‘Committed to seeing it through’: Vernon Hills inks amended deal for Hawthorn redevelopment
Estimated costs have nearly doubled and the timeline has been extended, but Vernon Hills officials and owners of the Hawthorn mall property say they are committed to seeing the massive redevelopment project through.
To that end, the parties have been working the past six months on a third amendment to the 2021 agreement to redevelop the mall. The revised pact, approved last week by the village board, incorporates the latest plans, schedules and a reworked incentive package.
While the project has not proceeded as quickly as envisioned, there is an upside to sticking with the process, according to Village Manager Kevin Timony.
“I think the silver lining in all this is that we still have a developer that is committed to seeing this project through, and in year seven is still here with us trying to get this project done,” he explained to the village board.
The changes were prompted by a jump in the investment needed to transform the 1970s-era mall into a mixed-use development including about 600 luxury apartments, new retailers and restaurants, and other features. The original $252 million cost estimate has jumped to $491.5 million.
The landscape is different from in 2019, when Dallas-based Centennial Real Estate publicly introduced the redevelopment plan during an open house at the now demolished Carson's anchor store.
“We've had quite a bit happen not just locally but globally, and a lot of those things have had adverse impacts on this project and its timeline,” Timony said.
Among them are the coronavirus pandemic, inflation, rising interest rates and oil prices, tariffs and increased costs of material and labor, he said.
As part of the amended agreement, the village's stake will also increase from $43 million to a maximum of $64 million in proceeds from the special financing district created in late 2020 as an incentive for the project. In that district, property taxes paid to local governments are frozen at 2020 levels, and added tax revenues generated by rising property values go to a separate fund to help pay for improvements.
However, a $7.5 million sales-tax sharing feature in the original incentive package has been canceled, and the village's share of the total investment has decreased, Timony said.
The amended agreement reflects plans approved by the village last fall that included a new Phase II divided into two parts. The first calls for 64,500 square feet of outward-facing retail space; two new mall entrances and related work; plaza, road and parking improvements; and 46 townhouses for rent.
The second part includes 280 to 290 apartments; about 37,290 square feet of retail/commercial space; and a mixed-use parking garage.
A third phase involves about 12,000 square feet of retail/commercial development on an outlot facing Route 60.
To date, a 311-unit luxury apartment complex called The Domaine, the Hawthorn Row retail space, and two restaurants along Route 21 have been built as part of Phase I.
Timony said the agreement “protects the village’s financial interest while also providing the necessary incentives for the developer to see this project through.”
mzawislak@dailyherald.com