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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.

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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