Oak Lawn taxpayers were left holding the bag on a $35 Million dollar no bid deal, recommended by the Village Manager, in which the Village gets only $6.5 to $7 million while the developers will walk off with $28 million despite the Village’s equity investment being at least six million dollars more than the amount of the developer’s investment.
The Oak Lawn Village Board voted to approve a sale of the Stony Creek Promenade property, featuring Mariano’s, and the lucrative land lease at a $24 million dollar loss despite never providing documents showing how much the developer, Hamilton Partners, will ultimately reap from the sale. Matt Welch, the TIF attorney said that Hamilton Partners invested $25 million dollars. Hamilton Partners reportedly recommended the deal and found the purchaser, Bentall Kennedy, one of the largest Real Estate Investment Advisors in North America. Hamilton will continue to manage the property and be paid by the purchaser.
Bentall Kennedy has agreed to pay the Village only $6.5 million dollars for its rights to revenue under a land lease and the underlying property owned by the village. Oak Lawn has invested between $30 million dollars and $31 million dollars into the property and that property was recently appraised at $41 million dollars, according to Matt Welch the Village’s TIF attorney. The amount could increase from $6.5 to $7 million.
Despite the fact that the Village of Oak Lawn has reportedly invested almost $31 million dollars into the development and Hamilton Partners, the developer, has invested about $25 million dollars, the village will receive only $7 million while Hamilton could receive as much as $28 million dollars. Documentation of the exact amount of the Hamilton Partners investment was not provided to the board or to the public despite requests by Trustee Robert Streit (District 3) for more information.
Trustees voted 4-1 Tuesday in favor of the proposed contract despite opposition to the deal from Streit, who questioned the form of the transaction and the lack of transparency surrounding the deal. Streit asked the board to delay approving the transaction until the Trustees could perform their due diligence in reviewing the documents provided only a few days ago. “The deal needs to be vetted before we decide if it is a good deal for the taxpayers of Oak Lawn,” said Streit.
Trustee Michael Carberry (District 6) said the deal is “a winner” for the village and called the transaction a “home run” despite the loss of $24 million dollars.
Trustee Terry Vorderer (District 4) said the deal is a success and will be profitable. He didn’t explain how a $24 million dollar loss should be considered a success or when it would be profitable since the village owes a bank $24 million dollars on a note for the deal.
Trustees Tim Desmond (District 1) and Alex Olejniczak (District 2) voted in favor of the sale without any comment. Trustee Carol Quinlan (District 5) was absent.
Trustees were provided no documents on the transaction at a meeting just one week ago and were reportedly forced to return the presentation materials prior to leaving the meeting a week ago. This past Friday, the board members were provided some documents in their “board packet”. However, the information did not include any information regarding the funds being paid to Hamilton Partners, the developer of the site.
A source within the Village of Oak Lawn administration pegged Hamilton Partners payment at $28 million dollars. Matt Welch confirmed that figure Tuesday night.
Streit said that without seeing the exact amount that Hamilton invested and is now being paid, it is difficult to answer whether the Village is making a good deal on the property. “On the face of it, with the village investing $31 million dollars and only receiving, at the most, $7 million dollars back, it sure screams out at us to take a closer look before we lose $24 million dollars of taxpayers’ money,” said Streit who urged caution and further study.
Last month the Village of Oak Lawn’s auditors announced that the village had written off $6 million dollars on the valuation of the property. The Village must also pay off a $24 million dollar bank note connected to the property. Village Manager Larry Deetjen had asked for approval of the sale noting that the village will still receive sales tax and property tax revenues from the property. Welch mentioned the same factors when asked by Streit what the village is getting out of the deal.
However, Streit said that the receipt of sales taxes and property taxes is “irrelevant” noting that the village would receive that money in any case. Welch confirmed that the property taxes and sales taxes would go to the village regardless of who owns the property.
Streit said the sale should have been based on fairness to the taxpayers and suggested that the split should have been based on the equity investments like any partnership.
“When we envisioned this development it was with the idea of the village’s taxpayers receiving a windfall not the developers,” said Streit.