Wheaton council needs more time to study apartment proposal
For the second consecutive week, Wheaton officials said they need more time to review a proposal from a Chicago-based developer who wants to build a downtown apartment complex.
But the developer is cautioning that continued delays are sapping some of the project’s momentum and raising questions among potential lenders.
The city council Monday postponed a vote on the agreement with Morningside Wheaton LLC until July 2. The proposed $60 million project calls for a six-story, 306-unit apartment complex bounded by Wesley, Scott, Front and Cross streets.
Council members electronically received a copy of a subordination agreement between the developer’s lender and the city on Monday afternoon. Such an agreement ensures that if the property is subsequently sold, the bank has first dibs on any money that would be generated.
Although City Attorney James Knippen said the city had achieved its “best negotiated position,” council members said they wanted more time to review the proposed agreement.
Councilwoman Evelyn Pacino Sanguinetti said she doesn’t make decisions “off the cuff.”
“Just because this may be as good as it gets doesn’t mean it’s going to be good enough for me,” she said.
Meanwhile, the developer has said the delays make it difficult to maintain momentum on the project. On June 18, David Strosberg, president of Morningside Group, cautioned council members that “lenders are losing faith in us.”
“Our even considering it tonight was on an accelerated schedule anyway,” Councilman Todd Scalzo said Monday. “Really, I don’t even view it as a delay.”
Council members also discussed whether the proposed pact should include a letter of credit guaranteeing the city repayment of $503,605 in upfront tax increment financing district funds if the project isn’t completed. The TIF money would be used to bury overhead utility lines at the site.
The developer wants the city to reimburse the fees associated with the letter of credit. That’s expected to cost $10,000 each year for the life of the letter. Council members said the letter of credit should expire when the city issues the last temporary occupancy permit for the building.
Councilwoman Jeanne Ives opposed reimbursing the letter of credit fees with TIF money.
“That should be done anyway,” Ives said of the utility work. “That’s a good public improvement for that site regardless of what happens after that point.”
Most council members wanted some form of security for the upfront TIF money. City Manager Don Rose said staff members will continue talks with the developer on possible alternatives to the letter of credit.
Early last month, the council unanimously directed staff members to prepare an agreement with Morningside to supplement the proposed project with $1.3 million in TIF money.
The roughly $500,000 in upfront TIF money would cover utility work. The city would provide the remainder of TIF funds after the developer obtains the occupancy permit for the building. That money would be used for landscaping, sidewalks and street improvements.
Tax increment financing districts are designed to capture increased property tax revenues from redevelopment. The funds are earmarked for improvements within the district instead of going to taxing bodies such as schools and parks.
Ives said she will be absent from the July 2 meeting, but announced her support for the project.
“We have concrete items that we can point to and say, ‘Our TIF dollars went to improve the landscape of our downtown and make it more attractive and inviting to residents and other businesses,’” she said.