HK wrote:

From WBBM News Radio

Union bets $500 million on Olympic Village plan

CHICAGO (STNG) -- A powerful union is betting big time on Mayor Daley's
Olympic dream.

This week, Daley took an $86 million gamble with taxpayers' money that a
moribund housing market will come roaring back -- by closing on the
purchase of Michael Reese Hospital to pave the way for construction of a
$1.1 billion Olympic Village.

That's a drop in the bucket compared with the risk the AFL-CIO is about
to take with its pension funds.

The AFL-CIO investment trusts and the labor-owned Union Labor Life
Insurance Co. have signed a "letter of commitment" to pump $500 million
into building the Olympic Village, a project alternately viewed as the
riskiest element of Chicago's Olympic bid and its enduring "physical
legacy."

Olympic Village projects in London and Vancouver have run into trouble
because of the worldwide credit crunch, forcing both cities to ride to
the rescue.

The labor organization's investment could help shield Chicago from a
similar disaster. It also bolsters the chances City Hall will succeed in
unloading the Reese property to a master developer during the five-year
window when neither principal nor interest payments are due on the
15-year, $86 million loan.

Daley plans to forge ahead with the new lakefront community -- with a
mix of affordable, market-rate, student and senior housing --with or
without the 2016 Summer Games. The union's investment would be
contingent on Chicago winning the Olympic sweepstakes.

The deal was engineered by Tom Villanova, president of the Chicago and
Cook County Building & Construction Trades Council.

Villanova was the first and, for a while, the only union representative
on Chicago's Olympic organizing committee. Not coincidentally, his union
gave Daley's 2007 re-election bid its only labor endorsement.

"It's a win-win situation for the unions because we get all the work
building the Olympic Village, and it's a good investment in a beautiful,
high-profile project on the lake," Villanova said.

Villanova denied that the investment was risky, despite the housing
slowdown and glut of unsold units.

Chicago's downtown condo market has an inventory of 1,167 unsold units.
Nearly 2,200 more under construction also remain unsold.

"These units are not gonna be put on the market for quite a while.
Hopefully, the market has turned around in that time," Villanova said.

"The people who know that business obviously think it's gonna be fine.
Otherwise, they wouldn't have sent the letter of commitment."

Sources said Villanova announced the union's contribution during
closed-door briefings with aldermen last month, designed to calm the
furor over Daley's pledge to sign an open-ended financial guarantee from
Chicago taxpayers.

Villanova's presence with Chicago 2016 Chairman Pat Ryan served as a
warning: Aldermen contemplating derailing Chicago's bid do so at the
risk of alienating union leaders.

Sources said the insurance company would serve as a lender to various
developers working on everything from housing to retail buildings in the
village.

The project calls for as many as 2,600 units in 21 residential
buildings, each 12 stories high. The units would be retrofitted for
permanent occupancy after they are used to house 16,000 Olympic athletes
during the 2016 Summer Games.


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As described in the news item, the investment sounds safe enough.

The article is wrong in one way. It says Tom Villanova was the only
labor leader to endorse Daley in his last election. They all did.

The reference to Aldermen being afraid to antagonize local union leaders
is amusing. In the Cook County version of enlightened democratic
centralism, local union presidents have the same rank as Ward
Committeemen, which means they outrank Aldermen. Alas, Obama didn't
carry the notion with him to Washington. :)

"Invest"? What is their expected return on their investment? No-bid
contracts? I hope they crash and burn and hire you to spin an apology
letter to the workers who lost part of their pensions. That would make
a great read.

BTW - Leave out the "my father" bull****. No one buys that, WAFA.