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HomeMy WebLinkAbout06/09/1992 COW minutes [ I Minutes COMMITrEE OF THE WHOLE June 9, 1992 I Roll Call The meeting was called to order at 7:35 p.m. by Mayor Gerald L. Farley. Trustees present were Mark Busse, George Clowes, Tim Corcoran, Leo Floros, Paul Hoefert and Irvana Wilks. Also present were Village Manager John Fulton Dixon, Planning Director David Clements, Economic Development Coordinator Ken Fritz/and Finance D~rector Dawd Jepson. Add~tionaily, Don Weibel, Chairman of the Plan Commission, Fidel Lopez and Steven Golden of Broadacre Management Company, about 15 Village residents and three members of the print media were p~resent. II Minutes of May 27, 1992 Trustee Wilks pointed out that the name "Robin La Best of the League of Women Voters" on page 5 should be "Robin LaBedz of the League of Women Voters." Trustee Hoefert stated that the first sentence of the last paragraph on page 3 which reads "rrustee Hoefert smd he liked the appearance of the proposed development and agreed with the proposed building heights" should read "... and agreed with the taller buildings toward the ce~tter of the project." He also said that he was concerned with the proposed height of the elderly housing building The minutes were approved with the above changes. Trustee Wilks p~sed when the vote was taken, r III Citizens to be Heard Elaine Grafton '* Elaine Grafton, a representative of the Mount Prospect Woman's club presented $200 to Lil Floros, Chairperson of the 75th Anniversary Comrrattee, to be used for the July 4 and Labor Day activities. · She also presented 'Mrs. 'Floros with a check for $100 which represented the proceeds of the Mount Prospect Woman's Club's 75th Anniversary Fashion Show. Mrs. Floros stated there were a number of exciting events planned for July 4 The Lion's Club will be sponsoring festivities at Melas Park from July 1 - 5, and there will be a Drum & Bugle Corp. competition on July 3 at Prospect High School. ~ Then there will be an extraordinary parade on July 4 with five of the Drum & Bugle Corps participating Mrs. Floros encouraged everyone to attend. IV Comprehensive Plan The Comn'uttee reviewed pages 44 - 65 of the draft of the proposed revisions to the Comprehensive Plan. A number of corrections and clarifications were made to the proposed revisions Two of the issues that generated a considerable amount of discussion were the _ elimination of a future railroad crossing at Maple Street and the suggested wording on the Maple Street land-use designation. Maple Street Crossiqg Trustee Floros asked why the Plan should not include a statement on a future railroad crossing at Maple Street. He said we should work toward that goal and try to achieve it at some time in the future. Don Weibel, Chairman of the Plan Commission, explained that the Plan Comnussion eliminated the reference to the crossing because it did not affect Police and Fire operations and because the cost would be excessive. Trustee Floros smd he did not think cost should be a consideration for inclusion in the Plan and he would hke to see the future Maple Street crossing left in the Plan. Trustee Corcoran suggested that the crossing could be at some other location, but Trustee Ciowes said Maple Street was the most feasible location. Trustee Wilks proposed a solution that would include wording on page 56 to the effect that the proposed study should include an evaluation of all possible locations and not be limited to a specific location. Mayor Farley and Trustees Clowes and Hoefert supported Trustee Wilks' recommendation. Maple Street Land-Use Desi~,n~tion ,- Planning Director David Clements presented ,the text of the Maple Street land-use designation as recommended by Trustee Wilks. The specific text follows: "the east side of Maple Street between Central Road and Northwest Highway had been designated for potential multi-family development when the Comprehensive Plan was originally adopted However, in 1992, this multi-family designation was changed to a single-family designation as there had been no change in property maintenance or economic conditions to suggest that the multi-family designation would be implemented. However, a multi-family land- use on the east side of Maple Street would not be inappropriate if conditions become such' that property maintenance and deterioration eventually led to a transition to a multi-family use," J Trusfee Hoefert said he did not support the proposed wording and preferred that all reference to Maple Street be eliminated from the Plan. Trustee Coreoran supported Trustee Hoefert and both Trustee Busse and Trustee Floros said they preferred designating both sides of Maple Street as smgle-farmly residential. Trustee Clowes said this was inconsistent with current TIF District boundaries and that he preferred deleting only the last sentence of the wording recommended by Trustee Wilks. In the final indication of support, Trustees Busse, Coreoran, Floros, and Hoefert supported the recommendations by Trustee Hoefert and Trustees Clowes and Wilks supported Trustee Wilks' recommendation. 