Michigan Developer to City TIF Slush Fund: Brother Can You Spare a Dime?

By Kevin Robinson in News on Jul 9, 2009 3:20PM

Crain's Chicago Business is reporting that Michigan developer Villiage Green Companies is looking to the City of Chicago to help finance conversion of a 45 story vintage office building into apartments, after private financing fell through.

The failed financing is the latest trial for the ramshackle Gothic Revival office tower, which is well-known for its crumbling terra cotta facade and has made two trips to Bankruptcy Court this decade. Village Green, which wants to convert the building into 313 apartments, is pushing ahead despite the bad economy, betting that the downtown rental market will pull out of its slump by the time the project, called Randolph Tower City Apartments, is finished.

The Farmington Hills, Mich.-based developer took a big step forward last year, when the city approved a $20-million tax-increment financing (TIF) subsidy for the conversion. Then the global financial crisis hit, scaring off the private lenders Village Green was counting on to back municipal bonds for the project issued by the city.

Since the Central Loop TIF district expired in 2008, the $20 million in financing disappeared, too. But that hasn't dampened the optimism of Village Green Senior Vice-president Kenneth Barnes. "It's sort of like Humpty Dumpty," Barnes told Crain's. "We've spent the last six months picking up the pieces and putting them back together again." And putting Humpty Dumpty back together again includes all of King Daley's horses and all of King Daley's men, or at least $141-million in diverted taxpayer dollars. Village Green plans to avoid private investment altogether, using instead a mix of TIF funds, Illinois Housing Development Authority bonds and federal tax credits for low-income housing. The proposed apartment complex, which will cost about $450,000 a unit to construct, will include 62 units for low-income tenants. The city is reportedly "trying to find a new way to provide TIF money to Randolph Tower."