Local economic development is complex and vulnerable to oversimplification. Case in point – the proposed Sertus development at Lake and Forest, in which the village is a partner. The oversimplification starts with the claim that the Oak Park village board is giving away $14 million to a developer. Nothing could be further from the truth.
Let’s run through the logic of this proposal, starting with a key fact: We have a failing parking garage at Lake and Forest that will cost us nearly $10 million to rebuild. In 2002, it was estimated to have a useful remaining life of five to seven years. Today, we could simply rebuild at a cost of nearly $10 million, with the resulting local tax revenue for the property being zero.
Instead, we have agreed to have our garage rebuilt as part of the Sertus project. Same cost to taxpayers – it’s just that Sertus would be our builder, and in so doing, Sertus would also be able to build a mixed-use project on the site, resulting in estimated revenue to the village and schools at $2.3 million per year for the next 20 to 30 years. When confronted with this choice – invest $9.8 million in a garage that’s part of the project and reap the tax benefits for years to come, or spend $9.8 million on a stand-alone garage with zero return – the wiser course of action was clear to the village board.
That leaves about $4 million of the supposed $14 million subsidy. Most of that represents the value of the village land that part of the Sertus project would be on. It does not represent any taxpayer money being given to Sertus. The amount is theoretically what we could have sold that property for a year ago (the price would be lower in today’s market). The key thing to understand here is that, in reality, we could never have actually sold the property because, one way or another, we need to use it for our parking garage!
So rather than a) simply using our land to rebuild our garage at a cost of $9.8 million, or b) selling that land to Sertus for $4 million but then no longer having any land for a garage, we’re doing c), which is letting Sertus use the land so long as our garage – and a hotel – is part of the project. Using the land this way is a good thing for taxpayers, not a bad thing.
Finally, yes, we are left with a $500,000 cash subsidy (a far cry from $14 million) that would offset startup operating costs for a new hotel. This would be paid for by an increased hotel room tax, which could be structured to also benefit existing hotels as the market acclimates to having more hotel rooms. That’s also a fairly standard arrangement for new hotels, and the subsidy would never materialize until the project, with a hotel, is actually up and running. It’s akin to an insurance policy that, once built, the hotel will actually get established as a going concern.
My approach on the board has always been to make decisions that I think most Oak Parkers would make if they were in the same position, with the same degree of information and responsibility I have as a trustee. I’ve tried to provide an example of that here. To be sure, there are aspects of this project over which reasonable people may differ, but let’s not allow public discussion on such an important topic to be dominated by oversimplified rhetoric. Lots of things in life are not as simple as they seem, and failure to appreciate that leads to poor decisions.
Jon Hale has been an Oak Park village trustee for two years.
