Panel Approves Changes to Developer's Agreement with Mandel Group

Shorewood's Community Development Authority Wednesday morning approved revisions to the developer's agreement with the Mandel Group for its .

The revisions in large part reflect the Mandel Group creating the Kenmore Place 4041 Corp. to receive grant funds from the village and, as a result, avoiding a federal tax liability, according to Bruce Block, special counsel to the village.

The revision stems from an Internal Revenue Service requirement that grants recieved by a limited liability company are treated as taxable income, he told the CDA.

By creating the corporation, the Mandel Group avoids a 35 to 40 percent tax liability on the $5 million in developer grant funds from the village's Tax Increment District No. 4.

"So what we had to do is rejigger the language to provide for this new party to the deal," Block said. "At the end of the day, it's just a matter of how the money pours into the deal."

Block indicated the Mandel Group also will need to get a bridge loan because the grant funds from the village will not be paid upfront. The $1 million grant will be paid after the extra level of parking has been completed and the $4 million grant will be paid after the project is complete.

In addition, the revisions to the developer's agreement language reflect the developer paying $80,000 in bond issuance costs and a $80,000 reduction in the amount of a $4 million village grant.

The $34.81 million project will consist of a six-story building which will include retail space for Walgreens, 84 apartment units and two parking structures.

The Village Board is expected to consider the revised developer's agreement on Tuesday.