ECONOMIC DEVELOPMENT COMMITTEE MEETING
Wednesday, October 19, 2011 – 5:30 p.m.
Chamber Room – Countryside City Hall
1. Call to order.
2. Roll Call: Ald. Sean McDermott, Chairman, Ald. James Jasinski, Ald. Bob Pondelicek, Treasurer Steven Jasinski, Adm. Gail Paul
3. Approval of Minutes – September 20, 2011.
4. Presentation by Shorewood Development and GMX Real Estate regarding marketing the available properties within the City Center Development.
5. Discussion of Ordinance 10-53-O regarding Tavern on La Grange.
6. Review of traffic study to determine if a traffic signal at 57th Street is warranted (to be distributed at meeting).
7. Review proposal from Chick-fil-A for the purchase of 1.1 acres in the City Center Development.
8. Review of counter proposal for tax sharing agreement with Ettleson Hyundai.
9. Review of tax sharing agreement with William Tell Holiday Inn.
10. Consideration of Revised Term Sheet with Hooters for 1.25 acres within the City Center Development (to be distributed at meeting).
11. Other Business
COUNTRYSIDE ECONOMIC DEVELOPMENT COMMITTEE
WEDNESDAY, OCTOBER 19, 2011 – 5:30 P. M.
COUNCIL CHAMBERS – CITY HALL
Ald. Sean McDermott, Chairman, called the meeting to order at 5:30 p.m. He called the Roll of those physically present:
PRESENT: Ald. Sean McDermott, Chairman, City Admin. Gail Paul,Ald. Robert Pondelicek, Ald. James Jasinski, Treas. Steve Jasinski.
ALSO PRESENT: Mayor Krzeminski, Clerk Sweeney, City Atty. Peck, Ald. Von Drasek, Ald. Straza, Asst. Admin. Peterson, City Eng. Fitzgerald, Fin. Dir. Drazner, CDP Swanson.
Approval of Minutes
The first order of business was approval of the Minutes of September 20, 2011. Ald. Jasinski moved to approve the minutes as presented, seconded by Ald. Pondelicek and carried by unanimous voice vote.
Review of Traffic Study to Determine Traffic Signal at 57thSt.
Chairman McDermott took certain agenda items out of order for the sake of timing. City Engineer Fitzgerald distributed copies of the site plan and discussed the Traffic Impact Study prepared by KLOA, Inc. Mr. Fitzgerald was authorized to review the possibility of relocating the traffic signal from 58thSt. to 57thSt., utilizing a new development on the NE corner of the intersection. The new development would theoretically consist of a Buffalo Wild Wings, 6,000 s.f.; Chick Fil-A, 4,000 s.f.; Chipotle, 2,500 s.f.; 5 Guys, 2,500 s.f. and a cellular store, 2,500 s.f. The signal at 58thSt. is no longer useful since the Fire Department has relocated. Most developers interested in the parcel request a traffic signal at that intersection – 57thSt. and LaGrange Road. The existing traffic counts on 57thSt. are very low; peak hourly left turns are 5; the proposed use has an impact on future need, but there is insufficient volume on 57thSt. at present. The above-named businesses are only used as examples for estimated traffic count purposes.
LaGrange Road is an SRA – Strategic Regional Arterial route and as such IDOT has more stringent rules and regulations such as special 8-hour warrants for SRA routes; this intersection does not meet that requirement. Some of the positives for the signal – it is pro-development; it is a four-legged intersection rather than a three-legged intersection as at 58thSt.; it will improve spacing with other signals on LaGrange Road. The negatives are – it doesn’t meet the 8-hour warrant for the SRA; it could potentially pose operational issues for McDonald’s – e.g., blocking the exit, and possibly cars queued waiting to turn into McDonald’s. Although McDonald’s is renovating, they are not rebuilding and their footprint will remain the same. All these things are taken into consideration by IDOT.
Ald. Pondelicek asked if there was input from residents on 57thSt. There was not, but there could be potential opposition to a signal, which will affect the IDOT position. Treas. Jasinski stated that is a brutal intersection for all traffic. Would there be additional traffic going westbound on 57thSt.; it would benefit the west area; more cars will use the intersection. People avoid that intersection now. Restaurants generate peak business hours three times a day, not all day long. If there was a curb cut on 57thSt. out of the McDonald’s, there could be a sign limiting it to left turn only. Ideal School would oppose losing the traffic light at 58thSt. Without the fire station, the light is not needed there. IDOT would allow a right in – right out in the new development, thereby lessening the need for restaurant traffic to use that light. William Nawrot, 5835 Kensington, would love to have the light there. Chairman McDermott thanked Mr. Fitzgerald for the presentation.
