NORTH  DEARBORN ASSOCIATION

Post Office Box 10521
Chicago, Illinois 60610
(312) 632-1241

Alderman Brendan Reilly                                                                   October 29, 2007
Community Service Office
311West Superior Street
Suite # 212
Chicago, Illinois  60610

            Re:       3Arts Club Redevelopment

Dear Alderman Reilly:

            In our letter to you dated August 13, 2007, we advised you that the North Dearborn Association (“NDA”) would support the proposal of the developer M Development for the redevelopment of the landmark 3Arts Club building located at Dearborn and Goethe as a private club/boutique hotel.  Our position was based on the understanding that an application would be filed for a special use permit within the existing RM-5 zoning classification, but that no other zoning change would be required.  Recently, it has become clear that this proposed project will require a zoning change, most likely to the C1-5 classification, the “C1” classification in order to allow the hotel use, and the “dash 5” classification because of the FAR of the existing building.  After further discussions, we have reached an agreement with M Development, which we anticipate will be reduced to writing, that will permit the NDA to continue to support the proposed redevelopment. 

            The NDA would ordinarily strongly oppose an application for a commercial zoning classification in the residential Gold Coast neighborhood.  Moreover, the NDA has for over 50 years aggressively and successfully fought for zoning height restrictions in the Gold Coast that help maintain the ambiance of the neighborhood by preventing developers from tearing down the beautiful old row houses and erecting high-rises in their place.  Although M Development’s proposed plans do not provide for any increase in the existing height of the building, the “dash 5” classification, which is necessary because of the building’s existing FAR, automatically carries with it an increased height allowance to 80 feet, compared with the existing RM-5 height allowance of only 47 feet.  The NDA would not want that additional height allowance to be available for any future redevelopment of the property if, say, the existing building burned down or the landmark designation was removed.  However, we believe that the agreement we have reached with M Development will alleviate our concerns both with regard to the “commercial” classification and the additional height allowance.

            In essence, in return for the NDA’s agreement not to oppose the rezoning, M Development will agree, in writing, that as soon as the redevelopment work has been completed and an occupancy permit granted, M Development will apply to have the property rezoned back to the current RM-5 classification.  As a result, the private club/boutique hotel will be permitted to operate as an “existing, non-conforming use,” but any further redevelopment of the property in the future will be subject to the reinstated RM-5 zoning classification.  M Development has also stated a willingness to record a restrictive covenant with the Recorder of Deeds that would provide further protection for the community regarding appropriate limitations on future development.

            The agreement to up-zone and then down-zone when the work has been completed is similar to the agreement previously entered into in 2005 between the NDA and the 3Arts Club Board of Directors in connection with a prior redevelopment proposal.  In that case the property was in fact rezoned from RM-5 to RM-6 in order to permit the necessary construction work, but then rezoned back to RM-5 when, in that case, that project fell through.  I have enclosed a copy of that prior agreement, merely for your information.  Although the NDA does not believe that such agreements to up-zone and then down-zone are, in general, an appropriate zoning device, we believe that it is appropriate in the special circumstances relating to the effort to preserve this existing landmark building.  (We also believe, incidentally, that it would not be legally appropriate for an alderman to formally be part of any such agreement, but that it is entirely proper for the private parties to enter into such an agreement.)

            Similarly, although the NDA would not ordinarily support a proposed commercial use such as a new hotel in this residential neighborhood, this particular situation is unique – it involves an effort to find an economically viable use for a landmark building, in this case one that seems well suited for the proposed use as a private club/boutique hotel.  Other hotels, the Ambassador East and the Indigo, already exist in the neighborhood, so this use is not unprecedented.  Moreover, because of the unique landmark-preservation aspect of this project, we feel there is virtually no risk of it leading to other commercial uses in the neighborhood, even other hotels.

            In addition, although the NDA has no expertise in the operation of a private club/boutique hotel, we are very concerned that an economically viable use be found to ensure the preservation of this landmark building.  The prominent real estate brokerage firm that handled the sale of the 3Arts Club discussed the situation with the NDA even before the sale of the property to M Development.  It was our understanding that they contacted a number of “upper bracket” condo developers, including the developers of 65 East Goethe and the Playboy Mansion.  The condo developers had little or no interest in the property for a number of reasons, including the landmark restrictions, a saturated high-end condo market, no existing parking and the probability that it would be impossible to construct garage space.  The numbers were simply not there to do a condo conversion.   A previous (non-condo) redevelopment proposal by the 3Arts Club Board of Directors fell through due to financing problems, and the building has sat dark and vacant for over three years. All of this further suggests that the current proposal deserves our support.

            We are aware that there are some neighborhood residents who live in close proximity to the property who strongly object to the hotel use (although other neighbors in close proximity support the proposal).  In any project such as this some opposition is almost inevitable.  Those residents who oppose the current proposal would prefer to see the building redeveloped as residential condominiums.  As noted above, there is considerable doubt that that is a viable alternative in the current housing market and because of the complications relating to its landmark status.

            Those neighborhood residents who oppose the project are apparently most concerned about issues of traffic and noise.  Traffic and noise have always been fundamental concerns of the NDA, and we are sympathetic to the concerns presently being expressed in connection with this project.  Nevertheless, we do not feel that they are significant enough here to reject the proposed redevelopment.  The proposed private club/boutique hotel will have no parking.  However, if the building were redeveloped as condos instead, it is doubtful that parking could be provided.  The developer states that most of its clientele will likely arrive by cab, rather than in their own cars, and because there will be a small number of rooms, the amount of cabs will not be excessive.  There is already a constant flow of cabs in the neighborhood because neighborhood residents themselves use them constantly.

            The proposal also calls for a swimming pool on the roof of the building.  There are already many buildings in the neighborhood that have roof-top swimming pools, so that is not unique.  Concerns about the hours of usage, such as closing the roof-top after 11 pm, and the extent of lighting at night, can be addressed in the terms of the lease with the hotel operator, something the developer has stated a willingness to do.

            In addition, the operation of the private club/boutique hotel will not be particularly different from the way the 3Arts Club itself operated for many decades, which was much like a hotel.  It had 97 rooms (far more than the proposed 36 to 41), served three meals a day in a cafeteria with a fully staffed kitchen, and received daily deliveries from food and linen vendors.  It also routinely hosted many events in its facilities.

            Again, although we do not suggest that the concerns about traffic and noise are irrelevant, we believe that they are not so significant as to warrant a rejection of the redevelopment proposal.  We believe that the preservation of the landmark 3Arts Club building is an important objective for the Gold Coast neighborhood and for the City as a whole.  We further believe that the current redevelopment proposal is a reasonable approach to doing so, that can be done without significant detriment to the neighborhood and while ultimately retaining the current RM-5 zoning restrictions on any further redevelopment in the future.  For these reasons, the NDA supports the current proposal.

                                                Sincerely,

                                                Eileen Ganz, President                                                                                                           

                                                Phil Wherry, Chairman, Zoning, Preservation and Community Development