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TO: Mayor Richard C. Irvin
FROM: David Dibo, Executive Director Economic Development
DATE: June 9, 2023
SUBJECT:
A resolution authorizing the purchase of the property at 101 N. Lake and 102 N River Street from Old Second Bank to facilitate the development of Downtown Aurora.
PURPOSE:
This resolution will facilitate the acquisition of strategically located vacant property, and the facilitation of the redevelopment of the property that also conserves downtown public parking, especially when events are occurring at River Edge Park and/or the Paramount Theater. The site is depicted in the attachment to this resolution.
BACKGROUND:
The subject properties, located at the northeast corner of Lake Street and New York, are parcels at a key gateway into Downtown. They have come on the market within the last year (site map attached). These properties became available as a result of the merger of West Suburban Bank with Old Second Bank. Having such large and visible gateway properties become available provides the City with a significant redevelopment opportunity. As noted above, controlling the property also helps ensure adequate parking in the downtown. The City wants to assure that the properties find their highest and best use that enhance the Downtown area.
For decades the City of Aurora has planned to improve this area of the Downtown especially moving north of New York Street towards Wilder Park. One example of City Strategic and Comprehensive Plans includes the 2017 Downtown Master Plan. Staff has also worked both internally and with the assistance of consultants to further plan for the northwest area of the downtown that could potentially become a new district that has a unique character and feel. In order to make visionary plans a reality, the City needs to manage capital (this property), explore partnerships, and create a culture for investment accountability.
The City plans to continue the strategy of supporting a mix of uses in the downtown that includes residential (affordable and market rate), restaurants, community facilities, office, open space, commercial and retail uses. As a gateway into the Downtown, examples of highest and best uses for this property include restaurants or retail.
DISCUSSION:
Purchasing these properties is a strategic move in our Downtown. The City's intention will be to control the property to be able to convert the now vacant financial institution to an active restaurant or retail space (for example) which will further enhance the downtown. The new businesses envisioned will also fit well with attendees at River Edge Park and the Paramount Theater, which are both within proximity of the properties.
Strategically, if this property is purchased by the City, a portion of the property could also be maintained for public parking. Today nearly half of the site is used for public parking that is convenient for the adjacent Restaurant Row, and nearby RiverEdge Park and the Paramount.
The City has negotiated a sale price with the seller of $1,600,000 from the original $2,000,000 listing price. A copy of the Purchase Sale Agreement is attached. In order to obtain the discounted price of the property, the City must close on or before June 30, 2023. After that date, the purchase price increases to $1,700,000. The City has valued the property using the expertise of Valbridge Property Advisors, at a minimum fee simple value for the land alone of $2,250,000 and a building value of $400,000 (maximum value is $2,650,000 land and $500,000 building). This value compares favorably to the City’s valuation of the properties being developed for the Windfall Development and the DAC development:
Windfall property: 2.9 acres valued at $1.6 million per the approved redevelopment agreement
DAC property: 2 acres purchased at $1.8 million
These comparables along with the valuation done by Valbridge show that the $1.6 million purchase price is below both the valuation price and the original asking price by the seller by 20%. Beyond this price point alone City staff (Economic Development and Central Services) have inspected the building and conclude that it is serviceable for future development and does not have material infrastructure defects. Finally, the site has an EPA Phase I and II environmental site assessment done in 2022 by the Environmental Services Group, Ltd, with no further investigation, hence remediation, needed. In summary, this transaction is an investment in the downtown wherein the City will use one asset (city funds) to acquire another asset (the property). The future potential use of this property will need to provide a return on this investment in the same way the city has calculated recent development agreements that included land in the project.
Funding for this purchase is provided in the 2023 approved budget in the Gaming Tax fund account number 215-4411-417.71-01 Capital Outlay-Land. A budget amendment of approximately $425,000 to this account will be necessary and will be brought forward to the City Council at a later date.
IMPACT STATEMENT:
Controlling these properties will provide the City with the opportunity to plan for and implement a highest and best use for this key gateway into the Downtown. If the properties are sold to a private party, the future use may not be in the best interest of the City as a whole for the strategic development of the downtown and the ability to provide public parking will be negatively impacted. Future development of this site will increase the City’s real estate tax base both at this property and, by encouraging investment development in the surrounding area.
RECOMMENDATIONS:
That the resolution be adopted.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution authorizing the execution of a property purchase and sales contract for property at 101 N Lake and 102 N. River Street, Aurora, IL.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, pursuant to the authority granted to it under the Illinois Constitution, the laws of the State of Illinois, and the common law, the City has the authority to acquire the real property, and appurtenances attached thereto, commonly known as 101 N. Lake Street and 102 N River Street, Aurora, Illinois, having permanent index numbers 15-22-162-005; 15-22-162-006; 15-22-162-003
WHEREAS, the owner of the Subject Property (“Seller”) desires to sell the Subject Property to the City; and
WHEREAS, the Corporate Authorities desire to purchase the Subject Property from the Seller, on terms to be negotiated and approved by the Mayor, in consultation with the Corporation Counsel, for an amount not to exceed One Million Six Hundred Thousand and 00/100 Dollars ($1,600,000.00), plus reasonable closing costs; and
WHEREAS, the Corporate Authorities have determined that the purchase of the Subject Property by the City for an amount not to exceed One Million Six Hundred Thousand and 00/100 Dollars ($1,600,000.00), plus reasonable closing costs, on terms to be negotiated by the Mayor in consultation with the Corporation Council, is in the best interests of the City.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows:
SECTION 1: That the Preambles set forth above shall be and are hereby incorporated in Section 1 herein, as if restated herein.
SECTION 2: That the Mayor is hereby authorized to negotiate, sign and execute a contract for the purchase of the Subject Property, in consultation with the Corporation Council, for an amount not to exceed One Million Six Hundred Thousand and 00/100 Dollars ($1,600,000.00), plus reasonable closing costs.
SECTION 3: That the Mayor, City Clerk, City Treasurer and Corporation Counsel are further authorized to execute any and all additional documents necessary to complete the purchase of the Subject Property following approval of this Resolution.
SECTION 4: This Resolution shall take effect from and after its adoption and approval as required by law.