What is 104,000 Square Feet of Space in Gateway Center Worth?
Michael Harrington hoped...
"By now some in DevCorp board planning committee should be doing some serious rethinking of the group's mission and activities. Unfortunately, DevCorp's public silence on these concerns is more troubling than anything else. Unfortunately, the apparent, and strictly adhered to, decision to not respond to criticism only intensifies our concerns."
I'm sorry DevCorp North is so secretive, we poor citizens and taxpayers are left to observe and try to understand the best we can and to speculate.
The Year in Review, 2005
Let's try as best we can given the limited transparency to connect the dots between three stories from 2005:
1. A groundswell of public dissatisfation with DevCorp North, expressed in part by citizens using new media.
2. DevCorp North and their partners in Gateway Mall announce they intend to sell a portion of Gateway Mall.
3. DevCorp North announces that they intend to purchase a new-construction commercial condominium on Morse Avenue from Moore contributor and real estate developer Robert Coe.
Follow the Money
Let's say Michael's correct and some within DevCorp North want to distance themselves from the Gateway fiasco. How would they do it? Say DevCorp North tells their partners in Gateway Mall, Combined Development-Howard, LLC, we want out. This creates a serious problem for DevCorp North's partners: where do the owners of a half-empty shopping mall get the cash equivalent to 5% of a 25-acre shopping mall on Chicago's north side? Forum49 estimates DevCorp North's stake in Gateway Mall to be worth approximately one-half to $1.5M.
We first heard of the idea of a storage company moving into Gateway Mall when an item appeared on DevCorp North's web site (since removed). At the time it elicited some disappointed comments in the "Broken Heart" in terms of this being DevCorp North's pathetic idea of fostering pedestrian-friendly retail.
We need to look at more closely at the fact that it is a SALE, not a lease, of a portion of Gateway Mall that is being announced.
The news is attributed to Ms. Muehl of Trident Development. Ms Muehl is a DevCorp North member and Howard SSA Commissioner. Trident Development is the management company for Gateway Mall, and is owned and controlled by James DiMatteo of the Dominick's DiMatteo's. (Trident is not to be confused with the company the owns Gateway Mall, Combined Development-Howard LLC, or the leasing agents for Gateway Mall.)
Note that while the sale of part of Gateway Mall could not proceed without the approval of the Board of Directors of DevCorp North and their partners in Combined Development-Howard, LLC, neither company is mentioned in the item. DevCorp North is hiding behind Trident.
Michael Harrington asked...
" ... a goofy plan (can it possibly still be a "go"?) to buy a storefront condo on Morse Avenue ... "
In the absence of any alternative explanation for how a store-front public charity, a delegate agency funded principally under contract from the City of Chicago's Department of Planning and Development, might be able to afford to purchase a new-construction home, I believe this news item may lend credence to the possibility that DevCorp North is quietly tapping out (or partially tapping out) of Gateway Mall to buy a commercial condo on Morse Avenue from Aldermanic pal developer Robert Coe.
Michael Harrington imagined DevCorp North writing...
"Dear Rogers Park residents. We just finished our year-end evaluation. ... we made some mistakes, some really big ones."
Sorry, Mr. Harrington, DevCorp North is extricating themselves from the Gateway Mall fiasco, but with no announcement, no mea culpa, no reform. They are getting themselves out of this mess the same way they got into it: with a back-room deal that enriches an Alderman's campaign contributor.
Using TIF (tax increment financing) to transfer public property taxes to private hands is a two-step process:
First, a TIF district is established, which begins the diversion of property taxes to the TIF bucket, and,
second, a development agreement with a developer is approved to disperse the funds.
The Howard TIF has three TIF projects to date: Gateway Mall, the Gateway Senior Apartments, and the Howard Theater. Gateway Mall was awarded an $8M subsidy from the Howard TIF ("Measuring Up: Six years later, Gateway Shopping Centre is still half-empty," Angela Caputo, News-Star, 7/27/05).
