Pete's asks Oak Park for $1.5M

Grocery store says money will go toward building renovations, cafe

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By Timothy Inklebarger

Staff Reporter

Pete's Fresh Market, which completed the purchase of the shuttered Dominick's grocery store in January, is asking the village of Oak Park for $1.5 million to open the new store by the end of the year.

Documents sent to the village say the store will use the funds "to facilitate renovation of the property" at 259 Lake St. to include façade, landscaping and parking improvements, as well as placing a café in the southeast corner of the building. Pete's also agrees to have a "targeted" grand opening in the fourth quarter of the year.

The Oak Park Economic Development Corporation interim executive director, John Hedges, said the organization supports the deal.

Village President Anan Abu-Taleb, who serves on the OPEDC Executive Committee, said in a telephone interview that the incentive package is a "good investment and a good return on the investment in a short period of time."

He said the village could generate the money for the incentive package through a combination of cash from the village and borrowing.

"This is an investment that is worth borrowing for," he said.

Hedges said in a telephone interview that the deal was part of negotiations with Pete's from the beginning.

"We didn't start at [$1.5 million]," he said. "As in any negotiation, you find common ground. They were looking for substantially more."

Pete's will make a formal request to the village at the weekly board meeting set for Tuesday.

The packet sent to trustees notes that Pete's purchased the building and land for $6.25 million. Planned improvements include a gut rehab of the property that would run approximately $5.85 million.

The proposal states the incentive package will make up less than 13 percent of the total cost of the project, which breaks down to $1 of public investment for every $8 in private investment.

Pete's currently has nine locations in the Chicago area and four new locations planned for Plainfield, Bridgeport and Willowbrook, in addition to the Oak Park location.

Oak Park would not be the only community to provide incentives to the grocery store chain, according to the proposal. Pete's says that Willowbrook provided $5 million in tax increment financing, Bridgeport provided seven acres of land worth $1.8 million, and the village of Plainfield also contributed seven acres of land.

The proposal also states that several other grocery chains have received similar deals, including:

  • $3.8 million for two acres of land for a Mariano's in Harwood Heights.

  • $3 million in development costs for a Mariano's in Westmont.

  • $2 million land subsidy for a Trader Joe's in Evanston.

  • $1.5 for site improvements for a Mariano's in Lake Zurich.

  • $1.5 million in development costs for a Mariano's in Elmhurst.

  • $850,000 for site improvements for an Aldi in Geneva in 2007.

  • $800,000 for site improvements for a Caputo's Market in Addison.

Oak Park is currently losing $250,000 a year in sales tax revenue due to the closure of Dominick's, according to the document presented to the village.

It would take the village approximately two years to break even, based on sales and property taxes, if they approve the incentive package, according to the proposal.

Contact:
Email: tim@oakpark.com

Reader Comments

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east sider  

Posted: June 3rd, 2014 10:26 AM

On the one hand I don't like giving tax dollars to for-profit companies. On the other hand, didn't we give Trader Joe's 10 million worth of free property? Maybe we should be complaining that Pete's didn't get more? Maybe the village thinking the east siders will travel west to Trader Joe's but the west siders won't travel east to Pete's?

DEEZ from Oak Park  

Posted: June 3rd, 2014 8:15 AM

Whatever needs to be done needs to hurry up and be done. I'm tired of overpriced Jewel.

John Butch Murtagh from Oak Park, Illinois  

Posted: May 28th, 2014 3:01 PM

I agree Bridgett, but shouldn't be a period where OP EDC, board president, and village manager prove that the can ensure that facts and opinions given to the press and residents is correct? Without government confidence, it is difficult to have a government based on trust.

Bridgett from Oak Park  

Posted: May 28th, 2014 1:08 PM

The OP EDC and the business, in this case, Pete's, negotiate what OP EDC will recommend to the Board. Ultimately, the Board then decides whether or not to approve such a recommendation. I have no problem with negotiations regarding the recommendation being done privately, and understand why it has to be done that way. Would it make some of is feel better to know the details, such as how much Pete's originally asked for? Sure, but the purpose of the process is not to make Bridgett feel better.

