Attachment 2

DRAFT RECOMMENDATION – THE CONTENT OF THIS DOCUMENT, INCLUDING ALL FACTS, STATEMENTS,
CONCLUSIONS AND SUGGESTED APPROVALS/DENIALS, IS PROVIDED FOR YOUR REVIEW, CONSIDERATION AND
AMENDMENT. AS A COLLECTIVE BODY, THE EDC SHOULD REACH AGREEMENT ON THE FINAL CONTENT OF THIS
DOCUMENT AND THEN TAKE FINAL ACTION. THIS DOCUMENT WILL BE UPDATED TO INCORPORATE ALL EDC-
APPROVED EDITS.

WESTERN SPRINGS ECONOMIC DEVELOPMENT COMMISSION

RECOMMENDATION NO. 23-01

Recommendation Relative To An Application For Certain Tax Increment Financing (“TIF”) Incentives by
KLM Development Group And Consideration of a Proposed TIF Economic Incentive And Tax Increment
Allocation Financing Development Agreement Between the Village of Western Springs and KLM
Development Group For The KLM 514 Hillgrove Avenue Development.

WHEREAS, the President and Board of Trustees of the Village of Western Springs (“Village
Board” or “Village”) is authorized, under the provisions of the Tax Increment Allocation Redevelopment
Act, 65 ILCS 5/11-74.4-1 et seq., as amended (the “TIF Act”), to finance redevelopment in accordance
with the conditions and requirements set forth in the TIF Act in order to prevent blight, to encourage
private development, to enhance the local tax base and increase additional tax revenues realized by the
Village, to foster increased economic activity within the Village, to increase employment opportunities
within the Village, and to enter into contractual agreements with third parties to achieve the aforesaid
purposes, and to otherwise take action in the best interests of the Village; and

WHEREAS, pursuant to Ordinance No. 19-2989, Ordinance No. 19-2990 and Ordinance No. 19-
2991, adopted December 16, 2019, the Village approved a tax increment redevelopment plan and
project (the “TIF Plan”), designated the tax increment redevelopment project area (the “Redevelopment
Project Area”), and adopted tax increment financing relative to the Village's “Downtown North Tax
Increment Financing District” (the “TIF District”); and

WHEREAS, the TIF District was established as a “pay-as-you-go” funded TIF District, which
means that incremental tax revenues would be used to pay for Village-approved eligible TIF project
costs or TIF economic incentives as such funds are generated through year-to-year increases in the
equalized assessed valuation (“EAV”) of the properties within the TIF District, and no bond or other debt
financing was issued to pay for eligible TIF project costs or TIF economic incentives; and

WHEREAS, KLM Development Group (“KLM” or “Applicant”) is the owner and developer of the
real property located at 514 Hillgrove Avenue, which is on the north side Hillgrove Avenue between
Franklin Avenue and Howard Avenue (the “KLM Property”). The KLM Property is located within the TIF
District; and

WHEREAS, in 2021 and 2022, KLM received zoning and development approvals from the Village
in regard to the KLM Property under the approval of Ordinance No. 21-3044 (passed on June 28, 2021),
Ordinance 21-3045 (passed on June 28, 2021), Ordinance No. 22-3075 (passed on April 25, 2022) and
Ordinance No. 22-3076 (passed on April 25, 2022), consisting of:
1. Approval of 2021 text amendments to: (a) amend the definition of “Commercial/Residential
Mixed Use Development” to remove the word “MXD” at Section 10-2-2 (Definitions); (b) add
the words “Commercial/Residential Mixed Use Development” to the list of permitted
Conditional Uses found at Section 10-7-1(B) (C-1 Village Center Commercial District;
Conditional Uses); and (c) add a new subsection 3 that reads “Conditional uses for
Commercial/Residential Mixed Use Developments: Thirty-five feet (35') or three (3) stories,

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 whichever is less” to Section 10-7-1(G) (C-1 Village Center Commercial District; Maximum
Building Height);
2. Approval of a 2021 development application for a conditional use permit for a planned
development for the construction and operation of a commercial/residential mixed-use
development at the KLM Property, including the preliminary and final approval of the
development plans and approval of a plat of consolidation and plat of planned development
for the construction of a three (3) story building (19,270 square feet) with two (2) first floor
commercial / retail spaces (total area: 1,600 square feet) and two (2) upper floors of eight
(8) residential condominiums with interior dwelling unit footprints ranging from 1,211
square feet to 1,274 square feet (the “2021 Project” or “2021 Development”). Since the
Applicant did not commence construction of the 2021 Development within twelve (12)
months of the Village’s approval of the Conditional Use Permit, the approval expired;
3. Approval of 2022 text amendments to Section 10-7-1(G) (C-1 Village Center Commercial
District; Maximum Building Height) to amend subsection 3 to read: “Conditional uses for
Commercial/Residential Mixed-Use Developments: Forty-five feet (45') or four (4) stories,
whichever is less, provided that the fourth story is set back a minimum of fifteen feet (15’)
from the front building parapet wall”; and
4. Approval of a 2022 development application for a conditional use permit for a planned
development for the construction and operation of a commercial/residential mixed-use
development at the KLM Property, including the preliminary and final approval of the
development plans and approval of a plat of consolidation and plat of planned development
for the construction of a four (4) story building with a total floor area of approximately
24,000 square feet at the Property. The proposed building will consist of two (2) first floor
commercial spaces (total area: 1,600 square feet) and three (3) upper floors of ten (10)
residential condominiums with interior dwelling unit footprints ranging from approximately
1,200 square feet to 2,100 square feet, and will also have a twelve (12) space interior
vehicle parking garage, a rear yard concrete driveway to access the garage, two (2) outside
rear yard vehicle parking spaces and on-site perimeter landscaping improvements (the
“Project” or “Development”). The Development had an initial total Estimated Development
Costs of $9,453,400.00, with an initial Total Construction Value of $8,982,508.81; and