Review Proposal from Chick-Fil-A for the purchase of 1.1 Acres In the City Center Development
City Administrator Paul received a proposal from the Chick-Fil-A real estate representative, who also came to the area and met with City Staff prior to the ICSC Conference. They were considering other locations but finally sent a proposal for the City Center Development. They would consider the hotel property only if there was a traffic signal at the intersection. They propose a purchase price of $970,000 for 1.1 acre site. They are not fast food; they are a quick service restaurant, very high volume, open six days a week. Their operators get very involved in community activities, which is a requirement for them. They present a very a unique model. Does the Committee wish to pursue this avenue; if so, Ms. Paul will meet with the broker to negotiate further. The Committee was in agreement to go forward with the project.
Chairman McDermott announced that Tavern on LaGrange has been tabled tonight.
Review Counter-Proposal for Tax Sharing Agreement with Ettleson Hyundai
City Administrator Paul stated that negotiations have begun with Mr. Ettleson for improvements to his new facility at 6420 Joliet Road. He is requesting a tax sharing agreement for 50% of the $2.7 million total expenditure, or $1.370 million incentive. Staff provided an agreement using $100,000 as a base with a 50/50 split of all tax in excess of base being rebated, approximately $100,000. Mr. Ettleson countered with a base of $35,000 — for reconsideration by the committee tonight. Fin. Dir. Drazner ran the numbers, included in the packet. The City also proposed a 5-year lease with an additional five-year extension should they purchase the property or renew the lease for another 5-year term. They are asking for an additional 5-year period – so a 15-year incentive versus 10-years and a lower base. Mr. Ettleson stated that the original term would not be long enough; $100,000 would cap them at $500,000 not the $1.3; that’s why they need the lower base — the time would run out.
Ald. Straza asked about a length of stay agreement – there is none. It is set up so that they have to turn in receipts for improvements and will be reimbursed. It is up to the committee to grant the additional 5-year term or accept the lower base. Treas. Jasinski stated that perhaps a combination of the two – different things could be done. The City hopes to have revenue raised from different areas to help offset any losses. If other areas of town pick up it could be a wash. Chairman McDermott stated there is a proposal on the table to abate $1.5 million in property tax. Ald. Straza is seeking longevity. Mr. Ettleson has a five year lease with another 5-year extension and a purchase option; if he comes to an agreement with the City, he plans to purchase the property after the first 5-year lease and remain there. Hyundai has had the best five months in its history. Mr. Ettleson cannot purchase it any sooner than five years. He stated that the Phelan agreement was a $5,000 base – that was for a new business coming into town. Mayor Krzeminski suggested using a middle ground, like $60,000 base; committee agreed – Mr. Drazner will carefully review the long range numbers with various terms considered. He estimated the figure will probably be $70,000 per year.
Presentation by Shorewood Development and GMX Real Estate
Mr. Andrew Goodman introduced himself and Messrs. Louis Schriber and Aaron Roth. They will speak to marketing the available properties within the City Center Development. Mr. Goodman provided handouts to the audience and discussed the slide presentation. They appreciate the opportunity to present their viewpoint. Mr. Goodman began with a sampling of current tenant relationship – in a very depressed real estate market – they are getting deals done. Several tenants include the quick casual or quick service users such as 5 Guys, Buffalo Wild Wings, Potbelly’s, Panda Express, Starbuclks. New concepts coming to town are Roti Mediterranean Grill – currently working on a deal in Schaumburg. The big box stores are taking a backseat to the smaller, newer startups. He listed actual deals taking place in the last 18 months — Smashburger – 5 Guys, Tom & Eddie’s, Epic Burger – these tenants are becoming market leaders in their developments. They are most effective when their development plan encompasses all parties; they are central to dealing with one collective voice controlling the property; all tenants deal with one party. Mr. Schriber stated that is open to discussion. The City would like a white tablecloth sit-down restaurant. By controlling all four sites they have the ability to do that. Texas Roadhouse was listed as a potential candidate; they are working on two deals with them, as well as Granite City Brewery.
