Evanston Aldermen Let Brewery Out Of $1.5 Million Lease For $60K

EVANSTON, IL — The Evanston City Council voted 5-2 Monday to end a 10-year, $1.6 million lease on a city-owned building in exchange for a several months worth of rent and compensation for utilities. The vote came three months after Smylie Brothers Brewing Company asked the city of cancel its lease before the first rent payment was due, two months after City Manager Wally Bobkiewicz recommended letting the corporation out of its contract with the city without providing any compensation and more than a year and a half after the lease took effect.

After passing an ordinance authorizing the termination of the lease agreement for the former recycling center at 2222 Oakton Street, aldermen voted to issue a request for proposals for future users of the site, which sits beside James Park. According to the ordinance, Smylie Brothers "cannot raise sufficient funds" to open a brewery in the site, as it had proposed in 2016 following over a year of negotiations.

The lease took effect at the start of 2017 and included 18 rent-free months, which come to an end this July, when Evanston had been due to collect more than $13,000 every month from the company. The brewing company had also been expected to begin paying property taxes on the site but never completed a final site plan required to subdivide the property, according to city staff.

Instead, the company will pay three months rent, a $10,000 flat payment to compensate for lost tax revenue and utility costs for electricity and water. The combined compensation in the approved settlement totals less than $60,000, according to the terms of the ordinance.

The project collapsed after Smylie Brothers last year set up a second location and began production in Lincoln Square, which had been the site of the Aquanaut Brewing Company before it went out of business. According to city staff, Smylie's planned financial partner backed out of the Evanston expansion after the company made a deal for the facility on Chicago's North Side.

In April, Mike Smylie wrote a letter to Bobkiewicz asking to opt out of the lease based on "mutual termination language" in the lease, writing he had spent "significant time and money in a failed attempt to find a new partner." But according to both the text of the lease and the opinion of the city's legal department, there is no such language in the lease Smylie signed.

Alderman Cicely Fleming, 9th Ward, said she wanted staff to continue negotiating with the company to get a better deal.

"We went forward in good faith with this and found out at the end that they were not going to move forward, right before we were expecting to have this on our tax rolls and start collecting rent on the building," she said.

Alderman Tom Suffredin, 6th Ward, agreed.

"It's a lease we would have realized $1.6 million from, I think letting them out for around $50,000 is too light," he said. "And I think that we should go back for more."

Suffredin and Fleming were alone in voting against letting the brewery out of the lease it signed .

Aldermen Judy Fiske, 1st Ward, Don Wilson, 4th Ward, Robin Rue Simmons, 5th Ward, Eleanor Revelle, 7th Ward, and Ann Rainey, 8th Ward, voted in favor. Aldermen Peter Braithwaite, 2nd Ward, and Melissa Wynne, 3rd Ward, did not vote.

Smylie, a former commodities broker, attended Monday's Administration and Public Works Committee and the City Council meeting but did not speak publicly. He has declined repeated interview requests on the subject.

None of the members of council who voted in favor of terminating the lease spoke during discussion or made any comments explaining their votes.

Rainey, who represents the ward in which the property is located, previously expressed dismay with the brewing company's handling of the deal with the city, although she was initially a booster for the proposal, calling it "one of the best put-together teams for a project" she had ever seen.

"It just feels wrong," Rainey said in May. "Right is right, and wrong is wrong, and they've not done us right."

Related:

• Brewery Wants Out Of Recycling Center Lease Before Rent Comes Due
• Evanston Aldermen Want Compensation From Smylie Brothers Brewing
• Smylie Bros. Looks To Expand To Old Recycling Center

Following the vote, council members approved the issuance of the below request for proposals for future users of the site. The deadline for responses is next month. City staff will review submissions by the end of August, according to a memo to the council from Community Development Director Johanna Leonard. The following month, submissions will head to the Economic Development Committee and the City Council will review the proposals the first week in November, the memo said. The next development team would then be selected by January 2019.

UPDATE: The City of Evanston Economic Development Committee gave a positive recommendation to a proposal for a rock climbing facility at the site during its Sept. 26 meeting.