Tax break for Arts District properties could make way for brew pub

Vote approves letter of recommendation to county for 5-year tax reduction

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By Timothy Inklebarger

Staff Reporter

It's been almost two years since Harrison Street Ventures purchased the long-troubled properties on Harrison Street once owned by Chris Kleronomos, but two of the larger properties remain vacant, and now the company says it needs help filling them.

Harrison Street Ventures partner and asset manager Mona Navitsky told the Oak Park Board of Trustees on Monday, Aug. 7, that her company is applying for a Cook County Class 7(c) Property Tax Incentive, which will reduce their tax burden over the next five years, for the properties at both 213-215 and 219-221 Harrison Street.

Navitsky said Harrison Street Ventures has a letter of intent from a brew pub to open at one of the properties, but the deal is contingent on the real estate firm getting the tax break.

The request, which was made through the Oak Park Economic Development Corporation, was for a resolution supporting the tax break, which ultimately will need to be approved by Cook County.

If approved by the county, the two properties, both of which are about 6,100 square feet, would have their tax assessment reduced from 25 percent of the market value – which is standard for commercial property – to 10 percent for three years, 15 percent for the fourth year and 20 percent for the fifth year.

Following the five-year ramp up, the assessment would return to 25 percent of the market value.

That would save Harrison Street Ventures a combined $200,000 over five years, according to OPEDC economic development manager Viktor Schrader.

That would result in a slightly lower take from the village on taxes collected from those properties, according to the resolution requested by OPEDC.

John Lynch, OPEDC executive director, said in the letter supporting the resolution that property taxes collected from the vacant buildings in 2016 were $17,735 for 213-215 Harrison and $20,345 for 219-221.

The lower tax amount is in part due to the vacant status of the buildings. The taxes on those two buildings – renovated, occupied and without the tax break – would be $37,414 for 213-215 Harrison and $36,783 for 219-221, according to OPEDC.

Those two amounts would drop to just under $15,000 for both properties in the first year with the tax incentive.

"We are aware that Harrison Street Ventures may be nearing a lease for 213-215 Harrison Street and that the tenant has expressed concerns about the long-term occupancy cost," Lynch wrote. "If this tenant moves forward, the cost reduction afforded by the Class 7(c) program will serve as a retention tool to allow this tenant to stabilize through the start-up phase."

According to OPEDC, the 213-215 building has been vacant for 30 years and the 219-221 building has been vacant for 15. The buildings, and others purchased by Harrison Street Ventures on that street in the Arts District, were bought in foreclosure in 2015 from Chris Kleronomos, whose family has owned the properties for many decades and who maintains a minority ownership stake in the properties.

The item originally was on the consent agenda for the Board of Trustees meeting, meaning that it was expected to be approved without discussion or a vote. However, it was moved to the regular agenda for discussion at the request of Trustee Dan Moroney.

Moroney, the only trustee who voted against the resolution, told Navitsky and the board that he was "skeptical about the long-term viability of these properties" if they needed such a large tax break to be successful.

"What happens when it goes to the market rate," he said, adding that "the incentive delays the inevitable."

Navitsky told the board that Harrison Street Ventures is investing "significant capital" – a combined $900,000 -- in the two buildings.

Schrader said the long-term vacancy of the two buildings make them a good candidate for the tax incentive.

Moroney argued that the parcels could be rezoned and marketed as residential property, noting the success of Flexhouse, Harrison Street Ventures' joint project with Ranquist Development Group to demolish properties at 200-210 Harrison and build four modern row homes.

CONTACT: tim@oakpark.com

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Waldhorn Fafner  

Posted: August 17th, 2017 11:21 PM

I am wondering how Chris Kleronomos can (be allowed) still be involved as an owner in any way shape or form. Mainly has he paid his taxes and penalties on these buildings for all the past years?

Richard Nitzsche from Oak Park  

Posted: August 15th, 2017 9:01 PM

@Jon Hale: Thank you for your calm voice of rationality. Having lived in the Harrison Street Arts District since well before it had that name, I and my neighbors long for it rise to the hopes we've long held for it. This modest tax relief will help get the empty buildings filled and give them a decent chance to establish the roots necessary for long term viability. I wonder if @BruceKline or some of the other critics live anywhere near my neighborhood. I for one am grateful that Mona and HSV have undertaken to turn these long festering properties around. What was it that Teddy Roosevelt said about critics vs those that roll up their sleeves to get things done? Finally, the idea of razing properties and making it all residential is problematic...Harrison Street is a busy thoroughfare and much better placed to be the commercial district that it was and will again be.

