FROM WHAT-IFS TO WORST-CASESkeeping the city solvent is a high purpose, too. Protecting Chicago’s...

Debt bombs are ticking at hotels all over the Chicago area. It will take an extraordinary economic recovery to defuse many of them.

With the coronavirus pandem-ic pushing the local occupancy rate below 20 percent in recent weeks, hotels here are trying to survive an unprecedented crisis that will spark an explosion of defaults throughout the industry. Among mortgages repackaged

and sold as bonds, nearly a third of all hotel loans could go bad, according to one forecast.

“If you took 9/11 and the reces-sion of ’08 and ’09 and put them together, you still wouldn’t be close,” says Robert Habeeb, found-er and CEO of Maverick Hotels & Restaurants, a Chicago-based ho-tel manager and developer.

In Chicago, the Palmer House Hilton, theWit and W Chica-go City Center are among the most vulnerable big hotels, but

many others face a grim outlook and di� cult conversations with lenders in the coming months,

CHICAGOBUSINESS.COM | APRIL 13, 2020 | $3.50

NEWSPAPER l VOL. 43, NO. 15 l COPYRIGHT 2020 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

TAKEAWAY: Matchmaker Barbie Adler on dating in the time of social distancing. PAGE 6

OP-ED: Ride-share drivers are considered essential. Shouldn’t they have a safety net? PAGE 10

INSURANCEWith drivers curbed, COVID-era rebates will be eclipsed by profit windfalls for insurers. PAGE 3

JOE CAHILLBlues parent’s pay decisions are immune to outside examination. That’s unhealthy for any company. PAGE 4

JOHN

R. BO

EHM

First came stocking up. Next comes trading down.

Consumers already are spending less on food and other household staples after a huge surge in buying ahead of coronavirus lockdowns. � e amount spent weekly by shop-pers fell 5 percent to 8 percent in the last two weeks of March, according to nationwide data from Fetch Rewards, a shop-

ping app used by more than 3.5 million shoppers month-ly to upload their grocery re-ceipts. Record unemployment claims, approaching 17 million nationally and 500,000 in Illi-nois over the past three weeks, will make consumers pull back further.

“We’re de� nitely seeing peo-ple spending less,” says Wes Schroll, CEO of the company,

Shoppers retrench as recession loomsBargain brands tend to shine in downturns

BY JOHN PLETZ

The Palmer House Hilton was heading in the wrong direction even before the pandemic.

COST

AR

See SHOPPERS on Page 22

FROM WHAT-IFS TO WORST-CASESMEDICAL ETHICISTS SEE HYPOTHETICALS COME TRUE BY STEPHANIE GOLDBERG

WHO GETS THE VENTILATOR? It’s a question Valerie Gutmann Koch addressed years before the COVID-19 pandemic cat-apulted her to the front lines of medical care.

Much of Koch’s work as a bioethicist had been done be-hind the scenes, planning for hypothetical situations like an in� uenza pandemic that causes sta� ng and equipment shortages. But few noticed in 2015 when the New York task force she was on published guidelines for allocating venti-lators during such a crisis.

Now those guidelines, and others like them, are being put into practice as doctors confront the all-too-real eth-ical dilemmas raised by an in� ux of COVID-19 patients, shrinking supplies of personal protective equipment, shortages of diagnostic tests and overwhelming demand for lifesaving breathing machines.

“� is whole experience has brought ethics to the fore-front in a way that I’m not sure it was before,” says Koch,

See ETHICS on Page 20

Valerie Gutmann Koch

MEDICAL ETHICISTS SEE HYPOTHETICALS COME TRUE

Which Chicago hotels will flunk COVID test?A handful of well-known inns are especially vulnerable

BY ALBY GALLUN

See HOTELS on Page 15

2 APRIL 13, 2020 • CRAIN’S CHICAGO BUSINESS

CORRECTIONSw The last name of John Bouman, chair of the Vote Yes for Fair Tax committee, was misspelled in Rich Miller’s April 6 column.w An article in the April 6 edition of Crain’s Forum misspelled the name of Farpoint Development.

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DAVID GREISING ON GOVERNMENT

Mayor Lori Lightfoot has made it clear that protecting lives is a con-suming passion as she leads Chicago through the COVID-19 pandemic. Behind that all-important purpose, keeping the city solvent is a high purpose, too.

Protecting Chicago’s �scal health is a big undertaking even in typical times. �ere’s a reason Chicago’s credit rating has hovered at or near “junk” status in recent years. And Moody’s last year called Chicago and Detroit the two cities in the country least prepared for a recession.

�ere are recessions, and there are—whatever is happening to the economy right now. Two straight weeks with 6.6 million new jobless claims nationwide. A virtual shut-down in travel; very little trade. Stay-at-home orders a�ecting 95 percent of the U.S. population.

Chicago is getting hit hard: �e $1.56 billion Lightfoot expects in federal aid is targeted chie�y at reimbursing losses arising from coronavirus. �e mayor is pushing to get through this without city layo�s—and counting on spending by 30,000 city workers to be a factor in recovery.

Fortunately for Lightfoot, her economic team—headed by Chief Financial O�cer Jennie Huang Bennett and Budget Director Susie Park—had a head start on corona-virus. Late last year, they conducted planning for varying degrees of economic crisis.

�e worst-case scenario for at least some parts of city government, Bennett says in an interview, was this: “What happens if we get no rev-enues for a certain period of time?”

�at may have sounded extreme then. �ese days, it’s closer to a

description of what is happening in certain areas.

In the weeks since coronavirus hit the U.S., last year’s planning work is coming in handy. “If we hadn’t had that in place, it would have been di�cult to do some of the analysis we need now,” Park says.

Lightfoot in a press call April 9 said the earliest days of the COVID-19 outbreak had her spending consid-erable time comparing notes with counterparts in Los Angeles, San Francisco, Seattle and New York City. She was looking for com-parables as Chicago’s case count climbed.

Likewise, Bennett and Park turned to reliable sources: contacts at the Federal Reserve, the big banks, the credit rating agencies and the global Organization for Economic Cooper-ation & Development.

Despite the helpful data, it still is too early to estimate the impact on Chicago from the looming recession. Meanwhile, the city is busy man-aging cash �ow—making certain to collect every dollar available and minimizing losses. One tricky big-ticket item: leases at the airports. Negotiations with the airlines are never easy, and the city today is negotiating with airlines to collect those payments, even though very few passengers are coming and going.

Lightfoot in her press call referred to a “yin and yang,” saying that many revenues are down from, say, restaurants and entertainment, but they’re up in other places. Revenues from the city’s “cloud tax,” levied on streaming services, are zooming.

Federal spending will make up for some of the lost revenue. �e $470 million to Chicago from the federal

Coronavirus Relief Fund is the biggest single item. But most of the money from Uncle Sam is intended to cover COVID-19-related costs. Its net economic impact may be limited.

And despite the e�orts by Park, Bennett and others to plan and respond, there still are some big unknowns. �e Federal Aviation Administration has allocated $10 billion for airports, but the city doesn’t yet know how much O’Hare and Midway will get.

In their e�ort to project forward, Park and Bennett have looked back, digging up revenue and expense data from past economic shocks.

�e 9/11 attacks and the SARS pan-demic—a respiratory disease that in 2003 a�ected 26 countries, including the U.S.—were not very instructive. Chicago’s diverse economy was resistant to both.

But the Great Recession, which �nally ended in 2009, hit Chicago hard, and Park and Bennett are worried this one could have similar e�ects. “We’re taking that experience

and adjusting it for what we’re look-ing at now,” Bennett says.

�e data is murky enough, and the course of the disease so unknowable, that no one quite yet knows what exactly we’re looking at.

Crain’s contributor Da-vid Greising is president

of the investigative watchdog Better Government Association.

Trying to measure depth of COVID hole with no yardsticks

Three things to help you through the COVID crisisBy this point in the pandemic,

staying at home and staring at the rightly named boob tube de�nitely has run its course. If I could wave a magic stick and let y’all safely outside, I would. But if I tried that stunt today, Lori Lightfoot would whack me with that stick.

�at being said, there are some things you can do to help the lives of yourself, your friends and your fami-lies, post-pandemic. Here are three.

�e �rst: Pick up your phone or open an email and let your state

legislators know that you support e�orts to expand easy, simple, safe voting by mail for this November’s general election.

I think lots of jaws are still on the ground over the absolute hash of things o�cials created in Wisconsin a few days ago. Like in Milwaukee,

where only �ve polling spots were open because there weren’t enough election judges to handle the 175 others that remained closed. Or Burlington, where Wisconsin House Speaker Robin Vos solemnly de-clared it was perfectly safe to show up at the polls—this while dressed head to toe in protective gear. Or in Madison, where Gov. Tony Evers dithered for weeks before �nally deciding at the last minute to try to postpone the vote.

�at’s so wrong. No American should ever have to risk his or her life to vote. Which leads to Sen. Julie Morrison’s bill to automatically send a ballot this fall to every registered voter, allowing people to vote from home or

fearlessly troop to the polls.�e Deer�eld Democrat’s bill set

up an immediate howl from Illinois Republicans who, like President Donald Trump—he says Repub-licans would “never” win another election if such a law passed na-tionally—see an illegal immigrant

and masses of fraud behind every rock. I’d point them to Illinois’ experience with motor-voter reg-istration, which has had a couple of bumps but generally rolled out well. Or to a recent op-ed piece by former Colorado Gov. John Hick-enlooper, a onetime small-business owner who says his purple state has successfully implemented lots of safeguards such as rigorous check-ing of ballot signatures. Besides, Hickenlooper adds, “one advantage of using mailed ballots is that paper can’t be hacked.”

Check. Illinois lawmakers can amend or add more safeguards to Morrison’s bill. But in one form or another, they must pass it—if they truly believe in democracy and care about the well-being of their constituents.

Suggestion No. 2: Go shopping at your local stores and restaurants. Not in person, mind you, but in other ways.

Most restaurants now have delivery and pickup service. Use it. And tip generously. Many stores

allow you to buy online or will sell a gift card you can use later. Try it out. �ose outlets now are �ghting for their lives. You can see the opposite approach in my six-unit Lakeview condo, where my neighbors are getting so much stu� delivered daily from Amazon that it’s sometimes hard to walk out the front door—all with nary a concern about the health and safety of the people delivering the junk.

Do you really want your neigh-borhood to be �lled with endless rows of boarded-up and empty stores? We’re headed there. Do something about it.

�e �nal thing you can do if you haven’t: Fill out that census form you tossed in a corner long ago. Or go online to Census.gov to answer

a few questions. Or follow the directions when you get a reminder postcard later this month.

At the moment, just over half of Illinois households have replied, 51.2 percent, according to the U.S. Census Bureau. �at’s better than in a lot of states, but not good enough. Why bother? Do you want to be safe from COVID-20 or -21? �at means having well-sta�ed, well-stocked public health units at both the state and local level. And that takes money, much of which comes from the federal government based on population. Would you rather money that Illinois needs goes to Utah or Alabama?

Take a whack at those three things, folks. It may make you feel a little better.

THE GOAL IS BETTER LIVES FOR YOURSELF, YOUR FRIENDS AND YOUR FAMILIES, POST-PANDEMIC.

GREG HINZON POLITICS

CRAIN’S CHICAGO BUSINESS • APRIL 13, 2020 3

HUNDREDS OF THOUSANDS of small-business owners in Chicago and across the country are waiting for gov-ernment-sponsored loans they hope will save their enterprises from the coronavirus, but most have re-ceived nothing.

� e co-owner of a Chicago bakery cafe, a snack entrepreneur and a suburban � nancial services pro are all counting on a government loan to bandage their businesses while the pandemic keeps people home, sapping revenue and adding costs.

So far, some 20 million small businesses nation-wide that drive the U.S. economy and employ nearly 60 percent of its workforce have received little help from a snarled $349 billion federal loan program, or local programs like the slow-moving $100 mil-lion city of Chicago e� ort. Governments, along with bank and nonpro� t partners administering the pro-grams, have been overwhelmed by demand while

Small businesses � nd loans slow to materialize, hard to navigate BY LYNNE MAREK

State Farm and Allstatecan easily a� ord theirCOVID-era rebates whiledrivers remain curbed

BY STEVE DANIELS

� e nation’s auto insurers scram-bled to provide rebates and credits to their policyholders after Allstate ap-peared to take the industry by surprise with the unveiling of a $600 million rebate program as the week dawned.

Northbrook-based Allstate is getting credit from analysts for an innovative approach to the eerie scenes of nor-mally clogged expressways now nearly empty as most of the nation shelters at home.

But the good-hands people poten-tially could have one hand doling out discounts and the other grabbing un-anticipated pro� ts. Because if drivers keep their cars in their driveways and garages for this second quarter, that $600 million easily could make up only half the windfall Allstate reaps, at least judging by auto losses the com-pany has borne at the same time the past two years.

Meanwhile, larger auto insurers that appeared to get caught � at-footed by Allstate’s initiative made up for it by exceeding it in generosity. Geico, the nation’s second-largest auto insurer, announced $2 billion of credits that will provide for an average of 15 per-cent o� a full six-month policy rather than just the two months of April and May that Allstate is covering.

Bloomington-based State Farm, the nation’s largest auto insurer, was the last of the big ones to unveil its program—$2 billion worth of credits on future bills that the insurer says will equate to cutting premiums by 25

Crisis favors the fastJimmy John’s long-standing

focus on quick delivery gives the chain an edge over other sub sandwich shops as coronavirus lockdowns keep customers out of restaurants.

Champaign-based Jimmy John’s, known for its “freaky fast” delivery slogan, gets about 70 per-cent of its sales from delivery and takeout. � at’s turning out to be a big advantage against rivals like

Chicago-based Potbelly, which depends on dine-in customers for about 75 percent of sales.

While most restaurants have been hit hard by stay-at-home or-ders across the country, the pain hasn’t been shared equally. Chains that do more “o� -premise” busi-ness—delivery and takeout—are su� ering less than those that rely heavily on in-person dining.

During the week ended March 30, fast-food chains that get most of their business from delivery

or takeout saw sales decline 27.4 percent on a year-over-year basis, according to MillerPulse, a restau-rant analytics and market research � rm. Chains that get more than half their sales from on-premise dining saw a 50.8 percent drop-o� . Jimmy John’s did not return calls requesting recent sales data. Pot-belly declines to provide an update on recent sales data.

Jimmy John’s entered the crisis

BY DALTON BARKER

Insurersgiveth, butthey may also getteth

Jimmy John’s limits customer options in its single-minded push for speed and simplicity.

MAN

UEL M

ARTIN

EZ

JOHN

R. BO

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Why Jimmy John’s can handle slowdown better than its sub rivals

BEER GIANT’S SELTZERFORAY FIZZLES

See FAST FOOD on Page 15

WAITING FOR A LIFELINE

Mindy Gohr, co-owner ofBittersweet Bakery

See SMALL BUSINESS on Page 21 See INSURERS on Page 21


JOE CAHILL ON BUSINESS

When Ronin Capital was forced to shed assets at auction last month, it became the biggest �-nancial industry victim in the U.S. of the deadly coronavirus so far, undercutting its legacy as a Chi-cago trading dynasty.

�e trading �rm, founded by veteran options trader John Staf-ford Jr. and his son John Sta�ord III, stumbled as it tried to stay on the right side of wildly swinging markets spooked by the pan-demic, grappling with potential-ly hundreds of millions of dollars in losses.

Chicago is home to dozens of market-making �rms that feed on volatility, knowing they stand to pro�t handsomely on big price moves or be decimated by a wrong-way bet. How the Staf-fords, who had trading assets of as much as $21 billion at the end of 2018, found themselves on the losing end of a trade isn’t clear, but the nearly two-decade-old �rm is still struggling to right itself as some of its traders seek new jobs, according to people who have talked with them.

Larger Chicago �rms, which have more capital to withstand losses, have been known to swoop in and buy rivals in tough times.

“�e smart players will wait until somebody needs to make a desperate move and they’re able to pick up opportunities at advan-tageous prices,” says Paul Rowady, director of research at Alphacu-tion Research Conservatory.

Ronin was forced by Chica-go-based futures exchange oper-ator CME Group to auction some of its assets last month, but the �rm appears to be operating with employees there taking calls for the younger Sta�ord. �ose calls weren’t returned.

Chicago-based rival Citadel Se-curities considered buying some Ronin assets and talked to Ronin, but in the end took a pass, ac-cording to sources familiar with the discussions. Citadel declines to comment.

