Title
Authorization to Assign and Amend City Contract for Development of 200 W. Monroe St. (Ordinance S-44293)
Description
Request to authorize the City Manager, or his designee, to assign City Contract 135145 ("Agreement"), a development agreement with 211 W. Monroe Holdings, LLC, and amend the scope and certain terms of the agreement. The amendment will not impact the General Fund.
Report
Summary
200 W. Monroe St. is an entire city block ("Site") which is owned by 211 W. Monroe Holdings, LLC, an affiliate of Golub Real Estate Corporation ("Golub") out of Chicago, Illinois. In July of 2012, City Council authorized business terms for Golub to develop a high rise tower which would include approximately 350,000 square feet of office space, 900 structured parking stalls, 3,500 square feet of public incubator space for emerging business enterprises or collegiate education, ground floor commercial space and a commitment to provide parking for Orpheum Theatre events on weekends. The City and Golub entered into an Agreement in December 2012 in accordance with that authorization which initiated certain performance benchmarks for Golub. Unfortunately, due to the market and economic impacts of the recession on the office market for an office tower of this size, Golub has been unsuccessful in advancing the original plan. Golub has been working with another Chicago development group, XSC 200 W. Monroe Acquisition, LLC, ("Developer") to acquire the site and development agreement.
Golub has reached terms with the Developer to acquire the site and development rights to develop a dense, urban, mixed-use, high-rise development on the Site. If approved by City Council, this amendment will take the Site from an underutilized parcel with surface parking and a vacant automotive repair shop, to a productive redeveloped property. In order to facilitate the development of the Site, staff recommends the following revised terms to be incorporated into an amended development agreement.
- The project scope will be amended to be a two phase, mixed-use, high-rise project with two towers with approximately 600 residential units, 40,000 square feet of commercial space, 1,000 structured parking stalls, and associated streetscape improvements ("Project").
- The Project will be developed in two phases with each phase consisting of an approximately 275-foot tower with:
*Phase 1, 300 rental residential units, 650 structured parking stalls, and 20,000 square feet of commercial space.
*Phase 2, 300 rental residential units, 350 structured parking stalls, and 20,000 square feet of commercial space.
- The performance benchmarks, and commencement of separate 25-year lease terms, for each phase are modified as follows:
*Phase 1, Commence Construction within 24 months of signing the amended Agreement, subject to one 12-month extension.
*Phase 1, Complete Construction and enter into Phase 1 Lease by Dec. 16, 2022.
*Phase 2, Enter into Phase 2 Lease by Dec. 16, 2022.
*Phase 2, Commence Construction within 24 months of entering into Phase 2 Lease, subject to one 12-month extension.
*Phase 2, Complete Construction within 36 months.
- Developer agrees to forfeit the $10,000 Performance Deposit to the City.
- The Net Rent provisions of the Agreement will be split equally between the phases and the First Sale provision will end after completion of Phase 2.
- The public incubator space may be used for office, retail or restaurant purposes at a rental rate at or below market.
- The Orpheum Theatre parking commitment will be modified to include all of the public having access to available parking spaces.
- If Golub and the Developer fail to complete the assignment within three months of Council approval of the amendment, the Agreement will terminate.
- Developer shall provide to the Community and Economic Development Department, at least one month prior to their submittal of Preliminary Plans, a site plan and elevations. These documents will be assessed by Community and Economic Development and Planning and Development Departments within 2 weeks so that additional feedback related to code impacts may be provided to Developer prior to submission of Preliminary Plans for formal review.
All other terms and conditions of Agreement will remain the same. This includes the previously authorized GPLET treatment of the lease and eight years of abatement of the excise tax after receiving the certificate of occupancy. Redevelopment of the Site will bring 600 new residential living options to downtown, approximately $283,000 per year in net new residential and commercial rental tax revenues to the City, approximately $2,000,000 in construction sale tax revenues, and $200,000,000 in new capital investment in downtown.
Contract Term
The amendment will not change the 25-year lease term previously approved by City Council in 2012. Additionally, pursuant to state law, the Developer must enter into the lease within 10 years of the original development agreement approval date of Dec. 20, 2012.
Financial Impact
This amendment will not impact the General Fund.
Concurrence/Previous Council Action
The development agreement was originally authorized by City Council on July 3, 2012 through Ordinance S-39053. The request to Assign and Amend City Contract 135145 was recommended for approval by the Downtown, Aviation, Economy and Innovation Subcommittee on Feb. 7, 2018 by a vote of 4-0.
Location
200 W. Monroe St.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Community and Economic Development Department.