Just because I’ve been focusing a lot on the Presidential race, that doesn’t mean I haven’t been keeping an eye on the local stuff. I only hope I have a Shorewood reader or two so this one can get sunk. According to JSOnline’s DayWatch, the Shorewood Village Board is expected to vote on an $800,000 TIF district to provide the seed money to allow Lakewood Financial Services to put a new facade on a 5-story office-and-apartment building they own on Oakland Ave. Unlike the dead plan to put a House of Blues and an arcade in the former Pabst Brewing complex, I won’t say that this won’t get repaid in short order; it will. However, there’s still a couple things quite fishy here.
First, I’ll take the village’s claim that this will turn a $3,500,000 building into $5,756,000 one, plus provide a boost to surrounding properties of $305,000. Unless I’m missing something important like the owner putting some of its own (or privately-borrowed) money in this, that’s a 383% net return on valuation from nothing more than a new facade. That is simply too good to be true.
Second, let’s run through the developer’s numbers. There are 44 apartments that go for $850/month, and 7,500 square feet of office and commercial space that go for $12/square foot/month. The developer is claiming they’ll be able to up that to $1,050/apartment/month (a $300/month increase per apartment) and $18/square foot of office and commercial space/month (a $6/month increase per square foot) solely from the effects of that facelift. That’s $58,200 per month coming in solely on the basis of the improvement, something I’m sure would cause reputable lenders would literally trip over themselves to offer $800,000 in conventional commercial loans on that promised revenue stream. Again, assuming that the facelift is $800,000 and the developer isn’t kicking in its own or privately-borrowed cash, one has to question why they’re running to Shorewood to be the banker.
Going back to the village’s claims, the increase in revenue (42.3%) doesn’t exactly jive with the expected reassessed value (64.5%). Now, I’m not in the real-estate business, so I do expect a bit of disconnect between increased rent and increased assessed value, but that’s not exactly adding up.
It’s been a while since I’ve been in the area, but the Shorewood portion of Oakland isn’t exactly blighted.
$18./square for commercial? THERE?
Good luck!
Out here in the country, they’ll use “blighted” to describe a corn field – then put a TIF on it.
Think I’m kidding? I’m not.
I can sometimes see using a TIF district on a corn field that is being developed. In fact, that’s been done several times in Oak Creek (with mixed results). However, calling the corn field “blighted” is beyond the pale.
Just as a note to the regulars; that is not the real Texas Hold’Em Blogger that Foust is claiming, but a parody (not particularily-funny, IMHO).