Freeport, Illinois — It appears another dormant downtown Freeport building may be getting a slight makeover soon. At least that’s according to Resolution #R-2017-60 of the City of Freeport that states a redevelopment agreement, regarding the vacant downtown property located at 223 S. Chicago Avenue, has been reached between the city of Freeport and a company called Chicago Port Authority, LLC.
An agenda item appearing on Monday November 6th’s Freeport City Council meeting listed Resolution #R-2017-60, a 20 page resolution and agreement to approve the use of TIF funds and the City’s Revolving Loan Fund to fund a development project in downtown Freeport.
While at the beginning of Monday’s council meeting for unknown reasons the agenda item for Resolution #R-2017-60 was taken off the November 6th agenda, according to items in the agreement the city is considering utilizing $156,000 of downtown TIF funds plus $208,000 through a grant from the City’s Revolving Loan Fund to support the project.
The resolution states;
“Developer has represented to the City that, but for tax increment financing, the Developer Project would not be economically viable. The Parties agree that TIF, implemented in accordance with the terms and provisions of the Act and this Agreement, will be a source of funding for the Developer Project in order to make the Developer Project economically Viable.”
What is the project?
At this point, sources have told us that the project is for the development of a boutique motel. A boutique motel is a small hotel which typically has between 10 and 100 rooms that began appearing in the 1980’s in major cities like Paris, London, New York, and San Francisco.
In May of 2017 WIFR reported that Rockford’s first boutique hotel was opening up in downtown Rockford. It was stated that the hotel would have 47 rooms, a restaurant and bar, and outdoor patio area, plus in the winter, outdoor ice skating rink.
While we haven’t confirmed with a representative of Chicago Port Authority, LLC a boutique motel/hotel is what’s in the works here, we do know some of the work proposed as part of the agreement to use $364,000 of public dollars.
As part of the grant from the City’s Revolving Loan Fund, the costs of the demolition work, sandblasting and concrete work, electrical utility relocation of poles/lines, down payment on elevator, Phase 1 environmental
study and architectural design portions of the Developer Project are estimated to be approximately $208,000.00.
In the agreement the City agrees to pay to the Developer the $208,000.00 after either one of the below, occurs. Those are;
1) full execution of their Agreement or
2) closing on the purchase of the Property.
While perhaps a creative and widely accepted community development strategy we don’t know, it appears Chicago Port Authority, LLC doesn’t actually own the building located at 223 S. Chicago Avenue. At least not yet anyway.
The additional money coming from downtown TIF funds is for the costs of the exterior windows and doors repair/replacement, roof repair, 2nd ﬂoor deck repair and 3rd ﬂoor egress improvements portions of the Developer Project. Those estimates were to be approximately $156,000.00 as set forth in the agreement.
All told it’s a $364,000 deal in the works on a downtown Freeport building we hadn’t noticed on a city agenda prior to November 6th. A deal which made it all the way to the floor of Freeport City Council for signatures on a building that isn’t yet rightfully owned by the Developers, and not much is being said about it by anyone.
While there may be nothing wrong with that at all, curious, we wanted to know who the Chicago Port Authority people were. Never hearing of them until now and then learning they are interested in our community to the tune of $364k on one of our old buildings, we did some simple digging and found that the Chicago Port Authority is an Illinois LLC formed on October 11, 2017. The agent of the limited liability corporation is listed as Gregory T. Mizen out of Naperville.
Two others are listed as managers of the LLC and those are Rocky Zuberbuhler of Freeport and Kurt Richardson of Rockford. We did reach out to Rocky Zuberbuhler who hadn’t responded as of the time of this report.
According to publicly available documents the City would pay the newly formed Chicago Port Authority, LLC $156,000.00 on May 1, 2018. Such payment would be deposited into an escrow account (held by the City) to be drawn upon by the Developer.
The $208,000.00 could be more immediate such as by the execution of the Agreement between the city and Chicago Port Authority, LLC, or when the closing on the purchase of the Property occurs. We can only presume closing might hinge on the city’s signature of approval on an established agreement between the parties.
What is Tax Increment Financing.
Tax Increment Financing (TIF) is a means by which cities, towns, and villages may achieve a level of community and economic development. A TIF District’s revenues (“tax increment”) come from the increased assessed value of property and improvements within the District.
The City, by Ordinance No.’s 94—64, 94—65 and 9466 adopted by the City Council on September 6, 1994, approved the Redevelopment Plan and Project, designated the Redevelopment Project Area, specifically entitled the Downtown Redevelopment Project Area, and adopted tax increment financing for the Redevelopment Project Area.
Once a TIF District is established, the “base” assessed value is determined. As vacant land and dilapidated properties develop with TIF assistance, the equalized assessed valuation (EAV) of those properties increases. New property taxes resulting from the increased assessed valuation above the base value create an incremental increase in tax revenues generated within the TIF District.
The “tax increment” created between the “base” and the new EAV is captured, deposited into a special city TIF account and used solely for economic development.
At Monday November 6th’s city council meeting no indication was made as to when Resolution #R-2017-60 might come up on the agenda again. A source close to the story who had learned of #R-2017-60 told us when they noticed the item on the agenda, “I made sure I appeared at city council”.
“I signed up to ask questions on agenda item 14. Two minutes later they announced on the speaker it was being removed.”
We reached out to Freeport City Manager Lowell Crow, Rocky Zuberbuhler of Chicago Port Authority, LLC and Andrew Chesney, Alderman at large of the city of Freeport for additional comment on Resolution #R-2017-60.
Only Andrew Chesney responded to our request, who directed us to reach out to Freeport City Manager Crow. (see below)
You can read the entire resolution and all supporting documents below.
[pdfviewer width=”100%” height=”900px” beta=”true/false”]http://www.freeportnewsnetwork.com/wp-content/uploads/2017/11/R2017-60-Redevelopment-Agreement-Regarding-Property-Located-at-223-S-Chicago-20171106.pdf[/pdfviewer]
UPDATE: Nov. 9 12:40 pm. We did receive a response from Freeport City Manager Lowell Crow who informed us the RDA was taken off the agenda until the next meeting because of concerns with the project. Crow stated they are still in negotiations with the developer.