Todd Lighty and laurie Cohen Hit 11th Ward Goldmine
Remember if you continue to investigate the 11th Ward Corruption and insider deals, you will find Mayor Daley's pals cleaning up on the Taxpayer's dime. A Chicago boat-ride turned a mighty profit for Daley's pals. Read this article, this is real reporting. Patrick McDonough
For insider, park a gold mine
City buys contaminated riverfront property from prominent Daley ally, who pockets more than $1 million in sale
By Laurie Cohen and Todd Lighty | Tribune staff reporters
Mayor Richard Daley took an hourlong boat ride on the Chicago River in fall 1997 and came back with a vision of improving the riverfront in the city's neighborhoods.
Just about that time, Thomas DiPiazza, an ally of Daley's, also took an interest in the riverfront, buying a highly contaminated piece of land that was slated to become a public park under the mayor's plan.
DiPiazza and a partner bought the vacant, odd-shaped property in Daley's native Bridgeport neighborhood for $50,000 in 1998. Six years later, the city paid them $1.2 million for the land.
The investors benefited from ever-escalating appraisals. The final one tripled the land's estimated value after the city broke from its usual practice of valuing land at its current zoning.
DiPiazza's good fortune is a familiar tale of how insiders profit from even the most public-minded projects undertaken by the Daley administration, from wrought-iron fencing to blue-bag recycling.
DiPiazza is a prominent Bridgeport developer whose company sits in the shadows of the White Sox ballpark. He has known Timothy Degnan, a political adviser to the mayor, for 40 years, and the two have teamed up on real estate projects.
It is unclear how or when DiPiazza learned that the land was being eyed by the city for a park.
City officials said they did not tip off DiPiazza about their plans. The Daley administration refused to make city officials available for interviews and insisted that the Tribune submit all questions in writing.
DiPiazza declined to discuss the park. His lawyer, Michael Kralovec, said DiPiazza profited from rising real estate prices in Bridgeport and that the city paid a fair price for the land. Kralovec said it is "silliness" to suggest that DiPiazza was helped by his political connections.
DiPiazza's ties to the Daley administration have come under increasing scrutiny since early this year, when another developer disclosed in a federal lawsuit that DiPiazza was a $1.3 million consultant to the Bridgeport Village housing development. In the suit, Thomas Snitzer alleged that he was punished by City Hall for refusing DiPiazza's demands for more money.
DiPiazza, 58, is a former city sewer worker who now owns a late-model Bentley and a Ferrari convertible. He has done real estate deals with Daley's friend Fred Barbara, who has made millions hauling garbage for the city. Barbara is a nephew of the late 1st Ward Ald. Fred Roti, long reputed to be organized crime's representative in the City Council. DiPiazza and business partner Richard Ferro are related to the Roti family by marriage.
DiPiazza and Ferro have been frequent contributors to Daley. In February's municipal elections, they pitched in $25,000 to a political fund created by some of the mayor's closest allies to help pro-Daley aldermen.
Though the Bridgeport park is not expected to be ready for visitors for at least two years, the idea originated a decade ago with Daley's boat ride.
After the trip, Daley ordered his staff to come up with a sweeping plan for riverfront improvements. By April 1998, city planners were telling neighbors that the property was destined to be a park.
By then, DiPiazza and Ferro were already working to buy the land. They began negotiating with the packaging company Jefferson Smurfit at the end of 1997, according to Kralovec. They closed the $50,000 deal in May 1998, acquiring the property as an investment.
Snitzer charged in his lawsuit that DiPiazza was tipped off by Degnan, but Kralovec denied the allegation, and a lawyer for Degnan declined to comment.
A month after DiPiazza and Ferro acquired the property, the city asked for a state grant to help buy the land. The Illinois Department of Natural Resources approved the park plan, which included a playground, fishing access and a pedestrian bridge across the river to Canal Origins Park, at the site of the historic starting point of the Illinois & Michigan Canal.
The park property is a 1.8-acre triangular plot located at the mouth of one of the river's most notoriously polluted sections. Bubbly Creek still bubbles because of decaying livestock waste dumped by the long-gone Union Stockyards.
The land also had well-known environmental problems. For years the plot and neighboring properties housed a plant that turned coal into gas used to light and heat Chicago homes.
The Daley administration did not buy the land until June 2004, after Peoples Gas agreed to clean up the site. Peoples already has dug down as deep as 30 feet to remove contaminated soil but might have to do more work on the property under a recent agreement with the U.S. Environmental Protection Agency.
In the meantime, City Hall hired four appraisers to determine how much it should pay for the land. The first, in 1999, turned in an estimate of $220,000. In 2002 another appraisal report put the value at $520,000.
Two other appraisers reviewed and approved the $520,000 estimate, including Francis Lorenz Jr., who told the city in July 2003 that he agreed with the figure. DiPiazza and Ferro said they would sell their land for $520,000 at that time, but the city did not respond to the offer, Kralovec said.
Eight months later, in March 2004, Lorenz submitted another estimate, tripling the value to $1.6 million.
Unlike all of the previous appraisals, which had assumed that the property would continue to be zoned for industrial use, Lorenz's report said the land would be more valuable if it were used for homes. In an interview, Lorenz said city officials directed him to take a second look at the property and base his new appraisal on residential zoning.
Lorenz is a longtime city contractor whose father was a key figure in the Cook County Democratic Organization under the late Mayor Richard J. Daley, the current mayor's father. But Lorenz said he was not pressured to change the appraisal. He said the city's request made sense because of the boom in residential development along the river.
The city had decided to buy the land for $1.2 million even before it saw Lorenz's appraisal, said Constance Buscemi, a spokeswoman for the city. The new appraisal was required because the original one was more than six months old, she said.
City Hall decided to use the higher-valued residential zoning for the park appraisal even though it typically tells appraisers to base estimates on current zoning.
The city adhered to that policy in 2000 when it was selling city-owned industrial land cheaply to a favored developer. In that case the land sale involved the Bridgeport Village housing project, where DiPiazza was a consultant.
City buys neighboring parcel
By the time the city bought the DiPiazza property, it had decided to expand the proposed park to include a bigger, neighboring parcel used since the 1960s by Speedway Wrecking. The family-owned company, which demolished the old Comiskey Park to make way for the Sox's current home at U.S. Cellular Field, employed about 15 people and operated its offices and garages on the site.
Speedway did not want to move but had little choice because the city said it would go to court and seize the land, said owner Irving Kolko.
The city also valued the Speedway property using residential zoning. Still, Kolko and his brother received less for their land than DiPiazza got for his, even though appraisers thought Speedway was worth more.
The city paid him and his brother $1.15 million for their 2.3-acre parcel -- about a half-acre larger than DiPiazza's plot -- and added another $500,000 to cover the costs of moving their business papers, cranes and trucks, records show.
Told that DiPiazza and Ferro received $1.2 million for their smaller property, Kolko said: "They got more than we did. They must have fought a little harder than we did. They did very well."