Crestwood aldermen were scheduled this week to consider for the second time a $44,601 reimbursement to the developer of Kohl’s for business-relocation costs.
During the board’s June 26 meeting, a motion for a second reading on the reimbursement bill was killed with three “no” votes. Under the City Charter, to adopt an ordinance, at least five of eight aldermen must vote in favor of it and at least one week must elapse between introduction and final passage unless an immediate second reading is approved by unanimous vote of the Board of Aldermen.
Board President Gregg Roby of Ward 3, Ward 1 Alderman Mac McGee and Ward 4 Alderman Steve Nieder voted “no” on the bill’s first reading.
Ward 1 Alderman Richard Bland, Ward 2 Alderman Steve Knarr, Ward 2 Alderman Chris Pickel and Ward 4 Alderman John Foote voted “yes” on the first reading of the reimbursement bill. Ward 3 Alderman Jerry Miguel was absent.
In April, aldermen approved a $295,000 reimbursement to THF Realty for the developer’s $850,000 purchase in 2002 of former Crestwood Swim Club property at Crestwood Point. Because the Crestwood Point Transportation Development District Board of Directors denied an additional $37,000 in reimbursements in April, Crestwood Point TDD board counsel Robert Klahr of Armstrong Teasdale said THF Realty found a mechanism to be reimbursed for the $44,601 in relocation costs.
The Crestwood Swim Club, a private entity, moved to its current site adjacent to the city Government Center in 2003.
THF already has received approval of $2,233,000 in reimbursable costs from a maximum of $2.285 million in tax-increment financing, or TIF, assistance. Because that leaves $52,000 in eligible reimbursement expenses, THF now is requesting $44,601 of that to be reimbursed.
The proposal also would allow the payment of legal fees to Armstrong Teasdale from TIF revenues once all TIF notes for the project have been paid. Klahr said since his work as legal counsel to Crestwood Point since 2004, his firm is owed an estimated $44,000. He reiterated that Armstrong Teasdale would not bill the Crest-wood Point entities until after its TIF notes have been paid, which he estimates should occur in 2009 or 2010.
And in a separate 7-0 vote June 26, aldermen decided to replace the Board of Aldermen president with Director of Public Services Jim Eckrich on the Crestwood Point TDD and Community-Improvement District boards. That move came at the request of board President Roby.
As for the issue of reimbursement, Klahr said —after Roby questioned THF Realty’s motives — that he believes THF’s request for relocation costs four years after the pool was moved is to recover the additional $37,000 denied in April by the TDD board. Miguel, Mayor Roy Robinson and City Administrator Frank Myers voted against that additional reimbursement in April. Ian Silberman of THF voted “yes.”
“So the pool’s been moved now for how many years?” Roby said. “Three? Four? And they’re just now submitting relocation costs for that. This wouldn’t by any chance be as a result of the failure to receive monies for the TDD portion of the parking lot?”
“I think that’s absolutely why,” Klahr said. “I think they’re doing it as a way to recoup a certain portion of what they believed they were going to get reimbursed by the TDD. That’s correct.”
Nieder, who with Roby voted against the April reimbursement of $295,000 to THF, questioned Klahr as to “how many more times” aldermen can expect to hear reimbursement requests.
“I guess to clarify, I don’t represent THF,” Klahr said. “I have not …”
“Is there anybody here who can answer that question?” Nieder interjected.
“I don’t believe there’s anybody here from THF, no,” he said. “But the only thing I can tell you, alderman, is there is no ability under any of the existing mechanisms that are in place for any additional reimbursement at this point. There are no more eligible costs to be reviewed or approved. This is the last time that I or anyone else will presumably be in front of you on this project.”
Myers said that after consultation with Klahr and a review of THF’s redevelopment agreement with the city, he believes that the $44,601 in relocation costs from TIF revenues is “an eligible and legitimate relocation expense.”
In addition, a 2001 Board of Aldermen memorandum stated THF would be reimbursed $650,000 for its $850,000 purchase of former Swim Club property. The developer received $295,000 of that in April.
But Civil Service Board member Martha Duchild, who spoke during the public-comment period June 26, said that even though the new request legally is reimbursable, the administration and aldermen have a responsibility to convey to THF that the developer made a mistake assuming it would be reimbursed for its purchase.
“They thought they were going to be reimbursed for their $850,000 for both parcels,” Duchild said. “They later learned that the parcel that became Kohl’s rear parking lot was not reimbursable. That was their error — not the city’s, not the Kohl’s shoppers and not the city’s residents. So at what point do you hold them responsible? Even though legally they are, they can expect that money.
“But as a resident and a Kohl’s shopper, it’s just, for lack of a better word, it’s a load of crap. So at what point is the city prepared to say: ‘Look, you made a mistake. You should take at least some responsibility for this mistake.’ Are you willing to do that and is the board willing to do that?”
“The TDD (board) did that when they had approached the TDD board with a $800,000 reimbursable request for reimbursement for land and received a substantially, a substantially lower number ($295,000)” Myers said. “In terms of this particular request that’s before this body, it is my understanding — not being here through all the project, I started in February 2006 — but my understanding in looking at the agreement and meeting with Mr. Klahr, the development agreement allows within certain categories maximum reimbursable amounts.
“This particular category, which is relocation expense, there is still some, if you would, wiggle room under the development agreement for THF to submit a legitimate, reimbursable cost under the agreement. All I’m saying as the city administrator and reviewing this with Mr. Klahr, this is a legitimate reimbursable expense under the development agreement. I do understand the frustration of the citizens and the questions of the board. And as a TDD (board) member at the time, it is frustrating when you see the TDD board take an action so they cleverly, some would say, cleverly found another avenue for reimbursement. But the issue is, from my perspective and recommending to this body, under that agreement, are they entitled to this reimbursement? And from everything I’ve seen and from everything I’ve reviewed, the answer is yes.”