Shorewood has been in this business for the last 20 years and has worked with many new shopping center developments and redevelopments locally and nationally involving about 8 million square feet of projects. He provided information re: Texas Roadhouse – averages $3.7 million in annual sales, 88% food 12% alcohol sales; average customer tab is $15.25. They primarily operate as a dinner restaurant; open for lunch on weekends. They have facilities in Tinley Park, Naperville and Joliet; they have long term financial stability. They are very keen on penetrating this market.
Granite City Brewery averages $3.5 million in annual sales; usually 9,000-10,000 s.f. They are very interested in the layout at City Center with the patio. They are open for lunch daily; they only have one facility in Orland Park. The average tab is $13.50 — for customers enjoying an upscale dining experience at a sit-down restaurant.
Treas. Jasinski discussed the 1% restaurant tax and its importance to the City. Who else besides the big box retailers have they been in contact with on the retail side but in a smaller category? Mr. Goodman stated that a relatively new arrival is Total Hockey – a regional draw – 7,000 s.f. retailer covering all hockey needs. They also deal with Verizon and AT&T stores, Athleticos – more service oriented. Retail is up and down; the small stores are the selling shops – very active. They recommend a vitamin shop – there are flexible options for a retail/service mix with a healthy blend of both. Chrm. McDermott suggested Whole Foods and better quality vitamin stores. The Roti Grill the bill with the Mediterranean diet popularity; also Freshie – featuring fresh food every day with healthy options and a broader range of choices. In Elmhurst all six stores will be opening before Thanksgiving; they vary their layouts with patios and landscaping; it is not a strip center — it is a gathering point. There is great opportunity here to find the right balance required to turn the City Center into a unique development.
Ms. Paul stated that Shorewood is seeking a Memorandum of Understanding stating that they will market the property for the City, giving them the ability to negotiate with tenants and then return to the City to discuss price. Chairman McDermott suggested 45 days. Mr. Goodman discussed the time line – 45 days is sufficient to get the LOIs and the mix of tenants. They will confirm that tenants are open for business before Thanksgiving. In order to do that for 2012, they must begin lease negotiations with completion by December. They have a standard form lease which can be completed in 1-3 months. They will get the mix of tenants put together, sign the leases by December/ January, begin breaking ground when the weather breaks and deliver by August/ September; tenants can be open by Thanksgiving 2012. If retailers don’t open by Thanksgigin, they won’t open until the following year. This is a very accelerated time schedule which benefits the City. Everyone is comfortable with the 45-day time frame.
Ray Manz suggested an upscale nightclub; there are none in the area for older adults except Maxim’s. He also suggested that what the area lacks is a sports outlet, such as Dick’s or Cabellas – stores that draw customers from a great distance; there are too many restaurants in the area. The vitamin shop is a good idea. Mr. Goodman stated that the tenants themselves have compiled their own market research re: over-saturated markets. Ald. Von Drasek stated that the fact that a preliminary site plan is already in place puts the City ahead of the game. Mr. Schriber stated that with demolition begun, retailers are ready to go. Shorewood Development and GMX are satisfying their retailers. Mayor Krzeminski stated that at the ICSC conference the President of the Texas Roadhouse chain had reviewed City Center, was very impressed and wanted to be part of it. Ms. Paul provided Shorewood with a copy of the Bradford Memorandum of Understanding to review; she will await comments. Mr. Schriber stated they will draft a new one based on the Bradford copy and send it to Ms. Paul by Friday.
Review of Tax sharing Agreement with William Tell Holiday Inn
Mr. Drazner stated that at the August Economic Development Committee meeting the committee agreed to a 50% rebate of local hotel tax paid by Holiday Inn over a ten-year incentive term up to a cap of $800,000, whichever occurs first. There are certain State requirements that must be met. 1) The business must be rated BBB or higher by S& P or Moody’s. 2) A financial institution with assets of at least $10 million provides a letter attesting to the financial strength of the business. 3) There is evidence that the business has equity of at least 10% of the total project cost. The City has not yet received the necessary financial information to make that determination. Ms. Paul stated if the committee is comfortable approving the terms of the agreement pending review of financial information by the Treasurer and the Financial Director, the matter could be brought to the City Council when the financial information is submitted, or the committee could just table the matter until the information is submitted.