Now if someone tried to propose a TIF project "let's give a great wad of cash to some political cronies" taxpayers would be up in arms, because TIF is supposed to be used to build things that increase property tax revenue that pays for the TIF. But if those same cronies build something and then sell it, that's apparently just fine.
Aldermanic pal developer Jay Johnson used this same trick in the Howard Theater deal. He got TIF funding to gut and rehab the theater, and then sold ground-floor commercial condos on Howard Street. The revenue realized from the sale of a portion of the project does not appear in the project plan Johnson used to secure his property tax subsidy.
Now if Alderman Moore had proposed as TIF project ...
"Let's see, I already have at my disposal my own PAC (Citizens for Joe Moore) and a ward organization (the 49th Ward Democratic Organization), but what I really need to balance my portfolio is a tax-exempt, 501(c)(3), not-for-profit corporation, public charity subsidiary of Moore, Inc., because it is easier to get grants, and there is no reporting of donations required, and, oh, I want to fund it with TIF property tax money ... "
... there would be a rioting in the streets.
But if he works his non-profit division into a TIF deal, waits a few years, and then taps put, he can achieve the same effect.
Under this scenario, DevCorp North loses nothing. Their equity in Gateway Mall is transferred to their real property on Morse.
They move from the edge of civilization to the Heart of Rogers Park. The Executive Director (Kimbery Bares ) gets a corner office and enclosed parking.
DevCorp North is quietly separated from Gateway Mall in sufficient time that it an be spun to not becoming an issue in the 2007 Aldermanic election.
A loyal Alderman Moore campaign contributor gets the proceeds from the sale of a commercial condo.
The Howard TIF and Gateway Mall may be being used to launder public property tax money to a developer and DevCorp North?
by Hugh
25 comments:
jtfm-
why so defensive?
what is YOUR scenario for the unusual "sale" of that commercial space?
>Let's face it, that space is about the least attrractive for retail stores.
Yeah, right opposite the bus station and all, with all those people just standing around, doing nothing, nothing to look at, terrible place for pedestrian-oriented or transit-oriented retail, way to go DevCorp North, you are urban planning gods.
>I can't imagine ...
why imagine? what happened to facts?
I have carefully reviewed DevCorp North's contracts with the City of Chicago's Department of Planning and Development on the City's web site, and I find no line item for "pre-construction price on new construction headquarters offices."
How will DevCorp North pay Aldermanic pal Coe for their new World Headquarters currently under construction on Morse?
Straighten us out, O Mr. Fact Man. No one is in a better position to set the record straight than you.
News item from Rogers Park Builder, the newsletter of the Rogers Park Builders Group, page 2:
According to Barbara Muehl, vice president-real estate for the owner [of Gateway centre] – Trident Developments – an ordinance approving the vertical sub-division of the three-story commercial building at the Centre Plaza (Paulina Street) was passed in September, thus allowing the sale of the ground level of that building to Life Storage Centers.
Life Storage operates environmentally controlled public storage space that will occupy 104,000 square-feet on the Paulina Street level of Gateway. Their main office and retail sales, said Ms.Muehl, will be located at 7524 N. Paulina, facing the Gateway Plaza. Anticipated opening, said Ms. Muehl, is January 2006.
jtfm-
if you owned 5% of IBM, you would be a billionaire and you would certainly have a vote and probably a seat on the board of directors even though that 5% was a minority stake. corporate raider, carl icahn owns less than 5% of both GM and TIME WARNER and they are certainly listening to him.
the mall has been half empty but
devcorp's 5% investment is worth more today because real estate is worth more today so if this sale is devcorp's exit from the gateway, they probably did well with their investment.
Fact Check
The Rogers Park Builders Group newsletter incorrectly state that Illinois coporation Trident Development, Inc. is the owner of Gateway Mall.
The owner of Gateway Mall is Illinois limited liability company Combined Development-Howard, LLC, a partnership of DevCorp North, James DiMatteo, John Terzakis, and others.
Trident Development is owned and controlled by DiMatteo.
Just the Spin,
Did the sale of part of Gateway come up at any meetings of DevCorp North's Board of Directors?
>I can't imagine they've gotten any profit yet since it's been about half vacant.
