Village Board Approves Lux Apartments Development Plan and Bond Financing

In front of a packed house, Orland Park trustees approve with one dissenting vote, but also agreed to find ways to lessen the financial risk.

Updated, 11:05 p.m. Monday

Catcalls and shouts from unhappy Orland Park residents did not sway the village board Monday night, as both the development plan and for the project were approved.

But the approval did come with a new caveat introduced during the meeting. The Orland Park Village Board also unanimously voted to have village staff pursue ways to reduce the “debt and gap financing participation” of putting up $63 million in bonds to cover loans and incentives for the construction.

Trustee Brad O’Halloran was the lone dissenting vote on the redevelopment agreement and the financing plan for the apartment complex. He said he supports the project itself, but not the financing plan.

While a few residents voiced their concerns and misgivings about the project, it was the trustees who carried most of the meeting as they responded to and .

Trustee Kathy Fenton, who also chairs the development services committee, spoke at length, first firing back at people who criticized the village for not working harder to fill vacant business spaces, citing that less than 5 percent of Orland Park’s business spaces are empty. She also listed several businesses that set up shop in spaces left behind, including in the former Value City space, in Sports Authority’s old home, and Johnny’s Charhouse in the former Canoe Club building.

Fenton then described vacant spots that soon will be built upon, including the northwest corner of 144th Place and LaGrange Road, where will soon build a new plaza space.

 “I am not a person to jump into things,” Fenton said. “If anything, I am a pessimist. But these are very proactive, not reactive, individuals sitting up here.”

Trustee James Dodge tackled the issue most talked about: whether residents will see the costs on their tax bills if the complex fails. He described simulations he asked staff to run 10 years down the line—when developer Flaherty and Collins is scheduled to have repaid the village’s investment.

“If Flaherty and Collins goes to hell in a handbasket, we, because we are the lender, step right in and control the asset, which will be more than the loan,” Dodge said. “We will have more than enough money in the home rule sales tax to make sure this never hits your tax bills.”

O’Halloran said he changed his mind on the financing plan for the project after Standard and Poor’s downgraded the United States’ credit rating because of “too much debt.”

“And here we sit to double out debt,” O’Halloran said about the financing plan. “It’s too much risk at this time.”

McLaughlin complimented staff and board members for the “tremendous amount of time spent over the last several years working on getting to this point.” He said he will work with staff to find ways to reduce the financial risk.

While some attendees clapped after the trustees spoke, others booed and called out while they were speaking, including one man who said, “Don’t treat us like a piggy bank.”

MS September 22, 2011 at 01:45 PM
I'm not sure I have the right answer to your questions, but I read that the Village brings in about $28 million a year in sales tax revenues. Assuming all things are constant, in 10 years that amounts to $280-300 million. I dont know if that means that they save a portion of the sales tax each year to be sure there is something in the end or what... Also, according to this information (http://www.orland-park.il.us/DocumentView.aspx?DID=1226), OP is 5th in the state in sales tax revenue. Sales tax revenue is 26% of the annual budget... I think Sales tax dollars are used for capital projects and business incentives but i am not sure. IF a disaster hits our town, I doubt sales tax will be enough to fix any problems. IEMA and FEMA would probably provide budget boosts.
Dave Wagner September 22, 2011 at 03:22 PM
To OrlandParker - Options are limited at best, but what the future holds is where the opportunity may lie. My initial (as yet uninformed) thought is to stay on the Board to allow the funding proposals to go thru the committe process. It is a BIG deal, and the potential negatives for the board out weigh the positives. Granted they can contend that it is still a public process and thus have a defensible position, but it still looks bad. I fully understand and appreciate they don't want to, and shouldn't with respect to the financing proposals, revisit the should we or shouldn't we do the project. However, without the funding, the project can't proceed. Which makes the interim financing a point of contention for them. Say they have arranged the interim financing, and it comes time for the bonding. They then have an argument that they 'must' approve the bonds as they owe on the interim money. It is more likely that they will both be passed together as they wouldn't want to put themselves in that position down the road. Especially since it could be near the time for the mayor and 3 trustees to get reelected. So keep an eye on the agenda for the meetings and be there when the question comes up. If I had to hazard a guess, I would say that the project will go over budget, and additional funds will have to be approved. I surely hope that the projecy IS a success, at this point failure is too costly. The risk, however, is not going away.
Andrea Williams September 22, 2011 at 04:30 PM
Dave, have you heard anything about who the lender is going to be? There may be an opportunity there...just thinking out loud...to go at this from a different direction and throw some community pressure on the potential lender(s).
Megan James September 22, 2011 at 04:38 PM
Thank you MS. Again, not being negative...just asking questions for further clarity on my end. & I apologize, I didn't mean "disaster" as in something that IEMA or FEMA would handle. I totally understand state & federal funding is provided for those situations when an area is declared a disaster zone by them. But I'm assuming communities who have the Home Rule Tax Fund, use that as a "savings account" for emergencies also. It makes sense that it would be used for business incentives and captial projects. But I would like to know if there are situations or unplanned expenses that could occur during the next 10 years where some of the $62m earmarked for this project may get used first? I do tend to agree with your thinking, that over 10 years, if we pull in about $28m a year constantly, in 10 years that would be about $280m, which is more then the $62m needed for this project. But I'm assuming that we already use this Home Sales Tax fund in to pay for other village projects regularly. So again, not trying to be negative, I'm just wondering if say their was another lawsuit, need for a new school, or say our state or fed gov't were too broke to provide funding, is it possible the full $62m is not 100% guaranteed to be there? Just trying to feel more confident with Home Sales Tax fund being the back up, especially since state & fed govts are not sending as many funds for things like they used to.
Dave Wagner September 22, 2011 at 07:25 PM
The Village, in their budget, plans to use the HR Tax to pay the interest on the existing debt, if I read it correctly. (Note: The budget contains 2009 actual information which was based on 15 months due to, I assume, a fiscal year change). Given that the likelihood of this revenue source decreasing is high, one would have to conclude that using this source on an annual basis going forward would cause possible funding shortfalls to other Village prorgams and/or projects (roads, parks, etc). Sure, the Village pulls in a lot of money from many different sources, but the two biggest changes (2009 actual equalized for 12 months and 2011 Budget) are an increase of $3.5 mil in fees for services and an increase of $2.3 mil in Real Estate tax revenues. State income tax revenue and miscellaneous (other) tax revenues both declined. What my point is - Revenues for fees and services and real estate taxes come from residents and businesses, as do State income taxes. The portion of sales taxes (relatively constant) comes from residents, but more so from others not living in Orland Park. Property Tax revenue and fee revenue went up about $5.8 mil while all the other major sources remined the same or fell slightly. Essentially, the residents are already paying more, and we probably can expect to pay more. But rest assured, as election time approaches, I think we can count on a rebate of our Orland Park portion of real estate taxes. Or maybe sooner, just to make us all happy.


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