Kline Maureen  

Posted: August 15th, 2017 3:34 PM

The business tenants don't pay the property taxes - they pay rent to the property's owners. Let the owners take the risk and LOWER THE RENT for their tenant. Why the hell should Oak Park taxpayers provide any support to this property, particularly when Chris Kleronomos is still an owner?

Jon Hale  

Posted: August 15th, 2017 2:29 PM

Keep in mind: 1. This is a Cook Co initiative. They just want a resolution of support from Village Bd. 2. Lower taxes help new business overcome higher start-up costs, making long-term success more likely. 3. Would cost only $8000 in year 1 spread across all taxing bodies; probably less than that in year 2 as value of property would likely go up. 4. Would generate sales tax. 5. Would enhance economic viability of Harrison District 6. Would help property owner attract a tenant for the second property.

Kline Maureen  

Posted: August 15th, 2017 1:47 PM

Is there anything we can do to protest this at the county level?

Kline Maureen  

Posted: August 15th, 2017 1:46 PM

At any rate, as I reread this news story, apparently this has been approved by the Trustees with Moroney the only vote against? It's confusing... but I guess the other trustees can all pat themselves on their collective backs for approving a taxpayer subsidy to Mr. Kleronomos. *expletive deleted*

Kline Maureen  

Posted: August 15th, 2017 11:56 AM

In addition to wanting to know the names of those who are part of Harrison Street Ventures, we should also know the exact structure of the ownership of these parcels. Apparently the longtime owner, Chris Kleronomos, still has a minority ownership interest. (See this WJ article for more info: http://tablet.oakpark.com/News/Articles/11-13-2015/Kleronomos-still-part-owner-in-Harrison-Street-properties/ ) Wouldn't that just be a double whammy and add insult to injury to provide a taxpayer subsidy to him so that he can profit from the buildings he allowed to neglect for so long and that the village spent years (and our tax dollars) trying to condemn. Really makes me think something fishy is going on. Perhaps something IS rotten in the state of Denmark!

Michael Nevins  

Posted: August 14th, 2017 4:04 PM

@JH. I am? Where did I say/imply that? I thought I was doing just the opposite. One question I am asking, though, "At what price?" must OP pay for this? Also, OP only gets two cents for every dollar spent. Therefore, these businesses must generate $400,000 in sales for OP to "break-even" and collect $8,000. If they had $1million in sales....it'd generate $20,000. However, how much do taxpayers have to pay in services to support them? I presume that the financials have been presented to the board on this, right?

James Hall  

Posted: August 14th, 2017 3:08 PM

I'm not really sure why Mike Nevins is arguing to keep property vacant. So you don't think they would bring in more than $8,000 in sales tax revenue?

Michael Nevins  

Posted: August 14th, 2017 1:29 PM

1.) I agree that understanding the taxes paid by both residents and businesses in OP requires the Rosetta Stone to decipher. 2.) If this tax break is granted, they would NOT be paying "essentially the same amount of taxes." I'm just focusing on the first year and, per Mr. Inklebarger/Mr. Lynch, the total taxes paid by those "vacant buildings in 2016" were $38,080 and, if this "Property Tax Incentive" is approved, they would be lowered to "just under..." $30,000." That's a reduction of at least $8,000 or 27%. I acknowledge the POTENTIAL for the future and that's what the last two sentences of my 8/13 post was attempting to address. 3.) Ms. Russell, my point regarding JC Penney or Macy's is not that the mall is losing just one tenant (or the community losing tax tax dollars) - it's that the trickle-down effect of that loss would lead to a much greater loss as many of the other smaller tenants will lose an essential client base when "the anchor" is vacant. Harrison's decline was hastened when Pan's left for OP Ave. What do you think would occur to the surrounding businesses if a semi-anchor, the Buzz Cafe, closed? These "anchors" drive "destination" people - sort of like how the Lake Theater improves nearby restaurant sales as some people get something to eat after/before the movie.

