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The LEED Council: Three Decades of Industrial Preservation

When the LEED Council first opened in a loft on Halsted Street in 1982, Chicago-based General Iron Industries was fighting to stay solvent.

At the time, big steel companies, facing competition from smaller, non-union shops, were going out of business left and right. And those companies faced further competition in Chicago, where residential and commercial developers had their eyes on the historic industrial corridors in which they were located.

"Our business needed protection from the encroaching neighbors," said Marilyn Labkon, third generation owner of General Iron. “And without the assistance of the LEED Council and the creation of the Clybourn Corridor Planned Manufacturing District (PMD), we would have just gone out of business."

Celebrating 30 Years
Labkon will be on hand when the LEED Council, originally known as the New City YMCA Local Economic & Employment Development Council, celebrates its 30th anniversary on June 21, from 5:30 p.m. to 8 p.m. at the Green Exchange, 2545 W. Diversey Ave. The event will bring together leaders from Chicago’s government, business and nonprofit communities along with LEED Council members and employees to honor the Council for its vision and commitment to a model of sustainable community development.

Along the way, the Council has helped keep industry thriving in Chicago while spurring small business and sustainable development. And its skills training and job placement programs have armed hundreds of workers with the tools they need to succeed in the 21st century economy.

Preparing to give a tour of The Green Exchange to two Obama Administration officials are (from left) Mike Holzer, LEED Council director of economic development; Jeff Silver, founder and CEO of Coyote Logistics, The Green Exchange's biggest employer; and Ted Wysocki, LEED Council president and CEO.

Gordon Walek

The Council’s involvement with General Iron – and the creation of the first PMD in 1988 – is, at its core, the story of how Chicago was able to retain and foster its industrial base, maintain a diversified economy, and encourage industrial modernization, investment, and expansion.

"We coined a term in the 1980s called industrial displacement, which describes the outcome of pressure by residential and retail development," said Mike Holzer, LEED Council's director of economic development. "The result was that industries got displaced, and often they didn't move across the street or across town, but went out of business or out of state to places with low wages or nonunion jobs. This was what General Iron and many other manufacturers were facing, and we needed to find a solution." 

Like Marilyn Labkon, Steve Kersten, president of WaterSaver Faucet Company, credits the PMD with allowing his business to stay in Chicago. With expanding residential development threatening his business’ ability to grow, Kersten worried that WaterSaver wouldn’t be able to stay in Chicago. Yet he was reluctant to move, as it would mean laying off local workers unable to travel to a new location.

The LEED Council found an answer in the form of PMDs, an innovative tool to foster the city's industrial base and encourage industrial investment by protecting and providing stable industrial environments.

PMDs to the Rescue
“At the time, the city really had no response to what Chicago manufacturers were facing,” said Holzer. “We were able to put together a case that showcased industry’s importance and the jobs that industry supported. We worked with universities and city planners and got the city to understand that the jobs at these medium and large industrial plants were often good paying, head of household jobs that paid benefits.”

Steve Kersten, president of WaterSaver Faucet Company, credits the Chicago-Halsted Planned Manufacturing District with allowing his business to stay in Chicago.

Courtesy of WaterSaver Faucet Company

This was juxtaposed to the retail jobs that were coming in at the time, which Holzer termed “McJobs”: often part-time, minimum wage jobs with few benefits.

“They paled in comparison to the economic benefit that the still-present industrial jobs provided to the city,” said Holzer. “So we worked with the city to underscore the importance of industry and industrial jobs, and got the city to see that the amount of dollars you can get for a square foot of dirt in a development doesn’t account for the cost of displacing those industries and those jobs, that the highest and best use for this land was industry.”

As a result of the Council and the city’s efforts, the Clybourn Corridor PMD and the Chicago-Halsted PMD were created, allowing General Iron and WaterSaver Faucets to stay in business, and ensuring the continued protection of Chicago’s manufacturing core. “The LEED Council’s effort was invaluable in helping me keep my company in Chicago,” said Kersten.

The Council’s vision caught on and fundamentally transformed the way the city viewed its long-standing industrial corridors.

