The building permits are in for the Lake and Forest development, a long-delayed Sertus Capital project, bringing Oak Parkers one step closer to seeing the vision for the 20-story project become a reality.
Although Oak Park village trustees still expressed some skepticism at the viability of the project launched by Michael Glazier, the lead developer for Sertus, at Monday’s village board meeting, he said filing the permits shows the group’s commitment to moving forward with the project even though financing has not been locked in.
“We wouldn’t be spending the money that we have if we weren’t confident,” Glazier told the board. “We are confident; we are getting positive responses.”
He assured trustees his group is “actively in the market” and said there is “substantial” interest in backing the project. While he couldn’t name what entities had expressed that interest for reasons of confidentiality, he said the many meetings already held have shown the process will move forward as proposed.
“It’s a process. It’s somewhat of an opaque process…It’s somewhat opaque to us too,” Glazier said. “The starts seem to be in alignment and that makes us very happy.”
To secure his financing though, he told the board that the village must approve its financing plans for the public portion, which includes replacing the dilapidated Forest-Lake public parking garage with a new garage incorporated into the larger project. The earliest the project will start is early spring, Glazier said.
He noted that the recent sale of the Whiteco apartment building in Downtown Oak Park suggests capital projects are regaining strength in the market.
The board’s task Monday to help the project move forward was approved with staff being given the discretion to take actions necessary as it relates to its portion of the financing for the garage. This is part of the 2011 Redevelopment Agreement between the village and Lake Street Investors. In this agreement, the village is responsible for reimbursing the developer for the cost of developing and construction of the public portion of the garage.
It was determined that the board should finance its portion of the public parking garage through a bank letter of credit during construction that will be followed later by a General Obligation bond. The fiscal year general fund allows for roughly $8.9 in bond proceeds for construction.
Approving finances for a project which still has the potential to fall through was a concern raised by Trustee Adam Salzman.
Interim Village Manager Cara Pavlicek said it’s important for the village to identify for the investors how the village will finance its portion of the project. She said board approval merely got the paperwork together to later streamline the process. Pavlicek compared it to closing on a house and said the authorization allows staff the resources to reviews finances for the project and look for the best rates.
Still, Salzman had reservations about how approving steps for financing would appear.
“Showing we are discussing financing. It makes me queasy to issue direction on how to proceed before what we know what’s on the other side of the rainbow,” he said.
Salzman suggested a more succinct version of the RDA agreement should be made for the public, and him, to better understand the process.
Trustee Collette Lueck followed up with a question about how to explain to the public why the village is issuing more debt to fund a project. Craig Lesner, the village’s chief financial officer, said that issuing this short-term debt makes is worth it since the village is gaining an asset that will generate revenue.
“It’s simply a question of cash flow,” he said. “We’re not simply adding to the debt load. We’re increasing debt, certainly, but we’re getting assets out of it.”
Lesner also said by seeking the letter of credit as its financial choice, the village is able to save money because using general obligation bonds would cost more because they are taxable. Village President David Pope suggested this method could save hundreds of thousands of dollars and helps the project’s process.
“The private market financing wants to see public funding commitment,” Pope said. “Our action actually accelerates ability to confirm private financing that allows project to move forward rapidly.”
The board voted unanimously to allow staff to proceed with the necessary financial steps. Before discussion ended, however, Pope stressed that the garage itself will not be built until Sertus’ finances are set.