Tom MacMillan from Oak Park  

Posted: August 14th, 2017 8:26 AM

the tax break these business want is not taking money out of anyone's pocket. They would essentially be paying the same amount of taxes for five years as the now vacant space pays. A new business in that spot would increase sales taxes collected and would create some local jobs, which a vacant spot would not do. Meanwhile, we have choice properties like the old pool hall on South Blvd. being bought by a church, which takes them off the tax roles forever -- if you want to get mad about having to pay more than your fair share look at all the properties like that around town, there are a lot of them. That spot could have been a restaurant or other actual business paying taxes.

Jenna Brown Russell  

Posted: August 13th, 2017 11:15 PM

@Mr Nevis, either out village is requesting us to fund as despairing a business as JC Penneys, or a business destined for great success. Neither deserves a claim on my family's shrinking economic sustenance.

Michael Nevins  

Posted: August 13th, 2017 10:30 PM

@Bruce Klein. Why did I write "I'm not necessarily opposed to this plan"? Because Harrison has been "challenged" for a long time and, in general, I know that certain types of "anchors" can rejuvenate some areas. Example? Think of a mall and that they are about to lose one or two major stores (think Macy's or JC Penney) - what follows their departure is a decline for all of the smaller stores which benefit from the larger group of shoppers/people that ONCE, but no longer, once came thru their doors - because of the departures of "the anchors." Harrison long ago lost their "anchors" and I wonder if HSV would be beneficial to the overall area? I'd like to know if OPEDC has presented to VOP an analysis on this matter or is this just another "build it and they will come/mud against the wall" approach that OP is so infamous for? Has a cost/benefit been prepared on this? It should include "the cost" ($725,00 annually) of OPEDC, too.

Alice Wellington  

Posted: August 13th, 2017 8:40 PM

You've got to be kidding me. This is exactly why our property taxes are too high, and why there are so many empty storefronts in prime business locations. By allowing this, the village board is actually incentivising blight. http://www.chicagotribune.com/suburbs/oak-park/news/ct-oak-harrison-street-incentive-tl-0817-20170811-story.html#nt=oft12aH-1gp29/

Bruce Kline  

Posted: August 12th, 2017 6:22 PM

And Mike: You say corporate welfare "..makes sense for small start ups." Further you maintain this is not "government picking winners and losers." Really? Why don't you ask the Connolly's about that. Well were was the Village when the Connolly's needed big time help for their Irish Bar and Grill that was largely done in by an unanticipated major village public works project? No where, that's where! And how do you know Harrison Street Ventures is a "small start up?" Once again who is behind HSV? HSV chose to invest. They were not forced to. They assumed the risk as well as what they thought would be a benefit. Not working out? That should be HSV's problem and not mine. These issues just further demonstrate how misguided and toxic this "welfare" strategy really is. Government should not be in the business of deciding which private business gets taxpayer largesse, and which do not.

Bruce Kline  

Posted: August 12th, 2017 4:40 PM

Ramona: And tell me who exactly is Harrison Street Ventures and why are they on the "chosen list" but Inas' is not? As as Mike Nevins point out, this is a zero sum game. Basically you and I (and the rest of us "nobodies") pick up the difference for the benefit accrued to a private firm. Again, who is HSV? My overall point is somewhat related to what Mike implies. The root cause of the problem to begin with is pathologic overly high taxes (too much spending). Rather than address this toxic disease (uncontrolled spending), the proposed "cure" is equally toxic: tax payer support of a private business. Again, who is HSV? Why are they the chosen? This is a toxic dangerous road we and the village are heading down. Perhaps, in 12 months time from now we will see who is right on this: me or you.

Michael Nevins  

Posted: August 10th, 2017 8:40 PM

1.) $38,334 annual property tax bill? How many tacos, etc. did they have to sell before they could pay this tax? And don't forget that they first had to pay the cooks, wholesalers, utilities, insurance, rent, themselves.....well, you get the idea. No wonder the business is no longer there. 2.) Are some of my OP neighbors now Reaganites and claiming that taxes matter? 3.) In this case, though (and I'm referring to the Harrison properties), if their taxes are reduced.....then everyone else has to pick up the difference. Yes, this is the definition of "zero sum." 4.) FYI, I'm not necessarily opposed to this plan (and I agree with Trustee Moroney that residential development at this site by the Blue Line might be the best option - at least to begin), but OP having to provide money for most developments is, well, concerning. Don't forget that we're paying $725,000 per year to find development that will, net, bring MORE than $725,000, net, to the village (and don't forget that almost 10% of our property taxes go to non-OP taxing authorities). 5.) Regardless, our kids are 23 & 26 and, like many like us (or older), we've got our eyes on the door. Both sides of my family have been in OP for nearly 100 years (3 generations of OPRF grads) but we'll eventually become part of the OP diaspora. Why? Because ALWAYS the "solution" is to just focus on one side of the ledger - "income" - and never on the "expense" side. Should we join the Haleys in Berwyn?

