Combined Development-Howard LLC (CDH), the owner of the Gateway Centre shopping center, has sold the Rogers Park development at Howard and Clark streets to SEC Clark & Howard LLC c/o RREEF America, an investment advisory firm.
Late last year, at the request of CDH, DevCorp North sold its interest in the center to CDH. “We understood that CDH wanted to have sole ownership of the center and be unencumbered by a small interest partner in the project,” said Kimberly Bares, executive director of DevCorp North.
The sale was finalized in November, 2006.
DevCorp North received $75,188 for its 5% interest in the partnership, which will be used as a down payment for the commercial condominium that the DevCorp is purchasing at 1448 W. Morse Avenue.
BLOGNOTES: Kimberly Bares, Executive Director of DevCorp North, and architect of DevCorp North's off-the-books speculation in real estate development and shopping mall management has finally sold off her shares to buy her dream space on Morse Avenue.
For years DevCorp North hid it's ownership of this property from the I.R.S. Basically it's called cheating the government. But why did it take a year to let the public know of the sale? Was a aldermanic election in the way maybe?
Let's the discussion begin.
photo by Tom Mannis
23 comments:
What is DevCorp North's stake in Gateway Mall worth?
Short of actually selling the property, all answers to this question are necessarily estimates. One estimate is in the City of Chicago's "Redevelopment Agreement" with DevCorp North and their partners in Gateway Mall.
The City of Chicago agreed to lend $8 million to DevCorp North and their partners as part of the redevelopment agreement for Gateway Mall. This loan was to be paid off by property taxes collected in the Howard Tax Increment Financing (TIF) district. In order to ensure that their loan would be paid off, the City included in the agreement a table specifying the projected assessed valuation of the Gateway Mall property, and extracted a written, signed pledge from DevCorp North and their partners that they would not protest their taxes below the agreed levels.
Excerpt from Howard-Paulina Redevelopment Project Area Second Amended and Restated Redevelopment Agreement
June 13, 2001
8.19 (c) Real Estate Taxes
The Developer agrees that ... for the purposes of this Agreement, the total projected minimum assessed value of the real property ... is shown on Exhibit N ...
Neither the Developer or any agent, representative, leesee, tenant, assignee, transfree or successor in interest to the Developer shall, during the Term of this agreement, directly or indirectly, initiate, seek or apply for proceedings in order to lower the assessed value of all or any portion of the real property ...
Exhibit N
Year Minimum Assessed Value
2001 $5,139,234
2002 $8,319,496
2003 $10,714,049
2004 $10,714,049
2005 $10,714,049
2006 $11,078,437
2007 $11,078,437
2008 $11,078,437
2009 $11,598,992
2010 $11,598,992
2011 $11,598,992
2012 $11,598,992
Commercial property is assessed at 38% of its full market value by the Cook County Assessor. In June, 2001, DevCorp North and their partners agreed that the Gateway Mall property has a market value of approximately $28 million currently. DevCorp North's 5% share of Gateway Mall has a market value of at least $1.4 million.
This figure is a conservative, lower bound on the value of DevCorp North's share of their property on Howard Street. The above table lists "minimum assessed value," what DevCorp North and their partners were willing to accept for purposes of paying property taxes. DevCorp North and their partners agreed to the above table before the property was improved by the construction of Gateway Mall. The Cook County Assessor's reckoning of market value is always lower than an actual sale price.
