Days Dwindle for Downtown Developer to Prove Financing for Project
Equity Services Group owner David Smith said he expects $12.5 million to be in the bank by Dec. 30.
For the first time in more than two months, downtown developer David Smith, owner of Equity Services Group (ESG), attended the Lake Zurich VIllage Board on Dec. 20 to provide an in-person update on project funding.
Smith addressed the ongoing question about whether the project will indeed receive financing by the Jan. 1, 2011 deadline set by the village.
"At the last board meeting I attended in October, we agreed that on or before Dec. 30, we would arrange for our bank, Northern Trust, to communicate with the village that we were in receipt of the first draw which is $12.5 million, and we still stand by that," said Smith.
Smith has said that another $7.5 million would be in the bank by Jan. 30, 2011.
Q Lotus Holdings, Inc., ESG's financial backer in the redevelopment plan, was able to take another step towards obtaining the money needed to get the project started, Smith stated.
"As of last Thursday, Q Lotus was successful in concluding negotiations, which sets the stage for them to tie that in properly with their investors, who have been waiting like everyone is waiting for it," said Smith.
At the Oct. 18 meeting, the board gave Smith and ESG a conditional and absolute extension deadline of Jan. 1, 2011 to prove financing was in place, or the contract will immediately be terminated.
ESG was also required by the board to provide bi-monthly progress updates on 'critical path' documents, which map out deadlines pertaining to different tasks for the project to move forward.
Those updates began to be presented at the Nov. 1 meeting, and were fulfilled not by Smith, but Bob Garrison of Garrison Inc., who also is working on the project.
Garrison submitted written updates to the village before the Monday evening board meetings. The updates didn't reflect much movement, as all of the work depended on the funding to move forward.
The extension was given to Smith after he missed the Sept. 30 deadline for the 3B submission. The submission includes three sections that map out the redevelopment plan for properties located in the Tax Increment Financing (TIF) district.
ESG was obligated to provide proof of financing, originally no less than $1 million, acquire all properties yet to be purchased in the development area and to submit architectural and engineering plans for village approval.
Design charettes were completed in the early stages of the project and are the only concrete work that has ever been completed in regards to the project.
The cost of that work, created by architectural firm Torti Gallas, was $226,000. Smith supposedly paid Torti Gallas the fee and will be reimbursed that amount by the village.
That payment will occur whether or not funding is in place before the first of the year, even if the contract is ended.
The technical deadline is Jan. 1, 2011 for the funding to be in place, but due to New Year's Eve and New Year's Day falling on a Friday and Saturday and business hours for the holidays, Dec. 30 is the date that funding must be confirmed.
"I recognize that for everyone in this village and on the board, and our feelings and efforts as well, it's been a very long and hard task in getting the finance and addressing the issues behind that; I'm here to thank you for your patience," Smith said.
"I am under no illusions, and this is a difficult challenge at this time of year, it is not going to be easy," cautioned Smith.
"We stand right with you as we did back in October that we expect Q Lotus to perform on or before Dec. 30," said Smith.
The only comment received from the board after Smith's less than five-minute presentation was a "thank you" from Suzanne Branding, mayor.
At the Dec. 2 TIF Joint Review Board meeting, Bob Vitas, village administrator, said that contingency plans are already forming if the $12.5 million isn't in the bank by the deadline.
So, in less than 10 days, the village of Lake Zurich and its residents will learn the fate of the current proposed revitalization project which has been more than two years in the making.