Frustrated owners demolish downtown building

Owners of of a downtown Evanston commercial building say city officials are obstructing their plans to replace it with a extended stay hotel..

Instead, says Robert Barr, a real estate advisor to the trust that owns the property, the city wants an office building on the site -- a project Barr says is not economically feasible.

So the owners are tearing down the building -- with plans to leave it a vacant lot to reduce their property tax bill if they can’t win approval from the city for an economically-viable project.

The one-story colonial-revival style building at 1515 Chicago Ave. was built around 1950 and once housed the Tally Ho restaurant. It more recently served as offices for the Heil & Heil Insurance Agency, which has now moved to Skokie.

Barr, who says he’s been in the real estate services business for over 30 years and worked for clients on transactions for nearly 5 million square feet of property, says city officials who say they want new office construction downtown “have no idea what it costs to build an office building.”

He says that construction costs, operating expenses and high taxes here would mean a downtown building with a parking structure would have to charge over $50 a square foot in rent -- roughly $20 more than the rent on existing Class A commercial space in town.

And, because Evanston is hard to get to from suburbs to the west, Barr says, there’s not a big demand for office space here.

The Chicago Avenue property totals about 22,000 square feet, and Barr says it would likely end up with a total of about 16,000 square feet of space per floor -- which Barr says would be small for most sizable businesses --which want more like 25,000 square feet per floor.

City officials have recently been pushing the idea of new office construction as a way to draw more jobs to town, and as a substitute for the condo construction that boomed in Evanston a decade ago, but then collapsed during the financial crisis starting in 2007.

The city has been pushing for an office development on a vacant lot on the southeast corner of Main Street and Chicago Avenue -- and has seen that as the centerpiece of a new tax increment financing district. But the developer the city has been working with on that project has so far failed to land the tenants needed to secure construction financing for it.

Barr says his clients have an agreement to sell the 1515 Chicago property to a developer who would construct a seven-story extended stay hotel on the site -- if it could win city approval.

He said the developer settled on the extended stay hotel concept after city officials said no to another rental apartment project.

Several new rental apartment buildings are now under construction in the city, and apartments “would have been a no-brainer,” Barr said, but the city didn’t want it.

The extended stay plan would be for “a national, high-quality brand with a little retail on the first floor.”
With the hotel tax, “it would provide $500,000 to $600,000, if not more, in annual revenue to the city,” Barr said.

“But now it looks like the site will be a vacant lot, with taxes substantially reduced because there’ll be no structure on the site,” he added.

Calls this morning to Alderman Judy Fiske, whose 1st Ward includes the 1515 Chicago Ave. site, and to the city’s community and economic development director, Steve Griffin, were not immediately returned.


Update 4:15 p.m.: Community and Economic Development Director Steve Griffin says the city has put Barr in touch with two different developers who wanted to build office projects on the site, but that the land owner and developers failed to reach agreement on terms of a deal.

"I'm disappointed that he'd say there's no office market here, when in fact I know that we've sent him two prospects," Griffin added.

Griffin said that while the city would prefer an office project for the site, it's willing to entertain any proposal for the property.

A hotel, Griffin said, would require approval as a special use, which would be reviewed by the Zoning Board of Appeals.

An office development would require approval as a planned development, which would be reviewed by the Plan Commission.

Either way, a final decision on either type of project would be up to the City Council -- which has substantial discretion in considering either type of request.

While the alderman of the ward where a project is located can be influential in determining whether a special use is approved -- their support is not always essential -- as shown by the City Council'sapproval in 2011 of a bed and breakfast in the 1st Ward despite opposition from Alderman Fiske.

He added that the developers of the proposed office building at Main Street and Chicago Avenue have lined up at least one tenant for the building and have submitted engineering and other details of the project for the city's site plan review -- although he said he didn't know whether financing to construct that building has been secured yet.


1515 Chicago Ave. in 2006.

In 2006 the 1515 Chicago Ave. building was considered by the city's Preservation Commission as a possible landmark building, but it was dropped from consideration after commission members concluded it had little architectural merit.

That year the properety was proposed as part of an 18-story mixed-use retail, office and condominium project on the southeast corner of Chicago Avenue and Davis Street called Optima Promenade, which city officials ultimately rejected.

The following year a smaller condo project was proposed for just the 1515 Chicago Ave. site, but that plan never got off the ground.

Comments

Stories like this makes you wonder

Stories like this makes you wonder what the city council is smoking.
This city does not need another empty, overpriced office building.
The hotel concept is fresh and the projected tax windfall is a much needed addition to the empty coffers of this financially struggling city.
Last year family friends visited to take a look at Northwestern for their daughter and had to stay in Glenview, as there were no available hotel rooms in the city.
Maybe the problem is that  the owners of the property are not asking for city money to build their hotel.

It appears that this land is not useful to Mr. Barr's trust

Assuming that this is parcel #11-18-408-002-0000, the assessed value of the land is $183,727 which implies a market value of $734,908. If Mr. Barr can't figure out a way to use this land profitably, he should be able to sell it for that (or more). Last year the parcel cost $26,787 in taxes; I guess it will be less this year after demolition, and we can expect appeals too. An intelligent tax policy would set the taxes on this parcel high enough that Mr. Barr, who can't use it, would sell it to someone who can.

intelligent policies

"An intelligent tax policy would set the taxes on this parcel high enough that Mr. Barr, who can't use it, would sell it to someone who can."
Yes....good tax policies would not encourage owners to keep lots empty, or to rent them to churches or other nonprofits to ride out economic downturns....
But good zoning and regulation policies are necessary too....NIMBYs and their  sympathetic aldermen should not prohibit reasonable development of commercial property.