CME, which auctioned the Ro-nin trading assets on March 20, declines to comment beyond a short statement issued that day saying Ronin “was unable to meet its capital requirements going forward,” suggesting that perhaps it had met its past requirements.

CNBC reported that Ronin found itself on the wrong side of a bet on the Cboe Global Market’s proprietary Volatility Index, or VIX, fear gauge, which spiked to 82.69 on March 16 just days be-fore the CME auction.

�e Sta�ords also owned a stake in a New York investment �rm called Parplus Partners, run by James Carney, who may have

been making VIX trades. It ap-pears that Parplus losses could have reverberated from that �rm to Ronin.

Alphacution’s Rowady has a theory about how it unfolded: When the VIX spiked, a short bet on VIX options and a related long investment on SPX futures contracts traded at CME sudden-ly turned against Parplus. When it was unable to satisfy margin calls, its clearing �rm, ABN Amro Clearing, came to Ronin looking for someone to pay up, he says.

“All of these factors—and like-ly others—converged to widen a spread beyond anyone’s expec-tations, causing Parplus’ futures, options and collateral value to evaporate,” Rowady wrote in a March 30 report. “Given Ronin’s stake in Parplus, the CME and ABN AMRO Clearing came after them, too.” He estimated a total loss of $700 million, based on ABN’s reported $200 million loss.

Like other private Chicago market-making �rms, Ronin bought and sold stocks, bonds and derivatives across a variety of �nancial markets, pocketing pro�ts for its owners, the Staf-fords, who presumably paid their trading professionals the six-�g-ure going-rate salaries.

Ronin was founded in 2001 and grew into a �rm that like-ly had hundreds of employees at its peak, though it’s not clear how many remain. �e �rm was named after the Japanese word for a master-less samurai warrior. It expanded in 2010 with a move to a sleek new River North o�ce overlooking the Chicago River. It’s adorned with serene natural accents like a giant bonsai tree in the lobby and a smooth stone ta-ble in its conference room.

John Sta�ord Jr. was a pioneer on the Chicago Board Options Exchange, trading there a couple of years after it started in 1973 through 1995, before founding Sta�ord Trading in 1996 and later selling portions of it to TD Bank in 2001.

�e father-son team started Ronin Capital the same year, and the younger Sta�ord has led the �rm’s day-to-day operations in recent years. Aside from trading, Sta�ord the third, also known as

“Triple Sticks,” has a penchant for race cars.

�e Sta�ords liked to spread their money out, investing in startups. In addition to Parplus, they seeded a young Chicago hedge-fund manager, William Heard, with $10 million. �ey also backed a trading industry software company called Ri-vals Systems, which sources say sought new investors after the March auction. Rival Systems CEO Robert D’Arco declines to

comment. In 2015, a Ronin entity also bought a minority stake in Chicago digital publisher Dose Media.

John Sta�ord Jr., an octogenar-ian who is largely retired, though a strategic adviser at Chicago venture capital �rm OCA Ventures, has had a reputation for

propping up others in the trading industry when they hit on hard times.

“Junior was known for helping people when they were in trou-ble on the �oor,” says Blair Hull, a former Chicago trading �rm owner and one-time U.S. Senate candidate.

With nearly 50 years of trading experience, weathering several downturns, perhaps the Staf-fords will �nd a way to overcome this setback as well.

As the country’s sixth-larg-est health insurer, Health Care Service Corp. determines how much doctors and hospitals get paid, regularly rejecting claims for services it deems unnecessary or excessive.

Its executive compensation practices could use the same kind of external scrutiny. �e Chicago-based parent company of �ve Blue Cross plans, includ-ing Blue Cross & Blue Shield of Illinois, hands out lavish pay to top brass in good times and bad, with minimal disclosure and no explanation.

As my colleague Stephanie Goldberg reported in Crain’s April 6, HCSC gave its 10 highest-paid executives a total of $70 million for 2019, a collective raise of 58 per-cent. Paula Steiner, who stepped down as CEO in July, took home $31 million, a 120 percent bump that includes $12 million in sever-ance pay. Company director David Lesar got $6 million for taking over as interim CEO. Another big win-ner was board Chairman Milton Carroll, whose pay nearly quintu-pled to just under $5 million.

�e numbers look even bigger when compared to CEO pay

at HCSC’s larger rivals. HCSC booked $38.6 billion in revenue last year while paying a total of $25 million for CEO services (that includes Lesar’s $6 million but excludes Steiner’s severance pay). Anthem, with $104.2 billion in revenue last year, paid its CEO $15.5 million. Humana’s boss got $16.7 million for running a $64.9 billion-revenue company. Cigna, with $153.6 billion in revenue, paid its CEO $19.3 million.

What did Steiner and Lesar do to deserve more money than bigger companies paid their CEOs? It’s hard to say, thanks to a lack of clearly disclosed, quantitative compensation metrics. Spokes-man Greg �ompson told Gold-berg that HCSC’s metrics include “expanding access to coverage and e�orts to help control the rise in medical costs for our members.”

Plenty of leeway there. Any link between HCSC’s �nancial performance and executive pay appears tenuous at best. Steiner’s 2019 pay (again, excluding the $12 million severance payment) leapt 35 percent to $19 million despite a 44 percent decline in HCSC’s net income last year. It wasn’t the �rst disconnect between CEO pay and �nancial results at HCSC. Stein-er’s predecessor, Patricia Hem-ingway Hall, got healthy raises in 2014 and 2015 even though HCSC lost money both years.

More mystery surrounds the big

payday for Carroll. His 2019 pay was almost 10 times the amount nonexecutive chairmen collected at other big insurers. �ompson says Carroll got the money under a side deal for helping “ensure a smooth transition” to a new CEO and providing “proper support” to Lesar and newly appointed HCSC President Maurice Smith. HCSC won’t spell out Carroll’s duties or say how many hours per week he devotes to company business.

CEO turnover has been good for Carroll’s bank account. He made $5 million in both 2016 and 2017 for helping Steiner take the reins from Hall, who retired at the end of 2015. Maybe HCSC should look for a new CEO who won’t require such expensive hand-holding.

Perhaps most troubling is HCSC’s stinginess with executive pay information. It took a Free-dom of Information Act request to get HCSC’s compensation �ling from Illinois insurance regulators.

HCSC gets away with such high-handed compensation prac-tices because of its legal structure. As a mutual legal reserve company owned by policyholders, it isn’t subject to disclosure requirements

applicable to publicly traded corporations owned by share-holders. Public companies have to disclose the performance metrics they use to calculate

executive pay. Public companies have to submit compensation pro-grams to an up-or-down advisory vote of shareholders every year. Public companies have to worry that their pay practices might look bad under public scrutiny, or attract meddlesome activist in-vestors who know how to squeeze management.

Not HCSC. Its pay decisions are immune to outside examination, insulating its top leaders from accountability. �at’s unhealthy for any company, especially one as large and important to health care as HCSC.

Policyholders have a right to know how much of their premium payments end up in executives’ pockets. Accountability and trans-parency in executive pay are even more important now, as a rampant contagion strains a national health care system already facing intense cost pressures.

It’s worth noting that HCSC itself is cutting costs as it jacks up executive pay. In January, the company announced plans to lay o� about 400 workers. �ey might be surprised to discover that HCSC could a�ord those big executive raises.

To get control of health care costs, we need to know how much we’re spending and what we’re getting for our money. �at applies to executive pay as well as doctor’s bills.

A health insurer immune to scrutiny

HCSC IS CUTTING COSTS AS IT JACKS UP EXECUTIVE PAY.

Caption

How Ronin Capital fell from grace as COVID spread

JOE CAHILL ON BUSINESS

BY LYNNE MAREK

The Sta�ord family had trading assets of as much as $21 billion in 2018. Now it’s struggling to hang on.

Source: Crain’s reporting

w WAGERING ON RONIN

Ronin Capital grew over the past two decades into an electronic trad-ing firm that likely had hundreds of employees at its height, but after recent losses it’s unclear how the operations will fare.

2001: Ronin Capital founded by Stafford family

2011: Staffords back Chicago hedge fund manager Heard

2015: Ronin entity invests in Chicago digital publisher Dose Media

2016: Staffords invest in New York trading firm Parplus Partners

2020: Ronin Capital forced to let CME Group auction assets

THE TRADING FIRM, FOUNDED BY VETERAN OPTIONS TRADER JOHN STAFFORD JR. AND HIS SON JOHN STAFFORD III, STUMBLED AS IT TRIED TO STAY ON THE RIGHT SIDE OF WILDLY SWINGING MARKETS SPOOKED BY THE PANDEMIC.

20cb0179.pdf RunDate 4/13/20 FULL PAGE Color: 4/C

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THE TAKEAWAY

Tell us a good love story.We matched a father of two with a beautiful, smart, funny woman. On their �rst date, he took her to a Bulls game. As they were getting situated in their seats, our client fell head�rst over two �ights of chairs, creating a big scene in front of a large crowd.

What does dating look like?A walk or run outside. Home-cooked meals. All at a safe distance, of course.

How does your service di�er from online dating?We target high-end, mar-riage-minded clients. We use the same vetting that I employed for executive searches: background checks, social media screenings, in-person (when possible) evalua-tions.

Was he OK?He was �ne and took it like a champ. They laughed about it throughout the date, eventually got married and now have their �rst child.

How did you learn about relation-ship building?My mom was a psychologist who led healthy communications classes for marriage in our living room. I would sit at the top of the steps and eaves-drop on her sessions.

I have to ask. Is it di�cult to

be a Barbie?It hasn’t

been the easiest name

to own, but I try to beat the stereotype. I’m

running a company of over $10 million annual revenue. I’m Barbie with a brain.

Tell us about love in the time of the coronavirus.We are experiencing high demand similar to what we saw during the 2008 recession. The extra downtime for people has forced many to take stock of what’s missing in their lives. Love is up.

Adler, 48, a former executive recruiter, is founder and president of 20-year-old Selective Search, a national, Chicago-based luxury matchmaking �rm. Her clientele includes the country’s top entrepreneurs, business leaders and celebrities. Adler also has consulted for ABC’s “The Bachelor” and “The Bachelorette.” She lives in Highland Park with her husband and her stepdaughters, 17 and 20.

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Barbie Adler

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An embarrassing moment?Our company policy says no dating clients. But one persistent gentleman kept asking me out. Finally he sent me a romantic letter saying that in return for one date, he would forfeit his member-ship in our service.

And?We’re married, and my sta� was elated. I dipped into my own candy jar and got the best guy for me.

What about company policy?It’s a cruel double standard, but I still enforce the no-dating rule.

By Laura Bianchi

sheppardmullin.com

Many people believe that law fi rms are pretty much the same. We don’t. We believe that what separates us from the pack is not what we do, but how we do it. Limitless service not lip service, aggressive not conservative, team players not one-man bands, practical problem solvers not just legal practitioners. Working 24/7 to get the job done. Our clients clearly understand and value this diff erence.

How can we help you? Contact our Offi ce Managing Partner, Lawrence Eppley at 312.499.6302.

“There’s really no diff erence between law fi rms.”

Offi ces inBeijingBrusselsCentury CityChicagoDallasLondonLos AngelesNew YorkOrange CountySan Diego (Del Mar)San Diego (Downtown)San FranciscoSeoulShanghaiSilicon ValleyWashington, DC

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Pandemic facilities swipe staff from safety-net hospitalsSome say they’ve lost doctors, nurses to the makeshift McCormick Place hospital

Sta�ng, which was hired by the city to place doctors at alternative care sites, has started requiring that ap-plicants—not including indepen-dent doctors—provide a letter of approval from their employer if they work within a 30-mile radius of the city’s COVID facilities.

Meanwhile, hospitals with deep-er pockets are o�ering higher pay for COVID positions. Sta�ng �rm Maxim Healthcare Services has ad-vertised $70-an-hour jobs for regis-tered nurses at Northwestern Me-morial Hospital in Streeterville.

“We cannot compete with North-western and the alternative sites be-ing opened,” Norwegian American’s Sanchez says.

DuPage Medical Group, which is helping sta� the McCormick Place facility, is “in frequent contact with local hospitals to understand their needs, and continue(s) to work to appropriately place our providers and clinical employees where they can best serve the health care needs of the community,” according to an emailed statement from the area’s largest doctors group.

BY STEPHANIE GOLDBERG

As the city works to build up its makeshift hospital at McCormick Place and other sites to support a surge of COVID-19 patients, local hospitals are losing sta�.

Loretto Hospital and Norwe-gian American Hospital on the West Side already have lost work-ers to the McCormick Place fa-cility. Hospitals, especially safety nets that serve large numbers of low-income patients, can’t a�ord to match the higher pay and addi-tional bene�ts o�ered by sta�ng �rms working for the city.

“If we have to shut our doors be-cause we don’t have the resources or sta� to take care of the patients, it will be the greatest failure our community has ever experienced,” Loretto CEO George Miller says in a statement.

Other hospitals and ambulance companies also have had work-ers threaten to leave for the city’s COVID facilities, which include MetroSouth Medical Center in Blue Island and the former Sherman Hospital in Elgin, sources said. �ey point to generous pay packages that are, in some cases, more than twice workers’ regular hourly rates.

Nurse practitioners in the Chica-go area make an average of about $50 an hour, according to the U.S. Bureau of Labor Statistics. Sta�ng companies have o�ered more than $100 an hour plus overtime. Mean-while, Favorite Healthcare Sta�ng o�ered paramedics $50 an hour plus overtime, as well as a $400 transportation reimbursement and hotel accommodations, according to an advertisement from the �rm. On average, emergency medical technicians and paramedics in the area make about $20 an hour, ac-cording to BLS data.

“It makes tremendous sense to expand capacity, but if you increase capacity in one place, you could decrease capacity someplace else,” says Jose Sanchez, CEO of Norwe-gian American. Sta�ng up the al-ternative care sites “has created a ripple e�ect for all of us in regard to compensation levels that many hospitals, especially safety nets, cannot a�ord.”

“From day one, the creation of the new McCormick Place Alternate Care Facility has been about creat-ing capacity to serve residents who become sick from COVID-19, while alleviating the burden on sta� and the operations of Chicago’s existing area hospitals to treat the most se-vere of cases,” Dr. Nick Turkal, exec-utive director of the facility, says in a statement. “While the early stages of our e�orts to mobilize needed health care capacity inadvertent-ly recruited from local health care providers, we have since addressed our sta�ng strategies to prioritize quali�ed medical sta� recruited from outside of Chicagoland.”

�e city has worked with the state to include “geographic radius and non-poaching clauses to tem-porary sta�ng contracts,” Hali Le-vandoski, a spokeswoman for the mayor’s o�ce, adds in a statement.

For example, Alliance Health

Hospitals and ambulance companies have had workers threaten to leave for the city’s COVID facilities.


Meet the man behind Lightfoot’s meme-worthy COVID-19 campaign

over time a very, very lean sta�, but I’ll rely a lot on existing re-sources at Choose Chicago, the Chicago Department of Cultur-al A�airs & Special Events and World Business Chicago. Anyone who wants to listen to my accent is invited to join.

I’m already seeing ads from car companies and restaurants that are capitalizing on their kindness during the crisis—car companies extending payment programs, restaurants doing free delivery. Can, and should, the city do something similar to promote its programs and relief plans?

I don’t know if I’d use the word “capitalizing.” I think we’re just here as government in a time of crisis. We’re trying to help with programs. If you look at the COVID-19 response fund at the Chicago Community Trust and the United Way, I helped on the marketing side of that. �e may-or’s done an amazing job with her team to build programs; my small role is to make sure people know about these programs and use them and can get through this very di�cult crisis.

I know you were helping with

CRAIN’S: This is a di�cult timeto discuss marketing amid a pandemic, but part of your role will be helping the city rebuild. Tell me about that.

FASSNACHT: First, clearly, while we are in the middle of a very challenging crisis for the city, we have to start at least planning for the di�erent phases of recovery. You can always think there are four phases. Surviving the crisis, which the mayor and the admin-istration have done a great job of so far. Second, how to restart the recovery, restart and open the city. We need smart marketing and promotional programs, es-pecially for restaurants and the hospitality industry. �e third is winning the recovery. How do we think about business develop-ment, tourism from international and the coasts? And last but not least, probably next year, what is

the new normal? Structurally and (through) marketing, how do we change the brand of the city of Chicago?

At the same time, I’ve already worked the last few weeks to help the mayor and (Deputy Mayor for Economic Development) Samir Mayekar with how to commu-nicate with all residents about the high compliance rate for the stay-at-home order. I was fortu-nate enough to work on the “Stay Home, Save Lives” campaign. It’s not just promoting the city, it’s making sure our residents under-stand the importance of compli-ance.

