Orland Financing Luxury Apartments With $63 Million in Bonds

Deal with the developer would double the village's debt, and repayment on the loan and incentive package could take up to 20 years.

Orland Park will nearly double its bond debt to finance a 295-unit luxury apartment complex, though staff says money from the Tax Increment Finance district, home rule sales tax and from the complex's renters will keep property taxes from being affected.

The $63,348,138 million needed to fund the project will include a $38 million loan to developer Flaherty and Collins.

The loan is scheduled to be repaid over 10 years as a mortgage. At the end of 10 years, the balance is due in full.

The remaining project money, about $24 million, will be considered an incentive package that must be repaid to the village. In 10 years, the entire property will be assessed. If the property is not valued high enough to generate that $24 million, the village will remain lease holders on the property and Flaherty and Collins will continue to compensate the village for up to 10 more years.

Orland Park will set a line of credit with a bank of about $30 million to start paying the project costs, and when spending on that credit reaches about $15 million, the village will issue between $20 million to $25 million in general obligation bonds. 

When spending on the credit line reaches about another $15 million, the village will again issue between $20 million to $25 million in bonds.

These additional bonds will nearly double the village’s debt, which is now at about $79 million.

The village says it will not push the cost of the debt onto village property owners through taxes, however. Annual abatements, as well as money coming from the apartment complex itself, TIF money and home rule sales tax money, will cover the cost, said Finance Director Annmarie Mampe during a press conference Wednesday morning.

“We have no reason to believe project revenues, increment and home sales tax, if necessary, aren’t sufficient to cover the costs of those bonds,” Village Manager Paul Grimes said during the conference.

But this project is not without risk.

“You’re asking me hypothetical, and I’m not going to give you a guarantee on anything,” Grimes said in response to SouthtownStar columnist Phil Kadner’s question whether taxpayers will never be at risk. “Every (general obligation bond) issue in America is pledged to the full faith and credit of the community. That’s a fact of life. This isn’t any different. That said, we’ve strapped this deal with belts and suspenders to ensure there is no impact on taxpayers.”

Orland Park’s village board is expected to vote on the development agreement on Sept. 6. Construction is expected to begin in early October with the board’s blessing, said Flaherty and Collins CEO David Flaherty. While building the entire complex is expected to take about three years, enough units should be built 14 months into the construction that lease-holders could begin moving in then, Flaherty said.

Money from the TIF district, which is expected to net about $650,000 a year, should start arriving in 2015, Mampe said.

Orland Park’s strong credit rating of Aa1 according to Moody’s and AA+ from Standard and Poor’s allows for the village to take out more bonds and still hold a strong rating, said Kevin McCanna, president of Speer Financial, Inc.

The village’s debt ratio, which is a comparison of debt to equalized assessed value, without this project is at about 2.85 percent, and with the project it would go up to about 5.5 percent. Orland Park has a debt ratio limit policy of no higher than 8.625 percent.

A public forum will take place at 6 p.m. Monday, Aug. 29, at the to discuss the apartment complex deal.