2 Triangle Redevelopment Project Financing~ + Mayor Farley then introduced Item V on the Committee-of-Whole Agenda being a discussion of the tHangie redevelopment project financing by Finance Director Dave Jepson and Broadacre Management ~ ~ ' of his~June 4 Mr Mr. Jepson presented an over~ew to the Village Board memo. . Jepson indicated that there were two important ~tems of informauon that needed to be determined before detailed and final revenue projections could be determined. Mr. Jepson indicated that ~t is essential to know how much tax increment could be generated by the proposed Broadacre project and what the total overall level of V~llage financial commitment to the project. Mr. Jepson stated that it is d~fficult to prepare that information with a high degree of accuracy based on the conceptual plan submitted by Broadacre. He indicated that certain items of information pertaining to financing have been changing on a daily basis, and that he expected ~hi~ would continue as the project is refined. ~- ~ ~ ~ , Mr. Jepson then provided a breakdown of the overall land uses in the triangle redevelopment project and Broadacre's estimate of tax increment revenues available. Mr. Jepson explained that the base year taxes are subtracted from this increment projection, and that this final amount ~s the increment available to the V~llage for the sixteen years remaining of the existing district to finance debt service. Mr. Jepson indicated that he reduced these figures because of several, unknowns with the Broadacre project. He stated that he had reduced Broadacre's figures by a factor of 10% and stated that this was done in part because of the optimistic projection by the developer of the total amotmt of retail space. Mr. Jepson stated that retail space produces taxes at a rate of two times higher than residential and he ~believed the Village must take a conservative posidon when looking at the revenue projections off this plan, He also stated that he had examined some preliminary dates for completion of the project and his estimates were based on when monies would be needed for initial pubhc improvement work. Mr. ~epson then discussed Schedule 1 wl~ich was attached to his memo and which depicted the breakdown of development in the Main/Wille block and the Pine/Wflle block. This breakdown provided the estimated tax increment in each specific block and provided a total tax increment for the project. Mr. Jepson then factored in the debt service requirements and stated that the schedule provides a cumulative cash flow to demonstrate that the increment would be sufficient based on his conservative figures ~ , ..... Mr. Jepson further explained that Schedule 2 provided for a taxable and non-taxable bond issuances for the redevelopment project. He stated that one issue was taxable because certain improvements proposed by the developer were not specufically for public benefit, and therefore, not eligible for a non-taxable issue. Mr. Jepson stated that his figures indicate that, in addition to property acquisition and public improvements, the project could finance two million dollars in increment available to contribute to construction of the parking garage. He indicated that Broadacre is asking the Village for four rmllion dollars or the total construction cost of the garage. Mr. Jepson emphasized that the project can only support two million dollars toward the garage construction and that by his conservative figures the increment cannot finance four million dollars as requested by. the developer. 3 Mr. Jepson further defined his figures by stating that 85% of Broadacre projections ~ would provide a break-ever~ point f6r the project and that an 80% figure of the developer's figures would result in an $800,000 deficit for the project at the end of the tax increment period Mr Jepson further stated that the 1992 base year taxes would be $172,000 and that in 2009 the total increment available for all taxing districts would be $I,100,000. Mr. Jepson indicated that more refined information would be needed to ~xamine these increment projections and to better determine the actual amount of~ project revenu? a~vai~able. '~ . ~ ~ '~ Mr. Jepson then discussed his Schedule 3 which indicated a $6,180,000 total Village investment in the project. He stated that this is broken down into $1.9 million for the Mam/Wille block and $4.2 million for the Pme/Wflle. Mr. Jepson stated that these Village investments were necessary for property acquisition, demohtion, and public improvements: He believed that of this $6,180,000 investment by the Village that $4,330,000 could be recovered through tax increment, thus resulting in a net Village investment of $1,850,000. Mr. Jepson stated that this $1 8 million deficit could be negotiated thrbugh a developer agreement and that he would hope that~ ~an eqmty settlement could be arrived at to offset th~s amount. :' As a~summary, the Finance Director stated that staff believed that this project would revitalize a deteriorated or stagnating area and that the plan could help other taxing districts at the end of the life of the TIF District. Mr. Jepson concluded by stating that his summary describes the process and what can be supported by tax increment, ~but that he believed that the next necessary step would be for a development ~ agreement to ,be negoiiated between the Village and