A planned two-mile relocation of Chicago’s South Shore Drive, about 10 miles south of the city’s downtown, is spurring a $4-billion megaproject to turn the vacant 530-acre site of a former U.S. Steel mill on Lake Michigan into a new community with nearly 14,000 housing units.

Photo: Skidmore Owings & Merrill LLP/Sasaki Associates Inc.

Chicago development set for site of former steel mill; officials have approved its first phase and committed $96 million in financing for infrastructure.

A public-private partnership of U.S. Steel Corp., McCaffery Interests LLC and the city has sited the village at the South Works mill, closed in 1992. Local master planners Skidmore, Owings & Merrill and Sasaki Associates drew the 25- to 45-year-long program to the U.S. Green Building Council’s LEED Neighborhood Design guidelines.

The Chicago Plan Commission has approved phase one, a 76-acre site that sits just west of the planned South Shore Drive extension. The city has committed $96 million in tax-incremental financing to support construction of streets, curbs, gutters, sewers and other utilities for the first phase.

Construction of the infrastructure is expected to begin in 2012. The work will coincide with the relocation and construction of South Shore Drive, a four-lane road with a boulevard that will carry Highway 41 and provide access to downtown Chicago.

Phase-one construction includes 800,000 sq ft of retail, restaurants, entertainment and residential space, says McCaffery. The company plans to start marketing sites this fall. The developer expects the overall $4-billion program—which, in addition to housing, calls for 125 acres of parks, a 1,500-slip marina, 17.5 million sq ft of retail and commercial space, a new high school and miles of lakefront access—to require $450 million in new public infrastructure.