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How Metra’s first-ever real estate purchase of Harvey Summit Laboratories hand

CHICAGO (WLS) — What was supposed to be a simple storage warehouse for the Metra transit agency has now buried the nation’s fourth-busiest commuter rail system in a sinking money pit, the ABC7 I-Team has learned.

In the city of Harvey, a warehouse purchased in 2020 was advertised to Metra’s board of directors as the agency’s new “material distribution center,” a centrally-located hub to store railroad parts, materials, and equipment, currently littered around the transit agency’s railyards, according to the board-approved proposal.

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But nearly four years later, the project has cost taxpayers about $18 million, with tens of millions of dollars still needed to complete the project, according to Metra staff speaking at a public board meeting last month.

The warehouse currently sits vacant and useless, all while the transit agency says it’s facing a “fiscal cliff” in the coming years, stemming from significant financial struggles brought on by “pandemic-related changes to work patterns and commutes.”

This is just a total screw-up by Metra getting involved with this piece of property.

Kenneth Koehler, Board Director and Treasurer

Questions are now mounting over how the agency got into this situation.

Metra’s board of directors — 11 members representing the six-county Chicago metro area Metra serves — have not hidden their feelings of confusion and frustration over the “Harvey warehouse project.”

“This is just a total screw-up by Metra getting involved with this piece of property,” Board Director and Treasurer Kenneth Koehler said back in May. “What the hell are we designing that’s going to cost, maybe $20, $30, $40 million? It’s a warehouse! What are we designing to make this the Taj Mahal to store railroad stuff?!”

Metra’s board chair Romayne Brown had pointed demands and questions about the project for the person whose name appears on the deed for the controversial purchase: Metra CEO and executive director Jim Derwinski.

“It’s like we’re peeling an onion,” Brown said last month. “We can’t get a definitive answer on where we’re at with the Harvey warehouse without another layer, another layer.”

Brown demanded, “This board needs to know how did we get into this fiasco, this cluster.”

The Harvey Warehouse Project

Reviewing public records and Metra board meeting transcripts, the ABC7 I-Team found the Harvey warehouse, located at 17010 Halsted Street, was approved for purchase on May 20, 2020, for the price of nearly $6.8 million.

The purchase was made through state “Rebuild Illinois” bond funds, according to Metra records.

Derwinski told the Board of Directors two primary reasons were driving the transit agency’s decision to purchase the warehouse property.

First, Metra needed a place to store railroad equipment overloads, scattered across its rail yards that were often getting in the way of its work. And the second, more pressing reason at the time, was the COVID-19 pandemic.

Derwinski said the agency was facing potential layoffs for its workforce and Metra’s Executive Leadership Team saw the building purchase as an opportunity to repurpose employees to work on and make improvements to the warehouse.

“We absolutely were on the verge of having to have massive layoffs here at Metra,” Derwinski said at a Metra Board of Directors meeting last month. “[At that time] we did not have federal COVID money coming in so we saw an opportunity to shift workforce into this building at that period of time to keep them working under capital dollars, knowing that operating dollars had completely collapsed.”

At the Board of Directors’ May meeting, Metra’s CEO said the agency agreed to purchase the property “as-is” with no prior inspections.

When challenged why the building was purchased this way, Derwinski only offered that this was the first time the transit agency purchased a used property in its entire history.

“In hindsight, we’ve certainly learned a lot on this project,” Derwinski said. “This is Metra’s first purchase ever of a building like this in its history. We’ve purchased railroads, but we’ve never purchased a building, a used building. So absolutely, in hindsight, we found that our processes between the real estate department has to be improved if we are to purchase any more buildings in the future.”

The 153,000 square-foot warehouse, sitting on nearly 10.5 acres of land, was originally built in 1972 for the Wickes Furniture company and showroom.

Property records show the building and land was acquired in 2002 by a company called Summit Laboratories; the company that would end up selling the warehouse to Metra in 2020.

Summit Laboratories produced hand sanitizer and other products, according to online listings and business filings.

Given what we know, and the fiscal cliff, we need to…

Read More: How Metra’s first-ever real estate purchase of Harvey Summit Laboratories hand

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