Valli Produce completed its purchase today of the Evanston Plaza Shopping Center — reportedly for twice what seller Bonnie Management paid for the property less than two years ago.
Evanston City Manager Wally Bobkiewicz says Valli reports it paid $16 million for the property. Bonnie Management and WHI Real Estate Partners purchased the property out of receivership from Bank of America in December 2012 for $8 million.
Valli has announced plans to completely renovate and expand the shuttered Dominick’s supermarket in the center.
Evanston aldermen last week approved giving the city manager authority to negotiate an agreement with Valli to take over an existing tax increment financing arrangement with Bonnie Management that could provide the owners up to $2 million in assistance with renovation of the shopping center.
Valli co-owner Frank Greco says his company, which owns five other stores in Illinois, likes to be the owner-operator of the properties in which its stores are located.
Bobkiewicz says Valli hopes to open the store as early as mid-May next year and has asked the city to help connect with local employment partners to begin recruiting staff.
Recruited management staff would be trained up at other Valli locations and then then transferred to the Evanston Plaza at Dempster Street and Dodge Avenue when it’s ready to open. Other staff will be hired closer to the new store’s opening.
Bobkiewicz praised members of the city’s economic development staff for their work on the project and thanked Alderman Peter Braithwaite, 2nd Ward, for his leadership in reaching the agreement with Valli.
Update 2:11 p.m. 9/19/14:
In a statement today, Greco said, “We want to make a positive impact to the food selections available in Evanston creating a family atmosphere and a sense of community that our customers can be proud of. In addition, we felt it was important to purchase the shopping center to improve the overall shopping experience at Dempster and Dodge. The retail offerings at this plaza have been stagnant for several years and we hope to revitalize its potential.”
How much TIF money will Evanston Plaza really get?
In two years, the 25 year-old Dempster Plaza shopping center sold for $8 million and then $16 million. The assessed value will no doubt rise quite a bit and the taxes will increase. That rise in taxes will go back into the TIF, or that is, the shopping center.
The idea of a TIF is to redirect tax revenue back into a blighted area during a 23 year period. Once improvements are made the assessed value increases and the area is rejuvenated. In other words, a TIF diverts potential increased tax revenue that would otherwise go to the other taxing bodies in hopes that the funds can be used to stimulate even more tax revenue growth in the future.
Aldermen passed the Dempster Plaza Shopping Center TIF in 2012 in order to provide TIF money to upgrade the shopping center and use it as incentive to attract other businesses. It's unusual for a government entitity to declare a single developed parcel as a TIF.
What's interesting is one could argue that the value of the shopping center has doubled in just two years of a 23 year TIF and no doubt the taxes will increase quite a bit right away. That increased tax revenue will not go toward our taxing bodies but back to the shopping center for improvements.
The shopping center, bordered on three sides by another TIF, the West Evanston TIF, sold for about $4 million in 2010. So in a four year period the value went from $4 million to $16 million in three sales!! And in that time, there have not been any significant improvements and in fact the anchor tenant had left!!
My concern, aside from declaring a 25 year old shopping center that's arguably not blighted into a TIF, is how much TIF money would be generated in a 23 year period for one shopping center? The city says only $2 million, even though the shopping center already quadrupled in value in four years. City officials initially stated the TIF would generate $20 million in TIF money as they debated the issue in 2012. They then corrected that estimate to $2 million (quite a correction!).
Consider that the state is about to pass a school equity bill that will eliminate millions of dollars to D65 and D202. Our schools now more than ever need additional tax revenue NOW. Yet, our city has turned into a public investment equity firm, loaning out millions to businesses and declaring a TIF for a 25 year-old shopping center that doubled in value in the first two years of the TIF without any USE of TIF money!!!
I'm glad Valli is coming to Evanston but at what price to overtaxed and poorly represented Evanston property owners?
What would have happened if the shopping center had no TIF? Maybe Bonnie Investments would have sold it to Valli for less?
Chicago/Church & Chicago/Main “Blighted”
You said as is so often said:
"The idea of a TIF is to redirect tax revenue back into a blighted area during a 23 year period. "
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I think most people would be surprised to find that the Chicago Ave./Church Street area was "blighted" when the the city created the Washington National TIF [where Whole Foods is]. Now apparently the Main/Chicago Ave. will if a TIF. Should we had/have a criminal task force in to clean up the crime/drugs there ? urban renewal to tear now all the apartments/condos/business in the area so these blighted areas can be cleaned up ?
Or are these TIFs just excuses for the Council to pick "winners" and support their causes ?
I need a commercial real estate agent
Is there a commercial real estate agent who can explain how the value of the Dempster/Dodge property increased in value from $8 million to $16 million in just two years. I am totally at a loss to see how this is possible. I am of course assuming that both the buyer and seller are astute business corporations.
Dempster/Dodge Mall Sale.
The article states " Bonnie Management and WHI Real Estate Partners purchased the property out of receivership from Bank of America in December 2012 for $8 million.". Most banks are not that interested in owning property. Bank of America probably sold it for the amount it was on the books for (mortgage balance) plus admin fees. It may of had an appraised value greater then that at the time Bonnie Purchased it.