CHICAGO — The Illinois Finance Authority board advanced plans Tuesday for the use of up to $75 million of Midwestern Disaster Area Bonds to help finance a $95 million retail, hotel and office complex on a brownfields site adjacent to the Great Lakes Naval Station north of Chicago.
The city of North Chicago would use the MDAB proceeds to help finance the Sheridan Crossing Project located on a 40-acre site.
The project includes a 200-room hotel, restaurants, retail and office buildings, and a sports facility with an indoor field house and hard court facilities.
The IFA gave preliminary approval to the borrowing so the city must return for final approval before proceeding. The city intends to privately place the unrated revenue bonds through placement agent InCapital LLC.
The bonds would likely be secured by a mortgage, security agreements, an assignment of all improvements on the financed properties, and an assignment of all rents and leases on the properties.
Smith & LaLuzerne Ltd. is general counsel to the city, Greenberg Traurig LLP is bond counsel, and Miller Canfield LLP is co-bond counsel. Miller Cooper & Co. is the city’s auditor.
The project would tap a portion of Illinois’ $1.5 billion allocation of MDABs for qualified projects in 18 eligible counties. The federal program enables the use of private-activity borrowing with a tax exemption for privately owned projects that are geared towards producing jobs and spurring economic development in Midwestern counties declared disaster areas after severe storms and flooding in mid-2008.
Though North Chicago would initially own the project, it might eventually sell off the properties.
Program borrowing authority expires at the end of the year. The IFA said it had issued $30.2 million of MDABs through the end of last year and projects seeking $87.5 million of allocation have been submitted to the agency.
The project could provide a boon for the Chicago suburb, which has struggled due to its economic reliance on a dwindling industrial base.
Bolstered by the presence of major employers, the city’s population jumped to a peak of 47,275 in 1970 from 5,839 in 1920. But as industrial facilities were shuttered, it dwindled to 32,594 by 2010.
Because a good chunk of land in North Chicago is owned by the federal government and other tax-exempt entities, residents bear a heavy burden to fund city operations through property taxes. The project would be located on the former Fansteel Inc., a contaminated site the city has invested $16 million in to prepare for redevelopment.
“The proposed Sheridan Crossing Project would culminate the city’s efforts to remediate and redevelop a brownfield site, return the property to the property tax roll, and create a nexus of development that would leverage the site’s proximity to Naval Station Great Lakes,” IFA documents said. “The proposed facilities would generate additional hotel-motel tax and sales tax revenues.”
The city is banking on capturing revenue from spending and tourism linked to the naval station. The Great Lakes Naval Station opened in 1911 and serves as the U.S. Navy’s largest training facility, hosting its only Recruit Training Command since the closure of basic training facilities in Orlando and San Diego. The station also serves as the home of the Navy’s technical training schools for surface warfare.
Each year, 37,000 men and women complete the training to become sailors at the base. Officials estimate that 25,000 military and civilian personnel work, train and live at the facility. The station hosts up to 4,000 guests for graduations 50 weekends a year.
The city has hired Weston Solutions Inc. as the master developer and anticipates infrastructure construction beginning this year.