Evanston aldermen Monday will be asked to approve plans for a new restaurant and brewery called Peckish One to take over a largely-vacant city-owned building on Howard Street.
The proposed agreement with Jamie and Debbie Evans, who until recently owned the Celtic Knot downtown, calls for a five year lease on the building at 623 Howard with an option to purchase after four years and no rental payments for the first 18 months.
Under the plan, the city, which paid $475,000 to acquire the building 16 months ago, would spend an additional $200,000 to make basic upgrades to heating and cooling systems, add new windows and doors and perform structural work to consolidate the building’s five individual storefronts into a single space.
The restaurant owners say they plan to spend nearly $500,000 on improvements to the property to equip it for restaurant use and on other startup costs.
A diagram showing planned renovations to the property at the corner of Howard Street and Callan Avenue.
After the first 18 months, the restaurant would pay what city officials describe as market-rate rent escalating from $5,500 to $8,500 a month over the remaining least term.
After four years, the restaurant owners would be permitted to buy the building from the city for amount the city had spent to purchase and rehab it.
The microbrewery is to be operated by Tom Fogarty, who’s also an investor in the restaurant.
The restaurant’s name, Peckish, the owners say, comes from a British expression for being “somewhat hungry.”
They say they hope to open the business by Dec. 1.
In their business plan, the owner say they believe their business will complement the Ward Eight cocktail lounge that recently opened in another city-owned building next door.
City officials are planning a gathering Friday evening at Ward Eight to celebrate its successful opening.
Related document
Déjà vu
The article indicates the Council has not approved this yet. They should vote NO !
The Council seems to think they have unlimited right to pay out taxpayer money to whoever wants it and would-be business people have realized they can get almost anything they want from the Council.
Has the Ward Eight Lounge given Profit and Loss statements to the Council and the taxpayers—after all we paid for it ? They should show the P&L by month so we can see the trend to their business.
P&L
What if those P&L's from Ward Eight show a modest to healthy profit? What will be your objection then to this new promising business which could help further improve Howard St?
Since they aren’t paying any rent…
Since they aren't paying any rent the P @ L should.
Simple….. My objection
Simple….. My objection would be that the City of Evanston shouldn't fund private business with my tax dollars. Business funding is what free caital markets are for.
Free capital markets…whatever
" Business funding is what free capital markets are for."
First, "free" capital markets just don't exist. The system is rigged, and has always been rigged.
Second, there are TIFs, tax abatements, enterprise zones, and outright subsidies etc. that are used by various municipalities, states, and the Feds to attract or support businesses. Sure, you don't agree with these…but they exist, and they are part of the rules that the City of Evanston has to play with.
Third, even if these 'free capital markets' did exist….they would only care about maximizing the return for investors….that is not the City's goal. If the City can bring business to Evanston, and revitalize a neighborhood , through tax incentives or subsidies , then it should.
So I think that the only valid arguments here are whether these particular subsidies work, and how much they cost….not over the purity of 'free markets'.
Free Capital
"Free Capital Markets…Whatever"
Well I'm glad to see that you got one thing right, Capital Investment's goal is to return capital to the investor.
Maybe instead of considering how to subsidize every other project that comes to mind you ought to pay attention to where our local, state, federal governments are fiscally:
Maybe it's time for you to take off your rose colored glasses and realize what we can and can't afford.
A better way to better beer
18 months of below-market rent, plus a free option to buy later, surely has some value. If the City really wants to spend some money for the benefit of us beer-drinkers, they should suspend the municipal portion of the tax on beer. Those who don't like beer might object, but that's their problem, obviously the City Council has designated beer-drinkers a protected class.
Membership has its privileges
While driving along Howard St. yesterday, I noticed a “flurry” of activity in front of the privileged “Ward 8” tavern. A small army of City of Evanston employees were working feverishly to clear nearly every snowflake from the street and sidewalk directly in front of the bar we all helped pay for.
A small snowplow, a salt spreader, and several City workers with hand shovels left only this area looking as dry as a summer day. Meanwhile, the remainder of Howard St. received minimal attention. I only wish I could attach a photo of the end result as a picture is worth a thousand words.