How did that come together?

After Tuesday’s (March 24) be-havior on the lakefront, the may-or was clearly not happy. We sat together as a team and asked, what can we do? We came up

with “Stay Home, Save Lives.” It was used in the U.K. We needed to �gure out, how can we convey it in the best manner? We thought of the way to leverage the mayor in the home setting. We shot it Friday night (March 27). (Adver-tising and PR �rm) Havas helped shoot and edit. �at’s now at al-most 2 million views across all platforms. For me, it’s more im-portant it seems to resonate with an audience in Chicago that’s sometimes di�cult to reach with more traditional government an-nouncements. If it just changed one person’s behavior to stay home, I’m happy. �at’s market-ing at its best.

I’m a millennial, so most of my interactions are online. I’ve obviously seen the memes and watched the “Stay Home, Save Lives” video on Twitter. How do you reach di�erent audiences

when promoting a government?

Under this overall campaign um-brella, we need to think very audi-ence-speci�c. We’re launching a sports interest campaign Monday (April 6) called “We are not play-ing” as a subset of that. �e key thing is to be culturally relevant. We can’t just say because we think it’s important, it resonates. One of my roles as a marketer, as a CMO, is to help the mayor to think through that and elevate our messaging to ensure that all of our 2.8 million residents engage.

Are you targeting based on communities that need to hear the message most?

We have some outreach fo-cused more on African Ameri-can audiences with Leo Burnett; we’re launching in the next cou-ple days. Monday is more sports interest, which skews young and old. We’re thinking much more creatively. I told the mayor and Samir not everything will work. We need a mind of experimenta-tion. I’m grateful we have a great creative ecosystem in Chicago, that agencies like Havas, Edel-man, Leo Burnett, FCB, McGar-ryBowen have stepped up and are providing their services pro bono. It’s great.

Why do you think they’re willing to do that? Is there a di�erent civic spirit in Chicago?

Business leaders realize, in to-day’s world, you can’t just be a business leader. You have to be a civic leader. If you look at the trust index of CEOs, what they require for younger employees and con-sumers, they need to be civic lead-

ers. �e agencies understand that. When I called (Leo Burnett Group CEO) Andrew Swinand at Burnett or FCB, they ask, how can I help? �e young millennial workforce loves working on projects like this, they’re passionate, so it’s a win-win.

We’ve seen the mayor become a meme in recent weeks. Did you expect that?

I got to know the mayor the �rst time six months ago. I think she is growing into this role. Ev-eryone knows how hardworking she is, how competent she is. I think over the last weeks and months in this time of crisis, peo-ple have seen all the di�erent di-mensions of her as a human be-ing. �at’s why she’s becoming a meme, or her cultural relevance has increased. She’s an amazing human being, I think, who feels the pain all of us go through, but she also has the vision to think beyond the crisis. We’re all work-ing with the mayor and for her to realize we need to be 100 percent focused on surviving the crisis in the best way possible; we also have to think about the future, send hope out that we will get through this together.

What’s your understanding of what the job will be?

My boss is really the mayor and Samir. �e job will be threefold. One, connecting with people; I’m still learning. I’ll meet with alder-men, a lot of people still to meet. Second is coming up with pro-grams and platforms and prod-ucts to promote us to tourists, corporations, to talent. And third, executing the program. People, strategy and execution. I’ll build

IT’S AN ODD TIME to be talking about marketing. As the pandemic rages across the country and the death toll mounts, the last thing on a government’s agenda might be considering its brand. But amid the dire COVID-19 headlines, you might have noticed and gotten a chuckle from a three-minute video starring Mayor Lori Lightfoot.

At home in casual clothes, the mayor plays serious analyst, then she dunks on a miniature basket-ball hoop and scolds a friend on the phone for wanting to go out to get her roots touched up. �e vid-eo—which followed several days’ worth of memes of a stern-looking Lightfoot photoshopped across the city to shame people into going back inside to slow the virus spread—has racked up more than 2 million views and, in turn, spawned another slew of GIFs and memes.

One of the forces behind that video is Michael Fassnacht, the German-born ad man who at the end of 2019 left FCB, one of Chicago’s biggest and oldest advertising agencies, where he’d worked since 2006 and been CEO since 2014. He’s been helping the city since March and assumed the title of chief marketing o�cer April 1. His salary will be $1 for the �rst year. He’ll be employed by World Business Chicago, the city’s public-private economic development arm.

Fassnacht, 52, will work “to ensure that all market-ing, branding and business development activities are aligned with Mayor Lightfoot’s economic growth plan focused on inclusive growth across Chicago’s communities,” the city says in a statement. “A major task that lies ahead is the city’s e�orts to develop a narrative for its recovery from COVID-19—which will call for major e�orts to repair economic losses, un-employment setbacks and stagnant growth.”

�e civic-minded Fassnacht will make for a good

�t for the city, says Ellen Alberding, president of the Joyce Foundation, who worked with him on a pro-bo-no campaign related to Joyce’s gun violence work. She describes him as “very solution oriented” and “incredibly substantive. . . .He real-ly thinks about the issues and the policies around civic concerns and then applies his commercial skills to them.”

“It will be incredibly important not to gloss over problems, but acknowl-edge them, think of solutions and give hope you can solve them,” Alber-ding says. “You can sink into doom and gloom with 10 million people applying for unemployment. We’re facing some really signi�cant chal-

lenges (from COVID) on top of the challenges that our city was already facing.”

Is this position necessary? Richard Edelman, CEO of PR �rm Edelman, says yes. He has known Fassnacht from their work together on Boeing’s 737 Max and the board of tech-boosting nonpro�t P33. �e two became friends.

“Chicago needs marketing. �e reputation of Chica-go is so much below its reality,” dragged down by its reputation for violence and �scal troubles, Edelman says. In truth, “it’s really one of the great places to live in the world.” Post-COVID, “I think it’s going to force everybody to reconsider how much global travel they want to do, where they want to live, what feels comfort-able and safe and clean and good for my family. Chi-cago, check check check, you know? Chicago works.”

What’s di�erent about marketing a city versus Lufthansa and Boeing? “Politics,” Edelman says with a laugh. “Cities are the accumulation of past history, too. I think he’s up to it. He’ll also be good at leaning on people like me to give him free work.”

Here’s a conversation with Fassnacht, edited for length and clarity.

Michael Fassnacht

Ad vet Michael Fassnacht, the city’s new chief marketing o�cer, talks about the mayor’s popular ‘Stay Home, Save Lives’ video and how the city will rebuild when the pandemic passes BY A.D. QUIG

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The man behind ‘Stay Home, Save Lives’ campaign

The coronavirus didn’t stop this big real estate dealStrategic Properties has acquired a 480-unit apartment tower in Streeterville at a time when many real estate investors are taking a hiatus from big deals

A New Jersey investor has ac-quired a big Streeterville apart-ment tower, a sign that some com-mercial property investors are still in a buying mood even amid a global pandemic.

An a�liate of Strategic Proper-ties of North America has bought Cityfront Place, a 480-unit build-ing at 400 N. McClurg Court, according to a letter sent to the property’s tenants. It’s unclear what Strategic paid for the river-side building, but the price likely is well below the $160 million that the seller, DWS, was seeking for it.

Strategic declines to comment, and DWS, a unit of Deutsche Bank, didn’t respond to requests for comment.

The sale of Cityfront Place stands out at a time when many real estate investors are taking a hiatus from big deals, unable to ascertain how badly the corona-virus and recession could hurt the market. The optimists are counting on a return to normal after a disruption of just a few months, while the pessimists are bracing for a meaningful decline in rents, occupancies and prop-erty values.

�e outcome will vary by prop-erty type. Many apartment land-lords today are in a pickle, under pressure to give struggling, out-of-work tenants a break on rent but limited in how �exible they

BY ALBY GALLUN


over time a very, very lean sta�, but I’ll rely a lot on existing re-sources at Choose Chicago, the Chicago Department of Cultur-al A�airs & Special Events and World Business Chicago. Anyone who wants to listen to my accent is invited to join.

I’m already seeing ads from car companies and restaurants that are capitalizing on their kindness during the crisis—car companies extending payment programs, restaurants doing free delivery. Can, and should, the city do something similar to promote its programs and relief plans?

I don’t know if I’d use the word “capitalizing.” I think we’re just here as government in a time of crisis. We’re trying to help with programs. If you look at the COVID-19 response fund at the Chicago Community Trust and the United Way, I helped on the marketing side of that. �e may-or’s done an amazing job with her team to build programs; my small role is to make sure people know about these programs and use them and can get through this very di�cult crisis.

I know you were helping with

census marketing for the city. What did that look like? Census Day was April 1. The mayor has obviously pushed for a delay. Are you adapting your messaging be-cause of the crisis?

We are looking at a few pro-grams to increase the response rate. At the same time, we’re pushing hard for an extension or postponement because it’s very challenging to ask our res-idents—some of our residents fear for their jobs, thinking about putting food on the table, paying their rent—to ask them right now to �ll out the census. At the same time, we’re thinking of programs to launch when the peak of the crisis is over.

You’re not unfamiliar with pro-moting the city. You worked on promoting the Chicago Public Library, the city’s Amazon HQ2 bid, the Joyce Foundation’s gun violence programs. What was your favorite civic project?

I’m really biased toward work-ing with the Chicago Public Li-brary and the (Chicago Public Li-brary) Foundation. It’s one of the biggest democratizers we have in the city. I’m happy how we reposi-

tioned. If you look at visitor num-bers, Chicago Public Library is globally recognized, and it’s such an essential part of the commu-nity. One of my goals is, when we can go be physically back at work, I will be one day a week working at one of the branches. I don’t need a big fancy o�ce. I’ll probably be one day at City Hall, one day at Choose Chicago, one day at World Business Chicago and one day at the libraries.

What’s your favorite branch?

Lincoln Park is my favorite. When my kids were younger, we spent a lot of time at the Lincoln Park Public Library.

What are the biggest obstacles to convincing people to live, do business and travel here?

I think if you look at how peo-ple make decisions, the research, there’s a lot of rational drivers for vacation or a company moving. When people get here, come here and spend time, everybody loves Chicago. �at emotion, that men-tal space of such an amazing Chi-cago, we have to create that feeling before physically coming here. Once they come here, they love it.

How do you do that?

You will see.

When the Chicago Tribune talked to you back in 2017, you were working on becoming a U.S. citizen. Where are you in the process?

I became a U.S. citizen a year ago. After the last presidential election, Friday morning I woke up and told my then-14-year-old daughter that we’d vote togeth-er in four years. She said, “That means you have to become a U.S. citizen.” I said, yep, and got my paperwork. I’ve lived in this country for 20 years. Especially after being immersed in Chica-

go, this is the greatest country I’ve lived in. I’ve lived in Ger-many, France, Africa—this is a great country, and Chicago is the best place I’ve ever lived in. It has welcomed me and my fam-ily with open arms. With all our challenges, with all our history, good and bad, it’s an amazing place to make a difference.

What’s your favorite soccer team?

Bayern Munich.

Are you looking forward to the Chicago Fire playing at Soldier Field?

Absolutely. I can’t wait for the season to start and we can cheer.

ers. �e agencies understand that. When I called (Leo Burnett Group CEO) Andrew Swinand at Burnett or FCB, they ask, how can I help? �e young millennial workforce loves working on projects like this, they’re passionate, so it’s a win-win.

We’ve seen the mayor become a meme in recent weeks. Did you expect that?

I got to know the mayor the �rst time six months ago. I think she is growing into this role. Ev-eryone knows how hardworking she is, how competent she is. I think over the last weeks and months in this time of crisis, peo-ple have seen all the di�erent di-mensions of her as a human be-ing. �at’s why she’s becoming a meme, or her cultural relevance has increased. She’s an amazing human being, I think, who feels the pain all of us go through, but she also has the vision to think beyond the crisis. We’re all work-ing with the mayor and for her to realize we need to be 100 percent focused on surviving the crisis in the best way possible; we also have to think about the future, send hope out that we will get through this together.

What’s your understanding of what the job will be?

My boss is really the mayor and Samir. �e job will be threefold. One, connecting with people; I’m still learning. I’ll meet with alder-men, a lot of people still to meet. Second is coming up with pro-grams and platforms and prod-ucts to promote us to tourists, corporations, to talent. And third, executing the program. People, strategy and execution. I’ll build

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The man behind ‘Stay Home, Save Lives’ campaign

The coronavirus didn’t stop this big real estate dealStrategic Properties has acquired a 480-unit apartment tower in Streeterville at a time when many real estate investors are taking a hiatus from big deals

A New Jersey investor has ac-quired a big Streeterville apart-ment tower, a sign that some com-mercial property investors are still in a buying mood even amid a global pandemic.

An a�liate of Strategic Proper-ties of North America has bought Cityfront Place, a 480-unit build-ing at 400 N. McClurg Court, according to a letter sent to the property’s tenants. It’s unclear what Strategic paid for the river-side building, but the price likely is well below the $160 million that the seller, DWS, was seeking for it.

Strategic declines to comment, and DWS, a unit of Deutsche Bank, didn’t respond to requests for comment.

The sale of Cityfront Place stands out at a time when many real estate investors are taking a hiatus from big deals, unable to ascertain how badly the corona-virus and recession could hurt the market. The optimists are counting on a return to normal after a disruption of just a few months, while the pessimists are bracing for a meaningful decline in rents, occupancies and prop-erty values.

�e outcome will vary by prop-erty type. Many apartment land-lords today are in a pickle, under pressure to give struggling, out-of-work tenants a break on rent but limited in how �exible they

can be by their own obligation to pay the mortgage. Longer term, the job market drives demand for housing, so a prolonged period of high unemployment could make it harder for landlords to keep their buildings full.

�ey’ve had the upper hand over tenants for most of the past decade, allowing them to hike rents and sell their properties for hefty gains. But the Chicago mul-tifamily investment market has slowed over the past year, in part due to concerns about the pros-pect of rising property taxes.

ON HOLD�e coronavirus adds more un-

certainty to the market here and beyond. Worried about overpay-ing for properties, Chicago-based Origin Investments put more than $241 million in apartment deals on hold last month in cities including Houston, Denver and Charlotte, N.C.

“We’re certainly hearing that nobody wants to take a deal out on the market right now,” says Ron DeVries, senior managing director in the Chicago o�ce of Integra Re-alty Resources, a consulting and appraisal �rm.

Strategic agreed to buy Cityfront Place well before the virus spread to the United States, but it’s un-clear whether the �rm used the pandemic as leverage to push for a price cut. An executive at CBRE, which sold the building for DWS,

declines to comment.DWS paid $107 million for

Cityfront Place in 2011, as the downtown apartment market was starting to recover from the reces-sion. Even at a price well below $160 million, the sale to Strategic could go down as one of the big-gest in the Chicago area since the beginning of 2019. �e Marquee at Block 37 in the Loop fetched the highest price since then, $265 million, followed by Prairie Shores on the South Side, at $168 million, and Railway Plaza in Naperville, at $96 million, according to Real Capital Analytics, a New York-

based research �rm.Built in 1991, Cityfront Place

was pitched as a “value-add” in-vestment, or �xer-upper. �ough DWS renovated the apartments, the property’s new owner could boost its value by adding washers and dryers along with new �nish-es to the apartments and enhanc-ing the building’s amenities with a dog run, media room or other fea-tures, according to a CBRE mar-keting brochure.

Cityfront Place is 96 percent oc-cupied, with rents ranging from $1,715 per month for a studio apartment to $3,216 for a two-bed-

room, according to real estate data provider CoStar Group. �e aver-age unit rents for $2,154, or $2.80 per square foot.

Based in Lakewood, N.J., Strate-gic has been busy in Chicago with condominium “deconversions,” buying up entire condo buildings and turning them back into rent-als. �e �rm recently complet-ed its $44 million acquisition of a 163-unit condo tower at 21 E. Chestnut St. Past deconversions include Kennelly Square, a 268-unit high-rise in Lincoln Park, and Bel Harbor, a 207-unit building in Lakeview.

BY ALBY GALLUN

Strategic Properties agreed to buy Cityfront Place well before the virus spread to the United States.


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How COVID has kicked Uber and Lyft drivers to the curbI’m one of thousands of Chicago-area

gig workers whose livelihoods have been decimated by COVID-19.

When I started driving for Uber and Lyft in 2016, I could make $200 in a regular day. But since 2016, even before the virus hit, drivers’ ability to earn dropped by nearly half. Incentives and bonuses have disap-peared. As Uber and Lyft have increased their commissions, our per-mile pay has gone from over a dollar to 60 cents—only a few cents more than what the federal gov-ernment considers our expense per mile.

