Hanover Park strikes deal for 90% stake in strip mall
Hanover Park will join forces with a Chicago developer to revitalize a declining strip mall, a deal that will give the village a 90 percent ownership stake in the Barrington Road shopping center and oversight of more than $3 million in renovations.
Trustees on Thursday night unanimously passed the agreement, ending more than a year of negotiations with Tobin Development Corp. Through the public-private partnership, the village will finally move closer to selling Hanover Square, a 10-acre property it bought for $2.8 million about four years ago, Mayor Rodney Craig said.
“Now, we've really got something cooking,” Craig said.
After the deal officially closes, Tobin will begin an ambitious rehab. By the end of the summer, the village expects the mall to have a new facade and a new anchor.
Gymkhana, a popular youth gymnastic and dance club, will move from a Tower Drive facility — Tobin Development helped design and build it — to a 24,000-square-foot vacant space. With its high ceilings, it's been one of the toughest pieces of the mall to fill.
Tobin also pledges to improve the parking lot, add landscaping and make repairs to the roof. In the project's second phase, the developer will remodel the interiors of vacant spaces, setting the stage for new tenants.
And the company will hire NAI Hiffman, an Oakbrook Terrace firm that will act as both a property manager and leasing agent of the more than 40-year-old shopping center, where 113,740 square feet of leasable space is spread across two buildings.
Under the terms of the deal, the village and Tobin will become members of a limited liability corporation called Hanover Square LLC. As a 10 percent owner, Tobin will secure the financing for the improvements to the mall. The village contributes the equity, or the value of the property.
As a 90 percent owner, the village also gets a say in which tenants move into which spaces. Tobin must also give monthly updates to the village on its progress.
“In the beginning, I think we need to watch very closely what's going on,” said Trustee Bill Cannon, noting the village's new relationship with the company. “But the overall agreement, I think, makes lemonade out of a lemon. We went from stagnation to movement in a positive direction.”
The village is optimistic it can still sell Hanover Square and get back its original investment. Greg Hummel, the village's attorney, said the improvements will boost Hanover Square's value and make it more desirable for a buyer.
The village did seek alternatives to Tobin, giving developers until Thursday afternoon to make their pitch, required under state law governing tax increment districts, where property taxes that are generated above a certain point are funneled back into development rather than to local governments. Hanover Square sits in one.
In the eleventh hour, Dino's Inc. offered to buy the northern section of the mall, anchored by Dino's Finer Foods. The board swiftly rejected it Thursday night. Hummel called the proposal a nonbinding, “mere letter of intent.”
“But the most important part is that it doesn't address the shopping center as a whole,” he said.
Tobin's design plans, however, are “reasonably detailed,” he said.