Megan James August 18, 2011 at 10:29 PM
@Paul......you are correct, there will be apt under $1500...the lowest, however is still $1000!!! So please...let me know what 18-22 without a real degree paying job is going to be able to afford that? I'd love to apply where they work! Also..please post the link on $200K 3 bd home going for only $1600. I researched 3 bed ranches in orland and there wasnt one under $2K.
Paul August 18, 2011 at 10:32 PM
umm in college my 3 bedroom apt was 1400.. in a college town.. we shared it with 3 people( we paid not our parents lol) .. i dont know many 18 year olds who live alone.. if they do they make enough to afford 1500 a month.. if they cant afford it they most likely have a criminal backround or are not applying themselves.. a part time job at min wage should be able to share an apt with 3 friends for 1500 a month!! :)
Megan James August 19, 2011 at 12:53 AM
Really Paul??? You said.... "if they cant afford it they most likely have a criminal backround"...nice! I know I'm not alone on thinking that was a way off based small minded elitest comment. But lets just put that aside and pretend you didn't mean it the way it came off. As for your college comparision Paul... Let's see....with 295 units @ 3-4 18-25 year olds per unit...you're talking about 885-1180 young single adults living in one concentrated location. I'm curious about all those who are "so for this", how many of you will actually be forced to live within a 4 block radius of this? Residents, like me, will now be forced to live less then 2 blocks from this complex . And based on your college apt comparison....we can now look forward to non-stop blasting of music, undoubtable hotspot for underage drinkers & possible recreational drug use, not to mention the increased late night screeching of tires and pounding music from the cars driving in and out of there during late hours. .Oh..and add in a few domestic battery calls from the drunking fights that break out during the parties being hosted there. So I'm sure our local law enforcement is going to really look forward to their increased duties of maintaining order there. So yes...this all makes prefect sense and sounds like a Great Idea!!! . Gee...I really can't understand why there are more on board like you Paul. We all must be crazy.
Paul August 19, 2011 at 01:01 AM
i didnt mean it the way it may have come off.. but nothing wrong with getting a second job or not going to the bar or casino so much so you can afford the lifestyle you want to live.. im just sick and tired of people complaing about money yet they are living outside their means!!.. if you cant afford it just because someone will finance it doesnt mean you should go buy it !! thats assuming all the the units were 18-22 year olds.. alot will be single men or women who want to take the train DT.. maybe another portion being single parents or something to that nature.. and if they are wanting to live in that type of "luxury" im guessing they may be above the screeching tires or loud music.. if not its easy to put ordinances in place to prevent that.. and if you live 2 blocks from there now u live 2 blocks from some of the worst maintained apartments in orland park and lets pray to god those get demolished and replaced as well.. i would love to be on the board.. i would start forcing the investment in our infrastructure (commercial )and give tax breaks to those residents who update there homes in a major way!! shall i ask for your support at the next election..
Megan James August 19, 2011 at 01:42 AM
While I have to agree that the apartments in our section of the town are not the best. If it wasn't for them, many would not be able to afford a place to live, as other rentals cost to much for them. The majority living there are good people. They live there because they either fell on hard times & are starting over, or others are single parents, families or retirees who would rather pay only for simple basics and have money left over for other basic needs or savings for their family's future, instead of luxuries they don't need. Instead of demolishing everything that doesn't look brand new & fancy, I prefer our Village finance low cost home improvement loans to help the owners beautify & update their buildings. It sad to me when people look down on others because they can't afford the best of the best. If you would like to be on the board, I would take time to get to know all the people who live in Orland, rich & poor. I think the next election will show more residents researching & looking for candidates who want to represent their needs. Not just someone who is looking to get into office for their own desires. I'm not saying I don't like some of your ideas, but many need to know you can put residents needs above your own when it matters. For example, in the past 10 years Orland has seen an increase in criminal activity. I want to see plans to get decrease this and protect us more.
John Paul August 19, 2011 at 02:21 AM
Come on guys, some of these comments make it sound like this developement will be a combination of a college dorm and Cabrini Green.The idea is that there are some folks who would like to live near the train so they can comute downtown. I'm guessing that they will be younger profesional people who might be saving for a home, perhaps some older folks too who have decided to downsize. With the real estate market being what it is, I'm thinking that there are some people who would prefer to rent until things calm down. We can debate all day how we came to this point, but now we're here and I think that this is about the best option that we have.
Arthur Huff August 19, 2011 at 02:31 AM
