After two hours of debate and negotiation, Oak Park Village Board Monday gave an embattled developer eight more months to rescue the controversial 20-story project at Lake Street and Forest Avenue.
Lake Street Investors, LLC, has until May 15 to begin construction of 270 apartments, 25,000 square feet of commercial space, and a 588-space parking facility to replace the current village garage on the parcel, at the northeast corner of Lake and Forest.
The garage must be completed by April 30, 2015, and the overall project by Nov. 30, 2015, under the re-amended development agreement approved 7-0 by the Village Board. Lake Street Investors agreed to pay Oak Park up to $100,000 to repair and maintain the current 39-year-old garage until it is demolished.
In often-confrontational exchanges between the two sides, village officials warned Lake Street Investors and two other firms planning to join the project that this is their last chance to develop a parcel for which initial terms were reached more than five years ago.
Lake Street Investors, which plans to restructure itself to develop the site with Golub & Company of Chicago and Wood Partners of Colorado, agreed to provide evidence that it has enough equity to finance the project by Jan. 15.
Rebuked by trustees, Lake Street Investors and its would-be partners also agreed to increase from $200,000 to $250,000 the amount it will reimburse Oak Park for any tax increment financing funds lost as a result of the deadline extension.
Oak Park officials expressed hope that Golub and Wood would help rescue the project. Golub and Wood both have built shopping centers and residential property throughout the U.S.
“I have heard that Golub is an excellent company,” Village President Anan Abu-Taleb told Michael Newman, Golub president and chief executive officer, during Monday’s meeting. “It gives me a certain comfort that you are here tonight representing your company.”
Nonetheless, Abu-Taleb reiterated his comparison of Lake Street Investors’ failure to deliver the project as promised to leaving Oak Park “at the altar” on the partnership’s wedding day.
“I also want you to understand that we are concerned because, as I’ve said before, we’ve been dating a long time, our wedding night was scheduled, and you were a no-show,” Abu-Taleb said. “We don’t want to be left at the altar one more time.”
The most previous development agreement required Lake Street Investors to begin construction by Sept. 19, said Loretta Daly, business services manager for the village.
Lake Street Investors, which bought the property as Sertus Capital Partners in 2006, lost one of its partners to an unexpected death in January. As a result of “current circumstances,” the company is “not in a position to complete the project and is looking to assign ownership to a new entity,” Daly said in a report to the board.
PNC Bank filed a $4.9 million foreclosure lawsuit against Lake Street Investors for the parcel, but the bank supports the proposed sale to Golub and/or Wood, Daly said.
Both Golub and Wood have submitted letters of intent expressing their interest in acquiring the senior debt and “related entitlements” for the project from Lake Street Investors, Daly said.
Michael Glazier, a partner in Lake Street Investors who represented the company at Monday’s board meeting, was hired as senior vice president for development at Golub in August.
In June 2008, the village first reached terms with Sertus Capital Partners to redevelop the parcel as a 13-floor mixed-use building with up to 208 condos and retail on the first floor. Sertus expressed an interest in including the existing village parking garage in the project at that time.
In July 2009, trustees approved a preliminary redevelopment agreement with Sertus to add a 140-room hotel and new parking garage to the project. That proposal called for 24,000 square feet of retail space.
In March 2010, the board voted unanimously to approve a 20-story project including a 140-room hotel, 85 condominiums and 28,000 square feet of retail space.
Lake Street Investors agreed to the most previous amended development proposal on Aug. 4, 2011, after various amendments and extensions, Daly said.