Village of Riverwoods

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Terraco Update

November/December 2014

By John Norris, Mayor of Riverwoods

On November 4, 2014, the Board of Trustees voted not to provide TIF assistance to the owner/developer of the property on the southeast corner of the intersection of Deerfield Road and Milwaukee Road. The owner subsequently withdrew its zoning application. During the process we sometimes heard a question about “why is this even being considered”? Why? Because “Due Process” and the rights of all concerned required that we do so.

I. Background

Terraco, Inc. is the lead developer for a joint venture interested in developing the vacant parcel where Riverwood Inn restaurant was located, at the southeast corner of Deerfield Road and Milwaukee Road.

Terraco bought the parcel in 2010 and initiated meetings with the Village about the site. The Village sought retail uses that both a) would pay sales tax and b) seemed to fill a void: grocery and specialty food stores (Trader Joe’s) were high on our list. Terraco appeared at some Board meetings over the next few years to discuss its efforts.

The site costs for infrastructure at this location are high because 40% of the land is floodplain, which limits construction or necessitates underground storage vaults. Most users require at least one full access point – if access is restricted to a right-in/right-out only on Milwaukee Ave., the site is undesirable for retail use. Accessing the site requires expensive, new turn lanes to comply with lake County highway standards. The cost of street improvements is high relative to the amount of buildable land.

All of these factors led the Board to include the site in a TIF district established in 2013, with the idea of being able to direct public investment in a manner that promotes our goals. Terraco said that the site was too small for grocery stores and that upscale restaurants did not like the site. Chase Bank and a day-care school for 200 kids had expressed interest in the site, but the bank went away for its own reasons, and the school seemed a poor choice to combine on a site with other uses.

Eventually Terraco concluded its best prospects were a financially strong company that operated gas stations and a McDonald’s restaurant. Terraco said that the high site costs made it imperative to find tenants profitable enough to support the cost of development.

In late 2013, the Board learned the nature of the proposed uses. Concern about these uses prompted the Board to deliberate over several meetings about purchasing the land. After much discussion, and input from several consultants, the Board decided not to purchase the land. It was believed that the community would not support an expenditure (proposed at $1.8 million) to acquire land that we could not easily develop or resell.

The possibility of re-locating the Village Hall to this site, rather than the proposed renovation of Village Hall, was part of the discussion. Among factors reviewed were, being in the flood plain; the cost of the site; the extraordinary site costs mentioned above; plus the costs of new construction over renovation. These factors persuaded most trustees that the site was not the best choice for Village Hall.

II. Zoning Hearings

Terraco applied last March for zoning approval and began submitting financial information to the Village’s TIF consultant to build a case that TIF assistance was warranted for their proposal. The Village never committed to any approval in advance – it advised Terraco to consult the Village ordinances and look to the relevant standards.

As a property owner, Terraco has the right to submit its application. The process is designed to afford all applicants due process and the opportunity to be heard. The process also allows the public to be heard. The proposal included a Shell gas station with a convenience store, a building with a McDonald’s restaurant with dual drive-through lanes, and a third building slated for office use.

The cost presented for the proposal was $7.6 million. Terraco would have to fund all of this cost though loans or equity. Terraco asked the Village for a TIF redevelopment agreement under which Terraco would be reimbursed for $1.5 million of TIF-eligible costs out of future taxes.

After hearings before the Plan Commission, the proposal moved to the Board of Trustees, which heard presentations by Terraco and comments from the public on October 7, October 21, and November 4. At the Board meeting on November 4, the Village Board voted to deny the developer’s request for TIF assistance. Each of the trustees articulated their reasons for his or her vote. To re-state those reasons here would take too much space; please see the record of proceedings on the Village web site if you want to learn more. Suffice it to say each trustee gave good reasons for his or her vote.

III. Village Goals

Village goals sometimes conflict. More development means more revenue but; it also means more traffic. This public testimony from many residents made it abundantly clear that they are feeling overwhelmed by the traffic on Deerfield Road. Residents also want development that adheres to the character of the Village. The last comment leads in many directions. One resident said a Chipotle restaurant would have been fine. Some would like a nice coffee shop or bookstore. Many residents said that the Terraco uses were not right for our Village and they volunteered to find more suitable uses.

Residents do not like a drive-through option, but the Panera restaurant has asked about constructing a drivethrough at their current facility at Colonial Court/Shoppes. Another decision will have to be made.

Retail uses that can pay to offset the costs of development will need to generate traffic. Some suggested that all traffic only enter or leave on Milwaukee, but that will limit the site. An office building will add to peak morning and evening traffic.

Others suggested that, to offset the commercial development proposed in Buffalo Grove at the northwest corner of the intersection, the Village should create a green belt, and not approve anything that adds traffic.

This is an opportunity for us to re-visit what the goals of the Village are and should be, as well as how the community might accomplish them. The Village’s current sound financial health cannot be taken for granted, and we have other goals to consider as well. The residents who took time to express their views at the recent hearings have contributed to renewing a much-needed discussion about our land-use and community goals.

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