Lake Zurich looks at plan to reignite downtown development

Lake Zurich’s village administrator on Monday outlined a preliminary, three-phase strategy that may be used in an effort to land a developer for a long-stalled downtown project.

Village Administrator Bob Vitas said what Lake Zurich won’t need to do is start from scratch, because there are different plans that can be used.

“What do we do when the truck doesn’t show up and there is no money to make the project go?” Vitas asked.

Lake Zurich’s downtown is once again on the front burner in the wake of developer David Smith and his Equity Services Group’s recent departure. Smith’s inability to deliver $12.5 million in funding by Jan. 1 opened the door for a different firm to take over the project.

Downtown Lake Zurich was declared a tax-increment financing district in 2002, meaning property taxes to local governments are frozen so any new tax income could go into development. However, because the project stalled, the income isn’t there. Vitas said there has been developer interest in some aspects of the project, particularly the unfinished Somerset townhouse development.

Lake Zurich’s current debt on the downtown project, including interest, is about $28.3 million. Officials said some of those loans will come due in the next few years.

As part of the preliminary strategy he presented Monday, Vitas said an evaluation of the village’s financial conditions must happen first for Lake Zurich to forge ahead with the downtown project this year. He said initial consulting services would be paid on a flat-fee basis.

When Lake Zurich is ready for the second phase, Vitas said, the village must attract highly qualified and well-capitalized developers with proven, successful track records. Such developers must match the village’s vision and financial needs.

In the third phase, Lake Zurich would execute developer agreements. Responding to Trustee Tom Poynton, Vitas said part of that will be to get the word out that Lake Zurich is “open for business,” adding that Lake Zurich is competing with other Illinois communities for downtown revitalization.

Poynton said it may be worth discussing developer incentives.

“What do we want to give away to get things developed?” he said.

Smith’s inability to make the payment by the deadline already extended from September 2010 essentially voided the deal he’d struck with Lake Zurich officials. At a meeting in January, the village board listened to Smith ask for an additional extension until the end of the month, but trustees opted to show him the door.

Vitas told village board members he’d welcome their input on strategies to ignite the downtown redevelopment strategy.