CHICAGO-The City Council has approved a redevelopment agreement for the first phase of a $4 billion redevelopment project of a former steel plant site, being planned by a partnership of McCaffery Interests and US Steel Corp. The city will contribute $96 million in a TIF for the project on the South Side, an area not known for commercial success.

The entire 25-year plan, a redevelopment of the US Steel plant with slag and trucked-in dirt on the property, includes more than 13,575 new homes and a 17.5 million square feet of retail and other commercial along the shores of Lake Michigan. The property will also have a 90-acre park and a marina.

The first phase will include more than 800,000 square feet of retail and about 1,000 apartments, in a development called Market Common. For this phase, the city has pledged the TIF funds in construction of new streets, sewers and other public infrastructure as part the 76-acre land parcel bounded by 79^th Street, 83^rd Street, Brandon Avenue and US Route 41. However, the city has reportedly put requirements on the funding, including a provision that the partnership get lease commitments for 60% of the first phase retail.

Work on the project won’t reportedly begin until 2013, after South Shore Drive can be moved to flow around the site. Some local experts have said there are high hopes for the development, but skepticism about demand and financing during a downturn. The city is now experiencing a flattening of activity in all property markets. Dan McCaffery, president of the self-named firm, did not return calls about the project.