Developer renews request for Wheeling board bailout funds

An attorney for developer Mark Smith made a desperate plea to the Wheeling Village Board Monday night for money to keep the bank from foreclosing on Smith's Prairie Park project.

The request comes nearly two months after the village board refused to give Smith an additional $3 million to help pay off bank loans to build Prairie Park.

The village paid Smith $3 million in 2003 through tax increment financing, or TIF, revenues to build the 306 high-end condo units in five buildings along North Wolf Road.

With this latest pitch for funding, Smith upped the request asking the village board for anywhere from $3.7 million to $5.7 million to complete unfinished work on the project.

"We really are the victims of cash flow and access to capital," Smith's attorney Paul Nicolosi said. "What we need is to find some additional liquidity to put into the project."

MB Financial Bank has issued default notices to Smith Family Construction for the $27 million in outstanding loans taken out for construction.

Nicolosi asked village officials to consider issuing TIF revenue bonds or authorizing a redevelopment note to reimburse Smith for TIF eligible costs already incurred. Smith has spent $22 million toward TIF eligible redevelopment costs on this project, he said.

Nicolosi said the funds would be used to complete all remaining infrastructure and roadwork on the project, finish the interior of the 80 unsold units and construction of a club house, and pay property taxes on those 80 units and related association dues. The money would not be used to pay off bank loans, he added.

Trustee Robert Heer said the village should do what it can to help the project succeed.

"I think the people that live there (Prairie Park) obviously need to have this project completed," Heer said. "I think we need to move forward on this and explore this option at this time."

The village board voted 4-1 authorizing staff to work with Smith to get a third party consultant to analyze the viability of his project and its sales projections.

Trustees Heer, Dave Vogel, Dean Argiris, and Ken Brady voted for the analysis, Trustee Pat Horcher voted against it, and President Judy Abruscato abstained because she is employed by MB Financial.

Brady and Argiris later denied a rumor spread by an online blog that day accusing them of accepting money from Smith for their votes.

"This has been turned over to the village attorney," Brady said asking for an investigation into the blog. "My integrity, my honesty and my principles are being put on the line here. I've never ever stole money."

Argiris' only comment on the rumor was, "I've got nothing to worry about."

He supports the idea of using TIF revenue bonds to finance Smith's project, as has been done in past redevelopment projects such as the Westin Chicago North Shore Hotel off Milwaukee Avenue.

Unlike general obligation bonds, TIF revenue bonds are not backed by the full faith and credit of the village and cannot be repaid through general fund revenues. They are repayable only through TIF funds and other revenues generated from the project itself, such as sales tax, user tax, food and beverage tax and hotel tax, Argiris said.

"The risk is to the bondholder," Argiris said. "It's no risk to the village taxpayers. It's a great tool out there."

Horcher said Smith already has received too much funding and has not delivered on past promises nor met milestones set by the village.

"He's already told us that he's not going to build the fifth building," Horcher said. "The clubhouse was supposed to be built after the second building."

Horcher said there is no guarantee Smith will meet the village's requirements.

"We had that and it didn't work," he said. "It's another request for the same money, except this time it's going to cost us more."