John Butch Murtagh from Oak Park, Illinois  

Posted: May 28th, 2014 12:32 PM

Joel - I agree with half of your post and disagree completely with the other half. Oak Park village fact base is weak at best. Its information process is pre-internet. As a result, it is difficult to get facts. So opinions are the main source of knowledge. Unfortunately, Though there are a lot more opinions than facts, OP opinions lack. Opinions are constrained by the board, village, press, to ensure that the decision making body have no interference from those with a differing opinion. How do you increase the value of facts and opinions? Build a state of the art information system that stores all and makes all, including opinion, The more facts and opinions available, the better the decision making process. The Pete Fiasco is a classic example of facts, opinions, and decision gone amuk!

Joel A. Schoenmeyer from Oak Park, Illinois  

Posted: May 28th, 2014 11:58 AM

"This story is full of facts and no opinion." Bridget, I think the concern is with the way in which the timeframe has (or hasn't) been reported. The news article begins by stating that Pete's "is asking" for the money -- implying that this is a new development -- while Hedges is quoted as saying that "the deal was part of negotiations with Pete's from the beginning." The editorial echoes that: "[a]n incentive package has been under discussion since early on in the family-owned Pete's bidding process for the Oak Park store." Yet I don't believe WJ or anyone else mentioned these negotiations in the reporting on the original purchase. As a result, there's a lack of clarity about how the negotiations went down -- in terms of when they happened, what was promised, and how the negotiations intersect with the actual purchase by Pete's.

John Butch Murtagh from Oak Park, Illinois  

Posted: May 28th, 2014 11:43 AM

Bridgett - I am never sure if subsidies are a good business or government practice, but I am certain that there is greed on both sides of the deals. Oak Park Village has given subsides in the past, has used special favors to the "possible" big tax paying business and government agencies, and as maintained a operating process loaded with the influence and secrecy. The last year has been filled with signs that Oak Park is getting smart. Unfortunately, in the village and board drive for revenue, they have missed the fact that our business development looks very much like what was occurring during the TIF days. .

Bridgett from Oak Park  

Posted: May 28th, 2014 10:48 AM

"WJ needs to report the facts, not just their opinion." This story is full of facts and no opinion. Perhaps you meant to comment on the related editorial? Though, editorials, by definition, are opinion pieces...

no thank you  

Posted: May 28th, 2014 10:09 AM

We, the public, need more info. It was reported that Pete's purchased the property in Jan. Then why is it taking so long to open their store? Don't they have every incentive to expedite the opening of their store? The site has become an eyesore of trash and weeds, with no signs of rehab. How can there be any any negotiation of a subsidy after the property purchase? Did the village previously promise a subsidy? If so, why wasn't it disclosed? WJ needs to report the facts, not just their opinion.

Bridgett from Oak Park  

Posted: May 28th, 2014 9:41 AM

I work in the movie industry and while it annoys me that taxpayers are supporting that industry via state tax rebates, it's not going to stop until all states stop such incentives. Same goes for these types of incentives as with Pete's. Until other municipalities stop, it's the way of doing business, and Oak Park has lost out on businesses because in the past, we refused to pay the game. And where has that left us? If we have to give money to a business, Pete's is a good choice.

In Glen Ellyn formerly from OP  

Posted: May 28th, 2014 9:30 AM

Nelson- All the fuss? Among the points being made here against giving Pete's 1.5M is primarily that the business deal was concluded without the 1.5M and Pete's hopes to get some free money for their business... from YOU. (Are you that rich to want to give it to them? Why not 2M or 3M?) I'd like to know where you (anybody) shop so I can go to Customer Service or the Manager after paying the cashier for properly marked items to get some money back. I'm going there (until they go out of business).

Nelson Taruc from Oak Park  

Posted: May 27th, 2014 4:28 PM

Why all the fuss? Oak Park spent $1.5 million for the old Madison Volvo site nine years ago. That "investment" will cost the village far more money than this one ever will. So if you're really upset, be mad at the village for spending money on properties that stay empty, rather than the village spending money to get these sites occupied. Shout out to OP and OPDad for keeping it real.

John Butch Murtagh from Oak Park, Illinois  

Posted: May 27th, 2014 11:06 AM

Joel - Pete 1.5M is blackmail. Pete says if the village gives Pete 1.5M now, Pete will open their store six (or so) months earlier than planned. An earlier opening will give the village an opportunity to begin accruing tax revenue earlier. Clever plan by both Pete and the Village but unethical as hell!

