Wheeling developer needs $2 million to finish project

Gary Levitas said he needs more than $2 million from the village of Wheeling to finish his townhouse project along Wolf Road.

However, both the village attorney and the village’s tax increment financing consultant have concerns about granting his request.

“The worst case scenario is that the project fails and the property reverts back to the village,” Village Attorney Jim Ferolo at last Monday’s board meeting. “Then you would have to market it to another developer. It could end up in litigation.”

Levitas started the Millbrook Pointe townhouse project at 431 N. Wolf Road two years ago. He’s built 26 units so far and 20 of those are either sold or under contract. He wants to build another 34 units, but needs the funds before he can get started.

More specifically, he needs $2.7 million, with $900,000 of that upfront, so he can buy the land from the bank.

“I’d like to get rid of the bank so I’d own the land free and clear,” Levitas said. He said the village can give him the remaining money as he sells the townhouses, which are priced between $269,000 and $399,000 for three- and four-bedroom units, so that would be money generated by new property taxes from the development.

If this story sounds familiar, it’s because last year the village board approved giving the Smith family $6 million in tax increment financing funds, bringing the village’s total contribution to Prairie Park up to $10.5 million. The final $3.5 million of that deal also had a performance-based clause, meaning the money will only be issued as Smith sells new units.

Is Levitas familiar with the Smith deal? You bet. In fact, his project is kitty-corner to theirs.

“I don’t think the village wants a half-finished project,” Levitas said.

“That’s not going to do anyone any good. The village wants this finished and the people that live there want it finished.”

Like Prairie Park, Millbrook Pointe is in a tax increment financing district.

In a TIF, additional property tax money generated by new development goes to pay for expenses associated with the development instead of going to schools, parks and village government.

Typically, before a development starts, the village will sign a contract with the developer committing money as an inducement to encourage proceeding with the project.

Prairie Park had such an upfront deal, but later the Smiths said they needed additional funds to complete the project because of the collapse of the housing market.

Levitas didn’t request any funds before starting the development, but he argues the money he is asking for is covered by property taxes his development paid into the TIF district’s coffers.

“The amount of taxes that have already been paid from Phase One more than cover this,” he said.

However, because the village didn’t budget him any TIF funds, the money is not available without transferring funds from other village TIF districts, village Finance Director Michael Mondschain said.

That’s a problem, according to some trustees, who didn’t make a decision on the funding last week.

“I’m pretty sure we’re going to run out of Peters to pay Pauls,” said Trustee Patrick Horcher.

“It’s difficult with this kind of financial dominoes.”

Trustees Robert Heer and Ken Brady agreed.

“It’s too risky,” Heer said. “I would consider something that is only performance-based, but that doesn’t seem to be an option.”

“God forbid something were to happen,” Brady added. “We would be the developers.”

Robert Rychlicki, executive vice president of TIF consultant Kane, McKenna and Associates, told trustees “there is risk associated” with the proposal.

“The housing market is not the strongest sector right now,” Rychlicki said.

Village President Judy Abruscato abstained from the discussion because her employer, MB Financial, is involved with the project’s financing.