Cleanup of polluted land likely to fall on taxpayers
Developer flipped Hegewisch property for millions after failed project
During the last years of Chicago’s once-mighty steel industry, a clout-heavy developer seized an opportunity to make millions while offering the city’s beleaguered Southeast Side a glimmer of hope.
Donald Schroud vowed to create hundreds of jobs by building an industrial park and sports complex on a swath of heavily polluted land he bought in 1994 from one of the last steel companies operating along the Calumet River.
For just $50,000, the deal gave Schroud control of a corner of the city nearly nine times larger than Millennium Park.
Mayor Richard M. Daley’s administration embraced the developer’ s plans. But another City Hall power broker helped doom the ambitious project from the start.
Now-indicted Ald. Edward Burke shepherded legislation creating a special taxing district intended to provide enough money to clean up Schroud’s land, build roads and install sewers, city records show. Then, working in his private capacity as Schroud’s tax attorney, Burke won an appeal that slashed the land’s value by 75%, depriving the city of millions slated to make the site attractive to new businesses.
A Tribune investigation found Schroud cashed in six years later by flipping half of the property to another developer for $4.2 million — a whopping 84 times more than what he paid for the entire site. He left behind some of the most toxic land in the city, setting back for decades the renewal of neighborhoods devastated by layoffs and lost retirement benefits when steel companies abandoned Chicago.
“Another example of people promising big things then failing to deliver,” said Peggy Salazar, a lifelong neighborhood resident
who leads the nonprofit Southeast Environmental Task Force.
Last year, the biggest parcel Schroud still owns became the city’s newest Superfund site, a federal designation reserved for the nation’s most contaminated properties. Taxpayers likely will be left with the tab for a long and costly cleanup.
He donated other tracts to a youth baseball organization in the Hegewisch neighborhood. The U.S. Environmental Protection Agency recently discovered that a field the Babe Ruth League built at 126th Place and Carondolet Avenue is contaminated with high levels of toxic manganese. (Schroud did not previously own a nearby ball field cleaned up during the summer by the EPA, according to property records.)
In a brief telephone conversation last month, Schroud said he did not make any money from the site, contradicting property records that indicate he did.
He said he left property development two decades ago and said itwas up to the city and the EPA, not him, to clean up his land. State records show he remained actively involved with the property until at least 2013, when the Illinois EPA kicked him out of its voluntary cleanup program.
Schroud told the Tribune he lives modestly in an apartment in suburban Arlington Heights. His tax bills are sent to a luxury high-rise in Chicago’s Gold Coast, records show.
He declined to characterize his relationship with Burke, the once-influential alderman accused by federal prosecutors of strongarming people into becoming clients of his tax appeals firm in exchange for help at City Hall. Burke did not respond to a request for comment.
In 2000, a federal grand jury subpoenaed documents relating to an unusually lucrative lease Schroud got from Secretary of State Jesse White. Schroud, who was not accused of wrongdoing, had purchased the North Side building from the brother of a Cook County commissioner.
Later that year city and state officials accused Schroud of turning a chunk of his land on the Southeast Side into an illegal dump. He defied Cook County judges who twice ordered him to fence off the site; state officials confirmed he never paid a $1.3 million verdict won by the Illinois attorney general’s office in 2010, and they have not attempted to collect the money since 2012.
“I don’t have any money,” Schroud, 77, said when asked about the unpaid verdict against him. “If I had a million bucks I would be living in Mexico or South America right now.”
The Coal Hills
For most of the last century, Schroud’s land was owned by Republic Steel, one of the companies that built sprawling mills near the shore of Lake Michigan and, for a time, made Chicago a world leader in steel production.
Republic is infamous for the Chicago Police Department’s 1937 massacre of 10 unarmed protesters who gathered outside the mill on Memorial Day demanding union representation for the company’s steelworkers.
South of the massacre site, Republic transformed more than 200 acres of wetlands into a moonscape. The company and its corporate successor, now-defunct LTV Steel, used the property as a dump for slag and other toxic waste, contaminating the land as well as a creek connecting Wolf Lake to the Calumet River.
Until the city extended 126th Place from Torrence Avenue to Avenue O during the mid-2000s, most of the former Republic/ LTV parcels couldn’t be reached by car. People who grew up in the neighborhood know the Superfund site as the Coal Hills, which remain an illicit destination for ATV riders and bored teenagers.
“If you’re not familiar with the environmental problems, it looks inviting,” said Gina Ramirez, a thirdgeneration resident who recalled hanging out with friends at the Coal Hills during high school. “Nothing grows on it. It’s completely black, like something you see on the X Games. But if you look closely you’ll notice the water running through it is neon green.”
Nowan adult with a child of her own, Ramirez works for the nonprofit Natural Resources Defense Council, helping low-income Black and Latino communities in the Midwest fight for protection from industrial pollution.
