McHenry County Blog

This morning I played photographer’s assistant on Pleasant Valley Road.

I held up the remote controlled flash.

Antonio Olivo is doing a story on things immigration, including the financing of the Lakewood SportsPlex complex with EB-5 “buy a visa” program money that is scheduled to finance the development.

Larry Larson and Al Stenstrom have been researching the financing mechanism and apparently have found something that interested the Tribune to interview them a couple of times and send a photographer to take their photo.

The photographeer had them stand near some signs on Pleasant Valley Road in front of Larson’s magnificent property.

Take a look at his back yard with a dammed up Laughing Creek running through a pond.

He has a covered bridge over one part of the water.

No wonder neighbors to the proposal have signs in front of their homes.

The group even lists how each county board member voted on its web site, “Stop the McHenry County SportsPlex.”

There’s a page addressed to Lakewood residents.

The Tribune photographer was off to the McHenry County Jail to take pictures of the cell blocks were illegal immigrants are housed.

The Alliance for Land, Agriculture and Water has made votes by McHenry County Board members up for election available to the public.

So, if the local newspapers didn’t ask the question you think is important, you might find some direction from actual votes the board members cast in Woodstock.

The weakness, obviously, is that challengers aren’t in the matrix.

Yesterday, land use votes were published on McHenry County Blog.

Today the votes on how the Federal Stimulus Bonds should be allocated.

Three projects are tracked,

• Lakewood’s SportsPlex
• the K-Nines Woodstock minor league baseball stadium and
• dredging Wonder Lake

Strangely, the county board members could not find any manufacturing firms who wanted to borrow money with Federal taxpayers subsidzing 25% of the interest.

Previously on the McHenry County Board, Nick Provenzano and John Jung were not serving when these votes were taken.

You will remember that details about the McHenry County SportsPlex have been dribbling out a little bit at a time. Some residents have been upset enough to distribute a broadside, which I publishes here. (We found it after coming back from a visit to Independence Hall in Philadelphia and Thomas Jefferson’s plantation of Monticello. What appropriate timing.)

I noticed that signs have been prepared as well, but I have only seen this one on Route 47.

As one who has watched public police roll-outs for decades, it seems to me the village should have been done two newsletters ago.

So far, no mention of the SportsPlex has been made in any official publication to residents/taxpayers. Really strange.

I’ll be reading this explanation of the Village official’s viewpoint as I am posting it this Monday morning.

Before I start, I can tell you I want to know who has how much money invested in the SportsPlex and ownership interest in this project, if any of my money as a Lakewood property owner is at risk.  [I've now read the part where the financing for the golf course that cost residents $500 a year for the better part of a decade is said to be nothing like that of the SportsPlex.]

The county board didn’t care to make that public, if anyone knows, even though the Federal stimulus package is involved.

I do not want Lakewood to end up owning a huge building, if the promoters are unsuccessful, so if that is part of the backup plan, something like a demolition bond ought to be included.

First is a cover letter from Village President Erin Smith, who now has enough allies on the board to do anything she can convince them of.

July 14, 2010

Dear Residents:

Erin Smith

During the past several months, there has been some discussion about a sports complex within the vicinity of Illinois Routes 47 and 176.

This includes land that was recently annexed into our community. While no formal proposal has yet been submitted, the Board of Trustees and I believe it is now appropriate to address some of the most frequently asked questions we’ve heard.

I have enclosed a document that provides a summary of the most frequently asked questions. As new questions are received, we will update this document and post an updated version on our Village website at: http://village.lakewood.il.us

We anticipate that the sports complex will be considered at our meeting on July 27, beginning at 6:00 p.m. [no location indicated, but the golf course club house where regular meetings are held, it seems to me, is way too small], and I urge residents to attend the meeting and learn more about this proposal. As always, I encourage you to contact me directly at erin.smith.lakewood@gmail.com or (815) 356-8005 with any questions or concerns regarding this matter.

Sincerely,

Erin Smith, President
Village of Lakewood

Lakewood Sports Complex Frequently Asked Questions

Updated Last on July 9, 2010

1. What is the sports complex and where will it be located?

While no formal submittal has yet been made, we believe that the sports complex will include about 160 acres of land that consists primarily of outdoor sports fields for baseball, softball, and soccer. There will also be an indoor facility of approximately 125,000 to 150,000 square feet. It will include basketball and volleyball courts as well as a restaurant and retail space.

