Shorewood would provide a $3.9 million grant, and a $3.5 million loan, to help finance a development that includes a Walgreens store, 84 apartments and two separate public parking decks, under a newly detailed plan.
That financing proposal was recommended Thursday night by the Community Development Authority. The Village Board could review the plan, which would create a tax incremental financing district, at its May 16 meeting.
The loan would be repaid by developers Mandel Group Inc. and RE Enterprises LLC through the project's rental income.
The village's remaining debt, including the grant to the developers, would be repaid through property taxes generated by the project. Along with the $7.4 million provided directly to the developers, the village's other costs would include interest and legal fees.
The village's total debt of $8.7 million would be repaid over an estimated 18 years, according to a study by the village's consulting firm, Ehlers & Associates Inc. The firm's report said the project would have a $22.1 million taxable valuation by 2038.
Mandel and RE Enterprises plan to develop a six-story building west of N. Oakland Ave. and south of E. Kenmore Place, on the parking lot for Nehring's Sendik's grocery store. The new building would relocate Walgreens from its current location across Kenmore Place, and include apartments on the upper floors.
The parking structures would provide spaces for the apartment residents, and residents of a nearby apartment building operated by Katz Properties Inc. They also would provide 94 free parking spaces for customers of Walgreens, Sendik's and other nearby businesses.
The plan is to complete the first parking deck, west of Sendik's, by the end of 2011, and begin construction of the Walgreens/apartment building, which includes the other parking deck, in early 2012.
Walgreens could move to the new building by the fall of 2012, with the apartments completed by early spring of 2013, under a preliminary timetable.
The village's financing is needed because the rental income provided by Walgreens and the apartment doesn't generate cash to cover the costs of the parking decks, Ehlers says.
The project would be financed mainly through the sale of tax-exempt bonds. Mandel would pay that bond debt back to investors over several years.
Because the bond purchasers don't have to pay taxes on those investments, they'll accept a lower interest rate--which reduces Mandel's borrowing costs.
In return, Mandel is required to set aside 20% of the apartments for people earning no more than 60% of the area's median income.
Those 17 units, a mix of one-, two- and three-bedroom apartments, would have rents ranging from roughly $775 to $1,100. The remaining units would rent for around $1,200 to $2,000.
Once Walgreens moves, Roundy's Supermarkets Inc. is expected to pursue its plans to redevelop a nearby Pick 'n Save supermarket.
Roundy's controls two blocks west of Oakland Ave. between Kenmore Place and Wood Place, a site that includes the current Pick 'n Save, the Walgreens property and former Harry W. Schwartz Bookstore.
A Roundy's spokeswoman has said it's premature to discuss the company's plans. Real estate industry sources expect the Pick 'n Save, Walgreens and Schwartz buildings to be demolished and replaced with a larger supermarket--possibly an upscale Metro Market--that includes a public parking structure along with additional development.
In a separate action, the authority recommended the Village Board change the village's plan for a larger tax incremental financing district that covers the Oakland Ave. business district. That change would allow for future actions to borrow money to add more public parking spaces, with that debt repaid through property taxes on improvements within the business district.
Below is a rendering of the Mandel project looking south on Oakland Ave. from Kenmore Place