Done from Oak Park  

Posted: May 27th, 2014 11:00 AM

I know since Dominick's closed, I have done more shopping at the RF Jewel. The Jewel on Madison has raised prices more than they were while Dominick's was open and I have heard this observation from many in our area. I have taken the time to go to the RF Jewel also because it has much better selections than either of the two OP locations. Whether it is a case of space or something else, the choices from the meat counter to the deli are much better than the OP stores.

Small business?   

Posted: May 27th, 2014 10:44 AM

The real question for is whether the avg independent, small business startup would get this same kind of incentive to open here. Plenty of us have been asking the village to do this to lure more business to OP, but starting with Pete's looks...well, let's just say I hope we're also doing this sort of thing for the smaller vacant storefronts that need to be filled. Don't give Pete's special treatment. Make this a new era of helping businesses get started here.

Bridgett from Oak Park  

Posted: May 27th, 2014 9:45 AM

@Sam, The Village receives 1% sales tax on food and pharmacy, 2% on general merchandise, 3% on liquor. If you look at the very last slide of this link, you'll see the breakdown you're looking for. In regards to where people are now shopping, they could be going to RF's Jewel, EP's Caputo's, etc. So OP is losing those sales tax dollars. And losing part of the property taxes as it stands vacant... http://oak-park.granicus.com/MetaViewer.php?view_id=4&event_id=122&meta_id=17263

Joel A. Schoenmeyer from Oak Park, Illinois  

Posted: May 27th, 2014 9:34 AM

I don't think I understand. According to the article, Hedges says the $1.5 million amount was part of negotiations with Pete's from the beginning. But as I understand it, Pete's already closed on the purchase of the building, and I don't see that the purchase was contingent upon the payment of the $1.5 million. So what is Pete's leverage? They can certainly ask for a handout, but what will Pete's do if we say no? It's in their interest to open as soon as possible.

Sam  

Posted: May 27th, 2014 9:26 AM

I would really like to see that $250K a year quantified. Does the village even receive any sales tax revenue from groceries? And even if they do, how is the village losing sales tax revenue? Did people just stop buying food when Dominic's closed? I would assume people would still buy their groceries at another store.

Clarity Please from Oak Park  

Posted: May 27th, 2014 9:22 AM

Continued...Also, what is truly troubling is the secrecy of our elected representative(s). The President is on Economic Development and knew Pete's was going to ask for this money BEFORE the sale occurred and decided to keep this information from the citizens. This is disappointing to everyone that supported him. When you are trying to land a grocery store you must assume that there will be carrots.

Bridgett from Oak Park  

Posted: May 27th, 2014 9:17 AM

@Want to Stay, That's comparing apples to oranges. One is a non-profit entity, the other isn't. Pete's will make millions of dollars here.//While I understand the "every town is doing it," I question the series of events, as the "asking" is happening after Pete's already bought the property. And I question the dollar amount. That's about three years of occupied property and sales taxes. Could we not fill that space in less time w/o the "incentive?"

Clarity Please from Oak Park  

Posted: May 27th, 2014 9:16 AM

The $1,500,000 is not coming from any TIF account designed to promote development it WILL come from the general fund or a bond issued by the Village. Both are problematic. Be prepared for more cuts in Village services like housing, health, building and code,(probably not police or fire). If there is a bond Moody's has recently indicated that the financial stewardship if the Village is not the best and we can expect to pay more in interest.

OPDad  

Posted: May 27th, 2014 9:06 AM

Cost of doing business, I suppose. It's probably more an indictment of the high tax costs and union costs in this state than incompetence of the OP Board. That said, no small businesses will ever be able to compete if the startup costs are so high and only chains can negotiate to defray the cost through Village subsidy.

Kevin  

Posted: May 27th, 2014 8:11 AM

$67 a household, so that annual savings Anan gave you on electric just got eaten up. :P

Want to stay in Oak Park from Oak Park  

Posted: May 27th, 2014 7:54 AM

Bridgett, $67 per household to have a very nice grocery store that generates a lot of sales tax seems to be a great deal. I'll buy my own gift card. However $800-$2500 per household for new swimming pools for the high school - which taxpayers can't use - not such a good deal, don't you think?

