Developer Martin Tuohy got exactly what he wanted when the Waukegan City Council approved the three ordinances necessary to establish a tax-increment financing (TIF) district around the dying Lakehurst shopping mall.
The TIF will help Tuohy move forward with his $800 million plan for University Station, a dense, new development with housing, shopping and office space surrounding a university campus to be carved out of the giant Lakehurst main building.
Although always part of the University Station proposal, the importance of the TIF was elevated earlier this year, Tuohy said, when the Illinois Board of Higher Education chose a site near the College of Lake County in Grayslake for a state-supported, multi-university campus. Lakehurst had been in the running for the state school.
State-regulated redevelopment tools, TIF districts establish a baseline on property taxes for as long as 23 years and require that the city reinvest all new tax revenue generated by investment in the district. Tax revenue flowing to other taxing bodies, such as townships and school districts, remains frozen for the life of the TIF.
Representatives from several taxing bodies that serve the area gave their non-binding blessing to the TIF at a meeting this summer.
The City Council also approved an agreement to pay the Chicago financial firm of Bigelow and Co. up to $9,000 to finalize a redevelopment agreement with Tuohy. The agreement, to be completed by next month, will spell out what Tuohy and the city need to do to make University Station a reality.
“Something has to happen at Lakehurst,” said Waukegan Ald. John Rickerd, whose 3rd Ward includes Lakehurst. “I think Martin Tuohy can make it happen. I think he’s earned the right to redevelop it, and I hope it goes his way.”
According to a report released earlier this year by the Arthur Andersen consulting firm, a redeveloped Lakehurst could be worth about $225 million.
The mall building, which is less than 20 percent occupied, was valued at $11.6 million in 1998, down from $20.9 million in 1994, according to the report.
The developer’s $800 million plan includes transforming the sea of parking lots around the mall into a mix of commercial and residential properties, most of which will be built by developers working within the University Station plan, Tuohy said.
The project will take seven years to complete, he said.
Building the university campus, the first step in the plan, is expected to take three years, Tuohy said. The Illinois Institute of Technology this fall began offering classes at a temporary location in next-door Park City until permanent classroom space is completed at University Station.
Deals with other schools are in the works, Tuohy said.
Ald. Larry TenPas cast the lone vote against the deal, saying the free market would develop Lakehurst sooner or later without a TIF. TenPas voted in favor of a TIF for downtown Waukegan in 1998, but only reluctantly, he said.
“I’m not in favor of meddling with the market,” TenPas said after the TIF was approved. “That’s a natural place for redevelopment without a TIF. If we’re not careful the city could be financially responsible for this thing.”