Another estimator of the value of DevCorp North's share of the Gateway Mall property may be found in the actual assessed values. Combined Development-Howard LLC's properties include:
11-30-403-002 7531 N Clark St
11-30-403-004 7521 N Clark St
11-30-403-011 1731 W Howard St
11-30-403-033 1731 W Howard St
11-30-403-034 7515 N Clark St
11-30-403-035 1779 W Howard St
11-30-403-037 1744 W Birchwood Ave
11-30-403-038 7518 N Hermitage Ave
11-30-403-039 1731 W Howard St
11-30-404-018 7535 N Hermitage Ave
11-30-411-001 7459 N Clark St
11-30-411-002 7457 N Clark St
11-30-411-003 7451 N Clark St
11-30-411-004 7441 N Clark St
11-30-411-010 1755 W Birchwood Ave
11-30-411-011 1751 W Birchwood Ave
11-30-411-013 7456 N Hermitage Ave
11-30-411-014 7452 N Hermitage Ave
11-30-411-015 7450 N Hermitage Ave
11-30-411-016 7444 N Hermitage Ave
The market value of Combined Development-Howard LLC's properties has fallen short of the projections from 2001. The total assessed value of these properties is $3,230,753. The total market value is about $8,568,548.09. At 5% ownership, DevCorp North's share of Combined Development-Howard LLC's properties may be estimated at $428,427.40. While this is lower than the estimate above, it is still more than double the total assets DevCorp North has ever disclosed, as shown below.
The Howard-Paulina Redevelopment Project Area Second Amended and Restated Redevelopment Agreement was obtained from the City of Chicago under the Freedom of Information Act. A redacted version of the agreement is included in the Journal of Proceedings of the City Council for June 6, 1999. The Journal of Proceedings of the City Council is available to the public in the basement of City Hall and at the Harold Washington Library.
Research by Hugh.
Does anyone know why lying Joe Moore didn't announce this Real Estate transaction to the public - like all the other real estate transactions he's sent out on his political email tree?
More from DevCorp North:
Construction projects such as the Renaissance Lofts condominiums directly adjacent to the Gateway Centre, and the 17 story residential rental development across the street from the shopping center in Evanston, point to the fact that DevCorp North accomplished its mission: to spur new development along Howard Street.
DevCorp North is claiming they're the reason Renaissance Lofts and the 17 store high-rise are building on Howard Street.
Out of ward TIF ownership.
CES Howard Clark LLC
101 CALIFORNIA ST 26TH FLOOR
SAN FRANCISCO 94111
Oversight or incompetence ("Oops, forgot the Mall! Again!") is an unlikely explanation for DevCorp North's failure to disclose their ownership of a for-profit shopping mall. DevCorp North's IRS filings were professionally prepared. Fees paid to accountants are consistently among DevCorp North's biggest expenses after payroll. From 1997 through 2000, DevCorp North's IRS filings were prepared by Friedman Eisenstein Raemer and Schwartz, LLP and FERS Business Systems, Inc of 401 N Michigan. DevCorp North's IRS filings for 2001 and 2002 were prepared by Thomas Bravos, CPA of Bravos and Associates of Bloomington, IL. Apparently, our local neighborhood business development corporation was unable to find a local neighborhood accountant who would do what they wanted done with their IRS filings.
Research by Hugh.
DevCorp North used the "Investments - land, building, and equipment" category to amortize at least $51,000 worth of "Furniture and office equipment" and declared no other land, buildings, or equipment from 1996 to 2002.
IRS Form 990, Part IV: Balance Sheets, Line 55: Investments - land, buildings, and equipment
2002 $0
2001 $0
2000 $0
1999 $1,675 "Furniture and office equipment"
1998 $2,144 "Furniture and office equipment"
1997 $5,160 "Furniture and office equipment"
1996 $6,207 "Furniture and office equipment"
IRS Form 990, Part IV: Balance Sheets, Line 57: Land, buildings, and equipment
2002 $0
2001 $0
2000 $0
1999 $0
1998 $0
1997 $0
1996 $0
IRS Form 990 asks the charitable organization to list as assets any investments that don't fit under any of the previous categories as "Investments - other" (line 56). If not elsewhere, you might expect an ownership share in a for-profit company to be declared here. DevCorp North did not declare any investments from 1996 to 2003.