Coincidence? I don’t think so. I have a feeling a certain Alderperson was influential in this snow removal process. At what cost?
Legal?
If true—
This sounds very much like other politicians we have read of making 'their'(?) employees available to private businesses.
They get the votes of those they help and we get the bill.
While not exactly the same as the recent case [and many like it] where a municipal manager has an employee work on his home and the department records show the employee was [errant] shown to be doing his official job.
This time, as far as we know [should be checked on] the alderman or other official did not have employees working on his/her property, it is still devoting public resources to a private use—I guess trying to make the business seem 'pretty' and drawing patrons. Too bad the city picks which ones to help—I'm sure a lot of Evanston companies would like this—oh wait a select few do get gifts from the Council while the non-favorites have to fend for themself and pay high taxes.
This sounds very fishy, I hope the city inspector checks this out.
City owned
The city owns the buildings from 623 to 633 Howard — so, it definitely has responsibility for clearing snow at the police outpost at 633 … and at 623-627 1/2 — which is mostly vacant.
Whether it is responsible for clearing snow at Ward Eight, at 629, would be a more complicated question.
— Bill
Perhaps the sidewalk around
Perhaps the sidewalk around the Ward Eight bar needed to be cleaned since Alderman Rainey was having a function at the Bar last evening (2/22/13)
Reject the current proposal for Peckish Brew Pub
I sent the following letter to the City of Evanston officials:
Dear Mayor Tisdahl and City of Evanston Aldermen,
I request that the current proposal for the Peckish One Brew Pub be rejected.
After appropriate revisions to the structure and terms of the deal, it should be resubmitted and approved.
While I favor economic development and new business creation in Evanston, my major concern is the risk/reward proposition
for Evanston taxpayers. This proposal seems to put significant risk on Evanston taxpayers, with limited upside.
This is being called “Economic Development” but the structure suggests “Government Giveaway.”
I looked at the 3 page memo (pages 146-148 from the packet) and did some quick numbers.
Here is my analysis :
$675,000 – Total Evanston investment – $475,000 for building + $200,000 for improvements
(50,000) – Incentive to operators for good behavior – why isn’t there a penalty for “bad” behavior?
(189,000) – Rent forgiveness – 4 years of rent – page 2 of memo
———–
$436,000 Likely case for Evanston Taxpayers Proceeds
(239,000) Expected loss by year 4 ($436,000 – 675,000) for Evanston Taxpayers (There will be sales & real estate taxes collected during the 4 years estimated per my discussion with Johanna Nyden of Evanston’s Economic Development group of $200,000 ; ($20,000 for real estate taxes & $30,000 for liquor sales taxes annually)
So the net loss after 4 years is $39,000.
However, the $675,000 investment assumes a ZERO % cost of capital for Evanston. Money is not “free.”
On page 3 of the memo it states that “if at the time of purchase appraisals are obtained that estimate the property for less….Peckish One
has the ability to negotiate a lower purchase price from the City.”
What about if the property value goes up? I don’t see a provision that enables the City to share in any potential upside.
Also, during the “4 year partnership” that the City of Evanston and Peckish One LLC are entering into, why isn’t there any profit sharing?
Evanston taxpayers are supplying $675,000 of capital, Peckish One is providing $500,000, so wouldn’t at least a 50/50 profit sharing agreement make sense?
No deal, would be better than a bad deal, and under its current structure the Peckish One Brew Pub is a bad deal for Evanston taxpayers.
I would encourage the Economic Development team to refresh their negotiating skills and review their introductory business and economic textbooks.
The City of Evanston doesn’t have access to zero cost capital. Options have value. The City’s balance sheet should be protected and not exposed to undue risk.
And most importantly, I would ask that the City of Evanston invests/spends taxpayer money as if it was your own money. It’s very easy to spend other people’s money.
When it’s your own money people are more careful and prudent. Please treat and view Evanston Taxpayer money like it’s your own money.
Bottom line – this deal should be restructured to more fairly distribute the risk and reward between Evanston Taxpayers and Peckish One, LLC.
Please reject this proposal and revise the terms to make it more fair for Evanston Taxpayers and then come back to City Council for approval.
Feel free to e-mail or call me with you questions or comments.
Thank you.
Jim Young