Broadacre in order to specify comments, target dates, and completion dates for the project, in order to better determine when increment would be received to finance debt service. * Village Manager John Dixon indicated that hb ~was comfortable with the conservative approach and that Broadacre provided him with a more optimistic look at project revenues. He thinks that certain commitments could be resolved through a ~development agreement and Mr. Dixon suggested if the Village Board wanted to continue, that the proper direction would be to have staff and Broadacre prepare a ~ development agreement to pin down the essentials of the proje, ct. ~ Mr. Fidel Lopez of Broadacre Management then introduced himself to the Vtllage Board and first responded to an inquiry from Trustee Clowes from the prior meeting concerning other alternative sources of finanong. Mr. Lopez indicated the Federal National Mortgage Insurance Programs and Illinois Housing Development Authority t loans are only available for low income renters or Iow and moderate income persons, and that their market inforrhation had indicated the strength of this particular project would be for market rate apartments providing an apaxtaient unit that ~was not , available in the community. Mr. Lopez stated that this would not be considered a low and moderate income project. He also stated that Cook County Tax Abatement Programs were not applicable for this kind of development, and that in his~estimation there were' not many other alternatives available to make this project work. Trustee Clowes acknowledged this information from Mr~ Lopez. '-~ ~ ~ ' Mr. Lopez then stated that the financial projections from his company had been subject to change and 'the reason was that certain ~stimates were provided by the ~4 project architect and then these numbers were confirmed by a general contractor. He indicated that this approach provides a good solid basis for estimating project financing but there can be a variation of as much as 5%. He stated that they cannot be more precise at ~hls point. Mr Lopez acknowledged the conservative approach taken by Mr. Jepson and indicated that this is appropriate for the municipality. However, he indicated that he believes several things could be done with the project that would result in higher pro3ect~ons to close the gap described by Mr. Jepson, and that they would be willing to look at these t3tpes of items within a development agreement. Mr. Lopez then briefly summarized two ~TIF m~dels for th~ Village Board. One being an extension of the existing district and the second being a creation of a new TIF District for the Pine/Wille block. He stated each scenario provided a substanual cash surplus that would be sufficient to fund the garage construction and also provide the percent yield necessary to attract investors to the project. Mr. Lopez and Steven Golden from Broadacre attempted to demonstrate that a more moderate financing model could be beneficial to the Village, the developer, and other taxing districts in the long run Mr. Lopez then stated he would be h~aPpy to answer questions from the Village Board. Mayor Farley asked why the developer was requesting the Village to pay for $4,000,000 in garage costs. Mr. Lopez indicated that in a suburban community, renters will not pay for a garage through their rents as would be the case in a Chicago development. He stated that the underground parking is necessary to avoid an abundance of surface parking and stated that 2'/0 spaces are provided in the underground garage for the proposed 230 units in the A Series and B Series buildings. Mr. Lopez stated that the amount of money that the Village is being asked to contribute to the garage construction is simply a function of attracting as much equity as possible to help Broadacre with the private sector financing, and attracting other reqmred equity to make the project work ~ ~ '~' dp king Trustee Hoefert asked ff the arage consmed of one level of undergroun ar . He also questioned the retail square footage from the Broadacre conceptual plan, and ~f this was realistic considering the market study. Mr. Lopez indicated that parking would be provided in one level in the underground structure and that the parking garage is proposed to be located entirely under the A and B Series buildings. Mr. Lopez .s. tated.that the retail square footage is the maximum amount of square footage available m the project, and that they believe they can lease tlus space based on the quality of the project and the reputation of the commumty. ~ Mr. Golden acknowledged that his retail projections were at the upper range of the ~rket study, but stated that they believed it was workable to have this level of retail at project completion Trustee Hoefert also asked about the square footage of retml ipace in I ~ke Forest and Mr, Golden stated that there was ?0,000 square feet of retail space at market Trustee Corcoran stated that the developer is asking for approximately $6,000,000 in Village participation and wanted to know how much of this was a subsidy to the 5 developer and how much was equity. Mr. Lopez stated that ~the land provided for by the Village is equity, and that the balance which could be considered a subsidy would have to be considered in terms of the 'overall downtown redevelopment and the sales tax and real estate tax that would be generated for the Village. ~'~ .... - -~, ~ had included the Trustee Corcoran asked Mr. Jepson if his financing p~'ojections Village' ~repayment for the AIdi's acqulsltion,~ and ~Mr. 