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CHICAGO-Skepticism from members of the community development commission could be expected this week before they unanimously recommended a $12.3-million sale of “Block 37″ to Mills Corp. The $336-million retail and entertainment base of what could ultimately grow to a two-million-sf redevelopment is hardly the first proposal to come and go in more than a decade.

The involvement of well-heeled Arlington, VA-based Mills Corp. is one reason city officials are confident the development, which ultimately promises to generate $17.5 million a year in property and sales tax revenue, will be built pretty much as planned. If there is any gamble to Mills Corp.’s proposal for 108 N. State St., though, it appears to be two towers that could contain multifamily units and hotel rooms.

Mills Corp. is building what it knows best–the 417,000-sf retail and entertainment portion of the development that will be “the podium” for 108 N. State St. Although negotiations are under way with CBS to take 100,000 sf to anchor a 400,000-sf office tower, that project would be built by Lincoln Property Co. Meanwhile, Mills Corp. is in negotiations with developers for the other two towers, says executive vice president of development Steven J. Jacobsen.

Those towers could be 200 to 300 units, and the mixture between residences and hotel rooms will be driven largely by the market, Jacobsen and city officials emphasize. That flexibility improves the odds of the towers being built, suggests Terri Haymaker, deputy commissioner of the department of planning and development. However, some were uneasy about the possibility of that portion of the project failing to materialize.

“The last thing we want is 450,000 sf of retail and an unfinished tower,” Jacobsen says. “This is very important to the company. “

So far, though, Jacobsen says there is “strong interest” from hotel developers, particularly because the base of the entire 108 N. State St. also includes a $172-million Chicago Transit Authority station three stories underground. It will offer express service to O’Hare International Airport, as the CTA’s Red line is connected to the Blue Line, which runs down the middle of the Kennedy Expressway to the airport.

Also overseeing the company’s redevelopment of Piers 27-31 in San Francisco as well as Vaughn Mills in Toronto, the 108 N. State St. assignment is a homecoming for Jacobsen. The architect is a Chicago native, received his degree Downstate at the University of Illinois as well as Downtown at Roosevelt University. “What’s important for me is to come back and do a project like this in the city,” he says.

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