV bags that it routinely orders from Baxter. That according to a Sinai Chicago spokesperson. Meeting twice a day, Sinai leaders say they are evaluating their IV supply and how many patients are currently using an IV, especially in intensive care units. The spokesperson said in appropriate cases, the hospital is moving patients away from IVs and onto oral hydration methods and said that so far, the slowdown has not negatively impacted patient care. Asplund and Davis reported that a similar scenario is playing out at Rush University System for Health, according to a spokesperson for that healthcare system, who said, quote, "like seemingly every hospital and health system, Rush has been working steadily to conserve supplies and prioritize needs." Northwestern Medicine is also feeling the impact of less IV solution availability. With their chief media relations executive saying in an emailed statement to Crane's, quote, "our biggest challenge and similar to many hospitals across the country is the IV fluid shortage due to Hurricane Helene." Continuing, quote, "we are monitoring the situation and have implemented conservation efforts to conserve IV fluids. When appropriate, we are exploring the use of alternative treatments when caring for patients." Loyola Medicine said in a statement to Crane's that the system does not expect a significant impact in the short term, but that it will continue to monitor the situation. But as Asplund and Davis also noted, meanwhile, at Cook County Health, the public health system that operates the stroger and provident hospitals reports that while it is seeing a slowdown in IV supply, the organization has enough on hand to last a couple more weeks. With a spokesperson saying, quote, "we are in a pretty good spot all things considered," adding that Cook County Health is in daily contact with its supplier. The Illinois Health and Hospital Association said in an emailed statement to Crane's, quote, "hospital and health systems have processes and procedures in place to manage supply change shortages and disruptions such as this to ensure safe and effective patient care." Continuing, quote, "Illinois hospitals are taking necessary steps to assess the potential impact of an IV shortage." Also saying, quote, "Hospitals are thoroughly reviewing their current stock levels, cash inventories, and expiration dates." The Illinois Health and Hospital Association also said that while the association and individual hospitals are monitoring the situation, conservation methods are being developed for the frontline that can ensure efficient use of available saline. Asplund and Davis further noted that the Chicago-based American Hospital Association has been working with Baxter and the U.S. Health and Human Services Administration on strategies to mitigate shortages. The association had encouraged the Biden Administration to invoke the Defense Production Act to require appropriate manufacturers to prioritize and accept contracts for materials and services necessary to produce sterile IV solutions and their containers, incentivize appropriate manufacturers to expand production and supply, remove barriers to their importation, as well as other measures. Deerfield-based Baxter said it is slowly resuming shipments of IV therapy products to hospitals and other customers, but that restarting production at the shuttered site could take until the end of the year. To bridge the supply gap, Baxter has instituted limits on how many products those already made or imported from other plants that customers can order at once. Right now, direct customers and distributors can order up to 60 percent of their usual volume. A Jones-Lingla Sal unit has sold a West Loop apartment tower for about $76 million. Crane's Rachel Herzog reported that JLL Income Property Trust, the investment arm of the Chicago-based real estate firm, announced on Thursday that it sold the 28-story, 274-unit high-rise at 180 North Jefferson Street, which it had put up for sale in June. Herzog noted that the press release did not disclose the sale price, which was listed at $76.3 million in online property records. That's down about 20 percent from the $96.4 million that JLL Income Property Trust paid for it in 2016, according to Cook County Property Records. But as Herzog also pointed out in reporting, it is not the first well-located downtown apartment property to trade in recent months for less than the seller paid for it. Coming on the heels of the Parker Apartments in Fulton Market also changing hands at a discount. Even as rents in the trendy West Loop are strong, the investment sales market is seeing prices dampened by economic factors, including high interest rates. JLL Income Property Trust said that it sold the property as part of a long-term strategy of reinvesting capital at opportunistic points in the market cycle and is shifting to investing more in suburban office buildings than in urban high-rises. Herzog further noted in reporting that the firm recently renovated all 