Illinois Site Fight: Wal-Mart Hits Obstacles in Chicago

2nd Wal-Mart in city unlikely [Chicago Tribune]

The likelihood that Wal-Mart Stores Inc. will open its second store within Chicago city limits just got smaller.

The city of Chicago declined a request to allow the world’s largest retailer to build a store at the 50-acre Chatham Market on the South Side, a former steel plant site that the discount chain has been eyeing for at least four years.

Arnold Randall, commissioner for Chicago’s Department of Planning and Development, notified the project’s developer, Archon Group LP, a unit of Goldman Sachs Group Inc., on Friday that he would not let the project move forward, according to a copy of the letter obtained by the Chicago Tribune.

The project has been in a political quagmire dating back to 2005, as labor unions, gunning for better pay and working conditions for Wal-Mart workers, fight to keep the retailer from expanding into urban markets, one of the few areas the Bentonville, Ark.-based giant has yet to enter in any big way.

City approval is required before Wal-Mart can build on the site because of some unusual events.

The City Council voted to rezone the property for retail use in 2004 after then-developer Monroe Investment Partners LLC stated in a letter to city officials that Wal-Mart would not be a part of the shopping center. As part of the rezoning effort, the city passed an ordinance in 2005 authorizing a redevelopment agreement for the project that included a caveat: The city would have to approve any user that occupies more than 100,000 square feet—knowing that Wal-Mart stores are typically larger than that.

Monroe is now a minority investor and Archon has taken the lead role. Randall sited this series of events when he said in Friday’s letter, “Based on these issues, I do not approve your plans as proposed.”

That next step could be to turn to the City Council to vote on repealing the 100,000-square-foot approval. But such a move is likely to rekindle the big-box ordinance fight that gripped the city in the summer of 2006, when Mayor Richard Daley, in his first-ever veto, overturned a city ordinance aimed at Wal-Mart that would have prohibited pay for workers at big-box stores from being below a certain minimum level.

Wal-Mart opened its first Chicago store, at 142,000-square-feet, last year in the Austin neighborhood on the West Side.

Wal-Mart spokesman Roderick Scott called the letter a “complication,” but said he is still hopeful that a solution can be reached that would allow Wal-Mart to build on the site.

Lowe’s Cos. has already opened its store, a 117,000-square-foot anchor that sits on the mostly empty swath of land—at 83rd Street and Stewart Avenue—where Wal-Mart was slated to go.

Bill Moston, Chicago-based director of retail investments for Archon, responded saying: “We’re disappointed that the city turned down our request and we’re investigating our options going forward.”

Posted by Alex Goldschmidt on Tuesday, March 18, 2008

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