Lincolnwood considers buying Purple Hotel site
By KEVIN GROSS
After years of plans that didn’t materialize regarding the redevelopment of the former Purple Hotel site, the Lincolnwood Village Board of Trustees at its meeting Feb. 20 considered an ordinance that would allow the village to purchase the site from Toronto-based lender and current owner Raumsen to possibly lease it or auction it off themselves.
As part of this consideration, trustees approved a resolution directing village code enforcement against the current conditions of the properties at 4500-4560 W. Touhy Ave. and 7350 N. Lincoln Ave, which usually translates to fines to the owner of the property for lack of upkeep to village standards.
Currently, the site requires removal of underground foundations and resurfacing of former surfaces and parking lots, which could cost about $1 million, according to village attorney Steven Elrod. Failure to comply could result in daily fines of up to $1,000.
"The village as a government has the ability to act in a regulatory manner or in a proprietary manner with respect to property," Elrod said. "The village could continue to operate in a regulatory capacity and await the application that the developers before you say they are prepared to file. Or it could act in a proprietary capacity, to achieve complete control over the property by acquiring it."
ZS Development chief executive officer Mike Sieman said at the meeting that he showed interest in acquiring the site since former site owner North Capital Group filed for foreclosure in January 2016 after years of failure to redevelop the property.
North Capital was ordered by the court to auction the site in January 2017 but challenged the auction for months until it was forced to transfer the property deed to its lender Raumsen, and in preceding weeks ZS Development had engaged in talks to purchase the site directly from Raumsen as well as various discussions with village officials.
Sieman said that any development would require "significant" public financial incentive packages that do not include tax increment financing support, with the site’s location in the Lincoln-Touhy TIF district.
He suggested that the village levy a general obligation bond to finance the project, or as the method to purchase and give or lease the land to the developers as the village’s portion of the investment, assuming the village chooses to purchase the land and approve ZS as the final developer.
"The typical process would be after the village buys the property, we would develop a request for proposals about what we want to see from the development community. Different developers would send their proposals but the village would decide and define what type of development we see fit," village manager Timothy Wiberg said. "This would let us better dictate what we’d like to see. Without acquisition, normally with zoning laws and within reason we only decide what we don’t want to see with a development."
Due to the high cost of buying land the measure was tabled to a future meeting, as trustees directed Wiberg to meet with bond and finance consultants to research options for financing any purchase before making a final decision.
If purchase negotiations with Raumsen were to fail, Lincolnwood could additionally pursue property acquisition through eminent domain laws. Although the village could seek additional proposals in the future and turn to a different developer, some trustees and staff liked ZS Development’s credentials and reiterated that they could still receive final approval as the best-fitting developer.
Wiberg said that it is too early to say which method of financing could be pursued, although he understood ZS Development’s reluctance to rely on TIF money.
"The TIF district is already 6 years old in its lifespan," he said. "It’s currently several million dollars below the base benchmark equalized assessed value, and (developers) could have to wait years to even reach a zero level in benefiting from TIF. We were shorted by the Great Recession, it put a significant hit everywhere in Chicagoland, and this was no exception. The (site) vacancy certainly hasn’t helped either."
Wiberg said that to date, ZS Development had not presented any potential renderings or concept plans, although Sieman outlined broad discussions for mix-use development that could "include a residential component and a civic space that we agreed would be necessary to ignite the project."
Trustees suggested that the desire for speedy development and control of the development might play a role in the board’s actions, with the site unused since the closure of the Purple Hotel in 2007 after more than 40 years of operation.
"I think part of the reason this board is taking the attitude it is right now is that they don’t want to spend a lot of time talking, they don’t want to spend a lot of time looking at plans that can span over a period of 2 years and never get brought up," Trustee Ronald Cope said. "I think that’s the frustration we’re being faced with, and that’s the issue we’re trying to resolve."
Todd Zima, the co-founder and design director of ZS Development, said that they are more prudent than preceding developers. "We are doing a couple things our predecessor have not done. We have commissioned full market analysis for the types of buildings we put on site, and plan to continue market analysis to ensure the spaces are robust and filled with economic incentive and people. We also created a request proposal and are interviewing three world-class master planners."
Sieman remained adamant that their group is qualified to take the task of developing the site, as he said he participated in the capitalization of about $3 billion worth of real estate in his history, including the 250-unit Sherman Plaza high rise condominium in Evanston.
"We understand and appreciate the caution the village has in working with anyone given the past, and we humbly request that everyone do their best to not allow the past failures of others, who had nothing to do with us, to affect how our vision and team is judged," Sieman said.
Lincolnwood previously was engaged in a court case over site maintenance in June 2016 with previous site owner North Capital, which demolished the vacant Purple Hotel with plans to construct a $135 million mixed-use development with 91,000 square-feet of retail that was touted as a potential Lincolnwood downtown area.