Number 11 in the Harper chronological series.
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Court Sale home. Previous in series- (#9)
July 12 2010 Vermilion presentation and request. (#10)
HPKCC letters June-July 2010.
Early look February 2010. 53rd TIF Advisory Council meetings. Development Hot Topics. Home.
Introduction from Chairman Males stresses that this request and project are way and beyond what the Council has ever considered before. The infrastructure and new streets alone call for enormous amounts of money.
Vermilion and team presenters went mainly over the relationship of the project to TIF objectives and the financials/economics including the challenges to doing such a project
What's asked is less than what could be. The limit to TIF eligibility would be 27 million; the city top threshold would be $28.5 million.
Two-thirds of total TIF contribution, $15 million of $23.4, comes from the project- actually in the form of tax rebate to the owner-- money the TIF doesn't see-- but that is not all that is generated ($15 million a year), with part of that being surplus going annually into the TIF after the project opens. The project cost is paid off in 3 years after opening based on increase in wages and other kinds of taxes generated.
Step by step. 2010 TIF as $2.64 million, Gets additional $831,000 in normal districtwide increment > $3.47 million. Of that, $2 million goes to Harper Court, $964,000 is left. Non-recurring TIF costs 750,000 to Harper, recurring $213,000; left in the till half a million (low point).
2011. .5 m + 925,000 (reassessed districtwide increment) > 1.4 million. - $750,000 out for Harper Court, $273,000 for all else > .5 balance. About the same 2012, 2013.
2014. Out to Harper so far $5m
Project comes on line. .5 balance + $2.1 from new property taxes > $2.6 m + about $1 m in normal increment > $3.68. $750,000 goes to Harper, $233,000 to other > $1.733. $.6 is said to be balance, [so an additional $1.1 annually rising goes to Harper to end up at $23.4 by 2025? Since yearly average 2014-25 to reach $23.4 is $1.67, the amount must go up annually but so will balance].
2020 snapshot. $1.77 balance + $3.777 normal increment plus from the project. $3.25 going to Harper ($750,000 plus $2.5), est. $270,000 toward others and still rising balance.
2025. Surplus is now $2.55 with $4m coming in or $6.50. $3.5 million goes to last payment for Harper, leaving $2.5 million at end of TIF.
The total increment increase is 4,100 percent.
Committee recommendation- Chuck Thurow
Informational questions asked at the July 19 meeting.
Can we see the redevelopment agreement? It will be online and locked in by end of the year.
University's role. No ownership role.
Will future phases be staged? Can be.
Changes made that strengthen the project.
Pushing retail to Harper
Minority and women firms, training, hiring will move quickly
Enough money left for Canter, other projects
No architecture shown
Community input including on architectural contextuality
Traffic strategy including pedestrian, transit, linkages
Retail strategy specifics including Lake Park visibility
Net gain to businesses
Interim parking, business impacts and staging
Recommendation was in favor with the proviso of continuing consultation. Males stressed the unprecedented size of the ask and that it is less visible than small projects.
FAQs from the developer.
Who owns? A private entity composed of Vermilion and other equity partners- not the city or university. University will only be a tenant in the office bldg.
Performance requirements. Will be strong-- the city can take pack a portion.
U of C will pay property taxes? The office building will pay taxes. The University cannot go after an exception, and the developer will need the taxes to pay off the note.
Does this request cover only phases I? Yes.
Are there other public incentives besides the TIF taxes? Yes, city contributes land and more.
Will money be left in the TIF? Yes, in every year and growing rapidly after on line.
Questions from the audience
What are the milestones to the end of this year. They are driven by the need to secure the tax-free recovery bonds by the end of the year.
If approved tonight, first city papers (PD request) are filed tomorrow.
The city process is for the Redevelopment Agreement, which goes before the Community Development Commission then City Council committees and the full City Council. This takes 60 to 120 days.
The Planned Development Ordinance process takes about 120 days.
How does retail leasing fit into the project's going, where are you? Needs to bed at 60% to close on the bond. It's underway. Also required is design to a certain level. They hope the bond can be done late November or early December.
Residents on Blackstone had many questions about how close the west building will come to their line and whether there will be room for vehicular/service vehicle access. Males said the council will pay attention to this, plus it will be in the Harper Avenue study. Vermilion said there will be a setback above ground level. More discussion was held and contacts asked.
How much of the developer's money will be invested? $15 to $20 million. The University will lease its building at market rate and be paid substantially less for the land it bought than it paid.
A question was asked on triennial reassessment- it will be for all properties in the district.
Space inside for community groups as well? Suggested was to look to the major tenant of the office building (UC) or to certain lessees of the retail spaces. The hotel will have a conference center.
One said the project over all looks consistent with the original TIF objectives, except there seems to be no subsidized or free public parking. The developer said it's a balancing. The structure and underground parking are very expensive, but tenants will want prices to be low enough that people will park there. They will look with tenants at validated parking options. The performance requirements do not include free public parking. One pointed out extensive areas of nearby free parking, including Hyde Park Shopping Center.
Who provides and pays for the infrastructure. The developer.
Is it possible to accurately forecast employment? There are industry benchmarks.
What is the breakeven occupancy? Not answered.
Could you break down the $114 million cost? Hotel $23 million, leaving $87 million for all the rest of phase I (office, retail and parking). Private capital is $75 million, leaving a gap because the city measures the TIF dollars at $23.4 million but when that is monetarized it's not that much (lot lower.) Clarified: the federal contribution is not money but right to have the note at tax exempt rate, resulting in a 6% savings.
Height, sf. Hotel 8-10 stories, east retail/apartment 6 stories, west apartment/retail 5 stories, office , condo [up to 24]. Retail is 100,00 sf, office 150,000 sf.
Can anything else major be undertaken with TIF funds? Requires additional development.
What if TIFs are raided or redeveloped? Unlikely a law would change what is in place for a particular TIF.
Retail interest and what kind? Much, and many that are not or are no longer in Hyde Park.
Will you present on UC campus. Willing to.
Is the MWE a floor or a ceiling? Floor. A plan is being developed with the city, schools, agencies. 28% minimum is built into the RDA.
Why is Vermilion so interested in doing this in Hyde Park? Fits with university community experience, fits with this community's extensive visioning-- there is commitment from many sides.
Mae Wilson spoke for Alderman Preckwinkle's enthusiasm and support.
Motion was made to proceed to a vote. Chuck Thurow moved his committee's recommendation to the council that the request by Vermilion be accepted with proviso they continue to consult with the council. The motion was seconded. Vote by hand and orally of proxies was taken. The motion was unanimously approved.