There is also a five (5) acre outlot that is proposed to be developed as a gas station/retail complex.

The exact location of the complex has not been finalized, but it will likely be located on the west side of Route 47, south of the northwest leg of Route 176. The gas station and retail complex will likely be closest to Route 47, with sports fields extending west along Pleasant Valley Road. More information regarding the land and location of buildings and fields will not be available until we see the first formal proposal for a planned unit development (PUD).

2. Will my taxes be raised if the sports complex fails?

It is essential for our residents to understand that the Village of Lakewood will have no responsibility or liability for payments if the sports complex fails.

While references are being made to the Sears Centre or Libertyville Sports Complex, these comparisons are not relevant.

In both of these instances, the facilities were financed using General Obligation or Alternate Revenue Bonds, which require that property taxes are pledged as a revenue source if the enterprise revenues do not cover the debt payment.

This financing model has never been considered for the proposed sports complex in our community. The sports complex financing is entirely private.

3. Is it possible that our taxes will be raised as they were to pay for RedTail Golf Course?

In order to maintain open space and support property values throughout the community, the Village of Lakewood made a decision to purchase and operate RedTail Golf Course using Alternate Revenue Bonds. As the owner, the community is ultimately responsible for the payment of debt if the operating profit cannot cover this obligation. The final payment for RedTail Golf Course will be made in 2011. As stated earlier, the Village of Lakewood will not own, operate, or be responsible for any payment relative to the proposed sports complex.

4. Will there be any economic incentives for the developer?

As all of our residents know, residential and commercial development is at a virtual standstill throughout our country, and it requires creativity and partnerships in order for projects to move forward.

As is often the case when communities are negotiating with commercial developers, we are discussing both a waiver of certain fees we would normally charge for development and a formula for sharing revenues produced by the development.

These are revenues that would otherwise not be available for our community, including:

• sales taxes,
• parking fees,
• entertainment taxes, etc.

We are also willing to partner with the developer to seek grant funding for infrastructure or unique environmental aspects of the project.

No cash contribution from the Village of Lakewood is being considered.

5. Are there any other risks to the Village of Lakewood related to this project?

The Village Staff has and will continue to invest a significant amount of time and resources to supporting the development phase of this project. There is certainly an opportunity cost associated with this time investment, as residents may find that there are days when there is a delay in responding to non-urgent resident requests. We believe that this time investment is worthwhile in the end, as commercial development at this major intersection is essential to maintaining essential services and public infrastructure without a future increase in property taxes.

A second risk is that the project will fail, leaving a vacant building and land behind. This is land that could easily be redeveloped by another land owner in the future. We believe this is an unlikely scenario, as the business plan for the sports complex has been vetted by several independent consultants and financial institutions, including Stern Brothers.

6. Did McHenry County contribute $15 million in financing to this project?

McHenry County received $27.5 million in federal bonding authority for private projects under the $789 billion American Reinvestment and Recovery Act.

The bonds are meant to encourage lending for shove-ready projects by giving investors a 45 percent refund of the federal taxes payable on them.

The McHenry County Board chose to dedicate $18 million of its allocation for this project.

Private investors will choose of their own volition to purchase these bonds, and McHenry County will have no obligation or responsibility for repayment.

7. Has there been an investment of foreign funds into this project?

Another funding source will come from a federal financing program called employment based fifth preference, or EB-5.

The program, created in 1990, offers permanent resident status to foreign investors who fund businesses that create or save jobs.

It is simply a unique investment tool that the developers have identified to help fund their project, and the use of EB-5 funds for this project has no bearing on the deliberations by the Village of Lakewood.

8. What benefit is there for the Village of Lakewood?

The recent annexation of about 565 acres of land was consistent with our boundary agreements with neighboring communities, our Comprehensive Plan, and our Facility Planning Area.

It brought four (4) existing businesses into our community and will help to grow and diversify our limited sales tax base.

The proposed sports complex is also consistent with these underlying documents and has the potential to significantly increase our General Fund revenues. It is also likely that ancillary projects (i.e. restaurants and retail) will develop to support the sports complex.

Finally, the proposed sports complex will be built incorporating best environmental management practices and provide a template for sustainable development within our community.

