Vernon Hills officials have approved a $20 million incentive as an investment in a retail and housing development they hope will justify the return.
The approval this week of four items, each by a 4-1 vote, ends a long give-and-take with developer Regency Centers Corp. to build Mellody Farm, a $200 million mix of 260 luxury apartments and an upscale retail center on the northeast corner of routes 60 and 21, a marquee intersection.
Regency, which proposed the project in summer 2015, has maintained a hefty incentive was needed, in part, because of the high price of the land.
The incentive amount, how and when it would be paid and safeguards to village finances have been key points of discussion since.
"The reason this has been languishing as long as it has is with the guarantee the village wanted from our development partner," Mayor Roger Byrne said before the vote.
Regency will pay $25 million in liquidated damages if the project is not substantially completed within four years, according to the redevelopment agreement, one of the four approved resolutions.
The others involve the designation of the area as a tax increment financing district.
In a TIF district, the increase in property taxes that would have gone to various taxing agencies as a result of higher property value instead are put in a special fund to pay for various expenses. In this case, it will include roadwork and bond payments.
Trustee Thom Koch was the lone dissenter. He didn't comment at the time but later said he was wary of the incentive amount and was concerned about the future for brick-and-mortar retail.
"I hope I'm wrong on all counts," he said.
In coming weeks, the village will borrow $18 million via a bond issue to be provided to Regency subject to 19 conditions being met in advance. They include proof the center is 50 percent leased and approvals from the Illinois Department of Transportation for substantial road improvements.
"We are making this investment to protect our retail base," Trustee Jim Schultz said before voting in favor of the measures.
Sales tax has allowed the village to operate without a municipal property tax on residents.
Once outlots are developed, the village would pay up to $2 million more from a source to be determined. The annual bond and interest payments of about $2 million would be paid from TIF district proceeds, which at build-out are estimated at $2.4 million per year.
Also, the 274,575-square-foot retail portion is expected to generate $600,000 to $700,000 in annual sales tax for the village.
Mellody Farm is described as having an urban feel unlike anything else available in the commercially dense village. It would be anchored by a Whole Foods store.
Regency plans to sell a portion of the property to Focus Acquisitions LLC to build 260 luxury apartments.
Improving the roads in the area has been another key consideration.
The cite is the last significant property owned by the Cuneo Trust and one of the key undeveloped areas left in the village.