The Oak Park Village Board of Trustees signed an agreement with Sertus Capital Partners in hopes of increasing tax revenue. In exchange for this opportunity, the Oak Park taxpayer will give Sertus more than $14 million in cash, land and TIF (tax increment financing) subsidies to build a 20-story building within 100 feet of the Frank Lloyd Wright Historic District. This skyscraper is to consist of 85 condominiums, 140 hotel rooms, 28,100 square feet of retail and a 510-space parking garage.
It is when one looks at the details of the agreement that one starts to question if it is truly beneficial to Oak Park. Some of the more complex facts surrounding this agreement include:
1) Sertus testified that they have the financial capacity to complete this project, but they appear to be in default on their $3 million loan agreement with John Vlahos, the previous owner of the property, which was to be paid off in March of 2009. There is no modification or refinance agreement for this loan recorded with the Cook County Recorder of Deeds.
2) The demand for the hotel is deemed “modest” according to a study commissioned by the village. One could assume this is why the agreement allows Sertus not to build a hotel if it is eventually determined that a hotel is not economically feasible. Nonetheless, the land valued at $5 million, which will be given to Sertus as an incentive to build the hotel, will not be given back to the village if the hotel is not built.
3) Sertus testified that they would need to pre-sell 50 percent of the condominiums before obtaining the necessary project financing. Sertus has not sold 50 percent of the condominiums in their Everleigh condominium project in Des Plaines, which broke ground in the first quarter of 2007.
4) The village board has stated that the garage at Forest and Lake must be replaced; however, according to a report commissioned by the village, the garage has a useful life of 15 or more years if properly maintained.
5) Oak Park says the current garage has a peak parking demand of 286 spaces; however, village counts show peak parking demand in excess of 300 spaces.
6) Sertus will not publicly reveal the financing arrangements for this project. This is unusual because Sertus has not shielded its financing arrangements from public disclosure with other municipalities. This naturally makes one wonder, what are the village board and Sertus trying to hide?
In the 146-page redevelopment agreement and 744-page application to the plan commission, one will find numerous other reasons why this project is not good for Oak Park. It is in these pages where one will also realize that the Oak Park taxpayer will once again subsidize a high-rise development that is a monument to the financial ineptitude of the Oak Park village board.
David Barsotti is a project manager with a background in economics who has read the Sertus redevelopment agreement and application. He has lived in Oak Park for 13 years.