Northbrook Court Redevelopment Gets Final Approval From Village

NORTHBROOK, IL — Trustees granted final approval Tuesday for plans to redesign the Northbrook Court shopping center and transform the 43-year-old mall into a mixed-use development with an apartment building, food hall and grocery store space. Supporters of the project said it is necessary to avoid risking the loss of a significant portion of local governmental bodies' tax base. Those who called for further modifications to the agreement expressed concerns about the impact on neighbors and a lack of on-site affordable housing.

The Northbrook Village Board voted 5-2 in favor of a package of ordinances approving a redevelopment agreement, economic incentives, changes to the village's zoning code and comprehensive plan, a new subdivision and site plan and exceptions to zoning requirements to allow for the demolition of a portion of the mall and the addition of a multi-family residential development.

The agreement includes $27 million in economic incentives to the developer to offset the cost of its $250 million redevelopment plan. Northbrook Court will see a five-story apartment building with up to 315 rental units, more than 100,000 square feet of new residential space and a 70,000-square-foot grocery store.

Village President Sandy Frum said it was one of the hardest votes in her more than three decades on the board.

"We have a chance today to make a difference to our community, and I don't plan on throwing that chance away," Frum said, as the board granted preliminary approval to the redevelopment plan last month. She said trustees have a responsibility to protect revenue sources for schools and parks as well as public safety. "Northbrook Court is too important to our well-being as a community to not do everything in our power to make sure it’s successful."

Macy's has announced plans to close the Northbrook Court location by the first week of August, laying off 70 employees as its lease expires as the mall's anchor tenant. The closure is one of 100 store closings first revealed back in August 2016. The mall's redevelopment is a joint project of residential developer Ryan Companies and mall landlord Brookfield Properties, which spent $25 million on the Macy's land last March while the firm was still known as GGP.

Adam Tritt, Brookfield's senior vice president of development, said Northbrook Court's footprint largely remains the same as it did when the mall was first developed in 1976.

"We need to break free from that site plan and modernize and reinvent Northbrook Court," Tritt said. "We're going to demolish and replace the Macy's building with the construction of the great lawn, the restaurants, the proposed grocery anchor. We're going to redevelop the west portion of the existing property in the ways that were discussed, we're going to renovate the balance of the existing common areas allowing all of it to work and function together and feel like one cohesive place and we'll construct the apartment development."

The focus of the redevelopment is the south and southwest portion of the mall, which the village declared to be blighted by the department store's imminent closure as it created a tax increment financing district earlier this year. The TIF fund will collect revenue from increased property taxes if and when the property is reassessed at more than its current value of $4 million, plus an added $425,000 to compensate the village for the estimated cost of providing services to the redeveloped site.

The developer would later be reimbursed up to $21.5 million for the cost of site and infrastructure improvements out of the incremental property tax revenue from higher assessments. Another $5.5 million payment to the developer would be accrued via a 50-50 split on the increase in mall-wide sales tax revenue beyond its current levels over the next 20 years. The "pay-as-you-go" method is intended to protect the village from any financial risk for the project.

The agreement provides for several up-front payments to go along with the redevelopment. There will be "initial occupancy contributions" of a combined $350,000 to local school districts. The developer also volunteered $750,000 "as seed money for ultimate use by the village as part of an affordable housing plan should the village develop such a plan," according to Village Attorney Steve Elrod.

The developer's payment was unconditional and would not establish any precedent that future developers would be allowed to offer cash payments in lieu of on-site affordable housing — a common practice in those North Shore communities that do have housing affordability requirements built into their code.

"There are no strings attached to the developer's contribution of the $750,000. Northbrook is able to develop its own affordable housing plan — or call it whatever — and it's also able to title its plan however it wants," Elrod said.

The consideration of the addition of more than 300 new rental units and last month's introduction of two new trustees has increased the board's focus on the issue of affordable housing. According to state housing officials, there are 722 affordable housing units among the village's 12,647, meaning less than 6 percent of housing in Northbrook is affordable for someone making 80 percent or less than the area's median income.

The developers offered the "contribution to a new affordable housing fund" in a May 15 letter to Frum seeking to address the community's affordable housing concerns. It noted the apartment building would have 73 one-bedroom and studio units that would be cost less than 30 percent of the average salary of local public-sector workers. Those units, comprising nearly a quarter of the building, would also be affordable for households earning 80 percent of the average median household income of the Northbrook-Glenview-Wheeling-Deerfield area, according to the letter.

"To complicate matters, the extraordinary costs to redevelop the Macy's parcel at Northbrook Court creates the need for tax increment financing, without which, this project is not financeable," it said, adding that ff a meaningful number of units were converted to affordable units at this stage, property taxes would not increase enough to support the cost. "Simply put, a conversion to affordable units renders the project unfinanceable."

Frum said it was time to have a discussion about affordable housing and establish an affordable-housing policy as part of village code. The village president promised there would be a requirement on the books by the end of the year.

"However we look at affordable housing today, there is no policy and there is no definition," Frum said. "It is wrong to expect these developers to include something when we don’t even know what we are talking about."

Trustee Jason Han, one of two trustees to vote against the final redevelopment plan, said he supported both mixed-use development and affordable housing but not an affordable housing fund.

"I think it only encourages future developers, anybody really, to pay the fee in lieu of developing actual affordable housing, and that's what I support — actual affordable housing," Han said, describing Chicago's affordable housing fund as a reservoir for misuse. "I don’t support the tax increment financing or the sales tax rebate. I think for this amount of public financing that we’re providing we should have a better plan."

During public comment before the final vote on the plan Julie Rosner of the Northbrook Working Families Coalition said the plan should not go forward without mandatory affordable housing units included.