Subsidize This  

Posted: May 26th, 2014 10:38 PM

Reject the builder handout. There were plenty of other parties interested in that site that were not going to test the villages knees and ask for a handout to subsidize their inflated price. They bid, they won, let them move forward on their business plan without us as taxpayers suddenly being a partner. Time to stop the madness of taxpayer partnerships here in Oak Park.

Neighbor from Oak Park  

Posted: May 25th, 2014 12:02 AM

In terms of generating potential sales tax revenue , it makes no sense to compare a large multi service grocery store to a pizza restaurant.

Bridgett from Oak Park  

Posted: May 24th, 2014 1:51 PM

Did Lou Malnati's ask/get anything from the Village? I'm trying to understand how these decisions of handing over taxpayer money are being made.

Mark Graham from Oak Park  

Posted: May 24th, 2014 1:39 PM

Tell you what, let's see them get started on the project using their own cash flow and then the village can provide the 1.5 million at the time of the grand opening.

Adam Smith  

Posted: May 24th, 2014 6:04 AM

I would like to see this set up as an annual rebate of increased taxes created from the site capped at $150,000 per year; over a period of 10 years conditioned on operating at the site the entire time.

Chris from OP  

Posted: May 24th, 2014 5:26 AM

http://www.chicagotribune.com/news/local/suburbs/northbrook/ct-northbrook-caribou-coffee-closing-tl-20140523,0,3192244.story?page=2

Chris from OP  

Posted: May 24th, 2014 5:25 AM

Speaking of "Peet's" it would appear that the last caribou won't become one after all and will just close soon.

In Glen Ellyn formerly from OP  

Posted: May 24th, 2014 12:52 AM

btw, how's the recruitment for a permanent executive director of the EDC going? There sure weren't glowing assessments of John Hedges' professional qualifications for interim director of the EDC posted on OakPark.com in response to his being announced as such. There were plenty of mentions of the Oak Park Parks' financial problems when he ran that.

In Glen Ellyn formerly from OP  

Posted: May 24th, 2014 12:33 AM

"Hedges said in a telephone interview that the (money) deal was part of negotiations with Pete's from the beginning." If it was part of the deal, why report that Pete's is ASKING for the 1.5M? and why report it NOW after the deal has been closed? Is this an occasion to ask for forgiveness rather than permission? Sounds like an Obama case of, "After my (re)election, I have more flexibility", Obama caught on open mic with Russian leadership about future concessions to them. Hail Oak Park.

Bridgett from Oak Park  

Posted: May 23rd, 2014 10:00 PM

$1.5 million works out to be about $67 a household. So...if that's what it takes to incentivize Pete's to do business here, can we all get a $50 gift card to incentivize us to shop at Pete's? Seriously, I really don't understand this handout. It doesn't seem necessary. But hey, never hurts to ask.

Suzette from Oak Park  

Posted: May 23rd, 2014 9:05 PM

So the property was purchased and the deal was closed. Was this $1.5 from the Village part of the closing or is this a surprise add-on ? The incentive I see is a perfect location for the grocery market to succeed once it is operational and open for business. The purchaser bears the cost of design and improvements to match their design ! So, I am confused, why pay an incentive after the fact !

tom  

Posted: May 23rd, 2014 8:54 PM

No No No. Many options for groceries around here.

Neighbor from Oak Park  

Posted: May 23rd, 2014 8:22 PM

OP, you said it all. Totally agree. JBM, you sound like you might be running for office around here?

Nunya from Oak park  

Posted: May 23rd, 2014 6:05 PM

What ever happened to the old way of doing business. A business buys up a location and uses it own money to do renovations and draw in customers. They pay taxes to do business with us residents not the other way around. This B.S of luring in business is ridiculous. Stopping running the Village of O.P like a bank/corporation. And if Pete's fails to bring in the expected dollar figures, who ends up waiting longer than two years for the return on our capital investment hmm? We do.

