Forest City Sugar Grove development on hold, maybe permanently

For the second time in 19 months, a major development in Sugar Grove is on the brink of being shelved because of infrastructure costs.

An official with Forest City Commercial Group said the company did not renew its option to buy land for a proposed 211-acre development - that calls for 1 million square feet in retail - and might nix the project.

"We're still trying to figure out how much we'll need to make modifications of Route 47 and Galena Boulevard," Jerry Ferstman, vice president of the development group, said last week.

"At this point, it doesn't seem like IDOT (the Illinois Department of Transportation) has much funding. We don't have a clue as to what road improvements will cost. How to pay for it is the real conundrum."

News of the possible loss comes after Neumann Homes decided not to go ahead with a 975-acre residential and commercial development because of the cost in infrastructure needs and impact fees. The village learned of that decision in March 2006.

In addition to the retail space, Forest City proposed a municipal area that included a movie theater and about 500 apartment and condominium units. The development would have been bordered by routes 47 and 56, and Galena Boulevard.

"It's a matter of timing with the housing slowdown," said Sean Michels, village president. "We need more rooftops for a project of this size, and more development in the surrounding communities."

"We are still working hard to keep them interested," said Perry Clark, director of the Economic Development Corporation in Sugar Grove. "Right now I consider the project to be on life support.

"We need solid numbers from IDOT for the entire region, and a state that is willing to help with funding. Infrastructure improvements are good for the economy, but it seems to be last on the list of priorities for the state.

"Fortunately, time is on our side with the downturn in the housing market," Clark said. "But I expect that it will pick up in late 2008."

The possible scrapping of the project is especially surprising considering the Cleveland-based real estate company paid a public relations firm to push a referendum on a proposed tax hike that they had requested.

Voters approved a 1 percent sales tax hike last November that was enacted by the village board in March. The state began collecting the tax for Sugar Grove July 1.

The village projected that the additional revenue could be as much as $3 million a year, but that figure is based on expanded retail.

Sugar Grove finance director Justin VanVooren said the additional 1 percent will bring in about $350,000 more per year based on past receipts.

At a March board meeting, village trustees disagreed on whether the increase was earmarked strictly for the Forest City project, but VanVooren said the tax was meant for the improvement of all infrastructure. The village board recently approved using the additional revenue to extend Municipal Drive and Galena Boulevard, which is miles from the proposed Forest City project.

Forest City let its option to buy the land expire in mid-summer. The company is negotiating to see if the land can be bought and held by another company, which in turn will sell it to Forest City at a later date. According to Ferstman, this would prevent the company from owning a "non-producing asset."

Ferstman also said "it's a possibility" that another developer will purchase the land.

"The property is well-positioned and crying out for commercial development," Ferstman added. "I still see the glass as half-full."

The village has hired a consultant to complete a study of what road improvements would be needed. The study will be submitted to IDOT fo