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The deal negotiated by the City to bring a Trader Joe’s to the former Blockbuster Video site, on Chicago Avenue just south of Dempster Street, was partially revealed at the March 19 City Council meeting. The plans involve three separate parcels: the Blockbuster site itself, the LA Tan building attached to the Blockbuster store just to the north, and the Northwestern-owned single-family home just to the north. The terms of the deal call for the City to purchase the northern two parcels for about $2 million to serve as the Trader Joe’s parking lot.

“This is our first opportunity to talk about this publicly,” said City manager Wally Bobkiewicz. The entire transaction was negotiated by the City, Northwestern, Trader Joe’s, and the project’s developer, Terraco, Inc., in complete secrecy over the past several months. Under state law, public bodies such as City Council may meet in executive session to discuss matters regarding real estate, and it is apparent that this was the case with the parcels involved in the Trader Joe’s project.  

The broad outlines of the deal came into the light on March 19.  Terraco has already purchased the Blockbuster lot, said Mr. Bobkiewicz. Initially, the plan was to acquire the Shell station just south of the Blockbuster site, but the owner was not interested in selling, the City Manager said. The focus then shifted north.

Terraco entered into a contract to buy the LA Tan building as well, according to the staff memo and other information prepared for the March 19 meeting. Under the measure introduced at that meeting, Terraco will assign its interest in the LA Tan building contract to the City.

The City will pay $1.4 million for the LA Tan building. Speaking during the citizen comment portion of the meeting, former township assessor Sharon Eckersall said the Cook-County-assessed value of the parcel is $1.5 million. Payment will come from the City’s parking reserve fund. Mr. Bobkiewicz said there is sufficient money in the Parking Fund to cover the purchase, and those funds are earning less than 1 percent interest. The LA Tan building will be razed and replaced by a parking lot, he said.

The fact that parking might still be insufficient has led to talks aimed at acquiring the Northwestern-owed home just to the north. Early, erroneous reports in media outlets described the Northwestern-owned piece as an alley, but it is in fact a house, say Mr. Bobkiewicz and staff materials. Negotiations are ongoing, and no realistic estimate of the cost of the Northwestern house was provided. Ninth Ward Alderman Coleen Burrus said she guessed that the purchase price would be about $600,000 – “Let’s say $2 million [when added to the $1.4 million] to make a nice round number,” and no one corrected that figure.

Other than those broad outlines, much of the deal remains in the dark. As for the LA Tan building, the cost of demolition and construction of the parking lot remain to be discussed. As for now, the City gets the building for $1.4 million, but the cost of improvements has not been agreed upon as yet. Mr. Bobkiewicz indicated that he expected Terraco to pay those costs, but nothing in the documents confirms that.

The terms, if any, under which Trader Joe’s would lease the parking lot from the City have not been discussed or agreed upon. Mr. Bobkiewicz said he envisioned a license agreement under which Trader Joe’s would be responsible for property taxes, but the discussion went no further. Maintenance of the lot has yet to be determined.

Staff materials indicated that overnight parking on the lot might be a source of additional revenue for the City. It was unclear how such a program would work, particularly given Trader Joe’s rather expansive hours of operation.

As for the Northwestern house, almost nothing is known other than the negotiations continue. Whether the house would be moved or razed is an open question. Who would pay the cost of moving or razing the house is unknown, though again Mr. Bobkiewicz said he expected that Terraco would pay such costs. There are currently tenants residing in the house, and the impact on them and their lease is still undecided.

In response to a question from Seventh Ward Alderman Jane Grover, Mr. Bobkiewicz said the property would remain on the tax rolls because it will be used for a commercial purpose, and Trader Joe’s would pay those taxes. Similarly, the Northwestern house currently pays taxes.

In the past, the City has provided incentives in the form of sales tax relief to new retail establishments. Ald. Burrus, who was not involved in the executive sessions concerning this issue because she works for Northwestern, asked if such an incentive was considered.

“We felt that rather than giving them money [in the form of sales tax relief], we’d buy the property and keep it for parking,” said Mr. Bobkiewicz. “We wanted to hold on to the asset… we wanted to do it this way.”

While the City has now introduced a measure that would obligate it to buy the LA Tan building for $1.4 million, much remains to be finalized before the deal can work. The most pressing item seems to be the Northwestern house, which is not under contract and for which a sale prices has not yet been agreed upon.

“I think we would say really nice things about Northwestern if they just gave us the property,” said Alderman Ann Rainey, 8th Ward.

“We have tried that,” said Mr. Bobkiewicz.

The measure passed out of the Administration and Public Works committee by a 4-1 vote, with Ald. Burrus voting no. It passed at Council on the consent agenda, and will likely return to City Council on April 10.