The village of River Forest will cover partial buildout expenses for two businesses looking to relocate to Madison Street, after developer Lake and Lathrop LLC purchased and made plans to demolish their present locations.
At a village board meeting on Aug. 20, trustees directed Village Administrator Eric Palm to look into covering the “reasonable costs” of relocating The Skincare Company and Allstate to 7756 Madison St.
Because the property falls in the Madison Street tax-increment financing (TIF) district, the village can use TIF funds to cover the expenses, which Palm said is “not uncommon.”
“If you turned the building upside down and shook it, everything that doesn’t fall down is a TIF-eligible expense,” Palm said, naming new plumbing, electrical, drywall and more as eligible for reimbursement.
The Skincare Company and Allstate will need to seek multiple bids for the work and submit them to the village, which will cover a percentage of businesses’ expenses and likely cap the total amount it will reimburse.
In the Lake and Lathrop corridor, Cigar Oasis and Tulipia Floral Design have found new locations outside of River Forest, and “there wasn’t a desire” by In & Out Fitness to move to Madison Street, Palm said.
“This does several things,” said Palm. “It goes ahead, removes businesses voluntarily from an existing location we’re trying to redevelop at Lake and Lathrop, so that ultimately leads to increased property tax values with redevelopment. Then, secondly, it goes ahead and helps moves forward with rehabbing and reinvesting in an existing landowner and business.”
Any agreement made between the village and two businesses would include a “clawback” clause, which states that if the tenant were to leave their space earlier than expected, it would need to pay back River Forest for the buildout funds provided.
Both businesses’ leases extend to 2019, and Palm said he hopes to get them out of the Lake and Lathrop corridor by the end of the year.
If River Forest does not cover their buildout, Lake and Lathrop LLC would be responsible for buying them out of their leases, should it start demolition before the end of the year. In its original application, Lake and Lathrop LLC aimed to demolish the properties in October.
“I see this as more, another subsidy for Lake and Lathrop, personally,” said Trustee Tom Cargie.
The village has awarded Lake and Lathrop LLC $1.9 million in TIF funds to help with the development, principally for environmental remediation.
Village President Cathy Adduci urged trustees to “segregate what’s going on with Lake and Lathrop to the businesses” and trust Palm to negotiate a fair deal.
“If it isn’t reasonable, we’re not going to approve it,” she said.
Trustee Carmela Corsini said she worried over the precedent the village was setting by negotiating directly with tenants, rather than with the property owners. When the Lake Street TIF was recruiting businesses to the River Forest Town Center, the village relied on Mid-America Real Estate Group to negotiate buildout deals with its tenants.
“My concern would be precedent setting, because we’d be negotiating with lease holders as opposed to the landlord,” Corsini said. “What does the landlord, do? Does he have any impetus or interest in trying to help these leases with buildout, so he can actually lease out these spaces? Where’s his responsibility?”
Palm said he felt OK setting this precedent since the businesses would relocate to an “underperforming” strip center and could potentially increase property values. He said he has talked to the landlord about his concerns, and that the landlord is starting to address the issues voluntarily, investing in new signage and façade. Palm also noted that The Skincare Company and Allstate are established businesses that want to move.
“Being a small business owner is a very difficult and can be daunting task, and we’re dealing with established businesses,” he said. “So we’re not dealing with folks that are saying, ‘Hey I’ve got this idea, my Etsy store took off, I’m going to launch from my basement to a brick and mortar.'”
Palm added: “On some level it’s always better to have these relationships with the individual tenants because then you know the money is going into their building.”