Lake Zurich hires developer to revise downtown plan

The Lake Zurich village board Monday night approved hiring a development coordinator and an architect to revise and update the village's downtown redevelopment master plan that officials say is outdated and incomplete.

Officials made a deal with Barrington-based developer David Smith's Equity Services Group to revive the redevelopment effort and projects that have been dead for many months.

Several residents attending the standing-room-only meeting argued the village could be getting into a cozy relationship with Smith that could later become a conflict of interest when the developer proposes projects for village approval.

Robertson Avenue resident John Thode, a member of the Lake Zurich Citizens for Responsible Development, asked village officials to reconsider the deal and take their time with any agreement to protect the village's interests.

"It creates too much leverage for Mr. Smith and puts the board in an extremely compromising position," Thode said.

Smith's current proposal targets 5 acres known as Nestlerest Park off Robertson Avenue along Lake Zurich's southern lakeshore. The concept plan calls for 110 condos with an underground parking garage for 240 cars surrounded by roughly 35 large-lot, single-family homes.

In approving the deal with Smith, the village board put a condition that the developer not yet go forward with the Nestlerest proposal, which is not within the downtown redevelopment area. Village officials did not specify how long he should hold off.

The contract was approved 4-1 with one abstention.

Under the agreement, the village would pay ESG a $50,000 fee to serve as the village's development consultant for four months. ESG would then front $226,000 to hire Maryland-based architects Torti Gallas & Partners to review and revise the downtown master plan, identify primary redevelopment projects within the revitalization area, and create a timeline and set a target date for beginning those projects.

The aim is to start the first redevelopment project before Jan. 1, 2009.

Though Smith is absorbing all upfront costs, the village will repay the developer by later establishing a development impact fee that would get tagged on to every future redevelopment project. The village would have to pay a 4.5 percent interest on funds borrowed from Smith.

Village officials say their best option is to make a deal with Smith because they have no money left to fund new projects or for revising the master plan. A special taxing district established to fund downtown redevelopment isn't generating enough funds to cover payments on the village's roughly $27 million debt.

"It's the best deal we've ever gotten on the downtown," Lake Zurich Mayor John Tolomei said in response to criticism that the village had not asked other developers to bid for the deal ESG was awarded.

Tolomei said other developers that came forward expected the village to subsidize their projects.

Several residents opposed to Smith's proposal for two five-story condominium buildings on the lakefront, outside downtown, again voiced their concerns Monday.

Thode also warned the village against opening itself up to potential litigation with its former master developer, McCaffery Interests of Chicago, who had the sole right to develop all seven phases of downtown.

The village decided late last year to sever ties with McCaffery, citing breach of contract.

Trustee Craig Taylor asked residents to divorce the Nestlerest proposal from the agreement officials made with Smith Monday, saying the two are separate issues.

Under Monday's agreement, ESG and Torti Gallas would jointly develop and recommend architectural standards for the village that would provide an aesthetically consistent approach to the development of properties within the "redevelopment zone."

Smith said in a telephone interview Monday he did not believe the deal gives him an advantage over other developers when it comes to downtown proposals.

He said ESG's role was to "help weigh in on the financial ramifications."

"When I looked at the situation and saw frankly how dire it is, I recommended, if (the village) were interested, to have Torti Gallas come to Lake Zurich and in effect to challenge the town to the possibilities that are there, if they are courageous enough to step up," he said.

If the revised master plan is adopted by the village, Smith would have the exclusive right to negotiate with the village on any downtown parcel he chooses to redevelop for 18 months. That includes an exclusive right to propose projects for the village-owned site across from the lakefront promenade and other key downtown parcels.

The agreement requires Smith to submit specific development plans within the first 6 months for village review and approval or risk losing that exclusive right.