Obstacles litter way for Block 37 opening

November 20, 2009 (CHICAGO) (WLS) -- There is yet another wrinkle in the Block 37 development in Chicago's Loop.

Friday, a judge appointed a receiver to take over for the original developer, who has fallen behind on payments.

It appears the retailers and the pedway under the building that connects Michigan Avenue with the Daley Center are working toward opening before Thanksgiving, but many unanswered questions remain.

Developer Joseph Freed will be out, and a court-appointed receiver will now takeover Block 37, which is one of the most valuable and yet most star-crossed pieces of real estate in downtown Chicago.

There are two decidedly different views on whether a new boss is good or bad, but the city hopes that the merchants shooting to open next week will still be able to do so. They also hope the underground pedway, which was undergoing final inspections Friday, can finally be reopened.

In this report, ABC7 highlights an expensive project underneath Block 37 that won't be opening anytime soon.

Above ground on State Street, workers are hard at it, readying Block 37 for its eventual opening, but a level below ground, directly underneath block 37, there is something that was intended to be the CTA's superstation, a modernistic downtown mass transit hub designed to ultimately provide express rail service to O'Hare and Midway.

Another level below is where the airport bound trains would run every 15 minutes. Tunnels were dug that would connect CTA Blue and Red line trains in a crossover.

Three years ago, a CTA consultant projected that the CTA airport trains would be handling 1.7 million passengers in 2010.

Well, that won't happen. Last year, the CTA decided to 'mothball' the superstation because of huge cost overruns and no realistic expectation that it would work without a private partner to help fund it.

"It was a reasonable idea. It was an attempt to attract private funds [for] real estate development, but it was not vetted in the context of what are all the other CTA needs that we have right now," said the Civic Federation's Laurence Msall.

The price tag on the empty superstation is, so far, $213 million, including $130 million in bonds that the CTA must repay, and $42 million from the city in tax increment financing money.

The CTA allowed ABC7 to view the station shell, and video tape it, but an invitation for the on-camera interview was declined.

The CTA says that digging the tunnels presented a staggering amount of utility work, with more challenging conditions than anticipated, which led to big cost overruns.

But the agency believes there is a future for what it calls a visionary project that will provide a significant benefit to the city when the economy supports its development.

No one can say when or whether that would happen, or who would pay the big money to create sidings and switching systems that would allow airport express trains to work in the first place.

"The cost. That's the problem. Who's gonna pay that cost? Who's gonna pay the billion dollars in order to create the express service? Is that a higher priority than ongoing maintenance of the CTA right now?" Msall said.

The debt service on the CTA's bonds for the superstation amounts to $5 to $10 million a year. The CTA says it is determined to receive a return on its superstation investment but acknowledges that may take years.

More immediately though, one of the big benefits of the plan can't pay off. Right now, finishing the tunnels that would connect the Blue and Red lines is too expensive.

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