Downtown Developer Continues To Extend Funding Deadline
Equity Services Group fails to attain proof of funding for revitalization project by November 5.
"Slippage" is the word Bob Vitas, village administrator used to describe recent developments about downtown developer Equity Services Group's efforts to achieve funding for the project.
Vitas referred to an updated ESG 'critical path' document provided to the village by project manager Bob Garrison on November 9. The report extends project deadlines by approximately 30 days.
Those setbacks include the much anticipated financing which would serve to jumpstart the project. Achieving that has been a consistent challenge for ESG.
David Smith, of ESG, said its financial backer, Q Lotus Holdings, Inc., has been in existence for just about six months, and he is waiting for the company to come through with millions for the project to begin moving forward.
"Without the finance, other tasks have to be moved back as well," said Smith.
"Q Lotus, Inc. has a very large level of assets they are choosing to monetize, and they have decided to put some of those allocations toward real estate," Smith added.
At the November 1 village board of trustees meeting, a report from ESG stated that a 'date certain' for financing would be determined by Friday November 5.
That referred to ESG providing a closing date that funds would be in the bank. The day came and went with no proof of financing to initiate redevelopment plans for the downtown area.
The most recent report from the developer states that Tuesday, Nov. 30, is the revised 'date certain' that funding for the project would be confirmed.
Vitas said he has had no contact with Smith or Q Lotus Holdings, Inc., since October 4.
"My only correspondence has been with Bob Garrison, and those exchanges are limited to the required bi-monthly reports and updates to the village," said Vitas. "The timelines in those documents reflect a 30 day setback."
At the October 18 village board meeting, trustees required the developer to provide twice monthly reports to track progress in reaching the January 1, 2011 deadline to have $12.5 million in the bank.
Regarding the updated 'critical path' document and missed deadlines, Smith said this type of situation is expected. "It is a very unusual (financial) time, our project is not a small project, and we too have been frustrated."
"We have underestimated the complexity of this project in light of current financing limitations in the market," he said.
"We are expecting the (finance) closing to occur shortly, but are waiting for that to be confirmed," said Smith.
With a growing number of setbacks, that remains to be seen.
ESG was given an extension by the board of trustees after the developer missed a September 30 deadline. The company failed to complete a required 3(b) submission related to redevelopment plans.
The contract with the village dictated that ESG submit architectural and engineering plans, proof of property acquisition located in the proposed redevelopment area and funding to cover initial costs of the project.
A portion of the architectural plans were received by the village in the form of design charettes which can be viewed at www.destinationlakezurich.com.
The developer asked for an extension and received it at the October 4 board of trustees meeting. The board stipulated that ESG have $12.5 million in the bank by January 1, 2011 or their contract would be immediately terminated.