TRANSMITTAL LETTER FOR BOARD MEETING OF OCTOBER 2, 2014
COMMITTEE ON PROCUREMENT
Mr. David St. Pierre, Executive Director
Title
Authority to advertise Contract 14-367-11 for public tender of bids a 60-year lease of approximately 1.801 acres of District real estate located southeast of the intersection of McCormick Boulevard and Devon Avenue in Chicago, Illinois, and known as North Shore Channel Parcel 8.06. The minimum initial annual rental bid shall be established at $118,500.00
Body
Dear Sir:
On November 19, 2009, the District's Board of Commissioners ("Board") authorized the commencement of statutory procedures for the leasing of North Shore Channel Parcel 8.06, located southeast of the intersection of McCormick Boulevard and Devon Avenue in Chicago, as a result of a request by a prior applicant. On February 16, 2012, the Board authorized the Director of Procurement and Materials Management to advertise for the public tender of bids a 60-year lease on the subject property, however no bids were received and the prior request was ultimately withdrawn. The site is improved as a parking lot and is unoccupied. Recently, the District received a request from First American Properties, LLC ("First American") to lease the site for commercial development and parking purposes.
Pursuant to statute, the lead applicant, First American, submitted two appraisals and the Law Department obtained a third appraisal as follows:
Appraiser Value
CohnReznick
Patricia L. McGarr, MAI $1,185,000.00
(District's Appraiser)
Frank C. Urban & Co.
Frank C. Urban, MAI $ 830,000.00
Madison Appraisals, LLC
Joseph T. Thouvenell, MAI $ 590,000.00
It is recommended that the subject real estate's fair market value be based upon the highest of the three appraisals and established at $1,185,000.00, and that the minimum initial annual rental bid be established at 10% of the property's fair market value or $118,500.00.
It is recommended that this site again be made available for a 60-year lease. At its meeting of July 8, 1999, the Board authorized a change in policy relating to leasing District real estate. The policy enacted allows for leases to be issued for 60 years, rather than the customary 39 years in certain instances involving commercial leases. The leasing statute allows the District to lease land for a maximum period of 99 years. The applicant in this instance is proposing to construct a commercial retail center on a portion of the site. Financing for a project of this magnitude necessitates a lease term in excess of 39 years. Lenders have greater security in a longer term lease and believe there is a greater probability of repayment. Additionally, a longer term will enhance the value of the lease, which would be reflected in the bids.
It is further recommended that the Executive Director recommend to the Board of Commissioners that it authorize and approve the issuance of the following orders:
1. The improved real estate consisting of approximately 1.801 acres located southeast of the intersection of McCormick Boulevard and Devon Avenue in Chicago, Illinois, and known as North Shore Channel Parcel 8.06, depicted in the exhibit attached hereto be declared surplus and not needed for the District's corporate purposes and available for lease as set forth herein;
2. The fair market value of the 1.801 acres of real estate be established at $1,185,000.00, and that the minimum initial annual rental be established at 10% thereof or $118,500.00; and
3. The Director of Procurement & Materials Management be authorized to advertise said 1.801 acres of real estate as available for lease for a term of 60-years at the minimum initial annual rental bid of $118,500.00 and report the results of the bidding to the Board of Commissioners for further action.
It is requested that the Executive Director recommend to the Board of Commissioners that it authorize the Director of Procurement and Materials Management to advertise Contract 14-367-11 for public tender of bids a 60-year lease of approximately 1.801 acres of District real estate located southeast of the intersection of McCormick Boulevard and Devon Avenue in Chicago, Illinois, and known as North Shore Channel Parcel 8.06. The minimum initial annual rental bid shall be established at $118,500.00.
Requested, Ronald M. Hill, General Counsel, RMH:STM:vp
Recommended, Darlene A. LoCascio, Director of Procurement and Materials Management
Respectfully Submitted, Barbara J. McGowan, Chairman Committee on Procurement
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for October 2, 2014
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