Not only will it generate new sources of revenue which are essential to our long term sustainability, but it does so by creating a destination that is consistent with our vision for our community.

9. How can I learn more about the proposal?

We anticipate that the proposal will be considered at our meeting on July 27, beginning at 6:00 p.m.

10. Should I be concerned with the statements that were included on a flyer that was placed in my mailbox recently?

Since the flyer was sent anonymously, it’s not possible for us to follow up with the person(s) who have expressed these concerns. Nor is it possible to understand the basis of their misinformation.

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Previous articles that might be of interest:

$18 Million Federal Stimulus Request for $40 Million Route 47 & 176 Lakewood Recreational Complex on County Board Finance Committee’s Agenda Tuesday

Concept Drawings of the Proposed McHenry County Sportsplex in Lakewood

May Letter Outlines $5 Million in Direct and Indirect Lakewood Financial Assistance to Sportsplex Developer Lou Tenore

So, You Want to Know More about the Lakewood SportsPlex?

Lakewood Village President Erin Smith Endorses Ken Koehler for County Board

First Electric Newspaper Finds Potential Snag in Lakewood SportsPlex

Chicagoland Foreign Investment Group Sends SportsPlex Investment Letter

Investment Bank Announces Commitment to SportsPlex, If

Thoughts on “Money in the Bank”

Lakewood SportsPlex Proposal Getting Curiouser and Curiouser

Lakewood Gains New Economic Development Tool

Lakewood Seeks to Annex 540 Acres, including Route 176 & 47 Golf Courses & SportsPlex Site

Judge Michael Caldwell Gives Lakewood Green Light to Grow to Route 176

Former Village President, Republican Activist Win Lakewood Trustee Spots

Big Zoning Doings in Lakewood Tuesday Night

Lakewood Annexes Past Route 47 Up to Route 176

Village of Lakewood Summer Newsletter, Anti-SportsPlex Flyer Arrive

Yesterday, McHenry County Blog showed you the letter from the Chicagoland Foreign Investment Group saying that it would raise $27 million “for construction and operation of the (McHenry County SportsPlex” sports facility complex to be constructed in McHenry County.”

That was dated December 1st, but just given to county officials on January 28th.

Today, take a look at a February 5th letter from Stern Brothers & Company.

It says the firm will find “sophisticated investors…in tandem with a sophistical investment letter…”

Then, there are two “if’s.”

• The operating LLC raises $8 million in equity, and
• The project is located in a Targeted Employment Area and CFIG (Chicagoland Foreign Investment Group) commits $27 million in long-term take out financing.

Miyun Cho, Managing Director, signs the letter.

Here’s the first of a series of article that Pete Gonigam has written for his First Electric Newspaper.

It’s entitled,

FEN Finds Possible Problems for Proposed SportsPlex

You can read about and see the Prairie Grove maraschino cherry processing plant that Lake in the Hills resident and SportsPlex CEO Lou Tenore owns.

The article reports that “at the moment the EB-5 fund owns 65 percent of the company, the Management Group 35 percent. Later on the Management group will end up with a 51 percent interest.”

The intriguing description of tomorrow’s article is

“How Do You Say ‘Sportsplex’ in Farsi?”

The McHenry County Board is poised to vote on whether to allocate $18 million of its $27 million in Federal stimulus money to the Lakewood development.

Approved unanimously by the McHenry County Finance and Audit Committee this morning, the proposed $40 million McHenry County Sportsplex comes with $5 million worth of strings to Lakewood taxpayers, including $1 million to buy the land on Route 47 and 176.

A May 13th letter from newly-elected Village President Erin Smith to McHenry County Sportsplex entrepreneur Lou Tenore of Lake in the Hills promises a “cash transfer of $1,000,000.00 from the Village to MCS to the extent permitted by law or acquisition by the Village of up to $1,000,000.00 in land for the project.”

This is part of a $5 million assistance package “to support this project in a manner consistent with Illinois law.”