WHEREAS, KLM in is the process of redeveloping the KLM Property with a new four-story mixed
use building plus provide on-site, below grade storm water detention facilities, on-site parking, public
and private utilities, and relocation of overhead electrical utility lines that will service the building,
limited on-site landscaping and streetscape improvements and sidewalks, all as depicted on the Village-
approved site plan, building elevations, landscape/streetscape plan, signage plan, lighting plan and
property maintenance plan, and the “Final Development Plans”, which are on file with the Village; and

WHEREAS, in 2021, KLM filed an application with the Village requesting certain TIF economic
incentives needed to successfully complete the Project (the “2021 TIF Incentive Application”). Without
the TIF economic incentives, KLM stated that it is not able or willing to undertake the redevelopment of
the KLM Property. In 2022, KLM submitted to the Village an updated version of the 2021 TIF Incentive
Application, which is referred to as the “2022 TIF Incentive Application” or “2022 TIF Incentive Request”.
Copies of the 2022 TIF Incentive Application and the Supplemental Application Materials dated
November 2022 and February 2023 are attached to this Recommendation as Group Exhibit “A”; and

WHEREAS, the Village has requested that the Cook County Clerk’s Office create a special tax
code area within the TIF District to separately account for the incremental tax revenues that are
generated from the KLM Property (“KLM Project Incremental Property Taxes”) as a result of the
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Development. The KLM Project Incremental Property Taxes consist of that portion of the ad valorem real
estate taxes, if any, arising from the taxes levied on and collected from the Property and paid to the
Village, and which are attributable to the increase in the EAV of the Property over and above the EAV of
the Property at the time of the formation of the TIF District, all as determined by the County Clerk of the
County of Cook, Illinois; and

WHEREAS, in accordance with the TIF Act, the Village Board, in its discretion, is authorized and
willing to provide certain TIF economic incentives to KLM to assist with the completion of the “Public
and Required Improvements” of the Project, which qualify as eligible “redevelopment project costs” as
defined under Subsection 11-74.4-3(q) of the TIF Act; and

WHEREAS, based on the 2022 TIF Incentive Application and an email from the Developer’s
lender, the key financial items are as follows:
• The initial Estimated Development Costs were $9,453,400.00, with an initial Total
Construction Value of $8,982,508.81.
• Lender Email: “… total project cost is $7,701,799 and the “Bulk” appraised value came
back at only $7,450,000 which exposes you to a potential loss on the project if these
projections and costs materialize. There is also minimal room for cost overruns with only
a $300,000 contingency factored into the budget. Therefore, our Loan Committee
believes it’s imperative that the TIF that you presented is fully approved to make this a
viable and profitable project.”
• Project Property Taxes Schedule through year 2025.
• “514 TIF Eligible Expenses” are listed at $1,048,171.99.

All of the listed categories in the 2022 TIF Incentive Application are TIF eligible redevelopment
project costs, as defined in the TIF Act, but the Developer’s initial request for reimbursement included
land acquisition and land financing, which have been withdrawn because those costs cannot be
reimbursed as they are not TIF eligible redevelopment project costs because KLM acquired the land on
August 14, 2018, prior to the formation of the TIF District on December 16, 2019. As a result, the
maximum amount of estimated TIF eligible redevelopment project costs (as defined under the TIF Act)
equals $971,801.05. The sole source of payment of the Village-approved TIF incentive to the Developer
shall be the KLM Project Incremental Property Taxes based on a “pay-as-you-go” reimbursement
arrangement and shall be subject to the set aside and payment of the annual required school student
fees to the appropriate school district (elementary or high school), estimated at 40% of Project
Incremental Property Taxes, as required by the TIF Act and as requested by the school district; and

WHEREAS, after reviewing this Recommendation and receiving input from Village staff, the
Village’s TIF Consultant and the Village Attorney, the Village Board will define those eligible
redevelopment project costs for reimbursement and will establish the maximum amount of TIF
economic incentive that will be approved for the Development, which will be set forth in a TIF Economic
Incentive Agreement for the Project to be entered into with KLM; and

WHEREAS, under Title 2 (Boards and Commissions), Chapter 6 (Economic Development

Commission) of the Western Springs Municipal Code, the Economic Development Commission (the
“Commission”), as an advisory body, has been created to assist the Village Board in all areas of economic
development of the Village, including the maintaining of communication between the business
community and the Village government, the promotion of economic growth of its business districts, and
other such matters referred to the Commission by the Village President, Board of Trustees or Village
Manager; and

