'Strange Situation': Western Springs OKs Subsidy

WESTERN SPRINGS, IL – A couple of years ago, a developer told Western Springs officials that it was "absolutely imperative" that he get a village subsidy to make a condo project a reality.

On Monday, the Village Board approved $829,000. The four-story downtown building at 514 Hillgrove Ave. is nearly done.

In 2021, Hinsdale-based KLM Development originally sought $1.5 million for the project.

At Monday's Village Board meeting, resident Martin Brown questioned the subsidy, with the money coming from a tax increment district, or TIF.

Brown said the village failed to independently verify the condos' proposed sale prices.

"There was no market study of the demand or viability of this type of project," he said.

He also pointed out KLM statements that it could not proceed without a subsidy. In 2022, Patch obtained documents showing that KLM's lender, Chicago-based Lakeside Bank, indicated the project needed to get the village's money to make the project "viable and profitable."

"If that is the case," Brown said, "why did they proceed prior to getting any formal approval of a grant? They put themselves in a strange situation."

He also said an official at a previous village meeting indicated the village's former community development director, Martin Scott, struck a verbal agreement with KLM on the subsidy.

In July 2022, KLM owner Felix Lampariello emailed village officials that his company was moving forward in good faith on the project because of the guidance of the village and Scott, who resigned and left for another job a month later.

"I have been continually assured that the TIF would be forthcoming," Lampariello said in a November 2022 email.

In response to Brown's statements, the village's attorney, Michael Jurusik, said it was unusual to give money after a project started. But he said the process was delayed by, among other things, the developer's request for an even larger building.

Jurusik confirmed no market study was done. But he said the village relied on data from the nearby Foxford development.

As for Scott's involvement, Jurusik said the former official entered no "handshake" deal on the TIF incentive.

Village Manager Ellen Baer backed up Jurusik's statement. Scott, she said, only told the developer that the request for money would go through the village's normal process.

Jurusik said the KLM agreement includes a "clawback" provision in which the developer gets less money if the building is less valuable than estimated.

"To me, TIF is the opportunity to incentivize redevelopment. And it does allow for a reimbursement of a developer who makes an investment in the community," Jurusik said.

The four-story building is set to include 10 condos, with the first floor containing businesses. Complete occupancy is expected by summer.

The project, called The Hill, was estimated to cost $8 million.

The subsidy is coming from the village's downtown tax increment financing district. The idea behind such a district is that the money spurs development, which will bring more taxes to local government bodies in the long run.

Lampariello has declined Patch's requests for an interview.