She also is part of a younger generation revitalizing community groups that have spent decades clamoring for improvements on the Southeast Side, where Schroud’s polluted property is among several new or lingering health threats.
‘A constant fight’
In August, the U.S. EPA began replacing soil from yards contaminated with manganese, a brain-damaging metal stored along the Calumet River by S.H. Bell, a Pittsburgh-based supplier to steel mills in northwest Indiana.
EPA inspectors discovered the pollution during an investigation of KCBX Terminals, a nearby company that collected huge open piles of petroleum coke. Gritty black clouds repeatedly blew off the piles into the East Side neighborhood during 2013, ruining summer picnics, interrupting Little League Baseball games and prompting parents to keep their children inside with the windows closed.
Under pressure from local, state and federal leaders, KCBX stopped storing the byproduct of oil refining, shipping out of town what it had on hand before leaving its property vacant.
But S.H. Bell and other companies along the Calumet remain in the spotlight.
The latest is Reserve Management Group, an Ohio-based company seeking Mayor Lori Lightfoot’s permission to move a scrap yard from white, largely wealthy Lincoln Park to the low-income, predominantly Latino neighborhood north of the Schroud Superfund site.
RMG already is building a new scrap shredder on another part of the former Republic Steel property, close to George Washington High School and Washington Elementary.
Company officials contend neighbors won’t notice the operation, set back from Avenue O at 116th Street. But opponents note the U.S. EPA has sued the North Side facility, known as General Iron, three times since the 1990s for emitting too much pollution.
“It’s a constant fight,” said Clem Balanoff, a veteran community organizer whorepresented the Southeast Side in the Illinois House from1989 to 1995.
Lingering problem
Federal and state officials knew the Republic Steel property was contaminated years before Schroud bought most of it, records show. They delayed ordering a cleanup in part because at the time other parts of the region were considered more dangerous, including a cluster surrounding Lake Calumet and abandoned industrial sites across the state border.
Schroud later avoided federal scrutiny by applying in 2008 to join the state’s voluntary cleanup program. He and his consultants exchanged letters with the Illinois EPA for five years, according to an online docket that shows the state agency repeatedly told the developer he had failed to followthe program’s rules.
When asked how Schroud planned to clean up his property, the civil engineers he hired kept forwarding detailed plans prepared the company that years earlier had purchased other portions of the land, records in the docket show.
By 2013, the Illinois EPA had runout of patience after Schroud declined to submit the required plans for his own land. Anagency official told Schroud to get lost, albeit in bland, bureaucratic language.
“Please be advised that the Illinois Environmental Protection Agency has, as of this date, terminated the Site Remediation Program Review and Evaluation Services Agreement with Schroud Reality Group for the above referenced site,” the Oct. 30, 2013, letter began.
The site continued to fester until attorney Keith Harley and his team at the Chicago Legal Clinic began combing through old documents, some of which they relied on to jog the memories of officials at City Hall, the state capital and the U.S. EPA’s regional office.
Harley’s quiet-but-firm advocacy on behalf of neighborhood groups persuaded the right people to request and order a cleanup under the Superfund law. Invoking the federal government’s authority enables the EPA to seek restitution from what’s left of companies responsible for the pollution and, if that isn’t possible, tap into the federal Treasury to pay for the work.
A potential future can be found north of 126th Place on the land Schroud sold two decades ago.
Oak Brook-based CenterPoint Properties turned most of it into a supplier park for the Ford Assembly Plant at 126th and Torrence Avenue. Center Point dugup some of the legacy pollution and paved over the rest, surrounding its lots with wrought-iron fencing, security cameras and artificial wetlands.
“We’re starting to turn a corner,” said Ald. Susan Sadlowski Garza, 10th. “Why don’t you write about all of the good things we’ve got going?”
The portion Schroud still owns is ringed by scrubby trees and concrete barriers featuring signs posted by the EPA warning visitors the property is toxic.
ATVs can be spotted riding the Coal Hills on the easily accessible Superfund site. Fresh tracks are visible through gaping holes in a rusty fence surrounding the other contaminated property, where county judges found Schroud had allowed illegal dumping on top of toxic waste from Republic Steel and LTV Steel.
“This case was problematic from the start, when a single individual — rather than a company — was authorized to purchase a large, complicated piece of land,” said Annie Thompson, spokeswoman for Attorney General Kwame Raoul. “We gave Mr. Schroud opportunities to comply with the law. However, any action he tookwas never done appropriately.”
Asked about the ongoing problems, Schroud said he always had good intentions for the property.
“I didn’t pollute it, Republic and LTV did,” he said during the November interview with the Tribune. “But they declared bankruptcy. So guess what: I’m gone and so are they.”