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 WHEREAS, the Village Board has requested that the Commission review the 2022 TIF Incentive
Application and provide a recommendation in regard to the TIF economic incentives that are being
requested for the Project; and

WHEREAS, after receipt by the Village Clerk, copies of the 2022 TIF Incentive Application were
distributed to the Village Manager, the Director of Finance, the Director of Community Development,
the Village Engineer, the Village Attorney and the Village’s TIF Consultant (Ryan / Kane McKenna) for
review and comment. Each of the members of the Commission has reviewed the 2022 TIF Incentive
Application; and

WHEREAS, in regard to its review and consideration of the 2022 TIF Incentive Application, the
Commission has held a public meeting on July ___, 2023, pursuant to proper notice being posted in
accordance with the Open Meetings Act. During this public meeting, the Applicant made a presentation
regarding its 2022 TIF Incentive Application, the Village staff and consultants gave reports relative to the
2022 TIF Incentive Application, members of the Commission asked questions of the Applicant, its
representatives and all other individuals who spoke during the public meeting, and an opportunity was
provided for public input; and

WHEREAS, based on the foregoing information, considerations and activities, the Commission
makes the following findings and recommendations to the Village Board, as set forth below.

NOW, THEREFORE, THE WESTERN SPRINGS ECONOMIC DEVELOPMENT COMMISSION FINDS

AND RECOMMENDS AS FOLLOWS:

SECTION 1: Based on the information contained in the 2022 TIF Incentive Application, and the
reviews and comments of the Village staff and consultants, and the information and testimony received
at the Public Meetings, the Western Springs Economic Development Commission finds:

A. The 2022 TIF Incentive Application is complete and requests reimbursement of certain
categories of “TIF Eligible Redevelopment Costs,” which are costs of the Project that comply
with the definition of “redevelopment project costs,” as set forth in Section 11-74.4-3(q) of
the TIF Act, 65 ILCS 5/11-74.4-3(q); and

B. All of the listed categories in the 2022 TIF Incentive Application are TIF eligible
redevelopment project costs, as defined in the TIF Act, except the land acquisition cost and
land financing cost are not eligible for reimbursements, as these are not TIF eligible
redevelopment project costs because KLM acquired the land on August 14, 2018, prior to
the formation of the TIF District on December 16, 2019. As a result, the maximum amount
of TIF eligible redevelopment project costs (as defined under the TF Act), equals
$971,801.05; and

C. In order for KLM to be reimbursed a certain capped amount of Project Incremental Property
Taxes, KLM is required to complete the Public and Required Improvements, including all
public and private infrastructure improvements (on-site and off-site improvements) and
required to complete the commercial/residential mixed use building and its finished exterior
improvements (brick, metal, glass, windows, terraces, etc.), all of the life safety
improvements, the interior build-out improvements to the commercial space and
condominium units as is necessary to receive a certificate of occupancy, as shown in the
final version of the Village-approved Final Development Plans, and constructed in
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 compliance with all Village codes, the Village Project Approval Ordinances and a Village-
approved TIF Economic Incentive Agreement for the Project; and

D. The Director of Finance has determined that KLM is not delinquent in the payment of the
retailer's occupation tax, sales tax, or any other financial debt or obligation owed to the
Village. The Director of Community Development, the Village Engineer and the Village
Attorney have determined that KLM is in compliance with the applicable sections of the
Village’s Municipal Code and the provisions of the Village Project Approval Ordinances, and
the Village Attorney has advised that the Application’s list of requested TIF economic
incentives are TIF Eligible Redevelopment Project Costs, except as noted above, and are
permitted under the TIF Act. KLM is eligible to receive a TIF economic incentive and to enter
into a Village-approved TIF Economic Incentive Agreement for the Project; and

E. But for the TIF economic incentives to be provided by the Village, KLM cannot successfully
and economically develop the KLM Property in a manner satisfactory to the Developer and
the Village.

SECTION 2: Subject to the conditions set forth below, the Western Springs Economic
Development Commission recommends to the President and Board of Trustees as follows:

A. Approval / Denial of the Application, with the final dollar amount of the TIF economic
incentive payable to the Developer for completing the Development to be determined by
the Village Board.

B. Approval of the Application is subject to the following conditions: INSERT or NONE.

A motion was made to approve / deny the Recommendation listed above, the motion was
seconded, and then the motion was approved by a ____ (__) to ____ (__) vote of the Commissioners
(motion by: _______; seconded by: _______).

PASSED by the Western Springs Economic Development Commission at a meeting held on the
___ day of July, 2023.

VOTE:

AYES:
NAYS:
ABSENT:
OTHER:

The above vote has been certified by me this ____ day of July, 2023.

___________________________________
Chair

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 Group Exhibit “A”

Application for TIF Incentives for

the KLM 514 Hillgrove Avenue Development
dated August 16, 2022
and
Supplemental Application Materials dated November 2022 and February 2023

(attached)

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