I personally went from making almost what I had been making at my previous full-time office job down to a pay so low that I now qualify for Medicaid.

Now that Chicago is sheltering in place, demand for rides has plummeted.

Drivers who are forced to take whatever rides they can get during the pandemic are taking their lives and the lives of their families into their hands.

Ride-share drivers, taxi drivers and app-based delivery folks are considered “essential” workers in Chicago, yet we cannot even guarantee that we will cover our expenses if we work right now.

Most gig workers I know don’t even have health insurance. Shouldn’t people who are considered essential be able to count on some kind of safety net?

Uber is one of the largest employers in the state, yet drivers aren’t even counted in unemployment numbers. Billion-dol-lar gig companies are getting out of pay-ing into our unemployment system by misclassifying us as independent con-

Healing the economic wounds starts nowWe are only just beginning to

comprehend the devastation COVID-19 has dealt to the Chi-

cago area. �e yardsticks at our disposal can merely measure the broad outlines of the crisis in cold numbers. As of this writ-ing, there are roughly 17,000 known cases in the state, an outbreak that has claimed more than 500 lives and counting. �ose �gures only hint at the pain and loss that lie beneath. And one of the things that makes humans great—our adaptability, our talent for normalizing even the wild-est situations if forced to endure them long enough—can unfortunately also make it possible to be numbed by the daily drumbeat of discouraging news and seemingly ever-mounting tallies of the ill and the fallen. As Illinois enters its fourth week since Gov. J.B. Pritzker issued his stay-at-home decree, days melt into one another, and it can be di�cult to believe that life will ever return to anything like what it was before.

It won’t always be this way, however. �e COVID-19 crisis eventually will end. Soon it will be time for our elected lead-ers, now understandably focused on mit-igating the public health crisis, to turn the greater share of their attention to the economic trauma spawned by the pan-demic. By some estimates, the United States could see unemployment approach 20 percent before the virus loses its lethal punch. �at wouldn’t overtake the 25 per-cent levels experienced during the depths of the Great Depression, but it would come disturbingly close.

According to U.S. Labor Department �gures released April 9, Americans ap-plied for unemployment bene�ts in over-whelming, unprecedented numbers for a third straight week, bringing the total to about an almost unbelievable 16.8 million since the coronavirus shutdown began. In Illinois, about 201,000 people applied for bene�ts in the week ended April 4, up

from about 178,400 the week before that. JPMorgan economists now forecast a 40 percent decline in the nation’s GDP for the second quarter, with 25 million jobs lost. Federal Reserve Chair Jerome Powell said April 9 that the American economy is facing an emergency and is deteriorating “with alarming speed.”

Putting those millions back to work will take time and sustained e�ort. Even folks who don’t normally see government as the solution to all the world’s problems agree on this: Economic disruption of the scale we’re experiencing demands a mas-sive and coordinated public and private response. Chicago’s business community is already there, eager to get back to work and �x what’s broken. Unfortunately, em-

ployers are presented with what amounts to a confusing patchwork quilt of loan programs and tax deferrals, with pitches coming at them from all levels of govern-ment, none of which seem to be coordi-nating e�ectively to deliver the business relief that’s needed quickly enough to keep businesses a�oat.

As Crain’s senior reporter Steve Dan-iels put it on our podcast, “�e Daily Gist,” getting the �ood of applications for fed-eral small-business loans through the ex-isting machinery is a bit like “getting a pig through a python.”

Perhaps the most egregious example of this slow-moving triage is what’s tak-ing place within the city’s Small Business Resiliency Fund. It’s been swamped with

about 7,000 applications since starting to receive them on March 31. As of April 9, the o�ce had approved just 10. “We’re go-ing through them as quickly as possible,” a spokesman for the city’s Department of Business A�airs & Consumer Protection told Crain’s senior reporter Lynne Marek. “We’re working to get our capacity up.”

If businesses are going to have a �ght-ing chance of putting tens of thousands of now jobless people back to work, gov-

ernments like the city of Chicago are go-ing to have to move faster to help more employers cover the rent, meet payroll and keep the lights on. As soon as she is able, Mayor Lori Lightfoot must put more muscle behind the small-business bail-out program. She can and should work with Cook County Board President Toni Preckwinkle, who has a bailout program of her own, and with the governor as well as with lenders and the U.S. Small Busi-ness Administration to create a one-stop shop—a uni�ed dashboard of how-to information and guidance to help local businesses navigate the befuddling array of programs and incentives that are avail-able. And applications absolutely must be processed faster.

�e steps our elected leaders take now to bolster the economy will have a pro-found impact on what the world will look like after the virus passes—six, 12, 18, 24 months down the road. With millions los-ing their livelihoods and businesses going under by the day, we can’t a�ord to wait any longer to take intelligent action.

tractors. �ey are deliberately excluding us from the bene�ts that employees rely on, like unemployment, worker’s comp, collective bargaining and paid sick leave.

Just a week ago, Uber’s CEO wrote a letter to President Trump, arguing that our system needs a “third category” for gig workers in order to permanently ex-empt us from these employment protec-tions. We reject this cynical and oppor-tunistic attack on workers.

Right now, excluded workers like me need our elected leaders to support short-, medium- and long-term solutions that ex-pand our rights and protections.

Short term: Require gig employers to pay a lump sum into the unemployment system. Taxpayers are already subsi-

Lori Simmons has been a full-time driver for Lyft and Uber since 2016 and is a gig worker organizer with the People’s Lobby.

THE STEPS OUR ELECTED LEADERS TAKE NOW TO BOLSTER THE ECONOMY WILL HAVE A PROFOUND IMPACT ON WHAT THE WORLD WILL LOOK LIKE AFTER THE VIRUS PASSES.


Sound o�: Send a column for the Opinion page to [email protected]. Please include a phone number for veri�cation purposes, and limit submissions to 425 words or fewer.

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THE CORONAVIRUS DISASTER HAS BROUGHT TO THE FOREFRONT THE ISSUES CAUSED BY ALLOWING A MASSIVE INDUSTRY TO GO UNREGULATED.

tractors. �ey are deliberately excluding us from the bene�ts that employees rely on, like unemployment, worker’s comp, collective bargaining and paid sick leave.

Just a week ago, Uber’s CEO wrote a letter to President Trump, arguing that our system needs a “third category” for gig workers in order to permanently ex-empt us from these employment protec-tions. We reject this cynical and oppor-tunistic attack on workers.

Right now, excluded workers like me need our elected leaders to support short-, medium- and long-term solutions that ex-pand our rights and protections.

Short term: Require gig employers to pay a lump sum into the unemployment system. Taxpayers are already subsi-

dizing these corporations by paying for their drivers’ Medicaid and food stamps. This needs to stop. Also, Illinois must immediately expand its capacity to pro-cess unemployment claims. The Illinois Department of Employment Security is actively telling unemployed gig workers not to apply for federal relief because they don’t have a way to process our applications. We’re relieved that the federal government is covering unem-ployment insurance for gig workers for now, but that doesn’t do people like me much good if it takes a month to apply and even longer to get that money into our bank accounts.

Medium term: �e city of Chicago must follow New York’s example and enact pol-

icies that ensure a minimum income for both app-based workers and traditional taxi drivers.

Long term: Our state must pass legisla-tion similar to AB5 in California to expand employment rights and put a permanent end to the gig business model, ensuring that gig companies pay into the system and all workers are protected. According to a study by ADP Research Institute, 18 percent of Illinois’ workforce is made up of independent contractors. �e federal government has decided that unemployment insurance for workers like me is necessary in this crisis. It must be made permanent.

The coronavirus disaster has brought to the forefront the issues caused by allowing a massive industry to go un-regulated. This crisis should serve as a wake-up call to the fact that our country

runs on the labor of the people who give them rides and deliver their food.

Continuing to allow the misclassifi-cation of gig workers as “independent contractors” is a dangerous and costly mistake.


Nobody won race to sell next $3MRiver Forest houseFive homes were priced at that level and up. It’s clear the benchmark should have been about $1M lower.

BY DENNIS RODKIN

Five houses along a two-block stretch of Ashland Avenue in River Forest were priced at $3 million or more in spring 2018. �ey’ve all sold now, but none came anywhere near the target.

�e last one sold April 2 for $1.8 million, one of three that sold below $2 million. Another sold for $2 mil-lion. �e highest sale for any of the �ve was $2.05 million, which buyers paid in January for a 12,000-square-foot Tudor built in 1929.

�at leaves River Forest’s real es-tate record book unchanged from where it was before this derby be-gan: Two homes that each sold for $3 million-plus in 2008 remain the only ones in the pretty western suburb to hit that mark.

“�ere was some wishful think-ing” behind the $3 million-plus asking prices, says Tom Poulos, a Gagliardo Realty Associates agent. In late 2018 he took over represent-ing one of the �ve, a new-construc-tion house at 925 Ashland, after its asking price, originally over $3.8 mil-

lion, had dropped by more than $1 million.

“�is was never a $3 million or $4 million market,” Poulos says, “but there had been some big numbers” in 2016, when four River Forest homes each sold for $2 million or more.

�ree of the houses were histori-cal, and two were new construction, each built on about half the former site of a grand old mansion that was once the home of the man who in-vented the Mars and Snickers candy bars. Builder Avra Properties bought that house for $2 million in 2014.

�e house was demolished in 2016, and in early 2018 the two re-placements built there came on the market, one at a little more than $3.83 million and the other at just under $3.6 million. �ey sold in 2019, one when it was no longer publicly listed, for about $1.87 mil-lion and $2 million. (�e one that started with the higher asking price sold for the lower price.)

�e house that sold April 2 was listed in February 2016 for $3.75 million, more than twice the �nal sale price. �e broad brick Colo-nial, built in 1926, has six bedrooms and seven full bathrooms in 10,500 square feet on a lot about four-�fths of an acre. �e sellers, who bought it for $675,000 in 1996, renovated the kitchen, the basement and oth-er spaces and added an outdoor

swimming pool and pool house.Jennifer Vande Lune, the

@properties agent who represent-ed the house, declined to com-ment. So did Robert Swindal, an @properties agent who represented a 10,500-square-foot, six-bedroom

Italianate house built in 1919 on about four-�fths of an acre. It came on the market in June 2017 priced at $3.2 million and sold for exactly half that in March 2019.

In October 2017, Swindal said the two-block stretch of Ashland where

the �ve homes were listed at $3 mil-lion or more “has always been one of the most desirable and most expen-sive in River Forest, but now we’re looking at breaking $3 million.” As it turns out, $2 million would have been a better benchmark.

The house on First Street was used as the home of a corrupt Chicago alderman in the 1991 movie about �re�ghters

BY DENNIS RODKIN

A Hinsdale mansion that has been owned by a railroad executive and a prominent publisher—and, in the movie “Backdraft,” a corrupt Chicago alderman—is for sale.

�e 1890 home, with seven bed-rooms in 10,000 square feet on a little more than half an acre on First Street, is priced at just under $1.6 million. Jacqueline Gideon, an agent who’s not a�liated with a real estate brokerage, is repre-senting the house for sellers Joe and Rebecca Varan. It came on the market April 2.

�e house’s hefty brick and stone exterior in the Romanesque Revival style and �rst-�oor recep-tion area trimmed with carved wood played the home of �ctitious Ald. Martin Swayzak in a pivotal scene of “Backdraft.”

In the scene, a �re inspector and a �re�ghter, played by Robert De Niro and William Baldwin, respec-tively, go to the alderman’s house in time to interrupt an arsonist and pull the alderman out before a ball of �re explodes out of the house.

�e formal rooms of the house have 11-foot ceilings, extensive wood trim that Joe Varan believes was never painted over, and some original stained-glass windows and built-ins.

Originally owned by Elizabeth Grant, according to a list of Hin-sdale historical homes, the man-sion was later owned by John C. Fetzer, who headed the Illinois Northern Railway, a freight line, and invested in Chicago real es-tate. In the 1960s, the house was owned by Henry and Eleanor Regnery. Henry Regnery was a prominent publisher of conser-vative magazine Human Events, books by William F. Buckley and other conservative authors, and books for the University of Chica-go’s Great Books program.

�e Varans bought the house in 1997 for $1.3 million and added a rear addition that enlarged and modernized the kitchen, says Joe Varan, a real estate investor. Rebec-ca Varan is a corporate executive.

�ey are selling the house now because their children are grown, Joe Varan says.

19th-century Hinsdale house with a role in ‘Backdraft’ for sale

The house in the center was the last of the �ve to sell.


A house on the Lake Michigan shoreline in Evanston sold in two days for the highest price anyone has paid for a home in the town since mid-2018.

�e house, on about one-third of an acre on Lakeside Court, was listed Jan. 27 at $3.3 million and went under contract two days lat-er. �e sale closed April 2 at the full asking price.

In the past three years, Evan-ston homes that sold for $2 mil-lion or more averaged 518 days on the market, according to Mid-west Real Estate Data. Of course lakefront property, which is much more rare than landlocked homes, behaves di�erently than the over-all market.

�e Lakeside Court property in-

cludes 95 feet of lake frontage and a four-bedroom, 3,250-square-foot house built in 1955, accord-ing to the listing posted by Sally Mabadi, the Berkshire Hathaway HomeServices Chicago agent who represented it. Mabadi was not available for comment.

�e seller, William Breen, now an emeritus professor of �nance at Northwestern University’s Kellogg School of Management, bought the home in 2001; the price he paid is not clear in county pub-lic records. Breen could not be reached.

�e buyers are not yet identi�ed in public records. �e agent who represented them, Emily DeSte-fano of @properties, declines to comment beyond saying they will live in the existing house and not tear it down to build a replace-ment home.

�e last Evanston home to sell for a higher price was a lakefront house on Kedzie Street that Cubs pitcher Yu Darvish bought for $4.55 million in May 2018.

This lakefront Evanston home sold in two days

This county’s housing market is highly vulnerable to COVID

The $3.3 million purchase price was the suburb’s highest since mid-2018

One in the Chicago area ranks fourth-highest on a list of 483 in the U.S.

�e housing market in McHenry County is one of the most vulnera-ble in the country in the event of a big economic downturn from the COVID-19 crisis, according to a re-port.

McHenry is the fourth most vulnerable among 483 counties ranked in a study released April 7 by Attom Data Solutions, an on-line property information service based in Irvine, Calif.

Kane County ranked as the 20th most vulnerable, followed by Will (30), Lake (36), Cook (55) and DuPage (88).

Attom ranked counties on three factors: lack of a�ordability of housing, the proportion of home-owners who owe more on their mortgage than their home is worth, and the number of properties that were in some stage of foreclosure in the last quarter of 2019.

“�e higher a local market ranks

on those factors, the more at-risk it is of a fall, whether this means price declines, greater mortgage delinquencies, declining home eq-uity or some combination of those three,” Todd Teta, Attom’s chief product o�cer, says in an email. “�ere are other important factors, too, including how dependent lo-cal job markets are on industries decimated by the virus outbreak,” but those are not part of this study derived from property data.

McHenry County housing is the least a�ordable of any Chicago- area county by Attom’s measure. �e monthly cost of a median- priced home in the county is 39 percent of the median local in-come, compared to less than 24 percent in Cook County. Relatively low a�ordability combined with a relatively high rate of underwater mortgages and foreclosure activi-ty to rate McHenry as among the most vulnerable counties. It’s im-portant to note that the last factor,

properties in foreclosure, is greatly reduced since the wave of foreclo-sures that followed the housing bust of 2007, not only in McHenry but in the other local counties.

In counties high in Attom’s rank-ing, “there is a signi�cant potential impact for a cascading series of events,” Teta says. �at could in-clude buyers pulling back from a market they perceive to be expen-sive, causing sellers to reduce their prices. It could also prompt people who are underwater to walk away from their homes in the event of a job loss or other �nancial problem.

In Attom’s U.S. ranking, the most vulnerable counties are heavily concentrated on the East Coast. Of the top 50, 21 are in New York City’s solar system in New Jersey, New York and Connecticut. Ten are in Florida.

All �ve Midwest counties among the 50 most vulnerable are in Illi-nois: McHenry, Kane, Will, Lake and Tazewell, in the Peoria area.

BY DENNIS RODKIN

BY DENNIS RODKIN

The Woodstock Opera House in Woodstock, the county seat of McHenry County.

