Scott Goodman has spent the last three decades enlisting private investors to turn Sterling Bay, a two-person startup in real estate, into one of Chicago’s leading developers. In his second act, Goodman is relying more on the public sectors.
Goodman’s Farpoint Development, seven years after he left the Chicago real estate giant he cofounded, is now a major player in the industry with several high-profile projects. The company is leading a group of developers who began work on the Bronzeville Lakefront mixed use megaproject in March. Farpoint also recently partnered with the Chicago Transit Authority in order to build a control center complex worth $158 million in Garfield Park. And the developer has a mixed-use development that could revitalize a South Side corridor
Farpoint and taxpayers or government agencies form public-private partnerships to undertake development projects that will help shape the cityscape. The big private developers, especially in the government-heavy Chicago, tend to avoid these projects because they are laden with red tape and other obstacles that slow down the development process and reduce returns for developers. They also attract unwanted public attention. Goodman was recently named as co-defendant with the city, some public officials and others in an allegation that they conspired against the development of privately owned land next to the Michael Reese property. Goodman and the city spokesperson declined to comment.
Goodman’s expertise could be a powerful voice for Chicago in the wake of COVID-19. His ability to turn these projects into profitable ventures for Farpoint could be an indicator for other large development firms that are considering working in public-private partnerships.
Goodman: “I believe Chicago is in a bind in certain ways.” He says that while public officials want to help residents, and private developers are interested in profits, “we’re working to bring them together as much as we can to fill the hole rather than (digging it) deeper.”
The progress has been slow. After dozens of meetings with the public and negotiations about how the city would finance the infrastructure and clean up contaminated areas of land, it took Goodman most of his seven years at Farpoint and nearly three mayors to begin work in Bronzeville. Negotiations on the CTA Garfield Park Project, which is not scheduled to begin until next year, took almost as long. The $10.3 million Englewood Connect construction project has yet to start, almost eight months after a city-sponsored groundbreaking ceremony.
Goodman, 65 years old, believes that Farpoint has “enough patience to make those deals”, and there are benefits to having City Hall involved in a particular project. The city, for example, agreed to sell the 48-acre Michael Reese land to his team in 14-year-long stages, at a cost of $97 million. This allowed the developers to develop the property without having to invest in its ownership and maintenance. Goodman says it’s an “advantage” over megaprojects such as Sterling Bay’s Lincoln Yards in the North Side or Related Midwest’s South Loop 78, where developers had large tracts of land vacant for years.
Goodman must now keep Farpoint’s project moving by forming new relationships with Johnson administration members who may have a different approach to taxation and real estate development than his predecessor.
It’s not easy to deal with the government, much less as a “quasi-partner”, says Zeb McLaurin. He is a developer who has worked with Goodman in Bronzeville and Englewood. “Scott has always been able to reach consensus and is the facilitator.” Scott has been at the helm for a long time. I’m not sure if we would be where we are today without him.
Goodman, like other developers, is a real estate junkie. “He’s always willing to hop in a car to look at an opportunity,” McLaurin explains. But he’s different from his peers because he has a knack for bringing diverse groups of people together.
McLaurin: “When Scott walks in a room, particularly on the South Side he probably looks differently than most people.” His ability to find commonality almost instantly is something that you cannot teach.
Goodman has also benefited from picking the right partners, even if they joined him by chance. He reconnected at a North Shore bar mitzvah party with Craig Golden who he had known “from the bar mitzvah circle”. They would launch Sterling Bay together soon after. Andy Gloor, a young broker who convinced Goodman and Golden that they should buy a large South Loop property in order to attract data center tenants. But the investment went bad when the tech bubble burst. Goodman recalls that they made Gloor a partner after he convinced them to buy a large South Loop property over a fiber-optic cable hot spot in hopes of attracting data center tenants. But the investment quickly went bad with the bursting of tech bubble.
Not all developers are able to work with the city and play the long-game on large projects. Dana Levenson says that the city will have to do more to develop its vast swaths public land into development like Bronzeville Lakefront. She was Chicago’s chief finance officer from 2004-2007 and managed the long-term leasing of the Chicago Skyway, as well as the garages beneath Grant and Millennium Parks.
“The city can be a difficult partner to work with. Scott may have figured out a way to work with the city, and from nothing, something has come of it. . . “That’s pretty good”, he says.
Farpoint was built to handle long-term contracts from the beginning. Goodman, who co-founded Sterling Bay in 1987 using leftover stationery, named his development company after a term that refers to the furthest point an object can remain in focus when it is far from the naked eye.
It was a good indicator of the way we view our business,” says Goodman. Goodman is an Evanston native. He learned the basics of property while working at his father’s plumbing company, where he rodded sewage in the Prairie Shores complex, which overlooks the Michael Reese Site.
Goodman refuses to reveal any details regarding Farpoint’s revenue or financial support. He says that the majority of funding comes from the principals and limited partners, rather than fund investors looking for a quick return. Goodman said he will be more proactive in raising funds now that Farpoint’s largest projects are underway.
Today, the firm has 19 full-time staff and owns 11 properties, with most being in Chicago. Goodman co-founded the company with Regina Stilp who was one of the original employees.
Goodman refuses to comment about the details of the lawsuit that is pending involving the property adjacent to the Michael Reese location. He says that people have the right to protect themselves. However, he believes they are doing the right thing.
Farpoint is now competing with Sterling Bay at times, which Goodman left because it was too large and its strategy was heavily dictated to them by institutional investors. He says that the culture at Sterling Bay was no longer his culture. It wasn’t fun anymore.
Bronzeville Lakefront, meanwhile, is searching for tenants in the life sciences sector at Lincoln Yards. Sterling Bay is also looking for such tenants. Goodman is also considering a 1,000,000-square-foot redevelopment for the CTA control center in Fulton Market District where Sterling Bay has made its mark and is looking to kick-start other projects.
Goodman is still an investor in a Sterling Bay fund from the early days and has a good relationship with Sterling Bay. “We are very different companies so there is not much reason to interact, other than our investments together,” he said. Gloor declined comment.
Goodman says that Farpoint’s development of public-private partnerships has taken longer than expected. He wonders if, if they had been known to him beforehand, he would still have signed on.
He says, “The important thing is that we did it. There were many times when we thought ‘This won’t happen’.” “But we were persistent. It’s more a question of personality than anything else. . . “I’ll tell you in 10 years whether I was right or not.”