ACTION REQUESTED:
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Communication from the City Manager with a Request to APPROVE the SIXTH AMENDMENT to the REDEVELOPMENT AGREEMENT with RIVER TRAIL DRIVE L.P. (Council District 1)
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BACKGROUND: On April 14, 2015 the City Council approved a Redevelopment Agreement with River Trail Drive L.P. to create the River Trail apartment project. The Agreement was fully executed by both parties on April 29, 2015. Section1.3(c) of the Agreement created a six month “Due Diligence” window in which both the City and developer had to produce certain documents and complete certain activities prior to conveyance of the property and commencement of the project. Those documents and activities are outlined more fully in Sections 1.3 and 1.5 of the Agreement. Among the more critical deliverables are having the property subdivided and rezoned; an approved bond resolution; securing of private financing; and obtaining approval from the Illinois Department of Natural Resources (IDNR) and National Park Service (NPS) for the conversion of the property.
The “Due Diligence Expiration Date” was originally set to expire on October 29, 2015. This date has been extended by five separate amendments to the Agreement, with the last being approved by the City Council on June 27, 2017 creating a Due Diligence Expiration Date of December 29, 2017. After that date, either party has the right to terminate the Agreement during an additional 10-day period. If neither parties terminates, the project could proceed.
Through the last few years of this project, the biggest issue was the City receiving approval from NPS that will allow project to proceed. On October 31, 2017, NPS sent a letter to IDNR indicating its approval of the City’s request. The approval included two conditions: (1) that the sand volleyball courts be replaced within three years of the approval; and, (2) that a purported shortfall in equal value between the converted property and replacement property be made whole by the addition of sufficiently valued property within one year of approval. The first condition is not problematic; the developer agreed to a similar condition imposed by the City Council to pay for the relocation of the volleyball courts. While a final design or budget has not been completed, it is a task that will be required before the agreement can be finalized and the project can start. The second condition of needing additional property to make the conversion whole is being contested by the City and IDNR. Neither the City nor IDNR believes that NPS’ rationale for the purported shortfall is correct. This issue has yet to be resolved.
While the City has received conditional approval of the conversion, there are a few outstanding questions that need to be addressed. Further, there are still deliverables required by the developer that could not occur until this approval was granted, such as finalizing financing. An extension to the due diligence window allows time for these tasks to be completed.
Given the hard work and progress on this project, neither the developer nor City staff wish to terminate the Redevelopment Agreement. The attached Sixth Amendment extends the due diligence window through June 29, 2018. It is important to note that this date is an outside parameter. Should all of the deliverables in the Agreement be satisfied prior to that date, the next steps in the project can proceed.
FINANCIAL IMPACT: The amendment extends the Due Diligence Expiration Date. The City has spent funds to during the due diligence period, including costs associated with its conversion request and purchase options for the replacement properties. As a separate item on the agenda, Council will be asked to authorize the purchase of the Detweiller Playground property, one of two replacement properties. James Simantel has agreed to another extension of a purchase option contract on the other property.
NEIGHBORHOOD CONCERNS: The River Trail project has been the subject of a great deal of public comment. While there has been support for the project, there has also been considerable opposition.
IMPACT IF APPROVED: The Due Diligence window will be extended through June 29, 2018.
IMPACT IF DENIED: The Due Diligence window will end December 29, 2017 and the City would need to terminate the Agreement under the provisions of 1.3(e).
ALTERNATIVES: Council could lengthen or shorten the proposed Due Diligence extension.
EEO CERTIFICATION NUMBER: Not Applicable
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Vibrant Downtown: Riverfront/ Central Business District/ Warehouse District
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Reinvest in neighborhoods.
DEPARTMENT: City Manager's Office