Outlined in the letter are other financial incentives:

“Waiver of Lakewood municipal annexation, platting, permitting, and associated hearing fees as well as reimbursement of Village professional costs up to a total value of $1,000,000.00.“An additional $3,000,000.00 (or greater to the extent that the amount provided if fee waivers [above] totals less than $1,000,000.00) provided through a combination of other sources included, but not limited to:

1. Revenue-sharing agreements or tax rebate agreements
2. Assistance from the Village securing a grant from the Upper Illinois River Development AuthorityOther technical assistance from the Village whether provided directly to the Developer or to the Village
3. Introductions and support by the Village to funders for other grants whether such grants are made directly to the Developer or to the Village
4. Any grants or financial assistance provided to MCS from McHenry County at the request of the Village
5. Property tax abatements, if any, for the parcel
6. USDA technical assistance whether provided directly to the Developer or to the Village
7. Tourism attraction or TAP grants whether provided directly to the Developer or to the Village.

So what, according to the letter, does Lakewood get in return?

To recover the $1 million “advance”

• The village may retain, for its own purposes, its share of the first $1 million in sales tax revenue or amusement tax revenue generated by the project.
• It can also “be satisfied by other cash payments from the Developer.” Listed are a “10% additional charge on all regular admission fees and a 20%s charge on all tournaments fees along with a $1 per vehicle parking fee.” This would be pledged for a ten-year period.
• If the village supplies land, rather than case, the land will be deeded to the developer when the village has recovered the purchase price through sales tax, amusement tax and other fees.

For the $15 million loan he sought authorized by the same Federal Stimulus source, Woodstock minor league baseball promoter Pete Heitman told the New York times that he expected to save $5 million over twenty years.

The letter from Village President Smith says the $5 million in assistance needs to be provided “within 18 months.”

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The photo to the right is of Lakewood Village President Erin Smith at a fall “Meet with the Village President” gathering.

Headed by Lake in the Hills’ Louis Tenore, Jr., a group of investors is seeking permission to obtain $18 million in Federally-subsidized stimulus money, according to a document posted on the McHenry County Board’s web site.

The proposed McHenry County Sportsplex will be mainly on the west side of Route 47 where it joins with Route 176. That area is within the planning jurisdiction of the Village of Lakewood. Background on the project can be found here.

While discussions have been going on for a considerable length of time, the application says that the Village of Lakewood will not act on annexation and approval of the project until next March.

Issuance of the $18 million in bonds, if approved by the county board, is scheduled for April 15^th. Construction would begin January 1, 2010, with completion six months later.

If approved, unless more Federal stimulus money is found, the current $27.5 million allocation of Federal Stimulus Bonds would not seem to have enough remaining to also provide the $15 million in financing that the Woodstock minor league baseball stadium promoters are seeking.

SportsThe time table listed seems a bit optimistic, given the stated March approval by the Lakewood Village Board.

The name of the limited liability corporation which will own 30% of the project is MCSMG LLC. It was formed on May 12, 2009.

The Illinois Secretary of State’s Office lists it as “McHenry County Sportsplex, LLC.”

McHenry Sportsplex E-5 Fund LLC, established August 21^st of this year and located at 111 E. Wacker Drive in Chicago, will own the other 70%. According to the Illinois Secretary of State’s Office, it is related to McHenry Real Estate and Property Investments, LLC. The fund proposes to invest $27 million in the project.

The application says that $13 million in equity will be put up by the investors.

This is how the document says the $40 million will be spent:

• $6 million – land acquisition
• $6 million – site development
• $24,100,000 – new construction
• $500,000 – furniture and fixtures
• $2.9 million – professional fees

Getting the project off the ground will produce 524 temporary jobs, the application says. 420 permanent jobs will be created. Annual payroll after the first year is estimated to be $14.1 million or almost $36,000 per person per year.

The investment banking firm is identified as Stern Brothers. The bonds will be privately placed.

Kitak, Rock, LLC, will be the bond counsel.

Legal counsel is Mike Moody of O’Rouke and Moody at 55 W. Wacker Drive, Chicago.

The application is dated December 16^th.

An attachment showing local labor, supplies and materials to be used is not posted on the county’s web site. Another attachment explaining the project is also not attached.

Crystal Lake borrowed a little over $22 million at unheard of low rates last night to finance Vulcan Lakes and water and sewer projects and re-financing of 1998 bonds.

Utilizing Federal stimulus-subsidizes, the city will end up paying just 3.062% interest on $5 million on Recovery Zone Bonds authorized by the McHenry County Board. The bonds are General Obligation bonds backed by the 45% Federal tax credits on the interest and the city’s
Home Rule Sales Tax, unless the Vulcan Lakes Tax Increment Financing money can be used to offset it.

