A tower on the Fountain Square block shorter than the current 38-story design would not be economically viable, the city’s real estate consultant told Evanston’s Economic Development Committee Wednesday.

Consultant Marty Stern of U.S. Equities said that given the cost of acquiring the property, a building with significantly less salable space wouldn’t make financial sense.

Stern, who has advised the city on major development projects for many years, said the project couldn’t be built at all right now. “The financing markets are in complete disarray, the condo and housing markets are in disarray,” he said.

“But we’re all making assumptions based on the history of the economy that eventually markets do calm down,” Stern said. “The time to plan these projects is in times like these. Zoning will take a while. Design and financing will all take some time to get through” and by that time the market likely will look better.

In response to questions about the possibility of ending up with a vacant lot or a half-finished building, developer Tim Anderson said that the developers have pledged not to demolish the existing 708 Church St. building until after financing is secured for the project.

And, he said, in any project of this type, full financing to complete the project has to be in place before the banks will release funds to start construction work.

He said the banks required that 35 percent of the units be pre-sold before releasing financing for construction of the Sherman Plaza project and that he expects that requirement will be “slightly higher” when the tower project goes to market.

He said the current owners of the 708 building have agreed to extend tenant leases so that the tenants who choose to do so can remain in the building longer and have 120 days notice of when they’d need to be out.

The city consultant also reviewed eight public benefits the developers have claimed the tower project would provide, splitting them into three categories.

He said quantifiable benefits include:

  • $21.8 million in new tax revenue over the life of the tax increment financing district that expires in 2018.
  • $880,000 in developer contributions to the city’s affordable housing program.
  • $1.6 to $3.2 million in added construction costs to achieve environmental certification of the project under the LEED program.

He said benefits that can’t be quantified include:

  • Preserving the Hahn Building and retaining Class B office space. Stern said Evanston residents seem to support those goals, but a restoration of the Hahn building likely can’t be achieved without substantial subsidy.
  • Enhancing the city’s retail core and emerging lifestyle shopping district. Stern said the tower’s addition of several hundred new downtown residents will help achieve those goals.
  • Assuring a vision for the block. Stern said the proposed plan is a step in the right direction, but noted that without control of the Fountain Square building, the city would “need to retain a significant role in protecting the vision for the block.”

Finally, Stern said two claimed benefits are questionable:

  • The claimed “outstanding architectural design” of the project is too subjective to assess, he said, although outstanding design can benefit the public by improving the image of a neighborhood.
  • Providing a “variety of housing options” with different unit sizes, Stern said, mainly benefits the developers by making the project more marketable.

Bill Smith is the editor and publisher of Evanston Now.

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3 Comments

  1. Financial consultant?
    “$21.8 million in new tax revenue over the life of the tax increment financing district that expires in 2018.”

    There are some details left out here:

    *this is non-discounted cash flow and if we use the time value of money (which everyone in finance does) this drops considerably.
    *it is even less if you deduct the current tax revenue that will be lost
    *no allowance for a likely delay in the actual start of construction and delay in tax payments as a result prior to the end of the TIF

    If this is an example of what we use as “financial consultants” — no wonder we are in deep financial trouble.

  2. Important Meeting on Skyscraper
    Meeting: May 7, 6:30 PM, Civic Center

    Although not mentioned in this web page, this coming Wednesday, at 6:30 PM, in the Civic Center (2100 Ridge), the Planning and Development Committee will hold a special meeting to discuss the skyscraper project. Residents will have 1-3 minutes to speak and only a total of 1.5 hours to do so. This could possibly be the last meeting to allow public comment, so please attend to have your voice heard or just to show your support.

    10 top reasons for opposing the 38+-story skyscraper:

    10. We have little information on whether this project will really be an economic plus for the city.

    9. The City has done very little to inform residents and ask for their inputs.

    8. The skyscraper will place more demands on city services, create more downtown congestion, pollution, and noise.

    7. The skyscraper, along with the new downtown plan (yet to be approved), will destroy Evanston’s unique character.

    6. The Skyscraper is not aesthetically pleasing and is by no means an “iconic” building.

    5. The project has less rentable business space than the current building (which means less revenue).

    4. Building 218 condos when there is a depression and a glut of unsold condos does not make good business sense.

    3. The developers have provided not one real public benefit with their project.

    2. The skyscraper project doesn’t have enough parking and will increase parking problems in the downtown area.

    1. And, the #1 and perhaps most enjoyable reason: the anonymouse (not a typo) posters (NIMBYs since they most likely don’t live in Evanston) are in favor of the skyscraper!

    1. Top 10 List
      To keep this posting as short as possible, I will address only a few of the incorrect statements in Peter Sanchez’s latest post:

      10. We have little information on whether this project will really be an economic plus for the city.

      9. The City has done very little to inform residents and ask for their inputs.

      This project has been out there for public discussion for over a year now. The ECRD has even had time to do their own “economic analysis” – which was based on faulty assumptions and used a short future time period .

      4. Building 218 condos when there is a depression and a glut of unsold condos does not make good business sense.

      The developers are risking their money to build this. Why is it our problem if they lose money? The units will sell, and the developers will not make as much money as they hoped.

      2. The skyscraper project doesn’t have enough parking and will increase parking problems in the downtown area.

      There is plenty of parking in the Sherman garage. Also, if parking is unavailable on downtown streets it means that we have a chance to increase meter rates again, bringing in more revenue to the city.

      This argument also contradicts one of the other NIMBY arguments – that the renters in 708 Church bring in lots of parking revenue to the city. You want to have it both ways.

      5. The project has less rentable business space than the current building (which means less revenue).

      The current stores do not generate a lot of revenue – look at the estimates on the ECRD. This will easily be replaced by the larger number of condos paying taxes.

      Anyway, the NIMBY’s want to have it both ways again: They want to ‘preserve the unique charm of Evanston’ and protect local businesses – but it is the large chains that bring in the revenue. Who brings more revenue to the city, Panera or Unicorn? Borders or Bookmans?

      [ Mr. Who Knows is working on an essay on the fallacious economics of NIMBYism, and the belief that “local” businesses are superior to big businesses. To be posted soon. ]


      1. And, the #1 and perhaps most enjoyable reason: the anonymouse (not a typo) posters (NIMBYs since they most likely don’t live in Evanston) are in favor of the skyscraper!

      Most likely don’t live in Evanston? So what is our motivation for supporting the tower and posting on these sites? Are we bitter residents of Tinley Park who just want to destroy the ‘unique charm’ of Evanston?

      And how could we be NIMBY’s , anyway? NIMBY’s OPPOSE construction and development. Are you saying that we want the tower built in Evanston so that won’t build it in our neighborhood? “Let’s get them to build the tower over there, instead of near us” That is silly.

      Check the signatures on the ECRD website, and you will notice quite a few posters who mention that they don’t live in Evanston now, but grew up here and remember how charming it was and don’t want it changed. You will also notice that many of the ECRD members – like Peter Sanchez – do not live near downtown, and many of the posters mention that they have lived in the city for 30 years or since birth and don’t like the changes. Go to the council meeting, and you will notice that most of these people with the ‘no tower’ buttons are over 60.

      These are old people who just don’t like change. They want ‘uniqueness and charm’ , but they don’t live downtown. This isn’t a museum, this is where we live. Those of us who live downtown want real stores that we can use: the CVS and 7-11 are more useful than Williams Shoes or Fashion Tomato. Panera and Whole Foods are more useful than the unique clothing stores (Coucou? Asinamali?) .

      Mr. Who Knows

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