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Big trading firms form new crypto acceleratorDRW, Jump Capital, CMT Digital and Volt Capital are locking arms to give young cryptocurrency �rms a boost

BY LYNNE MAREK

Some of Chicago’s biggest trad-ing �rms are coming together to form a new accelerator aimed at giving young cryptocurren-cy �rms a boost and raising the city’s pro�le as a nexus for the industry.

DRW’s Cumberland crypto unit, venture-capital �rm Jump Capital, CMT Digital and Volt Capital are locking arms to found Chicago DeFi Alliance, which will provide crypto entrepre-

neurs and startups with connec-tions to Chicago trading �rm pro-fessionals, regulatory guidance

and, potentially, capital from the founding �rms, according to a statement from the alliance. “DeFi” is short for decentralized �nance.

“�is isn’t an investment vehi-cle per se but a support structure for crypto startups globally,” says Imran Khan, a general partner at crypto venture fund Volt Capital. “We would like the next crypto exchange to leverage Chicago’s trading talent and ecosystem. If investment opportunities were available, we would invest based on an individual �rm’s strategy.”

Khan will run the organization day to day with Brad Koeppen, head of trading and business de-velopment at trading and invest-ment �rm CMT.

It’s a bid to revive Chicago’s early role cultivating the crypto

market after recent declines in the value of some cryptocur-rencies, including the biggest, bitcoin. �e city seeded and attracted a number of businesses in the na-scent industry, such

as San Francisco-based Coinbase and Virginia Beach, Va.-based Bcause. However, it has had its

ups and downs as a hub as some companies struggled. Last year, Coinbase pulled out of Chicago, and Bcause �led for bankruptcy protection.

Still, the founding Chicago �rms have elevated the industry with their venture investments. DRW Holdings, led by CEO Don Wilson, is parent to one of the biggest trading �rms in the coun-try, DRW Trading, and major crypto asset trading �rm Cum-berland as well as a venture arm that has invested heavily in �n-tech and crypto startups. Simi-larly, venture-capital �rm Jump Capital is an outgrowth of Jump Trading, another big Chicago

trading �rm that, like DRW, acts a market-maker buying and selling on �nancial exchanges all over the world.

“Jump Capital is pleased to be a founding member of the Chicago DeFi Alliance, which creates an opportunity to close the knowl-edge gap between DeFi startups and the Chicago digital asset and trading communities,” says Peter Johnson, a principal at Jump Cap-ital. “Chicago is the ideal place for this alliance, as it is home to many of the industry’s leading trading �rms, digital asset and block-chain venture-capital funds, and innovative DeFi startups.”

CMT Digital, led by CEO Col-

leen Sullivan, is a smaller Chica-go �rm that has also invested sig-ni�cantly in crypto companies, contributed to developing com-pliance practices, and cultivated an ecosystem for the �edgling crypto industry.

Some startups have already signed up to be inaugural us-ers of the accelerator. San Fran-cisco-based Dydx and Chi-cago-based Yield have been selected to be part of the �rst cohort of �rms moving through Chicago DeFi, Khan says.

Other a�liates of the new alli-ance include Omaha, Neb.-based TD Ameritrade and Chicago trading �rm DV Trading.

A big Greek wedding for gyros firmsKronos and Grecian Delight are combining under private-equity ownership

BY STEVEN R. STRAHLERChicago’s gyros industry is in

for a spin.A private-equity �rm that ac-

quired Kronos Foods in February is taking a stake in Grecian De-light Foods, facilitating a merg-er of the two suburban �rms

into an estimat-ed $320 million business. Grecian Delight CEO Peter Parthenis Jr. will remain an own-er with his family and run the com-bined company of 400 employees. Terms were not disclosed.

Kronos and Grecian Delight date to the mid-1970s when, along with other startups, they began to turn Chicago into the Silicon Valley or Battle Creek of gyros production. Over the years, fast-food customers became ac-customed to the sight of rotating cones of compressed meat and the sound of carving knives being

sharpened.Like other meat producers,

the gyros industry has diversi-�ed into plant- and other pro-tein-based foods. Parthenis, 44, a son of Grecian Delight’s founder, says the deal will speed that trend and set the stage for acquisitions.

�e purchase of Kronos by Chicago-based Entrepreneurial Equity Partners is the fourth by private equity since 1994. How-ard Eirinberg, Kronos’ CEO since 2013, is leaving. Eirinberg, a for-mer president of Vienna Beef, de-clines to comment.

In addition to the impact the coronavirus is having on the food industry, Parthenis doesn’t rule out layo�s or other cost-cutting typically associated with pri-vate-equity buyouts and con-solidation. Kronos is larger by several tens of millions of dollars in revenue than Grecian Delight, which had about $140 million in revenue last year.

“We’re going to see where we can eliminate duplications,” Parthenis says, while aiming for growth. Grecian Delight’s two plants in Elk Grove Village and Kronos’ single factory in Glen-dale Heights will continue to operate, he says. “�e challenge right now is the quick drop in de-mand these last two weeks.”

Among other local gyros-in-gredient suppliers are Devanco Foods in Carol Stream, with more than $50 million in annual sales, and Olympia Foods in Frank-lin Park. Hormel Foods in 2017 bought McCook-based Fontanini Italian Meats & Sausages, whose lineup includes gyros meat.

Parthenis’ new �rm, dubbed World Foods but continuing to be known by its brand names, is likely to be sold again in �ve to seven years, he says. �at’s in line with private equity’s tradi-tional timeline for holding port-folio companies, though Kronos was owned for 12 years, through the Great Recession, by Chica-go-based Prospect Partners.

“A lot of time frames got stretched out in the early 2010s,” says Prospect Partners’ Louis Kenter, crediting Eirinberg with reviving Kronos. Attempts were made to do deals with competi-tors, according to Kenter. Parthe-nis says Kronos has been on Gre-cian Delight’s radar for decades.

Mark Burgett, managing part-ner of Entrepreneurial Equity, which says it invests $25 million to $150 million in transactions focused on food and consum-er packaged goods, declines to comment.

Devanco CEO and former Kro-

nos executive Peter Bartzis pre-dicts an eventual sale of World Foods to Hormel or another large �rm: “�at will be good for the smaller guys. We will survive and thrive in this environment.”

Parthenis says the meat side of the business accounts for about half of revenue and is still growing, albeit more slowly than plant-based and other products. �ey include Greek yogurt, �at-breads, falafel and hummus dips and spreads that are sold to gro-cery, food service and other retail chains such as Sam’s Club.

What goes into those hunks ro-tating on a spit, you ask? Across the industry, various mixtures of ground beef, lamb, chicken, pork, breadcrumbs and seasonings,

all shaped with 60 pounds per square inch of hydraulic force.

“�e trick,” Kronos founder Chris Tomaras told the New York Times in 2009, “is to use certain forces, like temperature and pressure, to preserve the product as a solid mass, so it doesn’t de-teriorate.” Tomaras died at 78 in 2015.

�e twirling cooking device is known as an autodoner. Kronos calls its version the Kronomatic.

Parthenis says meat deliv-ery sizes range from 10 pounds to 40 pounds. But at the facto-ry, 500-pound monster slabs are used to produce robotically sliced packaged products, an in-novation that has boosted sales to customers like Arby’s.

Peter Parthenis, CEO of Grecian Delight Foods

Imran Khan, a general partner at crypto venture fund Volt Capital, will co-run the organization day to day.

THE ORGANIZATION IS DESIGNED TO PROVIDE “A SUPPORT STRUCTURE FOR CRYPTO STARTUPS GLOBALLY.”Imran Khan, general partner, Volt Capital


according to an analysis of loan data. In a best-case scenario, ho-tels will start �lling back up as lei-sure travel rebounds this summer after the lifting of government re-strictions to contain the coronavi-rus.

But even then, a slower come-back in business travel and trade shows means many hotels still won’t generate enough cash to cover loan payments.

“We’re not going to recover to 75 percent (occupancy) overnight,” says Stacey Nadolny, managing director and senior partner in the Chicago o�ce of HVS, a hospital-ity industry consulting �rm. “It’s going to take a couple years to get there.”

An examination of �nancial data on local hotels underscores the challenge. �e data covers 29 Chicago-area hotels with loan bal-ances exceeding $10 million that have been assembled and resold as bonds, or commercial mort-gage-backed securities. CMBS loans account for about 20 percent of all outstanding commercial real estate debt and constitute one segment of the debt market with publicly available data on speci�c properties.

Of the 29 local hotels, the over-whelming majority would �unk a �nancial “stress test” subjecting them to a 50 percent drop in net cash �ow before debt payments. �ough few analysts are providing public guidance on what could happen to hotel cash �ows, the market is so bad that a 50 percent

decline this year could be a good outcome for many hotels. Nadolny expects a lot will be in the red even before adding in debt payments.

Burdened with $423 million in CMBS debt, the Palmer House has the most to lose. �e hotel at 17 E.

Monroe St., the city’s second big-gest, with 1,639 rooms, was head-ing in the wrong direction even before the coronavirus arrived. Its net cash �ow before debt pay-ments fell to $27.2 million in the 12 months through September, down

19 percent from a year earlier, according to Bloomberg loan data.

�at was still enough to cov-

er $25.3 million in debt payments, but the margin of safety has nar-rowed. If its net cash �ow drops more than 7 percent, the hotel will no longer be able to cover its mort-gage from operating funds.

Representatives of �or Equi-

ties, a New York real estate �rm that bought the Palmer House in 2005, didn’t respond to multiple requests for comment.

Four blocks to the north, theWit also is in a tight spot. �e 310-room boutique hotel at 201 N. State St. has su�ered from fall-ing revenue over the past several years, pushing its net cash �ow before debt down to $4.6 million, still enough to cover $4.2 million in annual debt payments, but not by much, according to Bloomberg data.

A 50 percent decline in net cash �ow would be devastating, but Scott Greenberg, theWit’s owner, won’t let that darken his peppy mood.

“We’re going to weather the

storm,” Greenberg, president and co-owner of Lincolnshire-based ECD, says in a brief interview, de-clining to get into the speci�cs of how. “We are fully con�dent that we will be better than ever, not tomorrow, not the next day, but sometime in the future.”

�e present couldn’t be much worse. Since the coronavirus shut down business and leisure trav-el and conventions last month, the weekly local hotel occupancy rate has dipped as low as 16.1 per-cent, according to STR, a research �rm based in suburban Nashville, Tenn. �e downtown occupancy rate has fallen as low as 5.9 per-cent.

If the pandemic fades and life returns to normal in the next cou-ple of months, there’s still hope for hotels. But they’ll need to pray that tourists get comfortable traveling again—and quickly, Habeeb says.

“If the virus gobbles up the summer season, it’s going to be catastrophic,” he says.

Some forecasts portend a bleak future. Fitch Ratings projects that the delinquency rate for U.S. hotel CMBS loans could jump to 30 per-cent from 1.44 percent now, high-er even than the 21.3 percent peak in the last recession. HVS forecasts that hotel values nationally will drop 20 to 35 percent and won’t recover to their pre-pandemic lev-

els until 2024 at the earliest.If values fall enough, some local

hotels could wind up worth less than their debt—a common prob-lem after the last recession. �at, combined with a severe drop in cash �ow, could push hotels with maturing loans into default, un-able to re�nance with a new mort-gage. Exhibit A: �e Hilton Suites Chicago Magni�cent Mile, which is carrying about $72 million in CMBS debt that comes due Oct. 1. �e hotel is barely covering its monthly mortgage payments now.

�e list of local hotels on the CMBS loan bubble is long, and it includes such properties as the Inter Continental Chicago on North Michigan Avenue and a Marriott Residence Inn and Spring Hill Suites in River North. Some, like the Whitehall and Ivy hotels downtown, are already struggling with cash �ows that have fallen below their debt costs.

Many hotel owners in debt trou-ble will ask CMBS loan servicers for more time to pay o� maturing loans. Some will try to persuade servicers to restructure their loans to lower or defer their monthly payments. Others may decide to �ght it out in court—or just give up and walk away.“�ere are going to be a lot of as-sets that come back to the banks,” says Nadolny at HVS.

Chicago hotels face the COVID stress test. Which inns are in danger of flunking?

Why Jimmy John’s is better prepared for slowdown than its sub sandwich rivalswith a well-developed delivery mod-el. �e company employs 45,000 drivers who make deliveries from its 2,800 restaurants. Delivery is limited to a �ve-minute radius around each restaurant, helping the company live up to its advertising tagline.

Jimmy John’s refuses to trust de-livery to outside services such as Grubhub or DoorDash. Doing so would deprive the company of con-trol over quality and delivery times, Jimmy John’s executives explained last year in interviews with various media outlets. �ird-party deliver-ies typically arrive within 15 to 30 minutes, according to Service Man-agement Group, a restaurant market research �rm.

Competitors Subway and Jersey Mike’s, by contrast, have little choice but to live with that loss of control.

Without delivery capabilities of their own, they’re engaging third parties at a time when delivery demand is surging. Potbelly uses a combina-tion of in-house delivery drivers and third-party services.

“Jimmy John’s and the fast-food companies with drive-thru have been well suited and able to serve the customer,” says David Henkes, a senior principal at Technomic, a Chicago-based market research �rm. “Fast-casuals like Potbelly and Panera . . . they have all dipped their toes into delivery, but those are restaurants that thrive on in-person dining.”

Fast, e�cient delivery mitigates Jimmy John’s losses in the downturn while positioning it to gain ground on competitors in the long term. �e longer the slump lasts, the more op-portunities Jimmy John’s will have to impress new customers with fast

delivery and win lifelong converts.Even before the COVID-19 out-

break, companies like Jimmy John’s were outpacing dine-in-depen-dent rivals. Over the past few years, the growth of o�-premise dining exceeded total restaurant growth, according to data compiled by Technomic. In 2018, o�-premise dining expanded 5.2 percent, while on-premise dining saw 3.5 percent growth. �at increased the overall U.S. market share of o�-premise din-ing to 38 percent of all dollars spent on dining, translating to $209 billion.

DEGREES OF PAIN�e pandemic likely will turn

sales trends negative for both groups in 2020 but hit on-premise dining harder. Technomic predicts chains focused on delivery and takeout will see a 5.5 percent sales decline for the year, while those that rely on their

dining rooms will experience a 6.4 percent drop.

Another advantage Jimmy John’s possesses was seen as a drawback only a few months ago: simplicity. Over the last decade, customiza-tion has emerged as a key feature to attract a broader set of diners who want more variety or have dietary restrictions.

Potbelly, for example, o�ers four types of bread, 10 cuts of deli meat and up to 23 veggies and toppings. Customers wait as the sandwiches go through an oven before the �nal customizations are added and the sandwich is ready to eat.

But Jimmy John’s limits customer options to two types of bread and eight toppings. �e menu board numbers sandwiches from 1 to 17, and there’s no oven to slow service. According to Mike Halen, a restau-rant analyst for Bloomberg Intelli-

gence, that single-minded aim for speed and simplicity is important during the downturn.

“Everybody is sitting at home and ordering delivery,” says Halen.

Jimmy John’s focus on delivery eases the blow of COVID-19 restaurant closures. Fast-food chains that emphasize delivery and takeout haven’t been hit as hard as rivals that rely on dine-in service.

SAME-STORE SALES CHANGEFrom a year earlier for the week ended March 30

Source: MillerPulse

Delivery/takeout

Industry-42.4%

-27.4%

-50.8% Dine in

DELIVERY WINSFAST FOOD from Page 3

w BRACING FOR IMPACT

Downtown hotel occupancy has been in the single digits for three straight weeks as the coronavirus cripples the hospitality industry.

OCCUPANCY RATE

60

40

10

80%70

50

3020

0March

29-April 4

175

150

$200

125

100Feb. 2-8

Feb. 16-22

March1-7

March15-21

AVERAGE DAILY RATE

7.0%

March 29-April 4

Feb. 2-8

Feb. 16-22

March1-7

March15-21

$108.91

Source: STR

Among the big Chicago hotels most vulnerable to ticking debt bombs are, clockwise from left, theWit, Whitehall, W Chicago City Center and Hilton Suites Chicago Magni�cent Mile.