IRS Form 990, Part IV: Balance Sheets, Line 56: Investments - other
2003 $0
2002 $0
2001 $0
2000 $0
1999 $0
1998 $0
1997 $0
1996 $0
IRS Form 990 recognizes that some assets are more liquid than others, and asks the charity to classify their assets as "Unrestricted" (Line 67), "Temporarily restricted" (Line "68"), and "Permanently restricted" (Line 69). From 1996 to 2003, DevCorp North declared all their assets to be unresticted, and declared no temporarily or permanently restricted assets.
Excerpt from IRS Form 990:
"Under penalty of perjury, I declare that I have examined this return, including accompanying schedules and statements, and to the best of my knowledge and belief, it is true, correct, and complete."
Year Signed
2003 Kimberly Bares, Executive Director
2002 Kimberly Bares, Executive Director
2001 Kimberly Bares, Executive Director
2000 Charese L. Jordan, President
I don't know what that picture is or of whom - it looks computer generated, but I'm a little surprised it is used for any purpose considering how "cold" the woman appears.
Howard/Paulina TIF Profile.
Speculation that DevCorp North was tapping out of Gateway to send a big wad of cash to Moore campaign contributor Coe was discussed in a year-end 2005 post here on the Broken Heart
DevCorp North's Secret Backroom Deal
What to make of this most recent DevCorp North backroom deal? There's so much to say.
For starts, DevCorp North's claim their secret 5% share of Gateway Mall is worth just $75K is ABSURD!
That implies Gateway Mall is worth $1.5M.
This site is the largest single privately-owned chunk of land in East Rogers Park, a lakefront area on the north side of one of the world's great cities, adjacent to a regional public transportation hub. If it were RUBBLE it would be worth MUCH, MUCH more than $1.5M!
In 2001, 6 YEARS AGO, the ASSESSED valuation of Gateway Mall was $3M, which suggests a market value of approx. $8M.
But even at $75K, let's follow the money.
The taxpayers of Cook County subsidize a private development in Rogers Park.
Unbeknownst to taxpayers, Alderman Moore endows his favorite charity, the 501(c)(3) subsidiary of Moore, Inc, cutting them in to 5% of the deal.
DevCorp North goes down to City Hall and testifies and writes letters of support for the Howard TIF and for the subsidies for Gateway Mall, claiming to be a "community group," all the while concealing their interest.
Wait a decade for the heat to blow over, then tap out and launder some of the dough obtained from the back-room-deal into an above-board deal to purchase a commercial condo from a Moore campaign contributor.
If you follow the money, what you see is clear TIF abuse: public property tax money funneled from the taxpayers of Cook County to DevCorp North and Robert Coe. At no point was the taxpaying public consulted on whether DevCorp North and Robert Coe were community priorities.
History was made yesterday.
DevCorp North, purchased 5% of Gateway Mall for $50 on December 19, 1996, in a sweet-heart deal which was not offered to any of us.
On October 11, 2007, more than a decade later, DevCorp North for the first time admits on their website, first the first time ANYWHERE, their ownership interest in Gateway Mall.
Developer buys out DevCorp North Gateway share, sells shopping center
The Gateway Mall site, the LAND ALONE, is 25 acres.
That's 1,089,000 square feet of land.
That works out to less than $1.38 per square foot, if we are to believe that 5% of Gateway Mall is worth just $75K.
Just how stoopid are Bares and FitzGibbon?
Just how stoopid do they think we are?
Taxpayers pf Cook County -> DevCorp North -> Robert Coe -> Joe Moore
... why did it take a year to let the public know of the sale? Was a aldermanic election in the way maybe?
