City's lease with Vanecko's company has Hired Truck link
INDOOR PARKING | City says it didn't know of Vanecko's interest in warehouse

June 13, 2009

BY TIM NOVAK, CHRIS FUSCO AND FRAN SPIELMAN Staff Reporters
Chicago water officials wanted a place to park dozens of dump trucks they'd been leasing since the collapse of the city's scandalous Hired Truck Program.

They found the spot in October 2006 -- a massive industrial property on Pulaski Road, just north of the Stevenson Expy.

For a year, they parked dump trucks outside. Then, city officials decided they wanted to move the trucks indoors to a warehouse on the 15-acre site.

As they negotiated a lease for that building, it changed hands, city officials say. And they say they had no idea the new owners included an investment company co-owned by Mayor Daley's nephew, whose firm manages $68 million for five city pension funds.

Some of that pension money -- $4.2 million -- was used to buy the warehouse in November 2007. And Chicago taxpayers have since paid nearly $500,000 to lease it.

The property is at the center of the latest scandal confronting Daley, whose nephew Robert Vanecko resigned from his pension-investment company Tuesday, two weeks after a federal grand jury issued subpoenas seeking details of why the pension funds invested with Vanecko's start-up firm three years ago.

City officials have yet to respond to a Chicago Sun-Times request for copies of lease documents. But they are now offering an explanation for how they came to lease a huge garage at 3348 S. Pulaski for the city Water Management Department.

And it ties back into the biggest scandal Daley has faced during his 20 years as mayor: the Hired Truck Program, which the city got rid of after a Sun-Times investigation found the city spent millions of dollars hiring dump trucks that were often paid to do nothing.

"In 2006, the City of Chicago's Hired Truck Program was dismantled, and the city needed to purchase 50 20-ton trucks to work with water and sewer construction crews," said water department spokesman Tom LaPorte. "To meet this demand, an additional 45 trucks were also leased. This significant addition of equipment meant adequate parking locations needed to be found.''

The city wanted to park the trucks near Reliable Asphalt Corporation, a supplier of construction materials, at 3741 S. Pulaski. Reliable is owned by Michael Vondra, who is referred to in the original criminal complaint filed against former Gov. Rod Blagojevich. Vondra wanted unspecified help from the governor on a business venture, according to prosecutors, who said Blagojevich, in turn, wanted $100,000 in campaign contributions. Vondra, who hasn't been charged with any wrongdoing, never raised the money.

City officials hoped to park the trucks on property Reliable leases from the Metropolitan Water Reclamation District, but Reliable turned the city down, LaPorte said. So city officials set their sights on the Pulaski warehouse.

On Oct. 10, 2006, the city signed a month-to-month lease to park trucks at 3348 S. Pulaski. That included city-owned trucks and also trucks leased from Steve's Equipment Services under multimillion-dollar contracts struck after the Hired Truck Program was scrapped. At first, the trucks were parked outside the massive, 320,000-square-foot warehouse, LaPorte said.

Then, city officials decided they wanted to move the trucks inside and began negotiating a long-term lease with owner Michael Lazar.

"In the midst of the negotiations, Mr. Lazar sold his interest in the building,'' LaPorte said.

On Nov. 14, 2007, the city signed a month-to-month lease with Lazar to move its trucks inside the warehouse.

On Nov. 27, 2007, Lazar sold the building to Sydney Pulaski LLC for $10.5 million. The deal included the $4.2 million in city pension money managed by DV Urban Realty Partners, co-owned by the mayor's nephew and his partners, Allison S. Davis and his son Jared Davis.

City officials have said they didn't know Vanecko was involved. Vanecko has never taken part in the ongoing negotiations for a long-term lease, they also said.

On Dec. 1, 2007, the city began parking its trucks inside the warehouse, LaPorte said.

The city says it moved into the warehouse after Vanecko's group bought the property. Vanecko's firm said last week that the city already had its trucks in the warehouse before it bought the property.

The city has paid a total of $480,408 in rent to Sydney Pulaski.

The city had paid $50,026 in rent to Lazar's company.

The terms of the indoor lease remained the same after Lazar sold the building to Vanecko's group, according to city officials and Vanecko's company. The city is paying $3.83 per square foot for 70,565 square feet -- about 20 percent of the warehouse.

Another tenant is Bus & Truck of Chicago, a city contractor that got a three-year, $4.3 million deal last September from the city's Fleet Management Department to repair city vehicles. The city has paid the company more than $345,000 since 2006.

City officials are still negotiating a five-year lease for the warehouse, but they are also looking at other places to park the trucks, LaPorte said.

Vanecko's partners apparently wouldn't mind if the city found another location.

"What we knew is [city officials] were looking for larger space, so our assumption was that they would move out," Allison Davis said in an interview last week on WTTW-Channel 11's "Chicago Tonight." "And we were marketing the space to other buyers. They repeatedly came back to us and wanted to lease the space, and we said no, this is not appropriate, and this will only cause us grief and problems.

"While it's a very attractive lease, it's a problem,'' Davis said. "I don't need a problem."