COST

AR PH

OTOS

“IF THE VIRUS GOBBLES UP THE SUMMER SEASON, IT’S GOING TO BE CATASTROPHIC.”Robert Habeeb, CEO, Maverick Hotels & Restaurants

HOTELS from Page 1

PEOPLE ON THE MOVE Advertising Section

To place your listing, visit www.chicagobusiness.com/peoplemoves or call Debora Stein at 917.226.5470 / email [email protected]


Klein and Hoffman, Inc., Chicago Chicago-based structural engineering and architecture firm Klein & Hoffman named Homa Ghaemi, SE, PE its new Chief Executive Officer. Ghaemi steps into the role, while current CEO Jon Boyd, RA, SE steps down. Boyd remains in his role as Chairman of the Board. Homa Ghaemi, COO and Senior Principal, has been with the firm for 19 years. Having worked closely with Boyd for years, Ghaemi plans to continue to grow the firm and develop the team-based culture “Working Together. Building Integrity.”After 19 years at Klein & Hoffman, Boyd returns to his roots as a Licensed Architect and Structural Engineer while continuing to focus on advancing the technology used in the firm’s work and growing the focus on building sustainability and energy efficiency.

ARCHITECTURE / ENGINEERING

Ghaemi

Boyd

K2 Intelligence FIN, Chicago

Lisa Silverman has been promoted to Senior Managing Director at K2 Intelligence FIN. Joining the firm’s Investigations & Disputes practice in 2015, Lisa has spent her career conducting multi-jurisdictional investigations ranging from complex frauds, to asset searches, to due diligence for corporations and government agencies. She is particularly well known for her corporate activism expertise, working with attorneys, hedge funds, and companies to enhance their legal and business strategies.

CONSULTING

Benesch, Chicago Davis Chin joins Benesch as Of Counsel in the Intellectual Property Practice Group. Davis focuses his practice on intellectual property prosecutions, transactions and strategy. Davis has extensive experience in preparing and prosecuting patent applications related to a wide range of technologies in various areas.Daniel Murow joins Benesch as an Associate in the Real Estate Practice Group. Daniel advises and counsels clients in all facets of commercial real estate transactions. He works with Real Estate Investment Trusts (REITs), institutional and individual investors, private equity funds, developers and owners in the acquisition, disposition, development and financing of commercial properties across all asset classes.

LAW FIRM

Chin

Murow

Skadden, Chicago Skadden is pleased to announce David Clark and Marcie Lape have become partners of the firm. Mr. Clark focuses on M&A, corporate governance, and other corporate and securities matters. Ms. Lape has extensive experience representing corporate and individual clients in commercial litigation and arbitration, including securities class actions, shareholder derivative suits, and disputes relating to M&A and commercial contracts. She also advises corporations and individuals in investigation matters, including enforcement actions before the SEC and CFTC.

LAW FIRM

Clark

Lape

ReaderLink, Oak Brook

ReaderLink is pleased to announce the addition of Charles McStravick as Art Director. His client list ranges from Suze Orman, PBS, Disney, PGA Tour, to Lost Abbey Brewing. Charles comes to ReaderLink Marketing Services with a 20-year career in publishing, creative art direction and design.

PUBLISHING

Saggezza, Chicago

Saggezza, a global technology solutions provider and consulting firm, welcomes Jeff Pigatto as the Vice President and Global Head of its Salesforce Practice. As Saggezza’s Salesforce Practice lead, Pigatto will oversee business development, drive customer success, and nurture the Salesforce alliance partnership to further support clients leveraging the Salesforce Customer Success Platform. Previously, Pigatto held leadership roles at multiple Salesforce Global System Integrators (GSIs).

TECHNOLOGY SERVICES

Dorion-Gray Retirement Planning, Inc., Crystal Lake

Sean C. Gay joined Dorion-Gray Retirement Planning. Mr. Gay has been piloting client financial plans and managing client portfolios since 1999. He brings his formidable skills to educate and guide clients working towards their financial goals. In 2019 Dorion-Gray Retirement Planning merged with Professional Wealth Advisors, LLC. Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC.

WEALTH MANAGEMENT

To everyone at the frontlines of the pandemic,

from health care employees to food services,

words cannot begin to express our gratitude.

You sel�essly take care of others, putting their needs

ahead of your own. In times like these, your strength

and resiliency are an inspiration to all.

THANK YOU

How is climate change impacting your organization, and how are you dealing with it?

Michelle Carr: �e urgency of the climate crisis has driven us to ask ourselves, “Can nature and people thrive together?” �rough scienti�c inquiry, we found the answer is yes, but if and only if we move toward a more sustainable path, and advance strategies that address the biggest threats to both nature and people simultaneously. Climate change is now integrated into every aspect of our work. Restoring and managing natural and working lands remains a key priority, because this enhances land’s ability to store carbon and reduce greenhouse gas emissions. We also promote clean energy, advance smart, bipartisan climate policies and help nature and people build resilience to climate impacts that are already happening.

Howard A. Learner: Climate change is already causing signi�cant, far-reaching impacts on our ecology and economy, including more extreme weather, degraded water quality and increased erosion in the Great Lakes, and tougher growing conditions for farmers. �e U.S. Army Corps of

Engineers is forecasting that Lake Michigan water levels will be even higher in 2020. �at means more �ooding of communities along the shoreline. ELPC is urging preparedness today to protect people, public health and our communities. Policymakers and the public will need to rethink the Great Lakes shoreline’s built infrastructure and natural systems in light of climate change realities—more extreme higher, though occasionally lower, water levels. �e time for action is now. We’re engaging our legal, science and policy advocacy expertise to accelerate sensible green infrastructure strategies and climate change solutions that work for us all.

Ted Hamilton: Climate change impacts all organizations and all people. What’s more important is what companies are doing about it. At Elkay, we recognize and accept that climate change is, in part, our responsibility. We’re trying to make a di�erence; in early 2019, we launched our �rst-ever Corporate Social Responsibility report and are moving toward measuring and improving our performance on complex challenges like greenhouse gases. Programs like our newly created work from home initiative reduce commuting time for our employees, so in addition to enhancing employee work-life balance, we’re also reducing our GHG footprint. We like to look for win-win opportunities like these when putting new corporate responsibility initiatives in place.

How have recent rollbacks of environmental protections affected the Chicago area?

Carr: Environmental protections have been put in place to protect nature and people, not just today, but in the future. Removing them undermines the progress made by these remarkably e�ective tools. For example, the EPA and the National Highway Tra�c and Safety

Administration recently rolled back fuel economy standards. Reducing these emissions is essential to meet the challenge of climate change and for Americans’ health, especially in cities like Chicago where auto emissions are concentrated. Rolling back these standards lowers air quality, increases costs by forcing people to buy more gas and leaves our country behind by taking us o� course to achieve net zero emissions.

Hamilton: With the EPA reducing Midwest inspections by as much as 60%, manufacturers have to step in and put more emphasis on e�orts to protect the environment—the public

relies on us to �ll the void. �e recent Edelman Trust Barometer identi�ed that consumers trust businesses more than the government or any other type of institution. Companies need to continue self-monitoring and self-regulating our environmental impact to live up to and retain that trust, and

not wait for a government agency to regulate our behavior and enforce doing the right thing. At Elkay, one of our core values is “We are in business forever,” which calls on us to do our part to ensure that the world we live in and the resources we depend upon are here for future Elkay generations.

Learner: President Trump’s “War on the Great Lakes” threatens safe, clean water, �sheries and enjoyable outdoor recreation in Lake Michigan and the other lakes, which are cherished by all. �e EPA’s cutbacks in the Clean Air Act standards for the Chicago region mean dirtier air,

TED HAMILTONPresident - Elkay PlumbingElkay Manufacturing [email protected]

MICHELLE CARRIllinois DirectorThe Nature [email protected]

HOWARD A. LEARNERPresident, Executive DirectorEnvironmental Law & Policy [email protected]

SPONSORED CONTENT

Addressing Climate Change for Nature

and Peoplenature.org/climate

Crains ad v. 6 3-27-20.indd 1 3/27/2020 2:59:28 PM

“ . . . IN EARLY 2019, WE LAUNCHED OUR FIRST-EVER CORPORATE SOCIAL RESPONSIBILITY REPORT AND ARE MOVING TOWARD MEASURING AND IMPROVING OUR PERFORMANCE ON COMPLEX CHALLENGES LIKE GREENHOUSE GASES.”- TED HAMILTON

CLIMATE CHANGEADDRESSING THE THREATAccording to the EPA, most of Illinois has gotten warmer, �oods are becoming more frequent and ice cover on the Great Lakes is forming later or melting sooner. In the coming decades, it’s predicted that we’ll have more extremely hot days, with a climate similar to today’s Texas. Three local executives on the front lines of addressing climate change shared their insights with Crain’s Content Studio.

NEW_ 4_13_CLIMATE_ CHANGE_ ROUNDTABLE.indd 17 4/7/20 9:03 AM

more pollution and worse public health, especially for vulnerable children and elderly folks. Our legal team and colleagues are working overtime in the courts to protect the

Midwest environment, public health and safety. Fortunately, many of the rollbacks thus far have been stopped or stalled because they’re contrary to law. �e Trump administration is moving to weaken federal public health and environmental protections during the extraordinary COVID-19 public health crisis—these misplaced rollbacks trump ideology over common-sense priorities.

What are your organization’s sustainability priorities?

Carr: As a global organization, we’re setting science-based sustainability goals to reduce our carbon footprint across more than 70 countries where we work. For example, the Illinois Rivers Program O�ce at Emiquon National Wildlife

Refuge in Lewiston has received Gold-level LEED certi�cation. Since March 2018, the energy usage charge for the building has been $0. To a�ect change at scale, sustainability e�orts like this must

be implemented across the world and tackled with a range of stakeholders. Our strategies are designed to address the biggest threats to both nature and people—one of which is climate change—to ensure both can thrive. Our conservation approaches focus on creating sustainable landscapes, communities and systems.

Learner: ELPC’s core values include seizing opportunities to achieve environmental progress and economic growth together. We put that sustainability principle into practice through our clean energy and clean transportation advocacy programs. Likewise, our downtown Chicago o�ce puts our values into practice. We’ve combined innovative technologies and forward-thinking design to

create a workspace that protects the environment, is healthier for our sta� and makes good economic sense. We received LEED Platinum status—the highest LEED rating—in August 2011, and later added solar panels to the exterior walls of our o�ce, which is located in a historic landmark building. �is was a new approach to installing solar panels and required a number of permitting and approval steps. Now that we’ve successfully achieved this, we hope that other o�ces in high-rise buildings will follow suit.

Hamilton: Elkay’s �ve focus areas for sustainability include material health and transparency; climate initiatives; corporate responsibility; employee engagement; and extended producer responsibility. We’re currently prioritizing material health and transparency by developing health product declarations for all of our products. �ese full-material disclosures will help customers make informed purchasing decisions, while enabling us to identify and phase out substances in sourced sub-assemblies that are potentially hazardous to human health or the environment.

Please describe a climate- or sustainability-related project your organization is undertaking. How do you track and measure ROI?

Carr: Nature naturally stores carbon and plays a key role globally to �ght climate change. Here in Illinois, top opportunities for this include �oodplain restoration and advancing sustainable practices in agricultural production. Both have bene�ts beyond greenhouse gas mitigation. Protecting and restoring �oodplains, especially forested �oodplains along the lower Mississippi River, helps sequester carbon while mitigating �ood risk for farmers and community members. Wildlife bene�ts, too. On agricultural lands, we’re working in partnership with the agricultural community to advance practices that promote healthy soil. �e combined use of reduced tillage, cover crops and nutrient management practices not only sequester carbon, but also improve water quality. �ese practices increase soil resilience, bu�ering it from future climate impacts like harder rains in the spring and more inconsistent rains in the late summer. A strong ROI is inherent to most conservation approaches because they deliver multiple co-bene�ts.

Hamilton: �is year, Elkay is taking on a greenhouse gas inventory and a water reduction project at our largest manufacturing plant. �e greenhouse gas inventory, requested by one of our largest global customers, provides a precise look into our direct and indirect resource consumption. With this level of data, we’ll be able to assess areas for resource reduction. As we make changes to our facilities to increase resource e�ciency, we expect to experience signi�cant utility savings. Another one of those win/win situations we keep �nding as a result of this e�ort. Outside of the decrease in our bills, the project will also protect our facilities from resource volatility and prepare our operations for future resource use regulations.

Learner: Accelerating the transition to cleaner renewable energy is necessary to reduce carbon pollution. ELPC helped cra� and pass the Illinois renewable energy portfolio standard, which puts the state on a path to accelerate development of 3,000 megawatts of new solar; the prior baseline was less than 100 megawatts. �e Illinois Solar for All program involves meaningful deployment of and access to solar in low-income communities leading to lower utility bills for participants in these programs, job opportunities with hands-on training necessary for certi�cation, and cleaner air for all in Illinois. Good for job creation, good for economic growth and good for the environment. �at’s a win-win-win!

What lessons from the COVID-19 pandemic thus far can we apply to the �ght against climate change?

Carr: It’s di�cult to watch the severity of this pandemic unfold, and see the incredible toll it’s taking on humanity, from patients to �rst responders to businesses and many more. It makes us realize just how much all of us who share this earth are connected. �at’s important to consider as we work to address climate change. �e pandemic highlights the role that science plays in our lives and reinforces the need for coordinated action at both the local and federal levels to move the needle on threats of this size and scope. Climate change is no di�erent. We must have science-based, bipartisan policies in place if we want to create jobs, protect nature and cut pollution.

Learner: �e central lessons are that we’re all in this together, preventative actions and rapid responses save money and lives, and that following and learning from sound science matters. �e spread of the coronavirus underscored how we’re globally connected, and when it comes to climate change, it doesn’t matter whether the greenhouse gas pollution comes from a coal plant in Indiana or in Indonesia. Collective rapid, systemic action is necessary to contain the COVID-19 pandemic and to counter climate change. �e public is recognizing that allowing politics to trump sound science when it comes to COVID-19 or climate change realities is a tragic and costly losing approach.

Hamilton: �rough the COVID-19 pandemic, we’ve learned that you can’t act fast enough. You need to be thinking several steps ahead and meet the unfolding situation where it’s headed—not where it is today. Climate change might not yet be a pandemic, but it’s a severe worldwide concern, and in battling its impacts, it’s in many ways similar to what we’re experiencing with COVID-19. We know that doing nothing is not an option. Deliberative lifestyle changes—be they in response to a pandemic, or a radically warming planet—are necessary to get us to the future world we want to live in. What does that future-state world look like? What are the circumstances that are necessary to bring it about? Once we’ve answered those questions, we can outline the lifestyle adjustments that are necessary to bring about that desired reality.

How can individuals most effectively reduce their carbon footprint?

Learner: �e transportation sector has become the largest producer of greenhouse gas pollution in the United States. People can make a di�erence in advancing climate change solutions by changing how they go from place to place. Walking

Elkay ad. Crain’s Chicago Business. Attract & Retain Special Issue. March, 2020.

Imagine working for a company that inspired this kind of feedback:• I’m proud to work for Elkay.• The company invests in my success.• I do work that makes a difference.

Come to work for Elkay, and that’s how you’ll feel.Elkay is a thriving, values‐driven global company focused on doing the right things so we can be in business forever. We’re financially‐stable and family‐owned, with an enduring reputation for ethics, integrity, giving back, and providing an engaging, inclusive environment where careers flourish and grow.

If you’re ready to join a company where everything you do makes a difference and you go home proud at the end of each day, visit Elkay.com and talk to us about joining the Elkay family!

• I love my co‐workers.• I feel like part of a family.

“OUR LEGAL TEAM AND COLLEAGUES ARE WORKING OVERTIME IN THE COURTS TO PROTECT THE MIDWEST ENVIRONMENT, PUBLIC HEALTH AND SAFETY.”- HOWARD A. LEARNER

CLIMATE CHANGE ADDRESSING THE THREAT


more and biking more are healthier and avoid pollution. Let’s use the CTA, Metra, Pace, the city’s growing system of bikeways and walkways like the Pedway and Riverwalk. At home, by switching to more energy e�cient lighting, HVAC and appliances, and installing solar panels in the right locations, people can reduce their carbon pollution and save money on their utility bills. �at’s a good deal for our budgets and for the planet.

Carr: �ere is an action we think is extremely important—talking about climate change with friends, family and loved ones. Even though seven in 10 Americans believe climate change is happening, and six in 10 are at least somewhat concerned about it, two-thirds of Americans rarely, if ever, talk about climate change with the people they care about. We must foster a good dialogue about this issue if we want to a�ect change. Conversations at home can lead to conversations with coworkers, business leaders and ultimately policy makers, which is essential for gaining traction on durable climate policies.

Hamilton: �ose who have the resources can vote with their dollar by supporting businesses that are actively working to decrease their carbon footprint. �ese activities are o�en �nancially and time-intensive, so seeing support from consumers provides the necessary motivation for companies to continue their reduction activities. As a result, purchasing products with smaller

carbon footprints will decrease your carbon footprint. You can also do your own simpli�ed greenhouse gas inventory by documenting your use of electricity, natural gas and water each month. �is will help you and your family better understand what contributes to your usage and how you may be able to cut back.