"The developer is offering $750,000 instead of it. That is not appropriate. We should not accept money instead of actually having affordable housing as part of this plan," Rosner said. "Both Highland Park and Deerfield have affordable housing plans. We do not. We need to start requiring — starting here — developers to include affordable housing. This is the perfect opportunity because its a large developer to have affordable housing."

Instead of being limited to 50 feet tall and 150 feet away from its neighbors by existing zoning, the approved apartment building on the south side of the mall would be 100 feet away and about 80 feet high. That was a sticking point for some residents of neighboring homes in Glenbrook Countryside, a subdivision in unincorporated Northfield Township to the west of the mall.

"Now there's a proposed 80-foot monstrosity 150 feet away from my property," said Leonard Ginsberg. He said the apartment building would allow "direct visual access" to his living room, backyard and his child's bedroom. He said a doctor had assured him that the development would adversely impact his child's psychological development for years to come.

"I think the presentation that the applicant had submitted to you is basically a smoke and mirror game," he said. Ginsberg raised questions about whether the mall would really support a new grocery store and why the developers had not revealed any letter of intent.

The Brookfield vice president, Tritt, said the developers intended to lease the anchor building to a grocery store but could not guarantee it.

"However, we cannot be in a position where the entire economic incentive package and redevelopment project hinge on whether that space is occupied by a grocer. Given the evolving retail landscape, our ability to react quickly to market trends is critical to the success of the redevelopment project," Tritt said in a June 4 letter to Village Manager Rich Nahrstadt.

Carey Weiman, another Glenbrook Countryside resident, said he was embarrassed to see Northbrook Court struggling when other regional malls, like Oak Brook and Old Orchard, were successful due to continued reinvestment in their properties rather than seeing their ownership walking away with cash.

"In the 70s when Northbrook Court was built, it was amazing. Now it's still the same look, which is very tragic. But that’s not on us. Because the owners did not put money or marketing or upgrades into the mall, this is not the fault of Northbrook residents," Weiman said. "To make people believe that the only way to save the mall is through an apartment building is ridiculous. There are no apartment units at any of the other developer/owner's other property — or any of the regional malls in our area. The idea of a grocery store saving a mall is another ridiculous idea."

Weiman said the idea that either a grocer or multi-family residential development would save the shopping center needed to be examined.

"Northbrook Court has the same restaurants since the 90s. They have not brought any new exciting tenants and have not put any social programs concerts events that anybody has embraced in the village of Northbrook," he said. Weiman suggested the mall's management has shown its inability to successfully operate a food court, leading him to believe it would be unable to manage an apartment building.

Trustee Kathryn Ciesla, who voted in favor of approving the development agreement, said the redevelopment would have a long-term impact on everyone in the village. Northbrook Court, she said, needs to evolve or it would decline. Ciesla pointed out there were already several other malls in the area, including Hawthorne Mall in Vernon Hills, Wheeling Town Center and potentially Old Orchard, being constructed with residential components.

"This is the trend, this is what's going on. We just need to look at our neighbors. It only makes sense for us to look at the market and have Northbrook Court change with the times," Ciesla said, explaining that the developer had incorporated community feedback over several iterations and would make the apartment building livable and successful.

"There is zero 'Plan B' for Northbrook Court. So I think if we don’t act in a positive way now, this is going to have disastrous results for the village, our schools, our library and our parks," she said. If revenues from the mall were to dry up, Ciesla pointed out, the village would need to find ways of replacing nearly a third of the revenue in its general fund.

Trustee Bob Israel said his vote to support the redevelopment plan was a difficult one. While reassuring neighbors who continued to call for further changes to the plan, Israel said he believed the plan would have an overall benefit the village and the region.

"I believe that this development is a good move. I think that it benefits all of us in Northbrook," Israel said. "I'm sure you don’t agree now, but I do believe that it will be a positive reflection. It will bring a nexus of activity and a welcome vitality to the area that it doesn’t have currently."

Trustee Muriel Collison described her vote in favor of the redevelopment as an "ugly 'yes.'" She said she was disappointed that the a better solution was not found to assuage the concerns of neighbors, a trio of which were offered $15,000 to go toward landscaping, and that there was no assurances that a grocery store would be included.

New trustees Johannah Hebl and Heather Ross were presented with the final redevelopment plan in their first board meeting last month. In the final vote June 11, Hebl supported the plan and Ross joined Han in voting against it.

"But going forward I will hold your feet to the fire on every description on the landscaping that was done, as well, to make sure that, to the extent possible, we can really mitigate any obstruction," said Hebl, a former plan commissioner. "It is rare that developers are the ones that push us to start affordable housing, so I will be holding our feet to the fire on the affordable housing issue. It must be done. It must be done immediately, because I believe in transparency with our developers who are going to invest in our community."

Ross said she hoped the plan would be successfully and agreed with the need to update Northbrook Court and that a mixed-use development would be the right type of project. While she appreciated the developer's $750,000 contribution, she said, she could not vote for a project of its size that does not offer any "truly affordable" units.

"My disappointment still stems from the lack of affordable housing," Ross said. "I think when a developer is spending $250 million and getting a $21.5 million TIF — $8 million of which is going directly to a residential property that’s going to be providing over 300 units — there just is no excuse not to have some affordable housing units as part of that project."

Earlier:

• Northbrook Court Redevelopment Approaches Final Village Approval
• Proposed Northbrook Court Revamp Razes Macy's, Adds Apartments
• Macy's Sells Northbrook Court Space To GGP For $25 Million, Leases It Back For 2 Years
• Complete Northbrook Court Redevelopment Site Plan And Redevelopment Agreement (PDF)