Good points. I'm more worried about the $43 million that was spent to get to this point and the tens of millions more that they plan to spend.
frank August 19, 2011 at 03:16 AM
Are you for real?
frank August 19, 2011 at 03:28 AM
My comment was to John Paul and still is, "ARE YOU FOR REAL?"
Andrea Williams August 19, 2011 at 04:06 AM
John, why don't you come on over to Colette Highlands. John Fotopoulos and I can walk you to the back of the subdivision and show you how the last piece of property developed under the same theory has been coming along. The Park Station condos have not sold a unit in 3 years and we have a beautiful pit of a foundation that has been sitting there for longer than that. Those condos - ironically one train station up the road - was designed to house the down-sizing empty nesters and young commuters. Two developers later, it has been turned back over to the bank with no movement in sight. There is no financially sound way out - if Musa couldn't make it work (his own mother bought a condo in the building for crying out loud!) no one will. Unfortunately, if the McLaughlin Triangle suffers the same fate - which is more than likely as it faces even tougher economic conditions than the Park Station condos - the "bank" is the taxpayers. Sod and a basseball diamond is a better option than this irresponsible, ill-conceived plan.
JSuzeH August 19, 2011 at 04:10 AM
Andrea, it's good when citizens are involved but man, you're really involved!! You need to put all this time to good use. All these acronyms, wow!! Are your kids back to school already? Who has this kind of time? I need to get me some!! How do you find the time?
JSuzeH August 19, 2011 at 04:14 AM
This just out 5 hours ago..... By Katie Karpowicz NBCChicago.com updated 8/18/2011 6:16:01 PM ET Print Just when you thought safe to avoid a mortgage, renters' futures suddenly look grim. A new market study shows that a two-year trend of rent increases in Chicago and its suburbs will continue through the fall, according to the Chicago Sun-Times.Studies also show this trend has the potential to reach into next year. Potential homeowners continue to be discouraged by foreclosures, falling home values and tighter standards for mortage loans. They then flee to the rental market.
JSuzeH August 19, 2011 at 04:18 AM
Lots of people around here with real big earnings but real good credit!! Check out this latest article...interesting. By Katie Karpowicz NBCChicago.com updated 8/18/2011 6:16:01 PM ET Just when you thought safe to avoid a mortgage, renters' futures suddenly look grim. A new market study shows that a two-year trend of rent increases in Chicago and its suburbs will continue through the fall, according to the Chicago Sun-Times.Studies also show this trend has the potential to reach into next year. Potential homeowners continue to be discouraged by foreclosures, falling home values and tighter standards for mortage loans. They then flee to the rental market.
JSuzeH August 19, 2011 at 04:20 AM
sorry here's the rest of the article... The lack of vacancies caused by this influx, combined with the lack of new apartment complexes being built each year except in the downtown area has caused a high demand for rental space -- leading to higher month's rates.Some of the most popular rental neighborhoods like Lincoln Park, Gold Coast and some suburbs can expect increases as high as 3.4 percent this year, a substantial rise from 2010's 2.5 percent increase."We can certinaly confirm [the high demand for apartment rentals] because we're on the front lines dealing with landlords every day," said Andrew Porter, chief operating officer at Chicago apartment rental service domu. "Apartments are leasing much faster and much earlier in the season than ever before." . Rent increases are expected to rise 2.9 percent in the Chicago area this year -- up from 2.2 percent in 2010 -- according to a report released by real estate investors Marcus & Millichap.
Andrea Williams August 19, 2011 at 04:25 AM
Ah, Suzie Q, I can always count on you to be concerned about my health and quality of life. How lucky am I that you are now concerned with how I spend my time! Newsflash: When you have common sense and more than a few drops of brain juice, it really doesn't take all that much time. Maybe YOUR time could be used more productively by couseling someone who asks and cares for your input in their life.
JSuzeH August 19, 2011 at 04:30 AM
Actually, I'm just jealous. I want more time to do research. Its fun.
JSuzeH August 19, 2011 at 04:33 AM
I need to correct my comment. I meant big earnings but not good credit. Sorry.
Karen Foley August 19, 2011 at 11:54 AM
Question for the Legal Eagles: If the village owns the apartments, does that make it public housing? If is is public housing how many units will be disginated for low income families. How long before HUD knocks on the door of a publicly owned complex. I would be more comfortable if the development was geared toward 55 plus. The twenty somethings do not have the job prospects to pay the rent.
Karen Foley August 19, 2011 at 11:59 AM
Lincoln Park, Gold Coast. Close to jobs and low cost transportation, walking distance to work. No need for a car or train fees. You are comparing apples to watermelons. This is not a "Field of Dreams". Build it and they will come! Jobs first, housing later.
Megan James August 19, 2011 at 12:28 PM
