TRANSMITTAL LETTER FOR BOARD MEETING OF FEBRUARY 2, 2012
COMMITTEE ON REAL ESTATE
Mr. David St. Pierre, Executive Director
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Authority to commence statutory procedures for a 60-year lease of approximately 1.19 acres of District real estate located southeast of the intersection of Devon Avenue and McCormick Boulevard, in Chicago; commonly known as the approximate southern half of North Shore Channel Parcel 8.06.
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Dear Sir:
The District has received a request from Lincoln Village, LLC II (“Lincoln Village II”) to lease the southern half of North Shore Channel Parcel 8.06 comprising 1.19 acres of District real estate located southeast of the intersection of Devon Avenue and McCormick Boulevard, in Chicago. The site is vacant and has historically been used as a parking lot. The District also has a request from Cheder Properties, LLC to lease 0.693 acres comprising the remaining northern portion of Parcel 8.06. Authority to advertise said northern parcel is being presented to the Board for consideration and approval.
For informational purposes, we wish to note that to the south of Parcel 8.06 is a 2.4 acre Parcel (North Shore Channel Parcel 8.05) which is under lease for a 60-year term to Inland American Chicago Lincoln, LLC. A 1.4 acre portion of the 2.4 acre parcel is subleased to Lincoln Village LLC, which operates a senior housing facility thereon. Lincoln Village II intends to lease the site to construct and operate a second senior housing center.
Authority to commence statutory leasing procedures for a 39-year lease on the entire Parcel 8.06 was granted by the Board at its November 19, 2009, meeting. However, because the proposed lease term is greater than the customary 39-years, authority to commence procedures for a 60-year lease on the southern 1.19 acres of Parcel 8.06 is being requested.
At its meeting of July 8, 1999, the Board of Commissioners 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 senior housing facility, which will involve an expenditure of over $10 million dollars. Financing for a project of this magnitude necessitates a lease term in excess of 39 years. Lenders have greater security in a longer term of lease and believe there is a greater probability of repayment. Additionally, the longer term would enhance the value of the lease, which would be reflected in the bids.
The technical departments have no objection to making the site available for leasing as there is no foreseeable corporate use of the site.
It is requested that the Executive Director recommend to the Board of Commissioners that it authorize the commencement of statutory procedures for a 60-year lease of approximately 1.19 acres of District real estate located southeast of the intersection of Devon Avenue and McCormick Boulevard, in Chicago, and commonly known as a the approximate southern half of North Shore Channel Parcel 8.06, upon the terms and conditions set forth above.
Requested, Ronald M. Hill, General Counsel, RMH:STM:rg
Recommended, David St. Pierre, Executive Director
Respectfully Submitted, Terrence J. O’Brien, Chairman Committee on Real Estate Development
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for February 2, 2012
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