How can we overcome the current political divide on climate change? What longer-term impacts can we expect?

Hamilton: It helps to remind ourselves that climate change and environmental sustainability are scienti�c topics, not political issues. With the U.S. withdrawal from the Paris Climate Agreement,

corporations like Elkay stand �rm in our sustainability goals. It helps that �nancial institutions like Blackrock and thought leaders like the Business Roundtable have weighed in on climate change and openly embraced sustainability practices. �is reinforces the importance of making changes now through investments, innovations and large-scale procurement, leading to a more environmentally and economically stable world. Right now, Elkay is actively exploring options to make material transparency available on all products to support healthy buildings, regardless of budget.

Carr: We’re an apolitical organization and have a history of working to promote bipartisan solutions to environmental problems. Moving forward, we’ll need to bring even more diverse constituents on board, and increase collaboration among nonpro�ts, corporations and lawmakers to reduce carbon emissions and invest in greener technology. We see the value in mobilizing new groups on the front lines of climate change that are already experiencing local impacts. �ose most vulnerable to climate change are o�en in a strong position to push their local, state and federal representatives to dra� increasingly ambitious climate policy.

Learner: Changes in our political leadership are necessary for fundamental policy changes to accelerate climate change solutions. We’ve engaged focus groups of

conservative voters multiple times over the past decade to learn more about how to better communicate across ideological divides. Clean energy and clean transportation technologies can drive climate change solutions, especially as they become more economically competitive. Many companies are stepping up with climate change solutions because it’s good business, and that’s want their customers—the public—want and increasingly demand. �e recent Great Lakes and Mississippi River basin �oods and other extreme weather events are tragically making it clear to Midwesterners that climate change is real and the impacts on people, public health and our communities can be severe. �e time for action on climate solutions is now.

ABOUT THE PANELISTS

MICHELLE CARR is the Illinois director of The Nature Conservancy (TNC), a global conservation organization, where she leads strategic efforts to advance the organization’s work throughout the Midwest. She joined TNC in 2013 after 16 years as an advisor at Goldman Sachs. Through her leadership, the chapter has successfully piloted innovative approaches

to protect land and water, provide food and water sustainably, tackle climate change, and build healthy, resilient cities. She received a bachelor’s degree from St. Louis University and an MBA from Vanderbilt University’s Owen Graduate School of Management.

SPONSORED CONTENT

TED HAMILTON is president of Elkay Plumbing, a division of Elkay Manufacturing Co., a Downers Grove-based, 100-year-old family-owned company that produces, sources and delivers residential and commercial building products and services. As a shareholder and �fth generation member of Elkay’s founding family, he became president 25 years after joining the company, where he worked in a wide variety

of positions since he joined in 1992. He holds a bachelor’s degree from Valparaiso University, an MBA from DePaul University and has completed the Executive Development Program at Northwestern’s Kellogg School of Management.

HOWARD A. LEARNER is president and executive director of the Environmental Law & Policy Center (ELPC), the Midwest’s leading public interest environmental legal advocacy and eco-business innovation organization. He previously served as general counsel of Business and Professional People for the Public Interest. As an adjunct professor, he teaches

advanced seminars on environmental and energy law and climate change solutions policies at Northwestern University Law School and the University of Michigan Law School. He holds a bachelor’s degree from the University of Michigan and a law degree from Harvard Law School.

“AS A GLOBAL ORGANIZATION, WE’RE SETTING SCIENCE-BASED SUSTAINABILITY GOALS TO REDUCE OUR CARBON FOOTPRINT ACROSS MORE THAN 70 COUNTRIES WHERE WE WORK.”- MICHELLE CARR



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Pandemic puts medical ethics to the testan attorney who now serves as di-rector of law and ethics at the Uni-versity of Chicago’s MacLean Cen-ter for Clinical Medical Ethics. She acknowledges that ethics “can be a little bit of a lonely endeavor some-times. It’s a lot of writing and analy-sis and research. But it’s nothing like what we’re going through today.”

Amid the COVID-19 pandem-ic, she’s �elding questions weekly from doctors and nurses asking how best to apply New York’s al-location guidelines. For example, some emergency department prac-titioners have asked why the plan recommends against treating pa-tients on a �rst-come, �rst-served basis. Koch explains that such an approach could inadvertently pe-nalize disadvantaged populations who might seek care late because they don’t have transportation.

COVID-19 has shifted the focus of medical ethics. In normal times, ethical decisions usually come down to what’s best for individual patients and their families. Ethicists help sort out issues such as whether to start a new drug or discontinue life support.

Now public health drives deci-sion-making, as ethicists focus on what’s best for the community. �e guiding principle is to save as many lives as possible. It’s a sentiment Gov. J.B. Pritzker has echoed many times throughout this crisis. It’s also a real-life trolley problem: Would you sacri�ce one person to save �ve?

�e classic philosophical thought experiment is what attracted Koch to bioethics as a 10-year-old grow-ing up in Lincoln Park. She was in-trigued by the ethical dilemmas her parents, a psychologist and oph-thalmologist, would discuss after work.

“I started getting really interested in these complex, nuanced, thorny questions that don’t necessarily have a right answer,” Koch says. “In-stead, we have to think about what the best answer might be.”

Illinois, like other states, has its own ethical framework for medical services during a pandemic. �e guidelines, which serve as a refer-ence point for hospitals, say sup-plies should be rationed based on clinical criteria, like medical need and likelihood of survival. Not fac-tors like age, race, sexual orientation and socioeconomic status—includ-ing a patient’s ability to pay for care.

Koch is advising hospitals and practitioners in the Chicago area and beyond. It wasn’t that long ago that she served as the senior at-torney and special adviser to New York’s bioethics commission, which in 2015 was charged with revising eight-year-old guidelines for the al-location of ventilators.

�e guidelines are more detailed than most state plans, explaining certain principles and stating that youth may be used as a “tie-break-er” if multiple patients have the same likelihood of survival.

Most hospitals started �ne-tun-ing their contingency plans in late

February. It was clear early on that the U.S. wouldn’t have enough tests or personal protective equipment to go around, let alone ventilators to keep all the most critically ill pa-tients alive in the case of a surge. Hospitals had to make sure the right people could get the right care, and that doctors were equipped to make fair and objective medical deci-sions.

ETHICAL DILEMMASDeciding whether it’s safe to do

CPR and how to allocate ventilators are among the toughest ethical di-lemmas facing health care provid-ers during the pandemic, Dr. Kelly Nicole Michelson, director of the Center for Bioethics & Medical Hu-manities at Northwestern Univer-sity’s Feinberg School of Medicine, says in a statement.

NorthShore University Health-System focuses on the clinical criteria and leaves decisions to the medical team, says Dr. Da-vid Donnersberger, chair of the �ve-hospital chain’s Institutional Ethics Committee.

“Decisions about clinical care should be made by the care team who is taking care of the patient at that moment—who understand the patient’s clinical picture at that mo-ment and the institution’s resources and availability at that moment,” Donnersberger says.

But having a plan in place keeps doctors from having to make trau-matic decisions on their own in real time. And when it comes to scenar-io planning, sources say transparen-cy is the best policy.

Henry Ford Health System in De-troit had to set the record straight last month when a leaked memo indicated that the chain might be rationing ventilators for COVID-19 patients. Leaders told Crain’s De-troit Business at the time that the “worst-case scenario” plan had not been implemented.

�e worst-case scenario, which hospitals are hoping they won’t confront, involves a shortage of ventilators so acute that there aren’t enough to save all of the most crit-ically ill patients. In that situation, hospitals essentially must decide who to let die.

Di�erent hospitals will follow di�erent protocols in that situa-tion. �e New York guidelines, for example, recommend reassessing

ventilated patients at 48 and 120 hours to determine whether to con-tinue with treatment. Even Catholic hospitals, which abide by Ethical & Religious Directives, have special guidelines for dealing with scarce resources. In that case, treatment decisions that typically are made by patients and their family members might be made by hospitals based on the burden and bene�ts of care, as well as sta� safety, according to the Catholic Health Association of the United States.

One constant across the board: No institution, state or country had a big enough stockpile of protec-tive equipment or ventilators for a worst-case-scenario, 1918-level pandemic, Koch says.

“�ere are budget constraints,” she says. “Buying up that level of ventilators and sitting on them for 100 years or so is just not possible.”

So who gets the face mask and the COVID-19 test? Essential work-ers—like health care providers—get priority to support the health of the population, according to Illinois’ guidelines and many others. �at likely also would apply to any new treatment or vaccine, in the case of a shortage.

REMOTE WORKIn the midst of the COVID-19

pandemic, Koch is social distanc-ing in her Wicker Park home with her husband and two sons, ages 4 and 7. In addition to teaching on-line courses at the DePaul Universi-ty College of Law, she spends each day remotely counseling hospitals and doctors—many of whom have questions about New York’s guide-lines. Some want to better under-stand why decisions were made, while others are looking to make sure their approach is consistent with other institutions’.

When she’s not helping solve bioethical dilemmas—or molding the minds of future lawyers and ethicists—Koch is home-schooling her kids, cleaning, exercising “and doing all the things that help keep someone a little more put together and sane in these times.”

“Ethicists like to think about things that we hope never happen,” Koch says. “Now we’re actually in a situation where it’s happening. We don’t derive any pleasure from that, but at least we can use our work in a bene�cial way.”

ETHICS from Page 1

People wait in line in their cars to get tested for COVID-19 at Roseland Community Hospital on April 3. Most hospitals started �ne-tuning their contingency plans in late February.

GETT

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AGES


Small-business owners count the days waiting for promised loan lifelines

State Farm, Allstate can easily afford their COVID-era rebates while drivers are curbed

small-business owners count the days waiting for promised loan life-lines.

“A lot of people really just want to use it to get through these cou-ple months,” says Mindy Gohr, 34, co-owner of Bittersweet Pastry Shop in Lakeview.

�e cake-making cafe already cut about 65 percent of its sta�, reduced hours and shifted to focus on com-fort foods like cinnamon rolls. Rev-enue is down about 70 percent, she says.

Her co-owner �lled out their ap-plication for a $248,000 federal loan under the Paycheck Protection Pro-gram that was part of a $2 trillion stimulus package signed into law March 27. �ey also applied for the $50,000 loan available under the city of Chicago’s Small Business Resil-iency Fund, launched March 31, had approved only ten as of April 8.

When her partner tried to use a lo-cal bank’s online application for the federal loan, Gohr says she grappled with the form suddenly disappear-ing. “It added to the level of ‘Am I going crazy?’ ” she says.

�e Small Business Administra-tion, which is handling the federal loan program, has been deluged with applications and has so far ap-proved 629,000 for $160 billion as of April 9. �e city of Chicago has been swamped with some 7,000 applica-tions since starting to receive them on March 31 and had approved only 10 as of April 8. Meanwhile, unem-ployment claims nationwide sky-rocketed to 16.8 million, including about a half-million in Illinois.

“We’re going through them as quickly as possible at this point,” says Isaac Reichman, City Hall’s spokesman for the Department of Business A�airs & Consumer Pro-tection. “We’re working to get our capacity up.”

Chrishon Lampley, owner of North Kenwood wine supplier LCS Entertainment, is the creator of the Love Cork Screw label sold at Target, Whole Foods, Binny’s and Maria-

no’s, among other spots.While her sales initially got a

boost at grocery stores as people stockpiled after the outbreak, big-box tra�c plummeted. Revenue at her seven-year-old business, which sold about 20,000 bottles last year, has been cut in half.

Like many other small-business owners, she wasn’t able to apply for the federal loan program because she hires only contractors, not em-ployees. She �gures that will hurt her application to the Chicago loan program, too.

“I have put money in people’s pockets just like people who have payrolls,” she points out.

‘I NEED TO TRANSITION’Lampley, 45, also sought a $10,000

grant from the Illinois Hospitality Emergency Grant Program and was glued to her email inbox for a noti-�cation that never came. �at $14 million fund was depleted in days, with 700 recipients picked in a ran-dom drawing of 12,000 applicants.

“I said to myself, ‘I can’t go out of business in this pandemic. I need to transition,’ ” she says. She now hosts $75 virtual wine tastings with a three-bottle pre-shipment to make up for lost income.

Sales for Quevos, a Glencoe startup that makes chips from egg whites, have also declined since the grocery shopping frenzy tailed o� in late March. So far, the company is keeping six employees working at a food production facility in McKin-ley Park on the South Side, but CEO Nick Hamburger, 22, worries that an extended downturn will hamper the young business—especially given that its pricing is higher than that of standard potato chips—and make it tougher to raise capital.

He and his co-founder applied for a $30,000 loan under the federal program and a separate federal Eco-nomic Injury Disaster Loan program that includes a $10,000 advance that doesn’t have to be repaid, but they’ve received nothing so far. “We just want to do everything we can to somehow be prepared to weather

the storm,” Hamburger says. Businesses that may not ride out

the storm include those hit with mandatory closures, like yoga stu-dios, athletic clubs and hair salons. �ey’ll likely be counting on loans to reopen.

Charlie Altenbach, co-owner of cloud-computing services company DP3 Tech, says the Beverly business was on the cusp of landing a big new client when the coronavirus struck. “Unfortunately, that deal didn’t get closed and any new work has ground to a halt,” he says.

Altenbach, 36, and his partner were only able to apply for about a $14,000 loan under the federal pro-gram because they also don’t have employees, only subcontractors. �ey also sought a $30,000 loan un-der the city’s program; they haven’t been approved for either.

He panned his experience ap-plying for the federal loan through a major national bank. “It was very convoluted and crazy,” he says, ex-plaining he had to use a bank link from a friend’s application to submit his required documentation.

Altenbach says his company is

holding steady for now, but it’s un-certainty about the future that’s leading small-business owners like him to apply for loans in droves. If the stay-at-home edicts persist for even a few more weeks, owners say it will be crunch time.

“I don’t need an emergency loan right now,” says Lawrence Chester, who owns Highland Park-based CFO Simpli�ed. “I’m just interested in keeping my people working.”

To that end, Chester, 72, applied for the federal loan and says he was knocked o� a local bank’s sputter-ing online system four or �ve times while he was trying to apply.

His �rm, which provides �nancial management services to compa-nies, billed about $85,000 in Febru-ary, but in the last two weeks income dropped to $4,000, he says. “�e work that we had been doing has lit-erally vaporized” as clients put their business on hold, he says.

For now, he’s keeping his �ve full-time CFOs busy partly by pay-ing them to donate their services to businesses that need the help, hop-ing, too, that it may bolster future business.

percent for the period between March 20 and May 31.

Auto insurance, which the law requires every driver to have, is a brutally competitive business, marked by massive outlays for television advertising. But in re-cent years, few of the largest insur-ers have competed by substantial-ly cutting rates. So Allstate’s gambit was unusual and could help the insurer achieve its growth goals when the economy emerges from the deep freeze it’s in.

“We think that current and future customers will particularly respect Allstate’s �rst-mover status,” Keefe Bruyette & Woods analyst Meyer Shields wrote in an April 6 note.

And, he added, Allstate will pro�t in more than just customer good-will. “We expect (Allstate) to bene�t in the near-term from signi�cant near-term personal and commer-cial auto underwriting outperfor-

mance (even after the announced disbursements) as social distanc-ing, quarantining, and self-isola-tion translate into lower overall driving and hence lower auto in-surance claims,” he wrote.

How much Allstate pro�ts, though, will have to await its �rst-quarter earnings report and conference call with analysts. It’s di�cult to quantify just how sub-stantial the decrease in losses in-surers pay out for car damage and injuries in accidents will be. Most insurers, as they announce their re-bates, have been vague about that.

�ere have been a couple of clues, though. Madison, Wis.-based American Family, which announced $200 million in auto policy rebates on the same morn-ing that Allstate did, has seen auto claims running at 20 to 40 percent lower than normal since March 11, Chief Operating O�cer Telisa Yan-cy told the Wall Street Journal.

A State Farm spokeswoman says

average miles driven by its policy-holders are down 35 percent na-tionwide, with some states higher than that and some lower depend-ing on the severity of stay-at-home orders.

Using a rough average of 30 per-cent in how much lower claims are now than last year, Allstate’s “wind-fall” could be around $1.2 billion for the second quarter if the trends persist through June. In the second quarter of last year, Allstate’s auto losses were about $4 billion, not including claims tied to catastro-phes like hailstorms, according to investor disclosures. �irty percent of that is $1.2 billion.

