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Downtown Redevelopment

September, 2004 Update

Downtown Redevelopment Lawsuit is Settled!

On August 18th, the Village of Lincolnshire and Teng/Forrest LLC reached a settlement agreement resolving the lawsuit over the downtown redevelopment. The developer filed the lawsuit after the Village Board unanimously voted (7-0) to terminate the redevelopment agreement in October 2003.

The Board terminated the redevelopment agreement because it subjected the Village and its residents to unreasonable financial risks. These risks were many. First, the Board was unwilling to "give" the approximately 15 acres of land it purchased for $4.9 million to the developer without a guarantee or trust. Additionally, it would have required the Village to borrow $8.5 million with a loan repayment period of seventeen (17) years beyond the end of the TIF District.

As important, is the fact that the developer failed to deliver a Jewel grocery store as required in the agreement resulting in the necessity for the Village to contribute $2 million from the General Fund to offset the loss in anticipated revenues. The Board also felt the increase in the developer's budget of over $400,000 from the original figures despite the downsizing of the project was unreasonable.

With the settlement, the Village has been successful in maintaining ownership of the land that has continued to grow in value. The Village has also obtained ownership of all the designs and plans completed by Teng/Forrest LLC. The Village agreed it would pay the developer for its design and engineering work completed during a four-year period (1999-2003) prior to the termination of the redevelopment agreement.

As a result, the Village will pay $659,000 to the developer for the completed work and an additional $691,000 to settle the lawsuit for a total payment of $1,350,000. One million dollars will be paid twenty-one (21) days after the settlement is executed and $350,000 will be paid seven (7) days after the sale of the condominium property or six (6) months, whichever is sooner. The Village was defended in the lawsuit by its insurance company and, therefore, no legal fees were incurred by Lincolnshire. Additionally, the insurance company will contribute $60,000 toward the settlement amount, reducing the Village's payment to $1,290,000. It is key to note the settlement eliminates the uncertainty of the outcome of the lawsuit and permits the Village to move forward without further delays that could have lasted years and cost the Village uncertain amounts of dollars. Furthermore, the loss in TIF revenues could have reached $200,000 to $600,000 if the delays had occurred. The Village won't have to secure an $8.5 million loan and is now free to develop the land by selling it to developer(s) for more that its purchase price. Recent appraisals indicate the condominium site has more than doubled in value. The Village plans to sell the proposed condominium site immediately for construction in the spring of 2005. Moreover, the Village will start negotiations with restaurants for available sites and has selected an engineering firm to finish the work necessary south of Indian Creek.

Moving forward in this manner will be much less risky and allow the Village to move more quickly. More details will follow in the upcoming NewsLetters.