HomeMy WebLinkAbout08/10/1993 CS minutes
NlAYOR
GERI'.LD L FARLEY
TRUSTEES
GEORGE A. CLOWES
TIMOTHY J. CORCORAN
RICHARD N. HENDRICKS
PAUL WM. HOEFERT
MICHAELE W. SKOWRON
IRVANA K. WILKS
VILLAGE MANAGER
MICHAEL E. JANONIS
VILLAGE CLERK
CAROL A. FIELDS
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Village of Mount Prospect
1 00 South Emerson Street
Mount Prospect, Illinois 60056
Phone: 708 / 392-6000
Fax: 708 / 392-6022
TOO: 708 I 392-6064
MINUTES
EXECUTIVE SESSION
AUGUST 10, 1993
The Executive Session was called to order at 9:02 p.m., in the Conference Room of the
Senior Citizens Center, 50 South Emerson Street, for the purpose of discussing Litigation
and Property Disposition. Present at the Executive Session were: Mayor Gerald Farley;
Trustees George Clowes, Timothy Corcoran, Richard Hendricks, Paul Hoefert, Michaele
Skowron and Irvana Wilks. Also present were: Village Manager Michael Janonis, Finance
Director David Jepson, Planning Director David Clements and Village attorney Everette
Hill. Present from Broadacre were: Fidel Lopez, Francis Freeman and Paul Dewuskin.;.
Litiqation
The Village Manager and Buzz Hill discussed with Board members the Complaint Mr. Hill
had drafted in anticipation of filing suit against RJN Environmental for errors and
omissions in their flood control design contracts with the Village. There was considerable
discussion regarding the strategic advantage of filing suit prior to continuing negotiations.
Upon questioning, Mr. Hill estimated that the cost of litigation to the Village could be in
the area of $40,000-$60,000 if the case went to trial and expert witnesses needed to be
retained. Upon questioning from Board members, Mr. Hill indicated that he felt there was
a high likelihood that the Village would prevail on the number of counts brought in the
Complaint. His opinion was based upon the requirements of the contract and the
extensive file which Public Works had kept on all flood control projects. Based on
discussion. It was the consensus of the Board to authorize Mr. Hill to file suit against
RJN Environmental, Inc.
Property Disposition
The Village Board entered into discussions with representatives from Broadacre
Management Company regarding the status of the proposed PinelWille Development.
Mr. Lopez indicated that despite a 100% land cost write-down and approximately $1.5
million in public improvements being paid for by the Village, they could not secure
financing for the project. Mr. Lopez indicated that the inability to rely on annual rent
increases and the soft retail market made potential investors extremely uncomfortable
with the proposal. Mr. Lopez indicated that the same investors could receive returns of
15-17% by buying distressed properties at deep discounts. The PinelWille development
project would have to at least match, if not exceed, those types of returns. Unfortunately,
the current financial analysis showed a rate of return substantially less than 15-17%.
The Mayor expressed the Board's frustration with having proceeded to this point only to
have the financing end of the project fall apart. The Mayor indicated that the Board had
agreed to proceed with development of schematic design drawings based upon
Broadacre's opinion that the project could be financed. In response, Broadacre indicated
it was their professional opinion that the project was capable of being financed. It was
only after firm numbers had been run and the rental economy factored in that it became
apparent that establishing an acceptable rate of return would be impossible.
Trustee Corcoran also indicated his frustration with the failure of the project but thanked
Broadacre for being realistic in their financial analysis and not trying to sell the Village an
overly optimistic scenario. There was considerable discussion regarding market dynamics
and why the PinelWille development was not considered attractive enough to investors.
There was also discussion regarding the continuing relationship between the Village and
Broadacre. Broadacre expressed a desire to continue working with the Village in an effort
to find an alternate redevelopment plan or a suitable development partner if it was the
desire of the Village. Trustee Corcoran inquired as to whether Broadacre would seek
reimbursement for any unbilled hours that had been expended on the project. Mr. Lopez
indicated that since the project had failed because of an inability to obtain financing rather
than a decision on the part of the Village not to go forward, Broadacre would not seek
reimbursement for any un billed hours.
There was some discussion regarding the possibility of the Village forming a public/private
development corporation which could then seek financing for the project. After minor
debate, the Village Board felt it was inappropriate to commit addition Village resources
to a plan that private investors were unwilling to undertake.
As a result of the meeting, the Village Board directed staff to continue working with
Broadacre to identify alternate development scenarios as well as to solicit input from other
developers regarding interest in the PinelWille block.
There was no further business discussed. The Executive Session adjourned at
11 :20 p.m. on a Motion by Trustee Corcoran and Seconded by Trustee Wilks. The
Board officially directed the Village attorney to file suit against RJN Environmental, Inc.
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