Chicago hopes to return the title of world’s tallest building to its shores, but ongoing financial woes have kept the project from getting under way.
Scott Toberman, president of European American Realty Ltd., plans to demolish an existing vacant office building at 7 South Dearborn in order to erect a futuristic, 1,550-ft. (472 m) tower, which would include office space, condominiums, a parking garage and twin broadcast antennas for transmitting high-definition TV signals.
Earlier this year crews surrounded the lower five floors of the 17-story empty building on the Loop with scaffolding and began removing potentially harmful asbestos while they awaited the issuance of a demolition permit by city officials. At the time Department of Planning and Development Spokeswoman Becky Carroll said she thought the city permit allowing asbestos removal was “a precursor to a demolition permit,” and was certain that the project was moving ahead.
Seven months later, work is still on hold. Toberman’s failure to disclose the financial particulars of the deal on the $500-million development has stymied City Hall. City Planning Commissioner Christopher Hill said that without such details and proof of guaranteed funding, no demolition permit will be issued.
Toberman’s financial predicament has worsened as time passes without any action at 7 S. Dearborn. He owes nearly $900,000 in back taxes and penalties on the property. In addition to property taxes, he has failed to pay a $412,000 bill from architectural firm Skidmore Owings & Merrill LLP, prompting the company to file a lien in the hopes of recovering its fees. The mechanic’s lien ensures the payment of fees in the event of a sale of the property.
Jacque Ducharme, president of New York-based tenant representative firm Julien J. Studley Inc. said, “Letting the property taxes go on a development site is not uncommon, but in general a developer with a viable project wants to keep current with the taxes and the architects.”
Toberman claimed to have patched up relations with the architectural firm, securing a permanent contract for them to design the 1.86-million-sq.-ft. (172,800 sq m) facility. They will receive payment when his loan is in place. Toberman said he thought the first installment of the property taxes had been paid, but Cook County Treasurer’s office records indicate otherwise. Penalties accrue at a rate of 1.5 percent per month, compounding his debt.
Announcement of the financing plans has been delayed repeatedly since Sept. 29, 1999, when the City Council approved the project. Toberman said he has signed a $500-million construction loan agreement with an unidentified group of lenders. The announcement came in June one week after the original lender, Banque Worms Capital Corp., a New York subsidiary of a Paris bank, took title to the property after a default on a $22-million mortgage.
According to the Chicago Tribune, Toberman denied hat he defaulted on the mortgage, despite signing a forbearance agreement and agreement for deed-in-lieu of foreclosure, which are commonly used to surrender title after a default. As part of the transaction, Toberman received a right of first refusal to purchase the property if the bank has a contract to sell.
“I fully understand that people are skeptical about our ability to undertake a project of this magnitude. I’m not surprised that people doubt our ability to do this. It’s a huge, complicated deal. I only now understand how many elements are needed to finalize a loan of this size on a project this complex,” Toberman said.
The developer promised to identify the lender once the loan transaction is closed and funds are disbursed. That was scheduled to take place in July, but has yet to transpire.
Experts question the viability of the deal, claiming that few financial institutions are capable of putting together loans of that size.
“The capital markets are very thin for high-dollar loans, and providers are averse to taking on much risk at those levels,” noted Bruce Cohen, chief investment officer for Chicago-based real estate investment bank Cohen Financial.
Cohen added that, based on current lending practices, an equity investment of up to $300 million would be required to borrow $500 million. Toberman indicated he will raise a substantial amount of equity for the project.
Chicago Mayor Richard Daley has adopted a wait-and-see attitude about the project, saying, “They talked to me about financing. They are working on financing.” He added that the Skidmore architect Adam Smith came to him. “He is very convinced he has a financial package.”
The Plan
If financing becomes formalized and the city approves Toberman’s vision, the plan entails a 1.86-million-sq.-ft. (172,800 sq m) tower with offices, retail stores and 350 luxury condominiums priced at more than $450,000. The 108-story building will be topped by a 45-story broadcast tower. Reaching a height of 1,550 ft. (472 m), it will soar above the world’s current tallest building, the Petronas Twin Towers in Kuala Lumpur.
Ironically, however, the needle-shaped building will be smaller in volume than the nearby Amoco Building and John Hancock Center. Architect Adam Smith originally planned to incorporate a damper system with a pendulum to slow down sway from strong winds. More recent plans have him considering an innovative design using a water tank to shift water in order to offset wind sway, similar to a ship’s ballast. Also, notches in the tower will funnel wind and relieve pressure on the building.
Many city officials believe the new building would be a tourist attraction, and they welcome another way for Chicago to garner attention. Some local legislators rave about the unique form and texture of the proposed building.
“We’d be proud of it. If you look at the design, it is pretty far out, and that is good. It doesn’t have to fit into one category or another category, and that is what architects do. It is an unusual design from top to bottom,” Daley said of the slender, notched-needle design.
One unique feature of the facility will be HDTV televisions in the elevators. Studies indicate that people don’t like long elevator rides, so passengers will have several viewing options on the way up and down.
There will be no observation deck because it created too many design challenges. But the building will present a completely lit exterior at night, creating a singular needle-like spire to enhance the Chicago skyline.
Toberman indicated that once demolition begins, the work should take five months. New construction will begin “the day after,” taking approximately three years to complete. He said that he has already secured leases for two offices, several residential units and 20 percent of the telecommunications floors.
The special zoning granted for the project expires in two years.
“Other planned developments typically have six years [to begin construction], but because of the importance of this project and some uncertainty if it can be financed, that’s why we have the shorter sunset. We have done at the city what we can. The developer has a lot of responsibility and now the ball is in his court,” Hill explained.
He reiterated that the city will not grant a demolition permit until financing is in place because the city wants to avoid the potential of a large vacant lot in such a prominent location if the project falls through.
The Completion
Regardless of when — or if — 7 S. Dearborn gets launched, it may not be, or stay, the world’s tallest for long. A Japanese developer is planning to resume construction on a hotel and office building in Shanghai.
Minoru Mori, president of Mori Building Co., said he will rework his original plans for a 1,518-ft. (464 m) building.
“We can’t announce it yet,” he cautioned, “because some people might want to surpass it again.” The Chicago Tribune reported that other developers are seeking planning permission for a stratospheric edifice in Hong Kong that would top the 1,780-ft. (543 m) mark.
In a twist on this soap-opera-like tale, Smith designed both 7 S. Dearborn and the Japanese building.
“Mori is constantly getting attention, but never doing anything to get [it] built,” he complained. “Now you see them trying to steal attention from 7 S. Dearborn. ”
Smith’s comments reveal the existent rivalry to claim title to the world’s tallest building. Chicago owned the title from 1974 to 1996 with the 1,450-ft. (442 m) Sears Tower, but the Petronas Towers have held it since then. Chicago wants the title back, but with shaky financing and fierce international competition, the windy city may have to settle for the title of tallest building in North America.
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