Title
title
A Resolution Approving an Economic Incentive and Redevelopment Agreement Between the Village of Oak Park and 1144 Lake Street, LLC and Authorizing Its Execution
..end
Introduction
overview
This is a resolution approving an economic incentive agreement with 1144 Lake Street, LLC
end
body
Recommended Action
Staff recommends that the Village Board approve the economic incentive agreement.
Prior Board Action
On September 6, 2022 the Village Board approved an economic incentive agreement with 1144 Lake Street, LLC. for a new grocery store - Dom’s Kitchen & Market. The Dom’s Kitchen & Market grocery store did not move forward.
Background
Village staff and the Village’s Consultant conducted an Economic Impact Analysis to determine the feasibility of an economic incentive agreement in which the Village would provide a sales tax rebate to the developer for the municipal and home rule sales taxes generated by a new Barnes & Noble bookstore. The Landlord plans to initially undertake over $4.0 million in extraordinary renovation costs on the nearly 100-year-old building. This includes hard costs of $2.6 million and soft costs of $1.4 million. This does not include the build-out costs to be paid for by Barnes & Noble. The Village would retain 50% of the sales tax revenues and rebate 50% of the sales tax revenues for the first 20 years. The property has been vacant for over 12 years and has not generated any sales tax revenue. The extraordinary costs to bring the building up to current building standards will allow the space to be productive again for Barnes & Noble or any other retailer in the future. The economic incentive agreement will provide the landlord with a sales tax rebate not to exceed $2.0 million.
The Village Board previously approved an economic incentive agreement with 1144 Lake Street, LLC., for the Dom’s Kitchen & Market grocery store. One of the primary Village Board goals is to reduce retail vacancy in the Village’s business districts and enhance sales tax revenue generation. The redevelopment of this landmark building in the Downtown Oak Park business district will bring a new nationally-recognized bookstore to the district and expand the Village’s trade area for miles outside the Village. The Village Manager’s Office, Office of Economic Vitality, Development Services, Neighborhood Services, and the Legal Department have all been working together to assist with the revitalization of this property. The new bookstore will create cross-shopping opportunities for other retailers, restaurants, and services in Oak Park. Barnes & Noble will employ approximately 60 new part-time and full-time employees. There are also multiplier impacts of the new retail sales, part-time and full-time permanent employee wages, as well as full-time and part-time construction wages. These new revenues are recycled into the local economy. The Office of Economic Vitality and the Village’s consultant also conducted an economic impact analysis of the redevelopment.
Timing Considerations
1144 Lake Street, LLC. plans to deliver a “vanilla box” to Barnes & Noble by November 1, 2025. Barnes & Noble would then require approximately five months to build out the space to their specifications. Barnes & Noble hopes to open by May 1, 2026.
1144 Lake Street, LLC. is concurrently pursuing a Landmark Designation for the property from the Historic Preservation Committee (HPC) and the Oak Park Village Board. If the Landmark Designation is approved, the landlord plans to apply for a Cook County Class L classification, which would reduce the assessment level for 12 years and allow the landlord to renew after 12 years, given the age of the building.
Budget Impact
The property is not currently generating any sales taxes and has not done so for over 12 years. The property is not generating the maximum property tax revenue since the property has been vacant and is receiving vacancy relief from the Cook County Assessor. The Village would rebate 50% of the sales tax revenue generated for 20 years.
Staffing Impact
Village staff has spent approximately 120 hours analyzing the project’s economic impact and negotiating the economic incentive and redevelopment agreement. There will also be staff impact to process the landmark designtation/Class L incentive initially, as well as the sales tax rebate on an annual basis. This item aligns with the department’s core service delivery.
DEI Impact
The DEI impact will be enhanced by the Village collaborating with Barnes & Noble and other stakeholders to help hire local residents, minority applicants, and veterans.
Community Input
There has been no community input given in relation to this item.
Staff Recommendation
The Office of Economic Vitality recommends approval of the economic incentive agreement in order to revitalize a vacant and underutilized historic building in the Village’s Downtown District. The economic incentive agreement will provide the catalyst for the landlord to undertake over $4.0 million in extraordinary renovation and rehabilitation costs for the HVAC, plumbing, underground vault, retaining wall, electric system, elevators, sprinklers, fire alarms, and many other improvements. The new Barnes & Noble store will create approximately 60 new part-time and full-time positions.
Advantages:
• The economic incentive agreement will provide a revenue stream for the Village in terms of sales and property tax revenue.
• The economic incentive agreement will eliminate a 25,000 square foot vacant store in the Downtown District, jumpstart leasing efforts in the district, and create cross-shopping opportunities for other retailers, restaurants, and professional services in Oak Park.
• There will be multiplier impacts of all the wages and salary income from construction jobs and full-time and part-time permanent jobs created by Barnes & Noble.
Disadvantages:
• The Village will have to rebate 50% of the sales taxes in the first 20 years.
• Barnes & Noble may impact other Oak Park bookstores.
Alternatives
Alternative 1:
The Village Board can elect to deny the Economic Incentive Agreement.
Advantages:
• The Village would retain 100% of the sales tax revenue.
• The Village could utilize the sales tax revenue for other needs.
Disadvantages:
• The landlord may decide not to move forward with the redevelopment.
• Barnes & Noble or another retailer may not lease the space.
Alternative 2:
The Village Board could delay action and request additional information in the future.
Advantages:
• The Board would be provided with the additional requested information.
Disadvantages:
• The project would be delayed.
Anticipated Future Actions
The landlord is also applying for a Cook County Class L property tax incentive. The landlord will require approval of a resolution for the Cook County Class L designation from the Village Board that will require ultimate approval from the Cook County Board.
Prepared By: Village Manager’s Office of Economic Vitality - John C. Melaniphy - Assistant Village Manager of Economic Vitality
Reviewed By: Jack Malec, Assistant to the Village Manager
Approved By: Kevin J. Jackson, Village Manager
Attachment(s):
1. Staff Memo Sales Tax Sharing Agreement
2. Bakertilly Economic Impact Analysis
3. 1144 Lake Street Economic Incentive Term Sheet
4. Resolution