Unfortunately  

Posted: May 23rd, 2014 5:38 PM

@Farmer Jones - Bingo!!! I agree completely. And the argument that "other communities" do this...........sounds just like "but John said that it was alright and so I decided to jump off the roof, too!" What's next, Pan's is going to request $2.5 million or they're going to vacate and sell? What about the Jewel on Madison? Yes, yes, OP is a spendthrift community, but do we always have to re-prove that we're stupid when it comes to this sort of stuff?

haha suckers  

Posted: May 23rd, 2014 4:56 PM

Another shakedown of the OP taxpayer by a business, and the guy who ran for President promising to change the Board culture of throwing away taxpayer money is the first to sign up. The more things change in OP, the more they stay the same.

John Murtagh from Oak Park  

Posted: May 23rd, 2014 4:51 PM

OP -- How much money was lost because the Sertus Hotel and then the Sertus Apartments has taken six years to get anywhere near ground breaking? How many times was the project delayed because of mistakes by the developer or the village? Anytime we get into deals that are not forthright (Tony's - "Woops, forgot to tell you I need 15M to open) or blackmail (Tony's - Have a deal to get you get tax money early, but you need to give me 1.5M), we put the village at risk.

Judith Alexander from Oak Park  

Posted: May 23rd, 2014 4:49 PM

I hope they got a legally-enforceable commitment that Pete's will operate at that location for a long enough period of time to provide a return (not just a payback) on our investment.

Farmer Jones  

Posted: May 23rd, 2014 4:34 PM

Milk the cow, slaughter the pig. Pete's owns the property, negotiation power lost. Open whenever, pay property taxes semi annually. Forth quarter opening mean nothing. Pete's is losing money everyday they don't open.

OP  

Posted: May 23rd, 2014 4:13 PM

We allow op97 to piss away money with silly programs and get up in arms about this? We spent $30MM on Ridgeland with no payback and bemoan $1.5MM on a great branded business - that we as OP need. This is a math exercise - actually corporate/muni finance - not a hard one to figure out...

OP  

Posted: May 23rd, 2014 4:09 PM

Why does every person in the village expect the village to walk them thru the deal structure, economics etc. First, most dont have skills to understand issues and second, you can't lead by committee. This is a no brainer - stop the flipping whining - this is why OP has no mojo. We have become a bunch of whinny little beatches.....

in Glen Ellyn formerly from OP  

Posted: May 23rd, 2014 4:09 PM

I think they're saying Pete's business with be better than Dominick's, Rich. Bad business by OP gov't on behalf of Oak Parkers to give away Oak Parkers' money to a closed business deal. period.

John murtagh from oak park  

Posted: May 23rd, 2014 4:00 PM

OP - I understand the business calculation for the Pete deal's positive math, but my post's focus was on the village leadership's trust level. After twenty years of TIF secrets, village leadership needs to be diligent about being forthright and honest with the residents.

OP Resident from Oak Park  

Posted: May 23rd, 2014 3:33 PM

Great way to introduce yourself to my town by sticking your hands into my pockets for tax money. Way to go Pete!

Rich Barker from Oak Park  

Posted: May 23rd, 2014 3:29 PM

I'm confused. How does the village break even in two years?If the lost sales tax revenue is $250,000 annually, then the annual property tax must be $500,000! Is that correct? in only a two years? Are you saying the property taxes are $500,000 annually?

OP  

Posted: May 23rd, 2014 3:15 PM

Do it fool! The village waste more than this on all types of nonsense. This actually makes sense to bring a great business here and reasonable payback.

Mixed feelings  

Posted: May 23rd, 2014 3:07 PM

Short term, it's great we're receptive to this request, it's great we have Pete's, this is the kind of thing we need to do more of to be business-friendly. Long term, these big business who ask for handouts isn't good. Give the money to some smaller, independent start-ups trying to make it in Oak Park. Pete's doesn't REALLY need the help, does it?

John Butch Murtagh from Oak Park, Illinois  

Posted: May 23rd, 2014 2:56 PM

The examples of other communities is helpful and the tax loss is enough to consider paying the 1.5M. The other side of the coin is that the village or Pete did not let the residents know when the property sale was being made. Withholding important details - 150M - is not a good way to start a friendship with OP residents. The village needs to explain why they did not mention the 1.5M. Trust has value! The 1.5M to get early delivery of the store and its tax revenue for the village is pure blackmail. There does not seem to be much ethics driving this project.

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