Upscale, renovated residential apartments in a landmark downtown Waukegan building may be ready for their initial tenants by early fall with the approval of city participation in what developers hope will become a large redevelopment project.
Lowell Jaffe, the lead partner of developer Greater Waukegan Development Partnership, said the group can take its second step toward “repopulating downtown,” with a development agreement now in place with the city. The city is making a financial contribution.
“It feels great,” Jaffe said. “It’s been a long road, and we’ve spent lots of time with this. We want to increase the number of residential units in downtown, along with restaurants and green space.”
The City Council voted 8-1 to approve a development agreement with the partnership Monday at City Hall, committing to put $900,000 initially into the project, and another $850,000 after completion..
Outlining the initial part of the first phase of the partnership’s plans, Jaffe said there will be 19 apartments on the top three floors of the former YMCA at the northwest corner of County and Clayton streets, and 6,600 square feet of commercial space on the ground level.
Much of the planning was done before Mayor Sam Cunningham returned to office on May 5. He said at the meeting he is glad to see it happening, and vowed members of his staff will be watching closely.
“One thing I can assure you, we’re going to be on top of this,” Cunningham said. “As far as this being our first project, especially with the emotional building, the old YMCA, we need to go on and move on. I will make sure this project is protected as much as humanly possible.”
Immediately after approving the development agreement, the council unanimously ratified the city’s $292.2 million budget for the fiscal year, which started May 1.
Along with the former YMCA renovation, the partnership has already completed the other part of the initial portion of phase one — six upscale apartments on the top two stories of 38 North Genesee Street, and a restaurant opening in a few weeks on the ground floor.
Jaffe said the estimated cost of the YMCA project is $4 million, while the Genesee Street renovation will be $1.655 million. The city will contribute $900,000 as the project starts, and another $825,000 upon completion, according to the development agreement.
Stewart Weiss, a special counsel for the city, said the initial money will go into a construction escrow, with funds coming from the partnership before the city’s dollars are released.
“Every dollar of private financing gets a dollar of public financing,” Weiss said. “They don’t spend the city’s money first. They will provide market-rate units. This is the vision administrations have sought.”
Ald. Thomas Hayes, 9th Ward, cast the only dissenting vote. He expressed concerns about not knowing much about the apartments’ size or amenities. He was concerned that there were no personal guarantees from the partners.
“We’re writing a $900,000 check, and all we know we’re going to get is 19 apartments,” Hayes said. “It seems to me it’s a big risk, and we don’t have any idea of what it’s going to look like.
“We don’t know what we’re getting for our upfront $900,000,” he said. “We would be taking on a boatload more risk than a bank would take, and I don’t think that’s a good gamble.”
Several council members, including Ald. Juan Martinez, 3rd Ward, and Ald. Victor Felix, 4th Ward, said the city’s investment is worthwhile because the partnership is the first developer to seriously look at the downtown area. The hope is that others will follow. Martinez had concerns over getting the units rented.
Mikki Schuk, the head of Real Invest, Inc., and one of the partnership’s principals, will be responsible for renting the apartments. He completed the renovation of 38 North Genesee on May 19. He said three of the units are now rented.
Renovating downtown apartments is nothing new for Schuk. In the past few years, he has restored 18 apartments in three other buildings. He considers them all luxury units. He said they are all currently rented.
Hoping to have building permits in hand by July 1, Jaffee said he plans to have five ready for rental by fall and the rest within nine months. He also plans to work with the city for the rest of phase one. It includes building the 270-unit, $85 million Courthouse Commons kitty corner from the YMCA.
Along with Courthouse Commons, Jaffe said the partnership is working with the College of Lake County to renovate the Waukegan Building on the southwest corner of Washington and Genesee streets into 60 units of student housing. He intends to ask the city for help there, too.
“We can’t do it without that,” Jaffee said, referring to a city contribution. “The economics don’t work without it.”
Budget approved
With the $292.2 million record budget in place, the city projects revenue in the amount of $262.9 million. The difference will be covered using slightly less than $29.3 million of the city’s reserves — 16.2% of non-pension reserves.
Interim Finance Director Don Schultz described the budget as one that will include $76.3 million for capital improvements, nearly $124 million for worker salaries and benefits, $1 million to start planning improvements to the Washington Street corridor and $10.6 million to continue lead service line replacements.
“This is the largest capital improvement project we’ve ever had,” Schultz said during a public hearing on the budget before the council’s Finance Committee meeting Wednesday. “This is for three years of projects.”
“My capital improvement plan is part of our five-year plan,” Cunningham added. “It is all about rebuilding Waukegan.”