274 units and upgraded the building's amenities, although the amount spent on those renovations wasn't disclosed. The Real Estate Investment Trust has $2.6 billion worth of residential investments across 24 apartment complexes and more than 4,500 single-family rental homes, according to the firm. Crane's Mark Weinrod reported that the SEC on Thursday charged Cumberland DRW LLC, a unit of Don Wilson's trading firm, with operating as an unregistered cryptocurrency dealer. The SEC said Cumberland has acted as an unregistered dealer since at least 2018, buying and selling more than $2 billion in the alternative currencies as securities for its own accounts as part of its regular business. Cumberland, established as a DRW unit in 2014, proudly touts its crypto offerings on its website. In a statement, Cumberland said, "We and others in the crypto industry have repeatedly sought clarity from regulators on the appropriate applications of securities laws in the crypto-asset space. For the SEC to meet these good-faith efforts with a legal action is an incredibly frustrating and disappointing development, although not surprising given the enforcement-first approach we have seen in recent years from the SEC." Weinrod noted in reporting that the SEC said the crypto industry has been trying to get around registering as dealers by treating their assets as commodities rather than securities. The acting chief of the SEC's crypto assets and cyber units said in a statement that despite frequent protests by the industry that "sales of crypto assets are all akin to sales of commodities." Our complaint alleges that Cumberland, the respective issuers and objective investors, treated the offer and sale of the crypto assets at issue, in this case as investments in securities. And Cumberland profited from its dealer activity in these assets without providing investors in the market with the important protections afforded by registration. Weinrod noted that the SEC has been wary of crypto trading, highlighting the risks to investors in the market. Earlier this year, it approved a spot Bitcoin exchange-traded fund after a decade-long fight with the industry. The SEC said it is seeking permanent injunctive relief, discouragement of ill-gotten gains, pre-judgment interest and civil penalties from Cumberland. Weinrod noted that Cumberland said it has been working for years to understand the SEC's rules and regulations regarding crypto trading. It added that it has been prohibited from using its now-dormant registered broker dealer for crypto trading. United Airlines will be launching flights to eight new overseas destinations from the U.S. next year. The Chicago-based carrier is touting the entrance into leisure markets as the largest-ever international expansion in its history. Crane's Po'an Naidu reported that starting in May 2025, the airline will offer non-stop flights to new cities across multiple continents. Five flights will depart from its hub in Newark and New York, with new destinations in cities in Greenland, Italy, Spain, Portugal and others. And according to a statement by United, the particular cities that they will be serving are not serviced by any other U.S. airline. The remaining three flights will be from Washington, D.C. Dulles, to Dakar Senegal, operating year-round, and new seasonal non-stop flights to East France and Venice, Italy. The carrier will also add new direct flights from Tokyo to Mongolia and Taiwan. In summer 2025, United anticipates its transatlantic schedule to be the largest ever, with over 760 weekly flights. Naidu reported that United's strategy includes expanding into new leisure markets rather than focusing on what was described as traditional business destinations. The United Next playbook was created before the COVID-19 pandemic and has since been tweaked to accommodate changing travel patterns, like fewer business trips. Naidu also noted in reporting that in Chicago, the airline is now flying at a rate exceeding pre-pandemic levels. The carrier will be flying 5% more seats to and from O'Hare this month than it did in 2019, before COVID-19 hit the U.S. Additionally, it will also be flying 17% more seats compared to a decade ago. United will increase its capacity at O'Hare, its largest hub, by 12% in the fourth quarter compared to last year. And capacity at O'Hare is expected to continue increasing in the coming years. The city of Chicago is planning to invest billions in constructing new terminals to expand gate space by approximately 25%. That's Crane's Daily Jist for Now. Check in on our continuous news feed at ChicagoBusiness.com. Thanks so much to today's guest, Crane's Reporter, Justin Lawrence. You can follow all of our conversations on Apple Podcasts, Spotify, or wherever you like to get your audio on demand. Don't forget to subscribe and please rate and review Crane's Daily Jist. Our show is produced by Todd Manley at Earsight Studios. I'm Amy Gooth. Thanks so much for listening, and I'll meet you right back here next time.
