During the April 7 Committee of the Whole Meeting, Trustees reviewed the general plan for supporting not only the redevelopment of Hawthorn Mall, but also the many steps taken to support partner taxing bodies (especially Hawthorn schools) as well as legal protections put in place to safeguard the Village and ensure the appropriate completion of the project.
Village Manager Mark Fleischhauer, Village Attorney James Ferolo and Robert Rychlicki, representing consultant Kane McKenna & Associates, summarized the proposed agreement, which is many months in the making. As part of the project, the Village established a Tax Increment Finance (TIF) District, with the payout structure tied to specific completion schedules and expenditures. This pay-as-you-go structure encourages work to be completed in a timely fashion in order for the developer to be eligible for payments spread across three phases. If schedules are not met or construction budgets are reduced, payments from the Village would be reduced or potentially eliminated. If sales tax generation is below benchmarks, the developer will reimburse the Village to cover the gap. (Note that the Village does not collect property taxes, but rather relies on sales tax to fund the bulk of Village-provided services.)
Of particular note is that the Village worked with the developer to secure financial support for taxing body partners substantially over what is outlined by statue or typical for redevelopment agreements. Hawthorn District 73 is slated to receive 27 percent of the TIF increment generated by the residential development paid annually (for a projected total of $17,856,779 over the term of the TIF) as well as $400,000 in impact fees. Unlike typical agreements, Hawthorn payments are not based on the number of students housed in the new residential development. (Historically, the luxury rental market does not attract renters with children, so the actual impact of new students is minimal.) Hawthorn District 128 will receive 13 percent of the TIF increment paid annually, as well as $46,500 in impact fees. Cook Memorial Library District will be eligible to receive 2 percent of the increment to cover additional costs for any new library members. Vernon Hills Park District will receive $1,830,000 in impact fees, while Countryside Fire Protection District will receive $500,000 in impact fees. The Village of Vernon Hills will receive 60 percent of generated sales tax (with safeguards in place for additional reimbursement from the developer if sales tax marks are not hit).
The initial developer request for $58 million was negotiated down to $46.5 million, with the first $38 million eligible for payment at completion of Phase I construction; the remaining $12.5 million is eligible for payment at the completion of Phase III (the final phase of work). Proceeds are paid solely from TIF increments; no bonds or obligations will be secured for this redevelopment. Formal Redevelopment Agreement documents are being prepared, with anticipation of a formal Board vote at either the April 20 or May 4 Meeting.
April 7, 2021 Meeting Video: Vernon Hills Village Board Meeting - 4/7/21
Hawthorn 2.0 Webpages: https://www.vernonhills.org/872/Hawthorn-Mall-Redevelopment