The city’s real estate consultant told Evanston’s Economic Development Committee Wednesday that the developers of the proposed Fountain Square tower are asking for more city financial help than necessary to rehabilitate the landmark Hahn Building next door.

Marty Stern of U.S. Equities said the proposed $3 million in tax increment financing assistance from the city could be reduced to $2 million or even less with various cost reductions.

The developers’ attorney, Steve Friedland, told the committee that buying and renovating the three-story Hahn Building will cost $11.2 million, and that the income the renovated building will generate would only justify an investment of about $6 million.

The developers propose picking up $2.2 million of the difference themselves, with the city contributing the rest.

Stern noted that the cost of acquiring the Hahn building is driven largely by the potential to build something larger on the site. In recent years two since-withdrawn development proposals have called for preserving only the facade of the building and constructing a high-rise building on top of it. And the city’s proposed downtown plan calls for a 42-story height limit on the Fountain Square block.

If the building didn’t have that development potential, Stern said, its market value would be considerably less.

Friedland said the developers “feel strongly that our assumptions are reasonable and supportable and remain committed to the request for the $3 million subsidy.”

Keeping a low-rise structure on the Hahn Building site has value to the developers of the 708 Church St. tower because it preserves views to the south from the planned tower and gives them more control over retail development on the block. It also provides them with opportunities to provide a place to relocate some merchants and office tenants who would be displaced by the tower.

But city officials also may find the plan appealing. The developers have pledged to sign a covenant barring any future redevelopment on the Hahn site, which would provide stronger protection for the building than exists under the city’s preservation ordinance. A renovated Hahn building would likely generate somewhat more tax revenue for the city. And it avoids potentially bruising future debates about the site.

On the other hand, Stern said, the tower proposal does not require acquisition of the Hahn Building. If it were dropped, he said, the developer profit earmarked to subsidize the Hahn work could be used to rehab the Fountain Square plaza instead.

Stern said the developers are not “wrong” in their assumptions about costs for the Hahn project, but that he believes several slightly less conservative assumptions could be used in assessing the project.

Those include anticipating higher rents and lower financing and tenant relocation costs than the developers have used.

Bill Smith is the editor and publisher of Evanston Now.

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4 Comments

  1. Who Pays the Bill? The City (residents), as usual
    Well, last night was another one of those meetings where you scratch your head and say to yourself “Am I having a nightmare?” We waited weeks to get the “facts” but what Stern provided was minimal. The P&D committee should have done us all a favor and voted down this albatross at their last meeting.

    Some points:

    1. If the cost of the Hahn Bldg goes down (because the developers tell the owner “the City would only cough up $2 million”) will the city get a rebate? I suspect that they will try and pay a lower price and will keep the difference which means they will end up with more than $2 million, if not $3, which is what they wanted in the first place.

    2. Why did Stern say that this was a viable project that was the right height and density? He suggests that only a project with 218 condos will be economically viable. This is a ludicrous statement.

    3. To be fair, at least Stern pointed out that some of the developer’s “public benefits” were a sham.

    4. Stern used the term economically viable but it seemed that he was simply referring to whether or not it was a profitable project. Well, as Alderman Wynn pointed out, of course they are going to propose a project that will yield profits! What about economic viability for the city? Stern said very little about this; and this is the most important point as far as the city is concerned.

    5. Why is the City going to pay a developer to buy and restore a building that will mostly enhance the value of their profit-making skyscraper project; and will also make it easier to carry out the construction of their proposed skyscraper? (Can you imagine how much more difficult and costly it would be to build this albatross if they don’t control the Hahn Building location?) They probably want to control the Hahn Building to enhance the value (profits) of the skyscraper and to have an easier, less costly building process (which will also enhance their profits).

    The bottom line: the city wasted more money on a “consultant” to figure out whether or not to make a huge mistake.

  2. Gut the Hahn Building
    A better question is: What is so special about the Hahn Building that it is worth $3 million, or even $2 million, in city funds to restore it?

    Some of the most vociferous anti-development people have pointed out that the developers are asking for money to restore it, and the city should not do this. On this point, they are correct – the City should not spend money to restore it.

