By Anna Lothson
With assurances from two internationally renowned commercial real estate firms, a list of conditions and new check points on the calendar, Oak Park trustees granted Lake Street Investors the necessary extension to see if the long-delayed Lake and Forest project can come to fruition.
Monday's discussion about the future of the development proposal to bring a 20-story retail and residential mecca to downtown Oak Park kept trustees questioning the decision about continuing the agreement with Lake Street Investors since it has missed multiple important deadlines recently including the closing date, transfer of property and construction launch date.
The end agreement that trustees unanimously voted on Monday was to allow Lake Street Investors to have until Feb. 28 as a hard deadline to present its equity and financing plan, but also agreed the group will come back to the board by Jan. 15 with a formal update. The closing date is set for April 30 and construction is to start by May 15.
The biggest factor that gave the trustees confidence to move forward was the announcement that Golub & Company, a Chicago-based international real estate development group, and Wood Partners, another well-known developer of multi-family housing, would be backing the project.
Loretta Daly, the village's business services manager, said staff's recommendation was to grant the investment group the extension, citing two reasons.
First, she said, real work has been done on the construction documents which are nearly completed. Lake Street Investors says it has already invested $1.5 million in the architectural work and permitting process. Second, Daly cited the opportunity to capture TIF dollars related to this particular parcel if the work moves quickly.
Staff also cited three financial concessions the developer has now offered in its bid for the extension. The developer has assumed financial responsibility for all repairs to extend the life of the Lake and Forest parking garage for another 8 months; this comes with a $75,000-100,000 price tag on the village-owned garage that will be covered by Lake Street Investors. The group also agreed to put up an extra $15,000 for any additional incidental expenses that may occur over the next several months.
The final item involved an agreement by Lake Street Investors to put up $200,000 to make up for any potential TIF dollars that would be lost from a delay on the developer's part if a loss was to occur. Once Daly revealed the village had a $500,000 figure in mind, Trustee Peter Barber was quick to criticize the difference.
"I just find that a little problematic. It bothers me in the sense that this is a major multi-million dollar investment that's going on here," Barber said. "Coming in at $200,000 on $500,000 does not seem in the spirit of negotiation, particularly given that there's a lot of disappointment, obviously in the sense that it hasn't been going well."
He pointed to the developer's inability to break ground and meet deadlines.
Michael Glazier, the original face of the project who recently moved from Lake Street Investors to Golub, responded to Barber's points by suggesting Lake Street Investors has shown its commitment by making a $1.5 million investment to date. He said the burden has not been on the village to step up and make the same commitment.
That $200,000 figure, however, became a negotiating point for the evening and eventually caused Village President Anan Abu-Taleb to call a brief recess for the team of investors to consider making a better offer.
Glazier was joined by Michael Newman, president and CEO of Golub, and a representative from Wood Partners — another development group looking to join the project.
Rolando Acosta, the investment group's attorney, spoke with the developer trio and came back with an amount up to $250,000 as a guarantee to make up for any potential TIF funding loss.
Trustees said it's important to note that the village only has a written redevelopment agreement with Lake Street Investors, and not Golub and Wood, but trustees felt more comfortable after hearing Golub and Wood will eventually be the primary partners in the project.
"We're not going to come into a situation without knowing we can get it done," said Golub's Newman. "We would bring all of our resources forward to make this deal happen."
Newman assured the board the dates were "hard and clear" and said the group would be done if they couldn't commit to that date.
"This is sort of the exact type of projects we like to work and one we think we can execute well," Newman said. He also said he feels Oak Park is positioned in the capital market for a multi-family residential and retail project.
"It gives me a certain level of confidence that you are here presenting about your company," said Abu-Taleb. Still, he conveyed concerns about being misled in the past.
"I want to make sure we are operating on the same page. …I hope we can work together," he said. "We don't want to be left at the alter one more time."
Overall, trustees remained on the same page throughout the evening's discussions and relayed concerns about the constant delays, the lack of transparency with the village on the project's progress and the recent deadline lapse.
"Personally, I've been very troubled by the lack of forthrightness in financing," Trustee Adam Salzman said via phone during the meeting. He suggested having the deadline for determining both the equity partnership and the other financing in place by the end of the year, but the developers said they needed until the Feb. 28 date to feel comfortable. The developers agreed to bump the date to secure equity to Jan. 15, but said the February date for all financial aspects would be ideal.
Trustees eventually agreed the February date was appropriate given the holidays and how long it takes to ensure the project is executed properly. Trustees were also sensitive to the fact that Golub just joined the project and that Lake Street Investors lost a major funding source after the unexpected death of a major partner early in 2013.
Another aspect of the discussion was the lawsuit Lake Street Investors faces with PNC Bank for defaulting on its $4.5 million mortgage on the Oak Park property, but Monday's talks also provided some assurance that that deal will be worked through.
"We're working with PNC," Newman said.
Glazier jumped in to say that the bank has been cooperative and said "they want to see the project to move forward." He encouraged the bank to reach out to the village.
"It's the past of least resistance for them" Glazier said about working on a resolution with the bank. Golub discussed the possibility of buying the past due note and solving the matter.
Monday's meeting ended with a compromise between the village board and the developers. Both sides, however, agreed the Lake and Forest development — if it can happen — will benefit Oak Park.
"I want to take a deep breath and make sure there isn't a misunderstanding," Trustee Ray Johnson said. The frustration has been about the process, not the project itself, he said. "This is a good project for Oak Park."
He said not approving the extension would send a bad message to the development community and said the village needs to do whatever is needed to make sure the project is done so the attached garage is not left in isolation.
"Honestly if this doesn't happen by Feb. 28 our lives are even more complicated than they are today," Johnson said. "We need to be crystal clear to the public that we don't own the land. …I want to continue to stand behind this until Feb. 28.