Economic development?

Optima promenade should have been built.  NIMBY's killed that project and not one single valid reason was ever made, just the usual, typical, the sky is gonna fall again nonsense. 
The schools, parks and city have lost by now easily a million dollars in forgone r.e. tax revenue, jobs never materialized, no sales or liquor taxes have been collected, and all for no real reason whatsoever.
And now this, seemingly again for no real reason.
BTW, why did Heil and Heil leave, they were an office tenant, could that have something to do with why there is resistance to building an even bigger office building, when the one you have can't even be filled as is.

Heil & Heil

I don't know why Heil & Heil left Evanston, but let's not mourn this building.  It was an ugly building, and I am glad that it was demolished.
Now let's see an extended stay hotel go there!  That would be great for Evanston....I know many short term visitors to Northwestern who could have used something like this....and anyone on short term assignment in Chicago would welcome this.
I wonder if Judy Fiske will issue a statement....

Heil & Heil left, why?

Who is mourning the building?  Building shouldn't even be there to begin with, Optima should have been allowed to build there years ago. And this Hotel propositon shouldn't be getting any pushback whatsoever from anyone in the City.  I agree, build that hotel.
 What I am saying is that Heil and Heil left Evanston, an office tenant, and why is that?  Might those very reasons, the same reasons so many office tenants have left Evanston,  justify the owners desire not to push on the string for more office development? 
Who cares what Fiske thinks, she's positioned herself to be basically obstructionist, irrelevant and generally clueless in any serious economic development discussions.
 

City Economic Development a JOKE!

The city claiming there is a market for an office building is joke, The other new TIF they wanted down on Chicago ave  with an office building would not work,  the NU students who studied the TIF's told them there was no market for an office building in Evanston.
I was at the economic development meeting when the alderperson of the ward, begged the developers to take our money to do a study on the office building, the developers kepted on saying there was no market and they did not want the money.  I found the developers intregrity refreshing to say the least and our idiot public official disgusting.
Mr Griffin sending two people to the owner of this property for a office developement so what? Look at the screwed up documents submitted for Robert Crown the city's so called private public partnership, or the only one bid for the Hardley Clark Mansion, Mr Griffin  statements are meaningless, and political nonsense. When the city can do nothing but screwed up deals against our interest, how can city staff and council members with a straight face pretend they can direct the private market?
I remember when they did gave the business man who wanted to open the Tilted Kilt a hard time, with our idiot Mayor acting like the great moralist, ofcourse she  has allowed all types of theft of our tax dollars.  The World of Beer which is  now going to open on the site, looks like a first class operation, not built with one penny of our tax dollars, and what did this council and Mayor do? They approved the Wine and Cheese Bar on Howard, using 100% of our tax dollars, we own this business, while all of Ann Rainey's quick topic buddies see this as a great use of our tax dollars, I think anyone of reasonable intelligence see a major problem.
 

Optima Promenade

Yes, absolutely the Optima Promenade project should have been built.  It would have already been producing tax revenue - and quite a bit of it since those condos were not cheap - for years now.  The council never gave any reason for not approving it - just shut it down before the final presentation was ever made.  The council should not have such sweeping powers over projects with no explanation.  It makes citizens of this city assume someone’s ring didn't get kissed....
And, since then, with a largely new council, it is just more of the same.  Why bother with having a zoning code at all?  This is sort of thing is exactly why people get disgusted with the city’s government.

City ineptness?

I love this response by the owner. In one fell swoop it both obliterates an eye sore and publicly exposes the ineptness of the city.

Could backfire

yes, but you should never underestimate the stupidity of Evanston's NIMBYs
The Heil building will be replaced by an empty lot...maybe they'll plant grass on it...then the NIMBYs will want to have it turned into a park, or the "concerned neighbors" will oppose any development because it will bring traffic to bucolic Chicago Avenue, or anything over 10 feet tall will block the views from nearby apartments.
And if re-elected, the alderman from the 1st ward will oppose any proposed development on the site.

Large offices, other than

Large offices, other than personal services (medical,financial advisers, etc), are not feasible here for the transportation reasons mentioned by the developer. Evanston cannot compete with Skokie there. Its more natural competition would be a north side Chicago neighborhood like Lakeview which is primarily residential with businesses to serve the locals. With this one would want more apartments/condos to increase demand for service businesses and thus the tax base.

Very sad story-Local

Very sad story-Local residents of Ward 1 will have to suffer and watch their share of real estate tax bills increase and increase to pay for the shortfalls created by municipal leaders that cling for Disneyland zoning plans to be fulfilled while viable other business opportunities shuffle off to other communities welcoming developers still willing to invest and take risks on less glamorous propositions.

Unfortunately the world today and directions communities choose to take may not happy endings for all.
Good change only occurs when enough concerned citizens impacted by daily bureaucratic decisions start to pay attention and voice their desires. If they like their direction and decisions keep the people in office, if they do not like their decisions -Vote them out!
Maybe Donald Trump can build another Trump Towers for Companies who want to move into office space in Evanston and the amount of rent does not matter!! 
Wake up America!