Officials have approved an eight-month extension to the village's agreement
with Lake Street Investors for the redevelopment of the corner of Lake Street
and Forest Avenue in downtown Oak Park.
With May 15 as the target groundbreaking date, developers will need to provide proof that they have secured equity for the project, a 20-story high-rise containing commercial and residential space, by Jan. 15. The proof of equity will give the village a clear picture of the developer's status before their Feb. 28 deadline to provide all proof of financing for the project. The target closing date is now April 30, said Rolando Acosta, counsel for the development team.
Staff backs extension
Oak Park Business Services Manager Loretta Daly told board members Monday night that staff recommended approval of the extension because of the work that has gone into the project thus far, and because the agreement would allow the village to use tax increment financing (TIF) monies to reinvest in infrastructure before the TIF expires in 2018.
Daley said the developer and an architecture team have already produced about 85 percent of the construction documents needed to start the project, putting the village in a position to move quickly once the extension is approved.
In exchange for the extension, the developers have agreed to assume responsibility for repairs to the garage over the next eight months, and to reimburse the village for any costs incurred over the next eight months and for any loss of TIF monies, up to $250,000, that could result from construction delays.
The Village Board in January 2012 approved the plans for a new 20-story retail and residential building that will contain 20,000 square feet of retail space and 270 apartments. Per the agreement, developer Sertus Capital Partners—the former name of Lake Street Investors—will construct a parking garage with 588 spaces, 300 public and 288 private, replacing the currently deteriorating L-shaped garage.
New development partnership
After the sudden January death of one of the project's strongest investors and a foreclosure suit against the developer was filed by PNC Bank, Lake Street Investors has partnered with world-renowned firms Golub & Company and Wood Partners to move forward with the project. Sertus' Michael Glazier, who has been involved with the project since the beginning, worked for Golub before moving to Sertus.
Village Attorney Paul Stephanides said PNC Bank is "in favor" of the project, and put the foreclosure suit on hold temporarily. U.S. District Court Judge John Nordberg on Sept. 16 approved an extension for Lake Street Investors, giving them until Oct. 31 to answer PNC Bank's waiver of service.
Michael Newman, president and CEO of Golub & Company said Glazier’s proposal of the partnership was “coincidental,” and in line with projects Golub can execute well.
He referenced two projects, 22 W. Washington in Chicago and a public-private partnership in Scottsdale, AZ, that Golub has completed that compare to the Lake and Forest project.
He said Golub got involved with the Block 37 development in the heart of downtown Chicago when the developer selected by the City of Chicago was having financial trouble. Golub's development includes Morningstar, Inc. and CBS as its anchor tenants.
Given Golub's experience, the Oak Park partnership seemed like a natural fit.
But despite the promising new development partnership, trustees were wary of the extension because of the delays and uncertainty in the project thus far.
Commitments from the village, developers
Trustee Adam Salzman said he’s been “very troubled” by the developer’s forthrightness about financing. “I’m still bothered,” he said. “I’m not willing to support an extension for another lengthy period of time and wait around without any details… until February 28.”
Village President Anan-Abu Taleb, who has created a story about a fiance who ditched their love at the altar to describe the village's relationship with the developer, said he needed some kind of certainty to feel confident the project would actually move forward in February.
Glazier said with respect to the “spirit” of the project thus far, “Lake Street Investors has made all the expenditures and investments… A million and a half dollars is a significant commitment.”
Lake Street Investors initially proposed to provide financing information by Feb. 28, but agreed to show proof of equity by Jan. 15 and provide regular updates on their progress to village staff.
Trustee Ray Johnson, who has been on the Village Board since the village began its relationship with Sertus in 2007, stressed the importance of moving forward with the project and the message it would send about the board's commitment to the development.
“We need to do whatever we can to make this happen because otherwise, my fear is we get a site that sits vacant for years and years, which we can’t control," he said.
"I have a really hard time with thinking about… if we say no tonight, what message does that send about the Village of Oak Park's commitment to development?"
The board will also need to approve a reassignment of the LLC setup to make the Lake Street-Golub-Wood partnership official, Pavlicek said. The board will discuss the project after staff receives proof of equity at the Jan. 21 board meeting.