Gateway Mall: Half Empty or Half Full?
DevCorp North and their apologist do this dance on Gateway Mall. Whenever they get a new tenant, or even a prospective tenant in negotiation, or even TALK to a prospective tenant, they rush to issue press releases and make web site postings and blast e-mails, "Outlook on Gateway Brightens." Then if you start asking questions like what is that property worth? or how much does DevCorp North make off of it? it's a wasteland with tumbleweeds tumbling across the asphalt. They insult our intelligence hoping we will be incapable of making the distinction between the value of a property and the income from a property.
jtfm-
"let's face it, that space is about the least attractive for retail stores"
you are correct and who's responsibility might that be? back room deals aside, this "sale" of retail space once considered rental, only demonstrates how desperate the partnership is for tenants. any type of tenants.
has it occured to anyone that Life Storage is now the anchor tenant in Gateway Plaza with 2 storefronts that will not attract any appreciable pedestrian traffic?
has it occured to anyone that
prospective businesses that rely on a pedestrian traffic environment as the Plaza was originally designed as, have less of a reason now to locate there?
has it occured to anyone that this sale has permanently altered the perception of Gateway Plaza as a still possible, viable retail hub to one of anything goes, just fill the spaces, sign the leases ghost town.
Just the Spin,
When you move to Morse, will you list your new home as an asset on your federal financial disclosures, or will you keep it off the books like you did with your shopping mall?
> Personally I prefer to get the facts ... here's what I think happened ...
what you think happened? what about facts?
Just the propaganda maam said.....>"Life Storage said the only way they would do the deal is if they owned the space."
And how did you find this out? Bonus for answering the question how much Life Storeage paid for the 104,000 square feet of real estate?
Just the facts please.
has it occured to anyone that Just the Fact, Maam writes like "what a crock ", "whoo hooo", is unnecassarily argumentative and rude "what horseshit" as was the much maligned and now suspiciously M.I.A. T----- W-------?
just asking
such language!
"Just the Fact, Maam writes like "what a crock ", "whoo hooo", is unnecassarily argumentative and rude.."
Yes, I've noticed a definite change in writing style and the infusion of 'crock' 'horse***&" language in his 'person/poster'. Think we need to call for a 'wellness check'? The holiday season is terribly depressing to many.
JTFM used to write with such a superior attitude. Perhaps poking at the truth in the 5% Gateway and this 'sale' is chipping away the cover.
It's normal to feel a little pinched for cash around the holidays. Here's how we poor citizens and taxpayers first learned that DevCorp North and their tax-payer subsidized partners in Gateway Mall planned to sell some of the property assembled for them at taxpayer expense to raise a little cash for a holiday buying spree:
Michael wrote to DevCorp North asking for a progress report on Gateway Mall and got a reply and posted it on his blog October 3, 2005 (thanks, Michael!):
"An ordinance approving the vertical subdivision of the 3-story commercial building at Gateway Centre Plaza was passed at the September 14 city council meeting. Upon obtaining a recordable document, the closing will be scheduled for the sale to Life Storage Centers. Life Storage Centers is an upscale operator of environmentally controlled public storage space that will occupy approximately 104,000 square feet on the Paulina level of Gateway with their main office and retail sales at 7524 N. Paulina facing the plaza. Anticipated opening is January 2006. ...
Hope this helps
Kimberly"
The memo was cross-posted here on the "Broken Heart."
Back to the subject which is selling part of the mall....thank you Hugh and Michael K. Just the truth sirs.
Yes. Good deal for White and Vates too.
This is the biggest, Most overlooked development story of the year!
DevCorp North Brings New Subdivision to Rogers Park
DevCorp North and their partners were awarded an $8M subsidy from the Howard TIF in June, 1999. ("Measing Up: Six years later, Gateway Shopping Centre is still half-empty," Angela Caputo, News-Star, 7/27/05). Since by 1999 this amount of money had not yet been collected in the Howard TIF since it was established in December, 1996, our home town borrowed to give the $8M to DevCorp North and their partners. We taxpayers are still paying off that note.
