The developer of Kohl’s for the past few years has tried unsuccessfully to be reimbursed for the 2002 purchase of a piece of former Crestwood Swim Club property now owned by the city.
Last week, the developer, THF Realty, got its wish, but remains “dissatisfied.”
Crestwood aldermen voted 6-2 April 24 to provide a $295,000 reimbursement to THF for the developer’s $850,000 purchase in 2002 of former Swim Club property from Rosebrook Real Estate. Ward 3 Alderman Gregg Roby and Ward 4 Alderman Steve Nieder voted “no.”
The $295,000 reimbursement estimate for that parcel came from a recently performed appraisal based on market conditions when the city’s back parking-lot area was sold to THF in December 2002. That reimbursement will come from funds generated from a 1-cent sales tax at Kohl’s as part of the Crestwood Point Transportation Development District. That TDD sales tax originally was proposed as three-eighths of a cent, but was established as a 1-cent tax in 2003 by the Crestwood Point TDD Board.
The parcel for which THF received reimbursement is now used as the Crestwood Government Center’s back parking lot, which encompasses roughly two-thirds of an acre. While THF paid for that parcel, it actually was conveyed to the city by the Swim Club.
THF originally requested an $800,000 reimbursement from the Crestwood Point TDD Board. That reimbursement would have included not only the purchase cost for the city hall back parking lot, but also for the Kohl’s site. Because THF acquired property necessary for the Kohl’s development and the Swim Club conveyed the property now used as the city’s back parking lot directly to the city, the Kohl’s property is not eligible to be reimbursed through the TDD.
Ian Silberman of THF attempted at an April 19 Crestwood Point TDD Board meeting to obtain $37,119 more than the appraised reimbursement amount of $295,000 for the back parking-lot area. But that measure was denied by the Crestwood Point TDD Board with a 3-1 vote. Mayor Roy Robinson, City Administrator Frank Myers and Board of Aldermen President Jerry Miguel of Ward 3 all voted against the consideration for additional reimbursement. Marian Nunn of THF Realty abstained.
Reflecting on that unsuccessful plea and in light of a 2001 Crestwood Board of Aldermen memorandum that stated THF would be reimbursed in the amount of $650,000, Silberman said while he is not pleased with the $295,000 reimbursement, he is also not opposed.
“Dissatisfied?” he said. “I would say yes. But in an effort to resolve this matter and put it behind us, we’re aware that the TDD board has recommended … we’re aware of the number that’s been recommended and we have not stood out in opposition of it.”
The approval of the amendment to the intergovernmental cooperation agreement with the Crestwood Point TDD Board also authorizes the TDD board to issue separate notes or bonds to finance not only the TDD project, but also the city parking lot’s reconstruction. The amended intergovernmental cooperation agreement creates a $631,719 project fund for that parking-lot reconstruction, which would benefit from new pavement and additional lighting. The amendment to the intergovernmental cooperation agreement also authorizes the issuance of bonds to reimburse THF Realty for up to $2.355 million in project-related costs, which include the construction of Kohl’s.
The ordinance revising the agreement with the TDD board also amends the city’s agreement with the Crestwood Point Community Improvement District Board. Under that part of the ordinance, the CID board will issue notes to THF Realty for up to $515,000 of costs in connection with the project.
While aldermen were in agreement that the bond issuance would help further the city’s parking-lot reconstruction, Roby and Nieder both opposed the reimbursement out of uncertainty over documents authorizing that reimbursement.
“It’s not my intent to cheat THF out of any money they have coming to them,” Roby said. “They’ve been a tremendous developer for the city of Crestwood, and we appreciate them for everything they’ve done here in the city. I just feel that we do need to look out and make sure that we have all our bases covered and we’re not putting ourselves in a precarious position.”
Crestwood Point TDD bond counsel Robert Klahr of Armstrong Teasdale said he will “admit” the documents are not in “perfect” condition, but he still can see a number of ways in which the reimbursement to THF is legal.
“There could potentially be a number of ways the transaction could have occurred so that it would be legally permissible,” Klahr said. “THF would not necessarily have had to take title to the property so long as there’s sufficient evidence to suggest that the consideration they paid was in part inducement for Rosebrook to transfer the property that became the city back parking lot to the city …
“Subsequently, we had affidavits from Rosebrook saying these transactions were linked from the get-go. The $850,000 THF paid was, in fact, consideration for both transfers. Same thing from an affidavit from someone at THF who was there at the time. Same thing from the assistant city administrator who was there at the time. All those folks said exactly that same thing … These were linked transactions. And so the $850,000 was consideration for both.
“Beyond that, we have the 2001 board memo, which as we indicated, things didn’t go exactly the way that would have laid out. But it does suggest THF would pay some sum of money for both and would receive ($650,000) TDD reimbursement for the portion that ultimately would be titled to the city … They all don’t fit together as neatly in a nice package as certainly I would like or Mr. (City Attorney Robert) Golterman would like from the city’s perspective or, frankly, what Mr. Silberman would like, I think, from THF’s perspective. Because had this gone the way of the 2001 board memorandum, THF would likely be getting reimbursed for $650,000 or even more and not the $295,000 …”
Before he voted against the amendment authorizing the reimbursement and issuance of bonds for the parking-lot reconstruction, Nieder said because that project and the reimbursement are separate issues, he would have liked to consider voting on those issues separately rather than combined.
“We had the animal-control ordinance come before us and there was no more than two people that had difficulty with that and we tabled the whole thing based on that premise alone,” he said. “We’ve had more than that here tonight objecting to what we are moving forward with. And I think that should possibly be considered, possibly tabling it or amending it, one of the two.”