01/08/2009 05:12 am ET Updated May 25, 2011

Chicago Olympic Village Site Set

Construction of a $1.1 billion Olympic Village will be moved to the campus of Michael Reese Hospital after all, now that the property owner has agreed to restructure the deal to accommodate soaring demolition and environmental clean-up costs.

Mayor Daley initially wanted to roll the dice that a depressed real estate market would come roaring back -- by borrowing $85 million to finance the hospital purchase and sell it to a private developer.

The mayor's original plan called for Medline Industries, which owns the 37-acre Reese site, to make a "charitable contribution" of $20 million that was supposed to be enough to cover demolition, environmental cleanup and five years of interest payments on the loan at a rate of 5 percent.

Instead, demolition and cleanup costs were projected at $32 million and rising.

On Monday, Chicago 2016 Chairman Pat Ryan officially announced that he has salvaged the deal by re-structuring it.

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