Downtown Redevelopment Vote On Hold

The fate of the developer commissioned to revitalize downtown Lake Zurich is on hold until the 7 p.m., Monday, Oct. 18, Village Board meeting.

Equity Services Group (ESG), the developer, missed its September 30 deadline for various project plans. David Smith, managing member of ESG, asked for a 10-month extension and promised to meet all requirements by July 20, 2011.

"It's been a lot of work to get here (today)," said Smith.  Smith said he faced difficulties securing proper financing, and just recently was able to get the funds to initiate the project.  

"We fought very hard to obtain this financing, and have secured much more than we had hoped for," said Smith. He provided the village with a 'critical path' document that maps out how ESG would proceed over the next 10 months, if the extension is granted by the board.

"The timeline is reasonable, considering the current economic climate," said Bob Vitas, village administrator.

The current agreement between ESG and the Village was entered into in March of 2009. At that time, the area was already designated as a Tax Increment Financing district (TIF). A TIF is used as a subsidy for community improvement projects that relies on future tax gains to finance current projects.  

Under the agreement, ESG was required to submit documentation relating to the 3B submission, which would provide a path and a plan on how Lake Zurich's downtown would be redeveloped.   

The submission criteria included three parts to be provided to the village over the last 18 months, according to the agreement.  One of them was proof of financing, totaling no less than $1 million, which was considered ast start up money for the project to begin.   

A second requirement was that the developer had to acquire private properties in the redevelopment area necessary to complete the project, according to the agreement. Those properties haven't been purchased by the village. The final piece was the submittal of architectural and engineering plans to be approved by the village.  

ESG didn't meet the deadline to purchase the remaining private properties in the redevelopment area or submit the required architectural and engineering plans to the village. 

Getting all the pieces to fit has been challenging due to the complicated nature of the project, explained Smith.  It includes property acquisition, environmental clean-up, engineering and infrastructure improvements, razing buildings and rebuilding a mixed-use development.

Meeting property acquisition requirements is close. "Everything is set for year-end where all properties in the redevelopment area should be purchased or under contract," Smith said.

Jim Johnson, trustee, who was involved in the 2002 establishment of the TIF in the redevelopment area, said "back then there wasn't continuity or vision; now we have infrastructure and capital to do something significant."  

Rich Sustich, trustee, asked why the status of the project wasn't reported sooner, "Together we need to reinvent how progress is reported to our shareholders, the residents, because people want to have input," said Sustich.

The Village Board could have voted to terminate the agreement with ESG for not meeting the contractual commitments by the deadline, or voted to extend the contract another 60 days to allow them more time to submit the required information.  Instead they chose to wait until the October 18 meeting to give time to the board and village staff to consider their options. 

"We will be reviewing information until the next meeting to make a decision on where to go from here. I am optimistic about moving forward." said Jeff Halen, trustee.

If you are interested in learning more about the downtown Lake Zurich redevelopment plan, go to www.destinationlakezurich.com to view drawings of development plans and learn more about the project.