Between a rock and a hard place was what I took away from Monday night’s McHenry County City Council meeting.
Significant numbers of citizens showed up for this next step in the TIF project approved while Pam Althoff was mayor.
A view from the back of the McHenry City Council Chambers.
With the real estate market still tanking, the vision of councils previous and present that condominium owners occupy the Tax Increment Financed subsidized 27-unit residential building with businesses below seems out of reach.
At least that was the firm opinion of prospective developer Roy Blavvise, as he fended off request from various council members that there be some “trigger” which would initiate the conversion of rental units to condos.
Real estate developer Roy Blavvise makes his case to the McHenry City Council.
“The market will speak for itself,” he said, refusing to be locked into some artificial 3 or 4-year deadline after which he would have to seek re-approval from the council to continue renting out the units.
“I don’t think I’ll be comfortable taking that risk. Maybe there’s another guy.”
Blavvise envisions selling a riverfront lifestyle to prospective tenants first, condo buyers eventually.
You can see that from the poster below, which was on display:
Ad mock-up for the development. There are eight boat slips available.
The meeting seemed to stay abstract until two business people occupying the first floor units spoke up after the council members finished their questions.
Joe Scarnato, owner-operator of Buddy's, laid it on the line. Either the project goes forward now or he won't be in business six months from now.
Joe Scarnato, owner of Buddy’s, a pizzeria, told how the bank (First Midwest) was doing the minimum to maintain the building and whose plans to finish off the building were the most economical possible.
In comparison, Blavvise’s group plans granite counter tops, cove molding above large cabinets and stainless steel in the kitchen.
“My family has hundreds of thousands invested in this right now. My future is based in the future ownership of this building. If there (is) a bank takeover, I won’t be here in three months.”
He predicted that if the bank finishes the build-out, “It’s going to be done as cheaply as possible…How am I going to survive?
“You’re going to have 100% vacancy at that place. In another six months, I won’t be here. I can’t survive (without an owner that cares). There has to be some resolution.”
"The profit we make from this building will be when we convert to condominiums," Roy Blavvise said, trying to persuade the council that it was in his investors' best interest to convert from rental units to condos as soon as the market would allow.
Jevonne Williams, owner of Jevonne Riley Salon on Green Street (look closely and you can see her neon sign above) and whose family also lives in the building, took the podium next.
“I’m worried about safety. Things falling from the building.
“We have to be able to go with the flow,” she said, seeming hoping that the council would find some way to jump start the project with Blavvise’s proposal.
“I understand the concerns that this could be low income housing,” Blavvise said.
Re-enforcing that concern was Green Street merchant and former President of the Village of McHenry Shores, which was merged with McHenry.
“Will they be single family apartments?” she said, conveying what she had heard that she thought the council members might have missed.
Both Blavvise and city officials assured her that criminal and credit checks would be run on all tenants and that occupancy resgtritions would be enforced.
Council members brought up aspects of the project that they wanted improved, parking, a better plan to drop off and pick up people, etc.
“I’m willing to put a lot of money on the line to solve these issues.
Blavvise said his “worst case scenario” was being forced by a future city council to vacate all the units and sell them as condos.
“I’d have a vacant building with no cash flow and a huge loan. I’d lose the building.”
Making it clear that, if he had to fight the city, he would walk away from the deal, Blavvise said, “We’re not going to do this project to fight the city. Absolutely we’re doing this for profit. We’re not a not-for profit organization…The only way we’re going to do it is with a partnership with the city.”
The city is putting up %624,028 to subsidize the developer divided as follows:
- $182,430 – parking lot
- $47,000 – boar piers
- $100,598 – landscaping
- $284,000 – site development
The city’s attorney, David McArdle, and the developer’s, former Mayor Steve Cuda, will try to come up with acceptable language for next Monday’s council meeting.
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And, maybe it’s just when I attend, but for the second time everyone was wanded by police officers before entering the council’s chambers. The last time was when the city council hiked its city sales tax 50%. I have seen this at no other municipal meeting.
Cal-
Nice job trying to crystallize last night’s meeting.
They can put granite on the walls, granite on the ceilings and granite in the hallways. They will never have a successful rental or condo project until they address the issue of the number of available parking spots and the issues related to arriving and departing from their residences the with safety, weather, and elevation change concerns addressed.