Green Exchange Gets it Right
The next time someone asks what exactly LISC Chicago does, one good way to explain would be telling the story of the Green Exchange.
Oh sure, you could say LISC is an “intermediary” between funders and community developers. Or that it fosters the comprehensive recovery of challenged neighborhoods so they can reconnect to the metro region’s economic mainstream.
All true enough.
Coyote Logistics buzzes with 20-something college grads who book truck shipments all over North America.
But to show how LISC actually works – how policy, resources and people can interact to get something done – it would be hard to beat the seven-year, uphill struggle to bring about the Green Exchange, a national model for sustainable urban redevelopment.
Then again, LISC Chicago was not the developer of the handsome-but-obsolete factory just off the Kennedy Expressway at Diversey Avenue. Nor was it the principal lender on the building’s $53 million conversion into an incubator for businesses out to use and develop “green” technologies.
LISC was not the contractor that did the work. Nor was it the community group that led the fight to prevent the century-old landmark from “going condo” rather than remaining a source of good-paying jobs.
Yet this community development broker played its trademark quiet-but-effective role every step of the way, helping advance neighborhood-driven plans, bridging financial gaps, making key linkages and opening doors at City Hall.
Support beyond $$
“LISC provided some money at key points,” said David Baum, whose Baum Development LLC is the developer. “But more important was their moral and political support.”
“I’ve done a lot of projects with the city,” explained Baum of his 20 years doing commercial projects in and around Chicago. “A lot of developers promise a lot of things in return for this subsidy or that. But they don’t always deliver and the city gets skeptical. So it’s nice when LISC is with you, when they tell the city ‘No, this guy is for real. He’s really going to do what he says he’s going to do.’ It’s huge.”
Green Exchange developer David Baum had the vision to rehab office space when everyone else was converting old factories to loft condominiums.
LISC’s involvement with the building pre-dates Baum’s. It began in 2004-05 when the Logan Square Neighborhood Association (LSNA) – the local lead agency in LISC Chicago’s New Communities Program (NCP) – launched a campaign to prevent the still-serviceable factory from going condo.
After Cooper Lamps, a designer and maker of high-end lighting fixtures, announced it was moving production elsewhere – and laying off 150 workers – LSNA began exploring the idea of re-tenanting its quarter-of-a-million square feet with smaller manufacturers. Back then condos were hot. Factory after factory were converting to residential lofts as the upscale back-to-the-city boom roared west from Lincoln and Wicker Parks. Blue-collar Hispanics, however, faced a double-whammy: loss of nearby employment and rapidly rising housing costs.
In the plan
So LSNA’s quality-of-life plan – a core early undertaking by all NCP neighborhoods – specifically cited Cooper Lamp as having “the potential to anchor the business and industrial corridor on the community’s east end.” But a plan is just a plan without a workable strategy, so when Cooper Lamps signaled its intention to sell for top-dollar to condo developers, pending zoning approval, LSNA organizers began working the phones and recruiting allies.
It wasn’t easy. Then-Alderman Manuel “Manny” Flores (1st) needed to be convinced that there was a viable alternative before he would oppose a proposed zoning change to residential. Where was a credible developer, he asked, capable of signing enough commercial tenants to finance such a project?
Shannon Downey, right, who rents Green Exchange space for her e-marketing firm, PivotalChicago, said small businesses in the building have become a community, helping each other solve problems and sharing resources.
That’s when David Baum, who had worked on LISC-aided developments in the past, stepped up with the idea for a green incubator. Already he had been networking with start-ups looking for affordable but tech-ready space to do everything from e-marketing to green architecture. After a series of meetings involving Baum, Flores, LISC, LSNA and city officials, a complex public-private financing plan was agreed to and Baum proceeded to purchase the building, using a bank loan and his own equity, for about $7.5 million.
Fall and rise
Then came the fall of 2008, the fall of Lehman Brothers and the nationwide freeze-up of commercial lending, especially lending to develop a concept so untested as a Green Exchange. The bank that was to provide a phased construction loan kept raising its occupancy requirements for continued payouts. When Baum couldn’t sign tenants fast enough, construction money ran out and work all but stopped … scaring off several prospective tenants. Never a sure bet, Green Exchange was starting to look like a teetering house of cards.
So LISC stepped up, this time with a $30,000 unsecured loan to keep construction moving and reassure prospective tenants their spaces would be ready on time. Meanwhile LISC began working with the city to line up alternative construction financing.
But this was no vanilla borrow-build-and-lease deal. To make the numbers work, Baum worked with the city, county and state to obtain an historic preservation tax credit as well as a reduced property tax classification. Federal tax credits and grants were secured for solar energy and solar heating totaling $6.2 million. The city also committed to $10 million in tax increment funds over the life of the project. More immediately, to replace bank financing the partners helped secure a rarely-used $15 million Section 108 loan from the U.S. Department of Housing and Urban Development.
And that was just for the building. LSNA worked with other local partners to prepare area residents for the New Age jobs to be created. After all, this would be no table lamp assembly line. And whereas the building was originally constructed as a textile mill for making long underwear, companies lining up for space in the Green Exchange were more about intricate software.
