Waukegan, Ill., is saying goodbye to manufacturing and hello to lakefront living. The small town north of Chicago wants to capitalize on its greatest asset—Lake Michigan—and transform the industrial lakefront area into a vibrant mix of residential, retail, and recreational offerings. But there are major roadblocks: the relocation of a National Gypsum Co. wallboard plant and a Lafarge cement distribution centers, not to mention the EPA-mandated environmental cleanup of contaminants in the harbor, which could cost up to $36 million. Plus, more than 80 workers from the two plants would be displaced if the plan goes forward.

The city, however, is determined to proceed—despite the high price tag and protests from the plants.

“I have been involved with the city for 16 years, and I have never seen a time when the elected officials and the citizens of Waukegan were more in focus on staying with a plan,” says Ray Vukovich, Waukegan's director of governmental services. “The Waukegan lakefront quit being an industrial lake-front when Outboard Marine Corp. went bankrupt back in 2000. At one point, we had almost 30,000 jobs on the lakefront; today, that is under 1,000.”

The redevelopment strategy is part of a 20-year master plan for the city's downtown and lakefront areas—a plan developed by the Chicago-based architecture firm Skidmore Owens and Merrill, with help from the Urban Land Institute. City council adopted the plan in 2003. “Lake Michigan is so beautiful and there'd be such a draw we felt for higher-end housing with an easy commute down to Chicago,” says Bill Hudnut, a senior resident fellow at ULI who helped draft the plan.