MC&J Building II LLC
c/o Robert Coe
555 Skokie Blvd
Ste 500
Northrook, IL 60062
$1,500.00 3/28/2007 to Citizens for Joe Moore
$1,500.00 3/29/2007 to Citizens for Joe Moore
$1,000.00 4/6/2006 to Citizens for Joe Moore
$1,000.00 3/3/2004 to Citizens for Joe Moore
(that's right, Moore disclosed TWO contributions of $1.5K each on the consecutive days after the primary but before the run-off)
6417 N. Paulina
MC & J Building Co
555 Skokie Blvd
Northbrook, IL 60062
$1,000.00 12/23/2004 to Citizens for Joe Moore
MC&J Building II LLC
555 Skokie Blvd.
Northbrook, IL 60062
$1,000.00 3/3/2004 to the Democratic Party of the 49th Ward
Morse & Greenview
c/o Robert Coe
555 Skokie Blvd
Ste 500
Northbrook, IL 60062
$1,200.00 11/6/2006 to Citizens for Joe Moore
$1,200.00 11/6/2006 to Citizens for Joe Moore
(that's right, Moore disclosed TWO contributions of $1.2K each on the same day late last year)
Nearly $10K total disclosed
Illinois State Board of Elections
The TIF-to-Gateway-to-DevCorp-to-Coe-to-Moore money train represents an important role for TIF in Chicago: public funding of political campaigns.
Unfortunately, to date TIF funds have only gone to incumbents.
even if the highrise is built and the howard station is refinished, the other stores that are on and around howard will still be ugly, scary, and useless. the owners would have to really try to fix them all up. i know that i tend to keep away from that dominicks, for one, because morse el station is nasty as shit (no pun intended), and because it's scary over there. boarded up stores, brotha's walking around, scoping you out. i'd much rather to go the stores on broadway, even though they're further away.
Giving TIF money DIRECTLY to a political campaign would of course raise eyebrows.
And giving TIF money to a not-for-profit is hinky, too, given that TIF money is SUPPOSED to be used to leverage private investment in projects that bolster the property tax base.
And a not-for-profit giving money to a political campaign would jeopardize its tax-exempt status.
But, apparently, if you give TIF money to a private company with a not-for-profit minority partner who gives money to a developer who gives money to the politician who arranged the whole deal, everything is HUNKY-DORRY!
THIS is Joe Moore's Finest Hour, the culmination of his entire career to date in the City Council.
Question for the Rogers Park old timers reading this:
Does anyone recall being offered 5% of Gateway Mall for fifty bucks back around 1996?
Thanks!
Rogers Park has any number of worthy not-for-profit organizations, most struggling to keep their doors open. The Rogers Park Community Council, the Howard Area Community Council, to name a couple off the top of my head.
But only DevCorp North is being taken care of in terms of OWNING their own offices on the taxpayer dime. The others have to raise funds to pay their rent.
Is this because DevCorp North helped out Alderman Moore, lending staff to his political campaigns?
Is this because DevCorp North sponsored forums for Joe Moore to deliver his State of Ward addresses on the eve of each election?
Is this because DevCorp North reserved the front page of their newspaper, published at taxpayer expense each quarter, for Moore's latest propaganda?
Is this because DevCorp North faithfully churns out a fresh "Crime is Down" report every year?
Imagine what might have happened had James DiMatteo, the scion of the Dominick's familia, and the majority partner in Gateway Mall, if he had strode into City Council and asked:
"Here's what I want to do: I want to raise property taxes on the business, apartment buildings, homes, and condos in the Howard Street area, and use the money to hire some non-union, down-on-their luck black guys from the south side to push broom in & around my mall."
He probably wouldda been laughed out of the place, even a place, the Chicago City Council, were absurd proposals are par for the course.
"Get outta here. You're a multi-millionaire. You want to sweep up, hire your own janitors."
But if DiMatteo sends his minority not-for-profit partner, he can get exactly what he wants: taxpayer-funded janitorial services for privately owned commercial property.
DevCorp North lobbied, testified, and submitted letters of support for raising a special property tax assessment on the Howard Street area, all the while concealing their vested interest from the public, City Council, and the IRS.
OK, so is anyone going to tip off the IRS about the alleged bad acts?
Nice rack.
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