LZ Promenade Proposal Off the Table

Lake Zurich’s Board of Trustees passed on a proposal from LZ Promenade for a residential and retail development, citing the developer’s request for incentives too risky for the village and taxpayers.

The list of incentives included selling the developer village owned land for $10 and waiving hundreds of thousands of dollars in fees.

“I am having a hard time deciding on potentially granting the incentives you requested,” Trustee Dana Rzeznik told developer John Breugelmans. “I understand we have to do something for any developer, but I think this is not putting us in a good position.”

Lake Zurich had an agreement with LZ Promenade to allow the firm to draw up a proposal for the area known as Block A, which the village owns, before going through the formal planning process. LZ Promenade submitted a proposal in June.

“At the time we did this, we were told by Mr. Breugelmans that he had funding for the project. We weren’t told he had funding if we gave away everything we have,” Village President Tom Poynton said.

Monday, the board voted to decline the proposal by a vote of 4-2. Rzeznik and Trustees Jim Beaudoin, Jeffrey Halen and Dan Stanovich voted to decline the plan. Trustees Mark Loewes and Jonathan Sprawka voted no.

The vote followed Breugelmans’s presentation and discussion among the board. Breugelmans presented highlights of the $17.8 million project, which called for 66 rental units and 13,000 square feet of retail space including a restaurants, coffee shop and hair salon. The rental units would be converted to condos once the condo market bounces back, he said.

LZ Promenade projected the real estate income at $87,738 a year and retail sales at the restaurant alone at $3 million. Residents of the development would spend an estimated $1.8 million a year in Lake Zurich, he said.

Breugelmans also wanted Lake Zurich to sell him the land for $10.

The village paid $3.5 million for it or $45 per square foot, Breugelmans said. No piece of land that sold at the time or later was worth that amount, he said. Realistically, the land is worth $7 or $8 per square foot, or about $588,000. He is puzzled why the village overpaid for the land.

Breugelmans’s company was also requesting a $235,000 tax incentive and a waiver of fees totaling $750,000.

“If we have to invest in land and other things then we are out of whack,” Breugelmans said.

The land is within the village’s TIF district and the village can’t offer cash incentives so the incentives must take a different form, Breugelmans said.

“I fully understand there are hesitations, but the risk, in my view, whether you do it with me or something else, the risk you take is by doing nothing,” Breugelmans said.

Trustees, however, were concerned with the figures in LZ Promenade’s proposal as well as the incentives.

Halen said Monday’s presentation was different than a previous proposal. He wanted to know how frequently Breugelmans’s plans were changing and how those changes impacted the figures, including the overall cost.

“As much as we want to look forward, we have to look to the lessons of the past,” Halen said, including overpaying for the land on Block A and having two prior proposal fail.

“This just seems like another high risk opportunity which the village just can’t afford at this time, especially looking at our past mistakes,” he said.

Beaudoin summed up what ultimately would be the board’s decision. “We don’t know if this is the best we can do for Lake Zurich or not,” he said. “I am in favor of looking at other interests we have.”