Mr. Lenoch stated that their attorney is working with Mr. Drazner in providing all the necessary documentation; this is a slow process but it is being completed. There is much accumulated data that must be brought forward. He thanked the committee for the opportunity. Chrm. McDermott is comfortable moving forward pending submission of documentation; committee members agreed.
Consideration of Revised Term Sheet with Hooters for 1.25 Acres Within City Center Development
Ms. Paul stated that the purchase price was increased to account for the broker’s commission and will be paid out of the proceeds at the time of closing. Some things were added – such as landscaping in the parking islands. They discussed the marketing expense of $125,000 over a three-year period. Suggestion was made to put that money into an escrow account at closing and draw on it for marketing. Hooters was not receptive to that idea; they are making a huge commitment of $3 million to the project. They don’t want money to be held up in escrow. Sal is putting a marketing plan together and a term sheet, showing what they typically do for store openings. They will commit to $125,000 being spent over three years and it will be site-specific – for the City Center Development in Countryside; that is in their plan. They will provide definite criteria; final terms can be worked out in the redevelopment agreement. It it meets with everyone’s approval, Ms. Paul recommends bringing it to the City Council with the Marketing Plan attached. Ald. Straza stated that the City may wish to reconsider the ordinance regarding signage on LaGrange Road. Ms. Paul stated that one of the topics for the Ad Hoc Committee is the type of signage that will allowed in the development, which may eventually be incorporated into the City ordinance. Ald. Straza stated that Countryside is much stricter than other communities.
Ms. Paul stated that she and Mr. Fitzgerald need to update the committee on certain issues that have arisen. She provided numbers for potential users on the site – estimated collection of TIF tax revenue – sales tax, restaurant tax for each of those presented tonight – Texas RoadhouseChick-Fil-A Granite City Brewery
Yearly $116,000 $126,000 $152,000 = $394,000
Yearly average and $2.3 million over 20 years; the TIF actually extends 24 years. The tax stream comes into play for the price of the property. Treas. Jasinski stated that the 1% restaurant tax is huge; if that ever is lost, the numbers shrink down considerably. The City should have a backup plan in case that ever happens – ability to collect sales tax elsewhere.
Mr. Fitzgerald stated that the sanitary sewer pipelines were designed with the greatest economic benefit to the City. He stated that the lines were tied into the South Lyons Sanitary District (SLSD) sewer on Joliet Road with stubs to future restaurant locations throughout the development. Mr. Fitzgerald explained details on the site plan map. In getting the permit from MWRD, part of the review process involves getting SLSD’s signature on the permit. SLSD wants the City to redesign the entire sewer system mostly for their own benefit. They claim that the sewer on Joliet Road has infrastructure problems, not a capacity issue, but they want the City to tie off into LaGrange Road at a depth of 18 feet — this involves very convoluted redesign problems, rerouting their sewer into the City Center Development and utilizing the City sewer so they can abandon their sewer on Joliet Road. They are holding the permit hostage until we come to some terms with them. The City has no interest in paying for this additional work. If their Board approves the cost for the change within one week, Mr. Fitzgerald will speak to Schwartz Construction and their subcontractor, Suburban General, to come up with the price for a new design; if SLSD wants to pay, it is a benefit for everyone.
This is a massive expense that is not needed just for this development. Mr. Fitzgerald wants City officials to be aware of this problem. Ald. Straza stated that SLSD wants the City to pay for their inability to keep up their infrastructure. What is the next step? SLSD is having a Board meeting tonight and voting on whether to sign the permit. For them to take advantage of the City’s development and insist on replacing their infrastructure, is unfair; if they pay for it, the City has no objection. The City has lowered the sewers by three feet from the original design to accommodate the outlots. Mayor Krzeminski stated that Mr. Fitzgerald should come up with a cost estimate and they have to pay the difference; that is what’s being proposed. There is probably 500 feet of pipe in the new design that is not needed for the development; just pickup flow from offsite – let alone the connection on LaGrange Road -probably a $50,000 to $100,000 venture. This is not a unit cost contract; it is a lump sum and must be negotiated with Schwartz, whatever that number will be. Ms. Paul stated if the City doesn’t get the money, it will return to the original plan.
There being no further business to discuss, Ald. Jasinski moved to adjourn the meeting, seconded by Ald. Pondelicek and carried unanimously.
Chairman McDermott declared the meeting adjourned at 7:05 p.m.
ALD. SEAN MC DERMOTT, CHAIRMAN