Ramona Lopez  

Posted: August 10th, 2017 4:57 PM

Bruce....I agree. In a normal scenario, a private organization shouldn't be subsidized by the government, but when we live in Oak Park/Cook County where gov't continues to take and take and take, what choices are left. So the new business will pit Berwyn against Oak Park. Berwyn has a TIF on Roosevelt Rd (which i disagree with because according to the State of Illinois Berwyn is supposed to be one of the top 10 poorest school districts in IL, which is B.S.) that would gladly throw them some cash to compete with Kinslagher, etc. The poor business climate has been created by the government and its on them to fix it. With the new income tax and my property tax increase I am out another $2,000 this year. That's $2,000 I wont be able to spend at the Lake Theatre, The Brown Elephant, etc. The minimum wage has just been raised as well, so now prices in Oak Park must go up to cover the wage increase and the property tax increase. Lastly, the P.I.N. for Inos is 16-18-323-045-0000. If you look at their assessment you will see their original assessment in 2015 (2016 bill) was $212,043 and it was challenged and reduced to $102,610. I apologize, I was not abreast of the change. Last I checked their bill was $75,000. It has been knocked down to $38,334 and they still owe $19,734.

Elizabeth Titus Rexford from Oak Park  

Posted: August 10th, 2017 4:49 PM

Having lived near Harrison Street since 1972, we certainly welcome trendy new businesses like this! We have suffered so long with rundown buildings!

Mike Hanline  

Posted: August 10th, 2017 3:38 PM

While I'm generally against corporate welfare for large, established companies at the state level (SEE: Foxconn and Carrier), I think it makes sense for small startups/mom & pop businesses at the local level, especially when an area such as the Harrison Arts District is struggling to attract new businesses. In situations such as this, I don't see it as the government picking winners and losers, but rather, providing assistance to small business owners while they establish themselves and ramp up business.

Craig Williams from Oak Park  

Posted: August 10th, 2017 3:11 PM

Ramona is clearly stating property tax information from years ago before successful appeals. Taxes paid in 2017 for Ino's were $38,334.14.

Bruce Kline  

Posted: August 10th, 2017 1:56 PM

Ramona: Government should not be in the business of providing "welfare" for private companies. It's as simple as that. Mona and her company invested knowing the risks. Risk and reward is the name of the game. Government (us) should not be the "risk corridor" for her poor investment decisions. What happens, when the welfare train stops? Does Mona and company come back and ask for more hand outs? According to you, sure they do. Total BS.

Ramona Lopez  

Posted: August 10th, 2017 1:37 PM

Unfortunately, with property taxes skyrocketing nobody who can do basic math won't set up shop in Oak Park. Ino's on Roosevelt is for sale because their annual property tax bill is $75,000!!!! Yes, you read that right. Mr. Kline.....without a tax break that property will remain vacant. I hate corporate welfare as much as the next person, but there are only 2 option: 1. Remain vacant or 2. Give a tax break and get it occupied. If you have a more prudent solution, I'm sure the village of Oak Park would entertain it.

Adrian Rohrer  

Posted: August 10th, 2017 10:40 AM

I live two blocks from here, and the properties have been criminally underused for years, and something needs to change. A brewpub on this side of town would be amazing, and it, combined with the other restaurants going in, could be transformative for this area and grow it back into a real arts district where the galleries are fed by foot traffic. Getting people to gamble on this type of venture in a part of town that hasn't typically supported restaurants may truly need a tax break to justify the risk, and I for one am all for it.

Barbara Moline  

Posted: August 10th, 2017 8:40 AM

How many brewpubs can Oak Park support? This seems like a risky venture. Moroney is right to question this and ask for more discussion

Bruce Kline  

Posted: August 9th, 2017 6:21 PM

Maroney is right. Typical and classic BS welfare capitalism. Can I apply for a tax break too? I've invested literally hundreds of thousands over 30 years in my house. The taxes are killing me now. Where's mine? Take a hike Mona.

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