The Seeds of Prosperity: ALA in the 1970s; a Former Executive Director Tells the Story of Huron Plaza Construction and the Dawn of High Finance for the Association. (ALA History)

Article excerpt

Part II

At the time I was under consideration for the position of ALA executive director, there were rumors of a secret agreement to build a new ALA headquarters. There was no mention of this at any time during the process that led to my appointment. Therefore, you can imagine my surprise when, a few weeks after I started work, a subpoena arrived citing litigation by Collaborative Development Ltd. over a contract with ALA to build a new building.

I do need to point out that the Executive Board, through its legal counsel, had moved to terminate this contract the previous December (1971). The board thought the matter had been settled. However, Collaborative Development did not find the termination acceptable and sued to force ALA to continue in the relationship. After some negotiation, we recognized that ALA did not have specific enough terms in the original contract upon which to base our unilateral withdrawal. Overall, the contract was favorable to ALA; therefore, a contract extension was agreed upon with specific terms of performance. When Collaborative Development failed to meet these terms, the contract was terminated.

Although we were no longer bound in a contractual relationship to develop the ALA property, ALA still had a space problem. Even with the reductions that had occurred in 1971-72, the staff had outgrown the ALA building, which had been built in 1963. Chicago was in a development boom, and when news of the collapse of the Collaborative Development agreement became public, we were besieged with offers to buy the ALA property. Leading Chicago real estate development firms advised us to sell the property and relocate to a more affordable location. Knowing that the members had rejected several previous efforts to move the Association's headquarters to Washington, D.C., I was sure they would not look favorably upon moving to another city or to the suburbs.

ALA was nestled in a neighborhood of major national associations and benefited from that proximity. In addition, as the only permanent location the Association had ever occupied, ours was the most famous library address in the world: 50 East Huron Street. More importantly, ALA owned the largest parcel of undeveloped property close to the "Magnificent Mile," the stretch of Michigan Avenue from the Wrigley Building to the Drake Hotel. (When asked why Nieman Marcus was putting a store on Michigan Avenue, the late Stanley Marcus replied that it is the most important shopping street in America.)

New home decisions

Since we could ill afford to spend much time or money considering various proposals, the new ALA controller, Meldon Kirk, was directed to review all contracts and reject out of hand any proposals that did not allow for the joint development of the property and that did not meet the following conditions:

* more and better space for ALA;

* ALA's only contribution would be the land;

* potential for additional revenue.

ALA had rejected a number of offers when Dan Levin, of McHugh-Levin, a Chicago development firm, approached the Association and offered to partner with ALA to develop the property. Kirk worked on the agreement with Earl Talbot, ALA's real estate attorney at Kirkland and Ellis, and we kept the Executive Board (through its Space Needs Committee) informed at every step along the way. Still, our prior experience and the natural conservatism of the Association led some members to remain skeptical of the prospects for a new building. There were, in fact, a number of legitimate reasons to be concerned about the agreement:

* The property, which had been acquired from the Archdiocese of the Catholic Church, a neighbor of ALA, actually belonged to the ALA endowment, and there was some question as to whether this use of the property would meet with the approval of the endowment trustees. The trustees were, in fact, not entirely pleased that we could not project the return on their investment in Huron Plaza, which was essentially a bond. …