Evanston’s City Council voted Monday night to grant $2 million in American Rescue Plan Act funds to Northlight Theatre and $1 million to The Aux, a planned minority business incubator.
The approvals came after a lengthy debate about whether the city should include “claw back” provisions in the agreements that would attempt to recoup the funds if the projects failed.
Ald. Clare Kelly (1st) pushed that idea. She complained about the lack of recoupment provisions two earlier city grants — one to the owners of a chicken and waffles restaurant that ultimately failed, the other to owners of the Evanston Plaza shopping center — who ultimately made a large profit selling the center.
(The city had structured the restaurant aid as a second mortgage loan, but that security interest was mostly wiped out when the shuttered restaurant was sold for less than the total debt on the property.)
Ald. Peter Braithwaite (2nd) said both grants had ultimately achieved the city’s goals — that the restaurant had been taken over by a new operator who’s still in business and the shopping center had been successfully revived.
He also objected to changing the terms of the agreement at the last minute. “This is the worst exercise of local government that I’ve seen so far,” Braithwaite fumed, “you don’t move the goal line with seconds left in the game.”
(Kelly on Tuesday forwarded to Evanston Now a copy of an email she sent to Braithwaite and other city officials on Feb. 22 raising the idea of a claw back provision for the agreements.)
City staff, including Interim City Manager Kelley Gandurski, Corporation Counsel Nicholas Cummings and Housing and Grants Manager Sarah Flax, said that, given the way the federal government has structured the ARPA program, it is likely that any money the city recovered under a claw back provision would have to be returned to the federal government, and that the city would have to spend its own money to sue to recover the funds.
Gandurski said the city could simply use an approach it has followed in the past and negotiate the agreements as forgivable loans, that would be retired by the time the ARPA program concludes in 2026.
The $2 million to Northlight represents about 7.7% of the estimated $26 million cost of building a new home for the theater company on property it owns at 1012-1016 Church St.
The $1 million to The Aux represents about 13.7% of the estimated $7.3 million cost of redeveloping the former EZ Spuds warehouse at 2223 Washington St. to house a collection of minority and women-owned businesses focused on “community wellness and racial equity.”
Of the eight council members present for Monday night’s meeting, only Ald. Devon Reid (8th) voted against the Northlight proposal, saying Northlight is a well-connected and well-financed non-profit and that the donor class supporting the theater did not see a reduction in their wealth during the pandemic.
But Ald. Melissa Wynne (3rd) said the theater group was among a class of businesses that were most hard-hit by the pandemic — having to shutter its operations because of restrictions on public gatherings.
The Aux funding proposal was approved without any no votes.