By a 6-2 vote on Sept. 22, City Council voted to grant O’Donnell Investment Company $2.9 million toward the construction of the 835 Main St. building, with funds to come from the newly established Main and Chicago TIF. Because the TIF does not have funds yet, the City will borrow money to give to the developer if necessary.
“This is Evanston looking into the future,” said Alderman Melissa Wynne, whose Third Ward includes the site. With the new gigabit project set to include the 835 Main St. building, office space will be extremely attractive to high tech companies looking for space next to both the CTA and Metra lines.
“Why would we miss the chance to provide office space at this spot?” said Ald. Wynne.
Office space – about 13,400 square feet– is the reason for the developer’s stated need for $2.9 million in support. If the project were entirely residential, the developer told the Economic Development Committee recently, there would be no need for a City grant. “The developer is seeking TIF [tax-increment financing] assistance totaling $2.98 million to cover the financial gap associated with the construction and operation of 13,400 square feet of office space,” according to the staff memo accompanying the agenda item.
When the City created the Chicago/Main TIF, it also created an advisory board to oversee proposed expenditures. Per the staff memo, the TIF advisory board voted 4-2 to give O’Donnell $2.9 million.
TIF funds must be used for eligible expenses only. Of the total $45.8 million cost of the 835 Main building, staff concluded that $5.6 million constitute TIF eligible expenses. Examples include infrastructure such as sewer and utility upgrades, street grading, and parking.
Per the memo, the “developer is seeking assistance because the income obtained by renting this office space is less than the value derived from constructing new office space in this building.”
Ald. Wynne said office space that existed on the site years ago led to more street activity during the day and resulting economic activity. Based on the amount of office space contemplated, staff estimates between 45 and 90 new office employees at the Main-Chicago area during the day. The memo says the City anticipates these new workers will generate between $100,000 and $200,000 in additional sales tax over the 23-year life of the TIF.
Alderman Don Wilson, 4th Ward, and Alderman Coleen Burrus, 9th Ward, voted against the giveaway. Those two wards border Main Street and Chicago Avenue, and each ward contains a portion of the TIF area.
“I’m extremely excited that there will be a building at Main and Chicago,” said Ald. Burrus, but she questioned the decision to require one floor of office space “because it’s costing us millions of dollars [that go to] a very, very, very wealthy developer.”
Ald. Wilson said the office-space requirement was the City’s doing, not the developer’s. It is the City’s insistence on a single floor of office space that lead to the $2.9 million request.
None of the other aldermen addressed the issue. “It’s a risk that we’re taking,” said Ald. Wynne, “but a risk with really high rewards.”
The new AMLI development two blocks south of the site, just outside the TIF district, was developed without any City support and includes live-work office and retail space on the ground floor.