Des Plaines approves redevelopment
The Des Plaines City Council on Monday night approved a new redevelopment proposal for city-owned property at the northeast corner of Mannheim and Higgins roads, just south of the Jane Addams Tollway.
The city has agreed to sell the property for $1.1 million to developer TPS Des Plaines LLC, which proposes building and operating a parking garage, as well as a restaurant and possibly a future hotel on the roughly 5-acre site -- estimated to generate between $35 million and $40 million.
The property is home to Ace car rental, a large billboard and a former TraveLodge. It falls within the city's tax increment financing district No. 6, and has been dormant for years.
The district was created in 2001 to spur redevelopment in the area east of Mannheim Road and north of Higgins Road on both sides of the I-90 tollway. It captures increased property tax revenue from redevelopment -- money that normally would go to taxing bodies such as schools -- that can be used to defray costs of redeveloping the area.
A previous proposal to build two Hyatt hotels, restaurants and shops on the site was shelved in April 2010 after the city council denied developer HNI LLC's request to extend for another year the conditional use permit and variation granted for the hotels project.
The vote Monday was 6-2 in favor of the new developer agreement with 5th Ward Alderman Jim Brookman and 6th Ward Alderman Mark Walsten opposing the deal.
Brookman said he was not satisfied with the city's selection process to land a developer for the site.
In late 2010, city officials sent out Requests for Proposals to developers interested in the site and received five proposals in April 2011 that were vetted by city staff.
"RFPs don't really work for the city," Brookman said, adding that the city has used RFPs for past projects such as Metropolitan Square. "The only real competition at all is the selection process of who the developer is going to be. After that, the negotiation is done in private. No one knows what they are offering, and there is no real competition."
Brookman suggested the city use a more open process and lay proposals out for the public.
"When the city bid for the 10th casino license, there was real competition," Brookman said. "That's what I would like the city to do in the future. We need to find a process where there is actual competition between developers, between buyers so the city gets the best deal for the residents."
Acting City Manager Jason Slowinski explained the RFP process, saying each of the five developers submitted sealed bids that included competitive pricing.
Mayor Marty Moylan said the city staff recommended the best proposal of the five and the city council authorized negotiating with this developer, which took eight months.
Several aldermen agreed they had the opportunity to get their questions answered throughout the process.
Walsten said the city council should hold off on making a decision on a developer until the economy improves.
"I really believe there is probably a better deal out there than what we are looking at right now," Walsten said. "I do not believe we need to be in a panic that we either have to do this deal or we will not have anything until 2025."
Community and Economic Development Director Mike Bartholomew said if the city does not act on the proposal now, it's likely another development proposal won't come forward for a year.
Meanwhile, officials said the city's liability on TIF 6 is growing. The district is expected to be $5.9 million in deficit by the end of this fiscal year and $19.7 million in deficit over its lifetime.
Ward 3 Alderman Matt Bogusz said the city was saddled with the debt for this land by a previous administration.
The city borrowed $10.4 million to buy the land and for other redevelopment costs, which was to be repaid through TIF district revenues as the area redeveloped.
"We now have debt service that will equal a 5 percent property tax increase," he said. "It's going to eat into our city's coffers by $19 million. If the proposed parking garage takes off and just a few restaurants on that property, we would take a swing of $41 million."