    BUT…if we are not willing to spend our own (taxpayers’) money to restore it, we have no right to prevent the current owners from remodeling it, gutting it, or tearing it down.

    Mr Who Knows says: If the City declares a building to be a historical landmark worth preserving, then the City should be willing to pay for the preservation of said building. { If we follow this wise policy, we will be more careful about designating buildings as historic. Of course, the city is already paying – through lost tax revenue – by preventing development, but people don’t feel that. }

    Again, it pains me to admit it, but Junad may be right…on this issue only, I add…that having the developers keep the facade would be fine. Really, why does the city need to preserve the interior of this building? How many Evanston residents will EVER go inside of it? No, it is not historical, it is just old, like 708 Church.

    So, since everyone agrees that the Hahn Building is not worth 3 million , let’s say no to this condition, and let the developer do something with the site.

    { My idea: Keep the facade, if you want…maybe some parking on floors 2,3….and maybe 3 or 4 more stories of Class A office space – none of that Class B stuff, please, because Evanston deserves the best. }

    Mr. Who Knows

    1. Mr. Who Knows
      Thank you for admitting I might be right on something.
      You seem to believe the city has no authority to maintain its zoning or historic buildings – by the way it is not impossible to tear them down, it happens all the time.
      I do not think the city should be paying as you suggest – the city has the ability to listen to a developer who in his zoning request present plans for relief from zoning, to give some public value back. In the case of our council they want affordable housing – but more project related value is better in my opinion.

      By the way on the Central street project I suggested they tear down the old building next to it since it had little public historic value – the developer wanted to use it for justifying the increased story height.

      Mr, Who Knows – I am not so sure what you know – but not everyone is a NIMBY – you better hang on to your wallet – the council in almost all these large developments is giving the developers tax payers money.- in all types of give backs – when people in town ask why there is no tax relief – they need to take a look at all the give backs Look over the past month or two what they have done!

      By the way Mr Who Knows the city screwed up the Sherman ave garage not just the money as they ran out of money they “valued engineer” out the HVAC system in the glass elevator tower creating dangerously high temperatures. ( Added it back in at the last council meeting for $33,000 ) If someone was stuck in the elevator if most likely would have killed them before the fire department pulled them out – review the last council minutes or channel 16 if you want to see it. Most of the lawsuit here the city has lost have been in criminal issues – killing a innocent person due to an engineering screw up by the city would have cost the taxpayers millions! ( on top of the million or so we pay out each each on lawsuits and legal problems on average)

      1. Givebacks
        Mr, Who Knows – I am not so sure what you know – but not everyone is a NIMBY – you better hang on to your wallet – the council in almost all these large developments is giving the developers tax payers money.- in all types of give backs – when people in town ask why there is no tax relief – they need to take a look at all the give backs Look over the past month or two what they have done!

        Yes, Junad – the givebacks are a scandal. The way to solve it is not to stop developers from building, but to get rid of the zoning codes which permit – even encourage – this sort of extortion. Instead of forcing the developers to pay up for ‘affordable housing’ or some other nonsense, we should just charge a fee
        [ You want to build a 78 story tower on Central St.? Fine, just write that check for $99 million dollars, payable to ‘City of Evanston’, and we will issue your permit ],
        or have a more reasonable zoning code so exceptions aren’t always necessary.

        I suggest that we form a group, ‘Evanston Coalition for Real Development’ – to put an end to this corruption . I will print the lawnsigns.

        I think that this ‘affordable housing’ issue is really phony . If we want affordable housing, the city council just needs to get out of the way and let builders build more housing. Increased supply will mean lower price. And lower the city taxes too, since taxes often make housing unaffordable – this means getting rid of costly special interests like preserving the elm trees or preserving the Civic Center.

        Another reason I think that ;affordable housing; is phony is that some of the same people who trumpet that issue also support limiting any development that might possibly lower their property values or bring increased population to Evanston. In particular, with this tower issue, we see some NIMBY’s complaining that the tower will not produce affordable housing and only rich people will live there…but the tower will also decrease property values and bring in extra population to a city which already supposed has too many people.

        Mr. Who Knows

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