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City asked to chip in more for market

Evanston would double the sales tax rebate offered owners of a proposed food store under a plan approved by the Economic Development Committee Wednesday.

The new plan to revive the long-vacant Osco Drug Store at Oakton Street and Asbury Avenue calls for adding roughly 5,000 square feet to the existing 14,664 square foot store. The old concept would have left the building at its current size.

The project also has a new ownership team and lender.

Last fall the EDC approved a plan under which the city would rebate half the sales tax revenue generated by the store up to a cap of $500,000 over the 11-year life of the store owners' lease on the building.

But within weeks after that vote, before the deal could be approved by the City Council, the lead partner on the project, Nick Merikas, told city staffers that the nationwide economic downturn had led his two brothers, who were partners in the business, to withdraw from the project.

Wednesday night Merikas' new partners, Jim Stivers and Dean Theo, described plans for the expansion of the building and said the store, previously named Farmers Best Market would also have new name, Fresh Foods Marketplace.

The two said they had received a financing commitment from a new lender, ACAPS Joint Venture LLC of Cheyenne, Wyo., but that the lender is insisting on a sales tax sharing agreement totaling $1 million to help secure its loan.

The committee approved a plan under which 75 percent of the city's share of sales tax revenue from the project would be rebated until the $1 million cap was reached.

Start-up costs for the project are expected to total just over $3 million, including nearly $1 million to expand the building, $800,000 for refrigeration equipment and $850,000 to build out the interior.

Bob Rychlicki, the city's long-time advisor on economic development projects from the consulting firm Kane/McKenna, said he had only been able to obtain limited information from the new lender, but that the loan has an 11-year term with a 25-year amortization schedule, resulting in a large balloon payment due at the end.

The borrowers, Rychlicki noted, would not be personally liable for the debt, and they don't own the building or land on which the store sits, making the lender demand the financial assistance from the city to help secure its loan.

Alderman Ann Rainey, who's 8th Ward includes the store site, said, "The only thing we're risking is not having a store. We're not going to give them one thin dime that they don't generate in sales tax."

Stivers said the store would offer "a unique concept, something that has not been seen in Chicago. It's going to be the talk of the town."

He said the concept is based on a Texas-based chain called Central Market that he said is "very service-oriented and customer friendly."

He said the store would offer more competitive prices than Whole Foods but have a much greater selection of fresh foods than Trader Joe's.

To meet the lender's conditions, the agreement would have to be approved by the City Council at its next meeting, Feb. 9.

Stivers said that if the agreement is approved, the partners hope to move forward quickly with the expansion project and open the store by September.

He said the owners have a big incentive to move quickly, because the rent-free first year on their lease on the building runs out June 28.

Stivers said the expansion would involve building into what's now a drive-through lane on the east side of the building and expanding the west side of the building as well.

He said the partners are in negotiations with the owner of the property just west of the store to acquire additional parking space on that parcel.

Tracing history of the Osco site

Panel backs tax break for market (9/25/08)

Tax rebate proposed for new market (8/7/08)

Neighbors cheer plans for new market (7/9/08)

Green grocer plan wilts (10/18/07)

Green grocer eyes Osco site (8/29/07)

Trader Joe's rejects Osco site (10/7/06)

Osco closing; neighbors hope for Trader Joe's (6/27/06)

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