Agreement on $46.5 million village incentive makes Hawthorn Mall redevelopment official

The planned $252 million transformation of Hawthorn Mall in Vernon Hills will kick into high gear now that a redevelopment agreement outlining $46.5 million in village incentives for the project has been approved.

The deal with Dallas-based Centennial Real Estate began more than two years ago when CEO Steven Levin made an impassioned presentation to Vernon Hills officials pitching sweeping changes to reverse the slide of the 1970s-era mall.

He returned Tuesday night with a team of top executives to personally witness the vote and thank village officials for their support of what he and Mayor Roger Byrne described as a historic occasion.

"I can assure you and I promise you that with your support and what we are committed to do, that we will make you proud," Levin said.

"People will look at what has been done at Hawthorn in Vernon Hills as one of the best projects in America. I believe that in my heart of hearts," he said.

To do that, Centennial is pursuing "Hawthorn 2.0" - a mix of retail, dining, entertainment and hundreds of apartments in two buildings flanking a new Main Street-type entry at the site of the former Sears anchor store.

But it couldn't happen without village help, Centennial contended. That involved designating much of the mall property as a tax increment financing district to provide an economic incentive.

In a TIF district, property values are frozen, typically for 23 years. Property tax revenue generated above that point by an increase in land value goes into a special fund to pay for improvements within the district.

"This is the formalization of all the terms. Everyone has been pushing to get this done," Village Manager Mark Fleischhauer said Wednesday.

"It's good to finally put an exclamation point on it," he said.

The 60-page agreement outlines conditions, schedules and obligations of both parties.

It calls for $43 million in incentives for new construction. The balance of $3.5 million replaces a sales tax incentive with the mall's previous owner, which resulted in the addition of a 12-screen AMC theater and Dave & Busters to the mall.

This is the village's third TIF district. Unlike the other two, in which the village provided upfront money through bond issues, Centennial will get paid only as work is completed.

The project is planned for three phases. The $152 million first phase will replace the former Sears store with 313 luxury apartments, 83,343 square feet of commercial space and a 12,500-square-foot outdoor plaza.

Sears already has been demolished, and Centennial's partners, Focus and Atlantic Residential, will begin construction in earnest.

"We want to go as fast as we can," Levin said.

The village will provide $32 million for that first phase but nothing for the second phase, which calls for 249 apartments in a second building and a 460-stall parking garage.

As detailed in the agreement, the village would provide $10.75 million in incentives for the third phase, which involves the demolition or renovation of the former Carson's anchor store.

Village officials say the transformation of the 1.3 million-square-foot mall will be good for the entire area.

"The news marks a significant forward step in the center's plan for Hawthorn 2.0, a complete transformation of the shopping center that will create a modern and desirable mixed-used development combining the best retail, dining and entertainment with contemporary residential living," Hawthorn Mall said in a statement Wednesday.

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  Vernon Hills village Trustee Thom Koch speaks during a ceremonial groundbreaking event at Hawthorn Mall in March. Mick Zawislak/
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