The terms of their agreement with the City, DevCorp North and their partners agree to pay back the loan thorugh their property taxes. As with all TIF projects, the project plan includes a schedule of property tax payments. DevCorp North and their partners are behind in that schedule. We taxpayers are losing money on the Gateway project.
The $8M of property taxes we taxpayers pledged to the Gateway project included $6 to purchase property and $1M for demolition. We taxpayers bought the land for DevCorp North and their partners and cleared it for them. Now they are selling part of it.
Will DevCorp North and their partners use the proceeds to pay off their loan we gave them?
Will the proceeds be used to catch up the schedule of payments DevCorp North and their partners agreed to in 1999?
Year in Review, 2005: Gale Park Field House Goes Backwards
It was a bad year for our neighbors north of Howard. Not only did the Gale Park Community Center not make any progress, it actually went backwards. Our neighbors north of Howard got some more bad news last week ("Lied To Again," 24/7 North of Howard Watchers, 12/13/05).
This summer, we neighbors were asked to accept cut-backs in the plans for the Gale Park field house. It was explained to us that the cut-backs were necessitated by a lack of funding. The Park District's latest excuses for not building a community center in Gale Park included the price of steel. The plans sat around so long they are so old they are $1.8M under budget, so we the public need to axe features.
Which will be finished first, the Gale Park Community Center or DevCorp North's new home on Morse being built by Aldermanic pal developer Coe?
Year in Review, 2005: Howard CTA Station: Still Inaccessible and Still Smells Like Piss
Also this year, Alderman Moore announced that we the public need to suck it up and accept feature cut-backs in the plans for the long-awaited rehabilitaiton of the Howard EL station, necessitated by, you guessed it: the plans sat around so long that the price of stell went up! Those bastard steel companies!
The plan for the Howard TIF back in 1988 specified a new CTA station at Howard, and even budgeted $9M for it. Once the TIF was passed, and Aldermanic pal Jay Johnson got his subsidy of public property tax money, he decided that using his property as a CTA station entrance was not want he wanted to do.
We are sneaking up on the expiration of the Howard TIF, but we are no closer to a new Howard EL station. Although the station is a transportation hub for the far north side of the city and near north suburbs, the trains are inaccessible to the handicapped. The one escalator (no elevator) goes up, when it works.
Which will be finished first, the Howard EL accessibility project or DevCorp North's new World Headquarters?
Excerpts from Tax Increment Redevelopment Plan for Howard-Paulina Redevelopment TIF Project (passed by the Chicago City Council, October 14, 1988):
Redevelopment Plan And Project Objectives
3. By providing public improvements which may include:
(e) transit-related structures
Redevelopment Activities
3. Provision of Public Improvements and Facilities
Adequate public improvements and facilities will be provided to service the entire Redevelopment Project Area. Public improvements and facilities may include, but are not limited to:
(f) Provision of a new transit station
Rehabilitation of the Howard Theatre building to provide a new entrance to C.T.A. buses and trains.
Estimated Redevelopment Project Costs
6. Transit Station and Support Facilities
Estimated Cost: $8,500,000 to $9,000,000.
From the K. Bares memo:
Life Storage Centers is an upscale operator of environmentally controlled public storage space . . .
I have to ask: what the hell is "upscale . . . public storage space"?????? Is Gateway and RP now to be dumping ground for North Shorites and Gold Coasters who just don't have enough room for all their grand pianos, too large oriental rugs, and furs! Oh the irony. It practically kills.
We taxpayers bought the land for DevCorp North and their partners that they are now selling for cash.
Excerpt from the "Howard Paulina Redevelopment Project Area Second Amended and Restated Redevelopment Agreement, By and Between the City of Chicago and Combined Development-Howard, LLC" approved by City Council on June 9, 1999:
EXHIBIT C
TIF-funded Improvements
1. Acquisition-Site Assembly $6,000,000
2. Demolition $1,000,000
3. Environmental-Site Preparation $500,000
4. Relocation $250,000
5. Legal, Planning, Consultant $250,000
TOTAL $8,000,000
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