A group that owns a piece of property in the shadow of the site of the former Michael Reese Hospital, near McCormick Place, is asking a federal judge to order City Hall to pay $15 million, accusing city officials and the company overseeing the potential redevelopment of the Michael Reese site of using the city’s zoning and permitting power to drive down the value of their property, so the city can purchase it “cheap” to aid their Michael Reese redevelopment plans.
On March 15, the company known as King Sykes LLC filed suit in Chicago federal court. The lawsuit names as defendants the city of Chicago, along with developer GRIT Chicago and Farpoint Development. Individual defendants include 4th Ward Ald. Sophia King; Chicago Commissioner of Planning and Development Maurice Cox; Deputy Mayor Samir Mayekar; and Scott Goodman, identified as manager of Farpoint Development.
According to a published report, King Sykes purchased the parcel at 2545-2555 South King Drive in Chicago’s Bronzeville neighborhood in 2007. At the time, the parcel include a large medical office building, formerly owned by Humana, next to the former Michael Reese Hospital. According to a published report, King Sykes borrowed more than $17 million to finance the purchase.
The company has continued to own the 6.5 acre property in the years since, as the city of Chicago acquired and demolished the former Michael Reese Hospital in 2009. Various proposals have been floated for the redevelopment of the site.
In 2017, the city of Chicago selected a local group of developers known as GRIT to purchase and redevelop the site, as part of a larger proposed $3.8 billion project known as the Bronzeville Lakefront. Farpoint Development, led by a team including Goodman, is among the companies controlling GRIT and the plans for the Bronzeville Lakefront and associated Michael Reese redevelopment plan.
According to information posted online by the city, GRIT paid the city $96.9 million for the Michael Reese site.
According to that document, the GRIT project was being moved forward with the backing of Ald. King and the city’s Department of Planning and Development.
According to the King Sykes complaint, development pitches for the Michael Reese site have consistently also called for the inclusion of the King Sykes property in the overall project, even though the King Sykes property has never been owned by the city, GRIT, Farpoint or anyone else guiding the Michael Reese project.
According to the complaint, Goodman and Ald. King have repeatedly told representatives of King Sykes and potential buyers of the King Sykes property that they intend to eventually acquire the property and incorporate it into their larger Michael Reese plans.
However, the complaint asserts Goodman and Ald. King have also repeatedly told the King Sykes owners and potential buyers since 2017 that the city will never approve any development proposal for the King Sykes property, unless the proposal includes selling the site to the city for “cheap.”
To illustrate the point, the complaint asserts the city and Farpoint torpedoed a $30 million deal King Sykes had worked out with a buyer, identified as Equinix. According to the complaint, Equinix allegedly agreed in 2020 to purchase the property to construct a “state-of-the-art, multi-user data center.”
However, the deal was allegedly contingent on Equinix securing approval from the city to construct their data center.
The complaint alleges that when Equinix approached the city to secure permits and any other approvals needed for the project, Ald. King allegedly told Equinix “we have plans for that site,” indicating the alderman “would oppose Equinix getting the necessary approvals for its data center, because the City wanted to purchase the (King Sykes) Site.”
Later in 2020, the complaint alleges Goodman was involved in a meeting with Equinix and city officials at which Goodman allegedly told Equinix “it should move its planned data center to the Michael Reese Site.”
Ultimately, King Sykes asserted Ald. King, other city officials and Goodman made clear to Equinix that “the City would not grant Equinix the required approvals because the City wanted to purchase the (King Sykes) Site, and to purchase it ‘cheap.’”
Equinix allegedly then pulled out of the purchase agreement in April 2021.
According to the complaint, the city and GRIT later endorsed the idea of a data storage center on the Michael Reese property.
And in late 2022, King Sykes allegedly received an offer from a company allegedly controlled by Goodman to buy their land for $15 million. King Sykes refused the offer, and it expired on Dec. 7, 2022, according to the complaint.
King Sykes asserts the actions of Ald. King and the city amounted to an illegal taking of its property, prohibiting the owners both from developing the property or from selling it for what an able buyer was willing to pay.
The city’s actions effectively slashed the value of King Sykes’ property in half, the complaint asserts in an effort designed to favor one property owner over the other, and boost the city’s profits, “not … to promote the public good in any manner.”
They assert the actions of city officials were intended solely to punish them for not doing what the city desired with their property, and amounts to a denial of their constitutional equal protection rights, and they accuse Goodman and his companies of cooperating in that effort.
Further, the assert Goodman improperly interfered with their purchase deal with Equinix.
King Sykes is seeking damages of at least $15 million from both the defendants, plus potential punitive damages and attorney fees.
King Sykes is represented by attorneys Michael K. Forde, Kevin R. Malloy and Ellen M. Carey, of the firm of Forde & O’Meara, of Chicago.
Ald. King and Goodman did not reply on Thursday, March 16, to emails from The Cook County Record offering the opportunity to comment.
King has represented Chicago's 4th Ward on the City Council since she was appointed to replace former Ald. Will Burns in 2016. She was elected during a special election in 2017 and to a full term in 2019. She chose not to seek reelection in 2023, instead running for mayor. She placed 8th out of nine candidates, receiving 7,191 votes during the Feb. 28 municipal general election.