Coyote Logistics, the Green Exchange’s largest tenant, recruits heavily from Big Ten and other colleges in the Midwest.
LISC backed-up LSNA’s early organizing efforts with a $10,000 grant. LSNA expanded its partnership with the LEED Council, a non-profit business development and job readiness group active to the south in the Goose Island area. Together they set up an industrial retention task force, and later a Green Exchange Community Jobs Initiative to find and prepare local residents for new kinds of work. More recently their efforts have blossomed into the Community Jobs Initiative, a partnership with the city’s Department of Housing and Economic Development that is developing a set of job-prep tools that promises to pay dividends well beyond Green Exchange. (See www.worklocal.org)
Another $12,000 LISC grant to LEED Council funded preparation of a successful grant application to the U.S. Department of Health and Human Services, which leveraged a $573,000 grant to fund on-the-job training for employees of Green Exchange tenants. Companies that get funds must hire at least one worker who is either low-income, recently laid off, an ex-offender or a resident of public housing.
“What’s happening here,” said Mike Holzer, director of economic development at LEED, “is going to be a national model, not just for industrial retention, but for preparing local folks of limited education for jobs in an increasingly high-tech economy.”
Nowhere is the skills mismatch more apparent than on the operational floors of the Green Exchange’s star tenant – Coyote Logistics.
Any doubts about whether Baum could lease-up the building were erased in the fall of 2010 when he landed this fast-growing enterprise whose business is to more efficiently match freight haulers with companies with stuff to ship. Now two of the building’s upper floors are buzzing with young 20-something college grads who talk into headsets and tap on computer keyboards as they book truck shipments all over North America.
No doubt Coyote is a “green” business. Founder and CEO Jeff Silver says that by coordinating semi-trailer runs and reducing empty backhauls his firm, using its proprietary software to coordinate more than 2,200 loads per day, will eliminate almost 20 million pounds of CO2 exhaust this year and greatly reduce diesel consumption nationwide.
The challenge for LSNA, LEED Council and, indeed, all of Chicago, is to prepare the local workforce for good-paying, full-benefit jobs such as these. (Fun jobs, too, as evidenced by a sportswear dress code, Nerf-ball hoops and a help-yourself mini-cafeteria featuring high-energy snacks and an after-hours beer dispenser, etc.)
John McDermott, housing and land use director at LSNA, said the job-prep effort is well underway, including talks with Coyote to expand its college recruitment beyond the Big 10, DePaul and Notre Dame to include the University of Illinois at Chicago and other local schools graduating tech-savvy kids from working-class backgrounds.
Silver doesn’t need convincing that Chicago’s mid-North Side is the center of his target labor pool … or that he’ll have any trouble scaling up from 500 to 900 employees by year’s end.
“We’re a few minutes from where they all live,” he said, which was one reason he moved the company here from Lake Forest. “”They’re young, mostly unmarried and here they’re right in the middle of things.”
Other Green Exchange tenants have made great use of the LSNA/LEED pipeline, such as the Rainforest Learning Center, which has hired local referrals to help with its daycare activities. A complete listing of Exchange tenants and the many green features – from a rain-capturing cistern than waters a backyard garden to an escalator that runs only when someone steps on – can be found at www.greenexchange.com
Artifacts from the old Cooper Lamp factory on display in the Green Exchange lobby.
There is a conspicuous absence of file cabinets or wastepaper baskets.
“We’re almost totally digital,” said Shannon Downey, who founded PivotalChicago.com, an e-marketing firm that helps clients get noticed in cyberspace. As for the building’s “atmospherics,” she said the small businesses have become a community unto themselves, helping each other solve problems and sharing resources such as a common high-tech conference room.
They also like eating local, at places like the CornerStone Café two blocks away at the six-corner intersection of Western, Elston and Diversey avenues.
“It’s been so refreshing for the whole neighborhood,” enthused Tish Boidy, who runs the coffee-and-lunch shop with husband Paul. She talked at the cash register while ringing-up a steady stream of Coyote twenty-somethings. “It’s like being on a college campus.”
Most weekday mornings, she said, the restaurant will send over “big bags of breakfasts” ordered by Coyote workers, most of whom start at 7 a.m. “with a Starbucks and an empty stomach.”
“What’s happening here,” said Joel Bookman, LISC Chicago’s director of programs, “is that we’re learning how to connect city neighborhoods to the growth sectors of the regional economy.”
“It’s invaluable experience, but you’re not always going to hit home-runs, or work with developers as insightful as Dave Baum, or land a high-growth employer like Coyote. It’s a bottom-up process that begins with developing a workforce that can read, write and compute.”
“At LISC we’re in the business of helping develop healthy neighborhoods,” said Susana Vasquez, LISC Chicago’s executive director. She has followed Green Exchange from the get-go, having helped LSNA do its quality-of-life programming as NCP deputy director back in 2005.
“The lifeblood of our work is people and money,” said Vasquez. “The challenge is to align policy, funding and technical support, and do it in a way that puts a neighborhood in synch with larger forces at work in the region. At Green Exchange you can see what happens when we get it right.”
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