“This is the work that we’re most proud of,” said Holzer. “We were able to elevate the discussion around zoning changes from the ward office – where backroom deals could be made and signed – to shine the light of day on it at the planning commission, which is a much more public body. The city did an about-face and came to understand that to rezone property for a developer to create a loft condo on industrial land would have a negative impact on industry and the city’s economy.”

A. Finkl & Sons Inc. steel mill was a key player in bringing about the 1988 creation of the PMD.

Courtesy LEED Council

Since the creation of the Clybourn PMD in 1988, the city has added 13 additional PMDs, including the Goose Island PMD.

A study conducted by the University of Wisconsin-Milwaukee found that between 1988 and 2004, the number of businesses in the PMDs increased by 100, while jobs increased from 6,500 to 7,500. Goose Island, the PMDs’ strongest performer, today has nearly 5,000 jobs. Chicago’s success has been heralded as a model for economic development in cities across the country, including New York, Seattle, Portland and Milwaukee.

“Goose Island was the feather in the cap because it had a lot of land that was vacant and undeveloped, and there the opportunity was great for bringing in new industrial jobs,” said Holzer. “While it’s great to be able to retain all these factories here, it’s even better to take this land where there’s nothing and create a new, modern industrial park.”

A Holistic Approach to Development
Holzer notes that the Council’s success comes from its holistic approach to community development. What we’re fundamentally about is holding on to the industry and the jobs that we have, and coming in behind that land use assurance with redevelopment plans and projects for existing firms, vacant sites, and then looking at how the surrounding communities can be connected to economic opportunity.”

This approach can be seen in the success of the Goose Island PMD, the development of which was critical in retaining living wage manufacturing jobs in the city and ensuring diversity in the city’s economic output. Once commonly known as “Little Hell” due to the smoke, flames and heat that emanated from the factories on the island in the 19th century, Goose Island, located on the cusp of downtown Chicago, appeared ripe for residential and retail development after residents and businesses had largely deserted it in the late 1970s and 1980s.

The Wrigley Global Innovation Center (foreground) is housed in the Goose Island PMD, the city's top performer with nearly 5,000 jobs.

Courtesy LEED Council

As real-estate developers began to make their case to redevelop the island for luxury residences, the LEED Council’s effort to get city officials to see the economic benefits of PMDs paid off. Working with former Mayor Richard M. Daley and the local alderman, the Council helped curb the residential development plans, and the island was designated as a PMD. 

“Once the island was established as a PMD, we were committed to reaching out to low-income residents in the surrounding neighborhoods and providing them with job training and employment opportunities,” said Holzer. Working with city officials, the LEED Council helped support and create individual Tax Increment Financing (TIF) districts for companies like FedEx, which developed a large package handling facility on Goose Island.

“We were able to use TIF and obtain a hiring agreement with FedEx, where they committed to training and hiring 100 Cabrini Green residents and placing them in jobs,” said Holzer. “We brokered the deal, set up a job training program, and placed local Cabrini residents in jobs, and that become a model for our future work."

The Impact
“It’s really been our lasting legacy,” said Robert Doepel, president and founder of Chicago Scenic Studios and the LEED Council’s board chairman. “Fifteen years ago, Goose Island was vacant, and now it’s fully occupied.”

Asked how he sees the Council's work evolving in the coming years, Holzer noted the enduring impact of the city's PMDs: "As we climb out of the recession, opportunities for Chicago's manufacturers will continue to grow. We'll see more companies expand, and our work has ensured that the tools are in place to help existing manufacturers and industry thrive. Companies continue to move here because they have access to highly skilled young people, so we're seeing an evolution of the kinds of companies that want to have Chicago as a base: more value-added firms and knowledge industries, less heavy steel.”

Doepel agreed, noting that “the manufacturing landscape has evolved significantly, and what’s considered manufacturing and industry looks a lot different today than it did when we first set up the PMDs. We’ve got IT companies where blue-collar workers used to operate, so we’re in the process of reshaping and redefining our services to adapt to a new manufacturing landscape.”

But through it all, Holzer added, the Council’s core mission has remained the same: “We are committed to these districts that we represent, and we’re here for the long haul to help businesses, developers and the community create value out of these commercial and industrial districts located here.”

For more information on the LEED Council, visit http://www.leedcouncil.org/

This is one in a series of periodic articles featuring innovative approaches to economic development in the Chicago area.

Posted in Economic Development

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