'Jepson stated that this repayment was not in,eluded Trustee Corcoran also asked how the Village could figure on their return of eqmty, and Mr. Lopez stated that, at this point, he ~s only looking at how to attract outside investors to increase overall equity, and that the Village's return on the equity could be addressed in the redevelopment agreement.~He did acknowledge tha~ ce ~r~mn risks '~would be involved with th~s. ~ ' ~ ' ~ ,~ ' ~ 'Trustee Corcoran asked who would be responsible for cost over-runs, and Mr. Lopez stated that Broadacre Management w?ld be r?sponsib~e for cost over-r~ms~ Trustee Corcoran then asked who other investors would be in th~ project and Mr. Golden stated that $6,500,000 in additional equity would have to be rinsed, and that they anticipated tD~ng to bring investors with shares at $100,000 each. Mr. Golden indicated that they had talked prehminarily with several investors and that they were ~pleasantly surprised by the positive response to this~ initial inquiry for additional equity. ~ ~ ~' ~ ~' Trustee Corcoran stated ]hat it would be his goal in the developmei~t ?greement to see that the Village would break even over time? ..... ' ~ '" ~ ~ Trustee Clowes then indica'ted that real estate development has certain risks and he ~ has concerns for the involvement of the Village with downtown redevelopment. He stated that tax increment financing is taxes that are paid by residents and that the subsidy to the developer is being paid directly by local taiing districts He stated the result may be a working downtown, but he believed that the Village Board should be ' realistic about th6 risk involved ired that he ha~ a serious concern about the long- payoff to the Village ~ ~ ~ e ~' term . ~ Trustee Clowes also asked ff condominiums couldb~ provided 'i~ the de{telopment to increase the cashflow for the project and Mr. Lopez stated that apartments were initially planned due to the ability to lease that space rather quickly,,' ~ '~ Trustee Wilks questioned the overall s~te plan ~nd phasing and Mr. Lbpez provided · details on 'the phasing site plan. On this plan he pointed out that the five story buildings parallel to P~ne Street had not been xncluded m .the inci'emdnt projections, and that at some point in the future these completed buildings wo~ld add substantial more revenue to the increment stream. Trustee Wilks indicated a concerfi~about the ' ' on impact bther taxing districts and stated she believed the Village should be cautious and provide as much information as possible to other taxing bodies. Mr. Jepson stated that the 2009 projection for ~'~ increment indicated that there would be substantial monies available 'to other taxing districts at the expiration of the TIF District. : ..... ~' · Mayor Farley indicated that there were several basic issues that would need to be discussed by the Board and the de~veloper and that some items should be discussed in executive session under property acquisition. Trustee Floros questioned Broadacre and asked what gives them confidence in finding the necessary investors in the project to provide the required amount of equity. Mr. Lopez stated that he believes that Mount Prospect is a good investment opportunity, and that the Village's commitment helps the development pro-forma and provides investors with confidence about the stability of the project. He indicated that there is a great potential for success for downtown redevelopment and that Mount Prospect provides a good market and demographics for the type of project that they are proposing. Mr. Lopez stated that this is a quality project, and that this scale of development would be easier to market to the investment community. Trustee Hoefert asked if the project was successful, if a private investor could be found to take the Village out of the project at some earlier point. Mr. Lopez stated that this would certainly be a possibility. Mr. Hoefert asked if the developer beheved that the apartment market was strong at this point, and Mr. Lopez stated that their market report indicated that apartments were the best development opportunity in Mount Prospect at this time. No information was presented. VII. Other Business Trustee Corcoran stated that he had attended a meeting of the Solid Waste Agency of Northern Cook County and that he was asking for the Board consensus that the Executive Board of SWANCC should consist of at least 50% elected officials. The Village Board consensus to Trustee Corcoran was that the executive Board should consist of 50% elected officials. Mayor Farley then stated that the Village Board meeting would adjourn to executive session for matters of property acquisition and personnel. VIII. Adjournment ~ The Committee-of-the-Whole meeting was then adjourned to executive session at 10'55 p.m. Respectfully submitted, Sections I-IV: ~ ~r,~ Sections V-VIII' ~ ~' ~ Dawd C. jePson, David M. Clements, Finance Director Planning Director 7