“It’s the first sale by a local unit of government in the State of Illinois,” financial adviser Phil McKenna told the council. (City Finance Director Mark Nannini, whose office’s work received an Award for Excellence from the Government Finance Officers Association, can be seen standing behind McKenna.)

“You become leaders in the market.”

With a new choice opened up by the Federal government under which 45% of the Recovery Bond interest will be sent to city hall every six months, “We just looked at the lowest interest cost,” he explained.

The bonds can now be taxable or tax-free, as municipal bonds traditionally have been.

In the refunding of $4.675 million  bonds, there were four bids.  A technique was used in which if bids were within 2/100 of a percent those interested were given two minutes to offer another bid.

“One firm bid six times; another 4 times and they got it,” McKenna said.

Even though there was “a favorable interest rate environment going in,” he continued, the city saved $772,000 in interest costs.

The final $12.435 million was borrowed under the Build America Bond program.   The net interest rate, after figuring in the 35% interest subsidy from the Federal government, was 3.089%.

McKenna’s firm received $30,000 for its work on the sale.

The McHenry County Finance and Audit Committee voted to allocate the last of the $18,338,000 in Federal Stimulus bonds for governments to the City of McHenry and the Village of Fox River Grove.

With $10.6 million already allocated to

about $9 million was left.

McHenry County is reserving $4 million for itself, the City of McHenry wanted $3.5 million and Fox River Grove wanted $1.5 million.

That was more than the available allocation. 

The City of McHenry graciously yielded a million dollars of its $3.5 million to Fox River Grove.

Fox River Grove Village President Robert Nunamaker explained that his village would need $8 million to bring the streets up to standard and they were spending $200-250,000 per year. 

“We thank our friends from McHenry  who have offered to give us $1 million (in authority),” Nunamaker said.

Previously, McHenry City Administrator Doug Maseiner, seen in the top photo, said that his municipality’s road projects would be bid over the winter.

McHenry County Board member Tina Hill observed,

“We were doing this on a first come, first served basis. We got a good response.”

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County board members seen in the top photo are, from left to right, John Hammerand, Tina Hill and Lyn Orphal.

In the bottom picture are Mary Donner, John Ryan and Scott Breeden.

Toot, toot.

Or is it,

“Hoonk, hoonk?”

That train speeding down the track is the one delivering authority for the Woodstock baseball stadium developer to use $15 million in Federal Stimulus Bonds to finance their proposed stadium.

The beneficiary of this largess is Equity One Development Corporation. The application form lists Mark Houser as the 100% owner of the firm.

Here are a couple of relevant sections of the proposed resolution:

Section 1. The County meets certain conditions specified in the Act required to designate the County as a Recovery Zone, those conditions being a significant increase in the unemployment rate, an increase in the rate of home foreclosures, and general distress and the County has been designated as a Recovery Zone.

Section 2. The County Board hereby approves the Project submitted by Equity One Development Corporation and designates $15,000,000 of Recovery Zone Allocation to Equity One Development Corporation for the issuance of Recovery Zone Facility Bonds to finance the Project.

Section 3. The Allocation shall be used to issue bonds to finance the Project and said Bonds must close no later than March 1, 2010. In the event the Bonds do not close by March 1, 2010, then the Allocation shall expire and revert back to the County.

Section 4. All actions of the officers, agents and employees of the County that are in conformity with the purposes and intent of this Resolution, whether taken before or after the adoption hereof, are hereby ratified, confirmed and adopted.

Here are the committee members who will meet next Tuesday at 9:30:

Chairman: Marc Munaretto

Vice Chair: Lyn Orphal
Members: Scott Breeden, John Hammerand, Tina Hill, Daniel P. Ryan, Mary Donner

Up for election this year are

• Lyn Orphal in the Crystal Lake-Lake in the Hills District 2
• Tina Hill in Woodstock-Lake in the Hills-Huntley District 5
• Dan Ryan the Huntley, Marengo, rural Woodstock, Harvard, Hebron, Alden District 6

In yesterday’s article about this pending decision, I laid out the campaign opportunities it would offer Democrats.

The light at the end of this tunnel could be what Democrats planning to run for county board are seeing.