The Oak Lawn Village Board approved a purchase deal and assumed ownership of the village’s most notorious eyesore on a former wetland—the outdated retail development on the corner of Cicero Avenue and 111th Street.
Village board members unanimously voted to purchase the property for $10.9 million from the current owner, J.C. Penney, during Tuesday’s board meeting.
The purchase includes more than half of the 42-acre collection of land parcels, including the parcel adjacent to the former Edgar Funeral Homes, and the large asphalt parking lot in front of the Kmart along Cicero Avenue up to 111th Street.
Village Manager Larry Deetjen said the village had the property appraised and purchased it for slightly below its assessed valuation of $13 million.
“That is paltry,” Deetjen said.
The collection of retail parcels became a subject of controversy when the village board voted in 2006 to create a $25 million TIF district to redevelop the land. Kmart opposed the TIF and sued the village shortly thereafter. Sears Holdings later joined Kmart in its lawsuit against the village when Sears assumed ownership of Kmart after it declared bankruptcy.
Trustee Jerry Hurckes (Dist. 1) had high praise for the land purchase but wondered how the village could move forward on it with a pending lawsuit.
Deetjen said progress has been made in discussions with Sears Holdings, the parent company of Kmart.
“(Sears Holdings-Kmart) has been responsive,” Deetjen said. “The return on investment if we were in the market, which we are not, is very market driven. I think all the parties understand that. I’m hopeful that we’ll be able to come to some agreement with each other.”
The village plans to take out short-term loans to assemble the parcels, then pass them on to a developer who will secure more permanent financing. The village may then sell the property to the developer or enter into a master lease.
“That’s our exit strategy,” Deetjen said.
Sales tax revenue generated from stores in the development after it’s completed would go toward paying the village’s debt from purchasing the land and the tax increment. After that, 1.5 percent of new sales tax revenue would go back to the village, Deetjen added.
At least four banks have offered financial assistance to help the village assemble the parcels. The village has already chosen a developer, Chicago-based Hamilton Partners.
Plans are to build a mixed-use commercial development that will incorporate the by connecting the bike path and to provide much needed water detention to relieve flooding.
Deetjen said that several nationally known stores and restaurants already have expressed interest in the redevelopment, viewing that stretch of Cicero as a strong business corner.
A resident asked how the village plans to pay for the purchase stating, “The devil is in the details.”
“I don’t think there is a devil here,” Mayor Dave Heilmann responded. “It’s going to cost us a lot more in terms of the time that has gone by. I know the economy is bad, but if we sit by and tread water, forget it. There’s nothing hidden. It’s very open.
“Any developer will tell you that you have to acquire the land and it goes out of your hands so it can be developed …” Heilmann added. “It’s not like we’re going to sit there and own the land forever. That’s not our goal. This is a step you take.”