@John Paul - While in today's market it may make sense to rent instead of buy, what's going to happen in 5-10 years when the Real Estate Market finally rebounds and people go back to buying instead of renting? Please....lets try to think of long term...not just in today's economy. That's what happened to the Laurels in Justice. They started off as a apartment complex with tons of amenities for the young professional commuting downtown. But when the real estate market gave them the opprotunity to buy at cheaper rates then renting, they moved out. And when the landlords couldn't fill the apartments at the higher rents, they lowered their rates. And now, its over run by illegal activities and has destroyed both that part of town and neighboring sections of Hickory Hills. But at least no bond were used to finance that one.
Megan James August 19, 2011 at 02:31 PM
@JSUZEH You may want to check out this article too: http://www.suntimes.com/7143685-417/very-ambitious-plan-proposed-to-redevelop-atrium-village.html Here's a developer who is already in downtown Chicago with an existing apartment complex that they want to expand. Not only does it show the city is only involved in "zoning" not financing, but it proves my point about rent rates in downtown Chicago as being more reasonable than what Orland is offering. I work not to far from this River North section, and its nice. "For the market-rate housing, the project foresees substantial rent increases. One example the developers offered, based on a market survey of the area, showed that monthly rents for a two-bedroom apartment might rise to $1,890 a month from the current $1,303." If I were a young professional and had the chance to live downtown in a 2bd apartment at either their current rate of $1303, or even their projected increased rate of $1890, it's still a heck of a lot cheaper then Orland. Plus, I wouldn't have to pay $128 monthly train pass (soon to b increased by 20%), & be closer to more shopping, restuarants, bars and other activities then Orland has. Its seems like those jumping on board are not thinking outside the box, or ask the right questions. What happens when the real estate market swings back around & it makes more sense to buy then rent again. What happens if there's not enough $ pay off the bonds or developers default on their $38m loan.
PatriotCitizen August 19, 2011 at 06:55 PM
Interesting quotes from Thomas Jefferson: --> To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical. --> It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world. --> I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them. --> My reading of history convinces me that most bad government results from too much government. --> I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property - until their children wake-up homeless on the continent their fathers conquered.
MS August 19, 2011 at 09:58 PM
Oh great Patriot. Lo, the words of our other predecessors too: "The business of America is business." -- Calvin Coolidge "Every power vested in a government is in its nature sovereign, and includes by force of the term a right to employ all the means requisite...to the attainment of the ends of such power." Alexander Hamilton's Opinion on the Constitutionality of the Bank (1791-02-23) "It is a maxim deeply ingrafted in that dark system, that no character, however upright, is a match for constantly reiterated attacks, however false." -Alexander Hamilton "Drive thy business or it will drive thee." -- Benjamin Franklin "The only limit to our realization of tomorrow will be our doubts of today." -- Franklin D. Roosevelt Anyway, the point is, I can come up with any number of quotes from great Americans that will basically counter any other great American's quotes...
John Paul August 20, 2011 at 02:55 AM
Yes Frank, I'm for real. Like I said, from this point forward, this makes the most sense. Once the real estate market picks up, I would guess that this developement will go condo.
Ben Feldheim (Editor) August 20, 2011 at 06:56 PM
Kids, stay on topic instead of the childish swipes.
Andrea Williams August 20, 2011 at 08:35 PM
Learned a new word today. Misfeasance: the wrongful performance of a normally lawful act; the wrongful and injurious exercise of lawful authority. I wonder if the Orland Park trustees are familar with the word...
PatriotCitizen August 21, 2011 at 03:35 PM
Ben - thanks for the reminder. I just happened to be reading about Thomas Jefferson and was amused and amazed by the quotes considering the time frame they were made and today's local political climate. Back on topic - I'm still concerned that this project is being partly funded by the Orland Park taxpayers given in recent times Village Manager Grimes asked all the unions for concessions and layed off several Village employees due to having a budget deficit. One to two years later - the Village is now funding projects? Is there a record of the purchases along Lagrange Rd?
Robert August 21, 2011 at 11:54 PM
Here is one for William's blog: Vrdolyak says he met with Hogan and Gorman (Liz Gorman's husband), a onetime Vrdolyak business associate, and jotted down a handwritten note — a copy of which is in the court file — to formalize the deal. Despite signing the deal, “Vrdolyak did not receive the funds and/or the funds were transferred immediately to” Gorman’s (Liz Gorman) dealership, Vrdolyak claims. Vrdolyak also says he never was given the stake he says he was supposed to have gotten in Midlothian Dodge cars. http://www.suntimes.com/news/metro/6650391-418/former-ald.-ed-vrdolyak-fighting-law-office-foreclosure
Tim Gockel August 26, 2011 at 06:54 PM
I've only lived in Orland Park for five years (moved here from Oak Park) but I'm happy to have a mayor with the testicular fortitude to disregard the nattering naysayers and get this town moving forward instead of stagnating in the past.
Karen Foley August 27, 2011 at 02:40 PM
TIm....its the financing, growth and development is great, just not on the backs of the taxpayer. This means you. The risk is on the village not the developer.


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