�at leaves Allstate with a po-tential pretax pro�t of $600 million even after the rebates if its losses are 30 percent lower than in recent years. After tax, that would amount to an earnings per share increase of about $1.50. In 2019, Allstate posted total earnings per share of $14.03.

An Allstate spokesman didn’t re-

spond to a request for comment.Viewed another way, Ameri-

can Family’s $200 million in give-backs—unveiled on the same day as Allstate’s—are signi�cantly more generous. American Family’s re-bate, which it has said will be $50 per vehicle insured, amounts to 5 percent of the $3.9 billion in auto premiums it collected last year. All-state’s $600 million, which it said would equate to 15 percent dis-counts in April and May, add up to 2.4 percent of its $24.5 billion in 2019 auto premiums.

American Family is a mutual insurer, meaning it’s technically “owned” by its policyholders rather than by stock investors, as Allstate is. Generally, mutual insurers, since they don’t have to please investors with regular dividends and stock buybacks, can a�ord to be more generous than publicly traded in-surers.

Geico, which markets itself as the cheap alternative to agent-sold

insurers like State Farm and All-state and is a subsidiary of publicly traded Berkshire Hathaway, seems to have been the most generous of all the big auto insurers, at least by this measure. Its $2 billion in cred-its equate to 5.6 percent of the $35.6 billion in earned premiums last year.

State Farm, like American Family a mutual insurer, is larger than Gei-co and also rolled out a $2 billion program. With $41.5 billion in auto premiums last year, State Farm’s credits equate to 4.8 percent.

Customers aren’t likely to look at the issue this way, at least for now. To get the rebates, they’ll need to stick with their insurers, so the per-centage of drivers seeking cheaper alternatives to their current carrier is likely to drop along with their driving activity. But these di�er-ences may well emerge in the mar-keting messages the players in this hypercompetitive industry deliver when drivers hit the roads again.

SMALL BUSINESS from Page 3

Chrishon Lampley, owner of wine supplier LCS Entertainment

JOHN

R. BO

EHM

GOVERNMENT HELP?

INSURERS from Page 3

CHICAGO SMALL BUSINESS RESILIENCY FUND PROGRAMTotal fund amount: $100 million

Eligibility requirements: Fewer than 50 employees and revenue decline of at least 25 percent

Terms of the loan: Loans of up to $50,000

ILLINOIS SMALL BUSINESS EMERGENCY LOAN FUNDTotal fund amount: $60 million

Eligibility requirements: Located outside Chicago with fewer than 50 employees and 2019 revenue of less than $3 million

Terms of the loan: Up to $50,000 with at least 50 percent toward payroll

ILLINOIS TREASURER BUSINESS BRIDGE LOAN PROGRAM**Total fund amount: $250 million

Eligibility requirements: Shutdown businesses or non-profits with less than $1 million in liquid assets or $8 million average annual receipts

Terms of the loan: Amount determined by lender

U.S. PAYCHECK PROTECTION PROGRAMTotal fund amount: $349 billion

Eligibility requirements: Fewer than 500 employees* and payroll not exceeding $100,000

Terms of the loan: Loans up to $10 million

U.S. ECONOMIC INJURY DISASTER LOAN PROGRAMTotal fund amount: $17 billion

Eligibility requirements: Fewer than 500 employees* and lost revenue due to COVID-19

Terms of the loan: Loans with an advance of up to $10,000 that doesn’t have to be repaid

*Some businesses are exempt from this headcount cap.** Covid-19 related expansion of an existing program


To view Crain’s Notable Executives nomination programs, visit ChicagoBusiness.com/NotableNoms.

Help us recognize accomplished women

in science, technology, engineering and

mathematics in Crain’s all new Notable Women

in STEM feature. The section publishes on June 1.

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NOMINATE NOW! Deadline is April 17

DEADLINE EXTENDED!

Bargain brands shine in downturns as shoppers favor private-label offerings which has operations in Chicago and Madison, Wis. “Part of it is they stocked up. People also are running on much leaner budgets.”

Recessions favor the private-la-bel food brands of grocers and cut into the market share of main-stream brands from big pack-aged-food makers. � ose compa-nies, including locally based Kraft Heinz, Mondelez and Conagra, initially bene� ted from the forced retreat of consumers into their homes. Now private-label manu-

facturers such as Oak Brook-based TreeHouse Foods stand to gain as shoppers start to economize.

In the wake of the 2008-09 re-cession, sales growth of private-la-bel brands outpaced the industry, 5 percent to 1 percent in 2010, and 8 percent to 3 percent in 2009, says Todd Hale, who was tracking the industry for Nielsen then and still follows it closely.

“In a recession, people look to value and basic foods,” he says. “Private label outperformed

(mainstream) brands in almost every category.” Heading into this recession, private label al-ready has a tailwind. Hale says the sector has been growing fast-er than the industry for the past three years.

Retailers have been leading the charge, “trading out (mainstream) brands for their own. � ey have more control of the store shelf than ever. If there’s a threat to brands, it’s that.”

Consumer-products companies, like grocers, have been trying to keep up with the massive surge in

demand that built over the past two months as the coronavirus hit the United States. Numerator, a Chicago research � rm that also gathers receipts from individual consum-ers, says stocking up and hoarding by shoppers,

which it de� nes as spending 2.5 to 4 times their normal amount, more than doubled in mid-March.

“A lot of companies who’ve seen a surge in sales, they’re not cele-brating because they’re not sure consumption has increased or if supply is being put away for a rainy day,” says CEO Eric Belcher, whose customers include retailers and food, beverage and house-hold products companies. “� ey have a lot of decisions to make about production. We’re helping

them to extrapolate what demand will look like next month, during the summer or in the fall.”

Tim Miller, vice president for business intelligence at Fetch, says the foods that saw the biggest increases as shoppers stocked up were boxed macaroni and cheese, frozen appetizers, boxed prepared dinners and boxed rice and pasta.

ONLINE SURGEAnother major change facing

manufacturers and grocers as a result of the coronavirus is an in-crease in online ordering that will require improvement in their dig-ital capabilities. Just 3 percent of grocery sales were made online before the coronavirus outbreak, estimates eMarketer, while e-com-merce accounts for about 11 per-cent of overall retail sales.

Health concerns and empty shelves forced many to order gro-ceries online. Brick Meets Click, a retail consultant in Barrington that surveys shoppers, reports that the number of people who said they bought groceries online in the 30 days leading up to March 25 grew 146 percent from its previous survey in August.

“� e toughest thing to do with online grocery is to make the � rst order,” says Bill Bishop, co-found-er of the � rm. “Now we have over 20 million new households who’ve done that.”

� ey’ve � ooded grocers and their delivery partners, exposing cracks in a fragile supply chain. Euromonitor says 11 percent of es-sential products were out of stock online in the U.S. on April 8.

“I’ve been ordering groceries for over a year,” says Matt Mead, a technology executive who lives in the northwest suburbs. “I used to be able to order and get it in one or two days. Now I’m scheduling two weeks out, and there’s not a single window available.”

Many grocers, like other retail-ers, have adopted a hybrid strate-gy of online ordering and curbside pickup, called click and collect, out of necessity. � e number of

new “click and collect” shoppers among those tracked by Numer-ator grew from 8 percent to 15 percent in the � rst three weeks of March.

“Because of the cost of the last mile in delivery, it has been dif-ficult for companies, including Amazon, to develop a cost-ef-fective online grocery-delivery service to the consumer’s door,” says Tom Forte, a consumer in-ternet analyst in New York at D.A. Davidson, a brokerage and investment-banking firm. “As a result, buy online and pick up at the store may become the most prominent model for online gro-cery sales.”

SHOPPING SPREE

HOARDING INDEX 100 = typical behaviorFilling the pantry

Source: Numerator

Stocking up Hoarding

As the coronavirus hit the United States, here’s how different types of households increased their purchases of food and household items from a year ago.

1/15 1/12 1/19 1/26 2/2 2/9 2/16 2/23 3/1 3/8 3/15 3/22

50

0

100

150

200

250

300

0

50

100

150

200

250

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221

209

164

SHOPPERS from Page 1

“PRIVATE LABEL OUTPERFORMED (MAINSTREAM) BRANDS IN ALMOST EVERY CATEGORY.”Todd Hale, industry tracker


As marijuana companies have jockeyed for new locations, partic-ularly downtown, the biggest con-cern was navigating the state’s rule that no shops would be allowed within 1,500 feet of each other.

So everyone in the industry was watching the �rst two appli-cations, some 1,300 feet apart in River North: Cresco Labs’ planned shop at 436 N. Clark St. and MOCA Modern Cannabis’ application for

214-232 W. Ohio St.�e Illinois Department of Fi-

nancial & Professional Regulation, like the city’s Zoning Board of Ap-peals before it, surprised everyone in approving both April 3.

“�ere were no such dispen-saries within 1,500 feet of either applicant when the �nal inspec-tions were completed, and each secondary site dispensary was ap-

proved for licensure,” the depart-ment, which regulates cannabis dispensaries, said in a statement April 6.

�roughout the scramble by ex-isting marijuana retailers to add new sites, especially in downtown Chicago, where much of the area is o�-limits by city ordinance, the cannabis companies were oper-ating under the belief that it was a race to win approval quickly, and the winner would set the marker for the 1,500-foot rule.

Weed compa-nies spent time and money trying to lock up multiple properties in case a rival got approv-al before them for a site within 1,500 feet of their �rst choice.

�e 1,500-foot requirement was part of the con-troversial state law signed in late June that allowed recreational weed sales and gave existing pot companies the right to open a sec-ondary site for each medical-mar-ijuana license they held.

IDFPR sent out a notice Aug. 15 about how it planned to referee competing applications. “We are aware that potential con�icts may

arise between applicants if they seek locations for their second-site dispensaries that are within 1,500 feet of each other. In the event of such a con�ict, the applicant who receives a license �rst will be the one permitted to operate.”

“IDFPR will not grant a license for a secondary site until the ap-plicant’s facility has passed �nal inspection, which will occur after receipt of the necessary zoning ap-proval,” the letter continued. “ID-FPR will also not grant a license if it has granted another dispensing organization a license at a location within 1,500 feet of the applicant’s proposed location.

“In this situation, IDFPR will require the applicant to amend its application with a di�erent loca-tion, and if the applicant does not do so, it will deny the application. One way to minimize the possibil-ity of such con�icts is for potential applicants to make themselves aware of the proposed locations of other applicants.”

Now that the state has issued li-censes to Cresco and MOCA, how-ever, presumably others will have to take their marks from them.

But it will be interesting to see how IDFPR handles two other locations granted approval from Chicago’s Zoning Board of Ap-

peals that are within about 550 feet: Windy City Cannabis won approval for a dispensary at 923 W. Weed St., and MedMen received a permit for 1001 W. North Ave.

“�is doesn’t make any sense,” says Josh Kahan, a cannabis indus-try real estate consultant. “What’s the point of the rule? �at’s what all the companies were using for their benchmark. It’s an interest-ing cop-out.”

It’s not the �rst time that IDFPR has �ummoxed cannabis compa-

nies. �e law said existing medical marijuana dispensaries would be allowed to sell recreational mari-juana. But when companies sought to relocate existing facilities to larg-er or more accessible locations, or to move out of jurisdictions that rejected recreational sales, IDFPR interpreted the language to mean only the physical address in oper-ation when the law took e�ect July 1 would be eligible to begin selling recreational marijuana—and they were not movable.

A historical building that was part of Chicago’s Motor Row is set to reopen as apartments next month after sitting up on blocks for 16 years.

Kissel Kar Lofts, 36 units in a structure built in 1913 for a Wis-consin carmaker, is open for leas-ing, says Stuart Miller, principal of apartment development �rm TMG. �e apartments, ranging

from 1,500 to 2,100 square feet, will be available for occupancy in May, he says, at monthly rents of $2,495 to $3,600.

�e developer has posted a virtual tour, and Miller notes that because the units have not been occupied previously, the risk of coronavirus contamination on a walk-through is reduced (al-though not nonexistent).

Miller’s �rm bought the 90,000-square-foot building at 2550 S. Wabash Ave. in October

2015. A foreclosure suit had hit a venture of a developer who launched a condo project in the building in 2004. At the time Mill-er bought it, he said the apart-ments would all be two-story �oor plans, but the plan proved cost-prohibitive, he says.

�e revamped plan entailed building an entirely new structure within the existing exterior walls, which caused yet another delay in the building’s renewal, Miller

says. �e proj-ect, designed by Chica-go-based Vari Architects, also lifted the roof about 10 feet,

and what was a three-story build-ing is now �ve stories inside. �e exterior, originally red brick, is now gray with blue metal panels.

Building amenities include a gym and social areas on the �rst �oor and a rooftop deck where “you see everything, the lake and the city,” Miller says. Because of the coronavirus shutdowns, Crain’s could not tour the inte-riors, but informal photos that Miller provided show bright, open-plan interiors and contem-

porary ash-and-white �nishes in the kitchens and baths. Miller says he has collected some mem-orabilia of the Kissel company and its popular yellow speedster, one of which was owned by Ame-lia Earhart.

Much of what remains of Mo-tor Row, a bustling hub of the young automobile industry in the 1910s and ’20s, is north of the Stevenson Expressway, while Miller’s building is south. He says he hopes the Kissel Kar Lofts helps “bridge the gap between the South Loop and IIT.”

Although the building is out-side the boundaries of the Motor Row historic district, it clearly contributed to the neighbor-hood’s heyday in the car business. Based in Hartford, Wis., 40 miles northwest of Milwaukee, Kissel Kar had a showroom on Michigan Avenue and the sales and service building a block west on Wabash.

Kissel advertised in the Chi-cago Tribune in 1913 that its Wabash building was “one of the two largest in America de-voted exclusively to one make of automobiles” and with its sta� of factory-trained mechanics would “establish a new relation

between the manufacturer and automobile owner.”

Kissel, which also made hears-es and ambulances, went out of business in 1930.

In 2004 a development enti-ty headed by Dwayne Lawrence bought the building for $2.1 mil-lion and announced plans to redevelop it as 36 condos. At the time, the Lyric Opera’s former storage building a block away on

Dearborn Street also was going condo.

Lawrence’s venture was the subject of a foreclosure suit when Miller’s �rm bought the building for $1.5 million in 2015, with the purchase ending the foreclosure suit.

Miller is a longtime developer and owner of apartments who op-erates about 30 buildings, primar-ily in North Side neighborhoods.

EDITORIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 312-649-5200

CUSTOMER SERVICE . . . . . . . . . . . . . . . . . . 877-812-1590

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Vol. 43, No. 15–Crain’s Chicago Business (ISSN 0149-6956) is published weekly, except for the last week in December, at 150 N. Michigan Ave., Chicago, IL 60601-3806. $3.50 a copy, $169 a year. Outside the United States, add $50 a year for surface mail. Periodicals postage paid at Chicago, Ill. Postmaster: Send address changes to Crain’s Chicago Business, PO Box 433282, Palm Coast, FL 32143-9688. Four weeks’ notice required for change of address. © Entire contents copyright 2020 by Crain Communications Inc. All rights reserved.

HOW TO CONTACT CRAIN’S CHICAGO BUSINESS

After idling, Motor Row building rolls out as apartmentsKissel Kar Lofts—36 units in a structure built in 1913—opens for leasing

BY DENNIS RODKIN

How a curveball created two weed winners downtownA key state agency determines marijuana shops can’t be within 1,500 feet of one another—that is, unless they’re approved at the same time

BY JOHN PLETZ

In 2004 a development entity bought the building and announced plans to redevelop it. The venture later was the subject of a foreclosure suit.

The �rst new marijuana shops in downtown Chicago were approved by the state of Illinois and could be open soon.

DENN

IS RO

DKIN

GETT

Y IM

AGES

THE REVAMPED PLAN ENTAILED BUILDING AN ENTIRELY NEW STRUCTURE WITHIN THE EXISTING EXTERIOR WALLS.

“WHAT’S THE POINT OF THE RULE? THAT’S WHAT ALL THE COMPANIES WERE USING FOR THEIR BENCHMARK. IT’S AN INTERESTING COP-OUT.”Josh Kahan, cannabis industry real estate consultant

20cb0177.pdf RunDate 4/13/20 FULL PAGE Color: 4/C

WITH COVID-19,

THE NEED

FOR FOOD

IS GROWING.Please give now. With rising unemployment and kids out of school,

the need for food is increasing throughout our community.

Donate to support our COVID-19 response.Together we are greater.

chicagosfoodbank.org/COVID

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