Chicago aims to save landmark Congress Theater with $25.2M federal loan backed by city funds

A City Council committee agreed Wednesday to support providing a $25.2 million federal loan — backed by Chicago’s share of community development block grants — to breathe new life into the landmark Congress Theater.

It’s the fourth time that the Finance Committee has agreed to up the ante to save the deteriorating movie palace-turned concert venue at 2135 N. Milwaukee in Logan Square.

Deputy Planning and Development Commissioner Jeff Cohen said the Housing and Urban Development loan is needed to salvage the “gut rehab” because developers of the project were unable to secure a conventional loan — a problem that has little to do with "the operator’s ability to perform."

“It’s a perception issue. ... There’s just a risk perception in the wake of COVID for live entertainment venues," Cohen said. “This was a very successful live entertainment venue prior to it shutting down, and given the time that’s transpired, conventional, risk-averse banking groups don’t necessarily have comps to point to in that particular sector."

Exacerbating the problem is the fact that AEG Presents, the entertainment partner in the deal, was "unfortunately being considered as a startup because it is a new entity operating in the city” even though its parent company has “been around for a long time and is the second-largest entertainment group right behind LiveNation and Ticketmaster,” Cohen said.

Finance Chair and 3rd Ward Ald. Pat Dowell asked Cohen who would be "on the hook if this goes south?”

Cohen acknowledged that the city would bear the risk. If the development team led by Baum Revision defaults on the 20-year loan, Chicago’s share of Community Development Block Grant funds could be siphoned to make the debt payments.

“It’s worth the risk because we have high confidence in both the development team and the underlying operator to be able to perform their obligations. If we didn’t believe the commercial tenant AEG had sufficient capital or wasn’t able to perform, even if their venue doesn’t, we wouldn’t necessarily consider this,” Cohen told the Chicago Sun-Times.

Cohen pointed once again to the deteriorating state of the theater, even after emergency repairs to the roof and windows.

“Since it’s been sitting vacant and unused, it will continue to deteriorate if we can’t move forward… This is another attempt to help move this project forward to avoid any negative outcomes in the future,” Cohen said.

David Baum of Baum Revision could not be reached for comment.

Ald. Daniel La Spata (1st) said he does not believe the developer would have invested so much already in the Congress if Baum wasn't "confident of the success of this space as an entertainment venue.”

La Spata said the photos of the deteriorating theater shown at Wednesday’s meeting are four years old and “nothing has gotten better since then.”

“We are at the last opportunity to make this happen,” he said.

Noting that the surrounding TIF expires in 2027, La Spata added, "If we don’t find a way to get this done, not only does it not happen now — it does not happen for the forseeable future.”

The plan calls for the Congress to be reborn as a “state of the art, 3,500-seat live music venue” operated by AEG Presents.

The project also includes 13,000 square feet of retail space along Milwaukee Avenue, 23,000 square feet of office space dedicated to nonprofits and community groups, and developing 16 residential units, with 14 of those qualifying as affordable housing.

Roof replacement and restoration of the theater’s familiar marquee are in the plan. City planners also say a “significant amount of exterior stabilization” is needed to keep the Congress operating for the next century. Inside, there would be an extensive revamp of interior systems and spaces with a particular focus on restoring the theater’s historic features, including lobby spaces and ornate fixtures.

The Congress was built in 1926 in the Classical Revival and Italian Renaissance style. The movie theater was once one of 30 of its kind in Chicago. In the 1980s, it was turned into a live music venue. It earned landmark status and a spot in the National Register of Historic Places in 2002.

It has been closed since 2013, when the city clamped down on the facility after the latest in a series of failed inspections.