AN ORDINANCE AUTHORIZING THE ISSUANCE OF NOT
TO EXCEED $60,000,000 SPECIAL ASSESSMENT
IMPROVEMENT BONDS, SERIES 2002 (LAKESHORE
EAST PROJECT), OF THE CITY OF CHICAGO, ILLINOIS,
TO FINANCE THE ACQUISITION AND CONSTRUCTION
OF LOCAL IMPROVEMENTS
WHEREAS, the City of Chicago, Illinois (the "City") is
a municipal corporation and home rule unit of the State
of Illinois authorized pursuant to Article 9 of the
Illinois Municipal Code, 65 Illinois Compiled Statutes
5/9, and the Special Assessment Supplemental Bond and
Procedures Act, 50 Illinois Compiled Statutes 460, as
modified and supplemented by Section 075 of Title 2,
Chapter 102 of the Municipal Code of Chicago, to undertake a local improvement by special assessment and to issue special assessment improvement bonds to finance the cost of such local improvement; and
WHEREAS, on June 19, 2002, the Mayor and City Council
of the City (the "Corporate Authorities") adopted an
ordinance of the City entitled: "An Ordinance
Providing For The Installation Of Sanitary Sewers,
Watermains, Storm Sewers, Public Park Improvements and Right-of-Way Improvements in Regard to the Lakeshore East Development [Special Assessment Docket No. 58763/Warrant No. 62456]" (the "Special
Assessment Ordinance") providing for the acquisition
and construction of local improvements to benefit
property described therein and referred to as the
Lakeshore East Project (the "Improvements"); and
WHEREAS, it is anticipated that the Circuit Court
of Cook County, Illinois will enter an order (the
"Confirmation Order") confirming judgment on the
Assessment in the aggregate sum of $67,415,731 and the Series 2002 Bonds (as defined below) will not
be issued unless and until such Confirmation Order
has been entered; and
WHEREAS, the City proposes to issue its Special
Assessment Improvement Bonds, Series 2002 (Lakeshore
East Project) (the "Series 2002 Bonds"), in the
aggregate principal amount not to exceed $60,000,000
pursuant to a Trust Indenture (the "Bond Indenture")
to be entered into between the City and BNY Midwest
Trust Company, as trustee (the "Trustee"), and to
enter into a Servicing Agreement (the "Servicing
Agreement") with BNY Asset Solutions LLC (the
"Servicing Agent") and the Trustee, such Bond
Indenture and Servicing Agreement to be substantially
in the forms presented to this meeting; and
WHEREAS, the City hereby finds and determines that
the Improvements are in the public interest and serve
a public purpose; and
WHEREAS, forms of the Bond Purchase Agreement (the "Purchase Agreement") by and among the City, Lakeshore East Development Group LLC and Lakeshore East L.L.C. (collectively, the "Developer"), William Blair & Company and Podesta & Co. (collectively, the
"Underwriter"), the Preliminary Limited Offering
Memorandum (the "Preliminary Limited Offering
Memorandum") with respect to the Series 2002 Bonds,
the Servicing Agreement and the Bond Indenture, each
in substantially final form, have been prepared and
presented to this meeting as Exhibits to this
NOW, THEREFORE, BE IT ORDAINED BY THE MAYOR AND CITY COUNCIL OF THE CITY OF CHICAGO, ILLINOIS, AS FOLLOWS:
Section 1. Incorporation of the Recitals. The
Corporate Authorities hereby find that all of the
recitals contained in the preambles to this Ordinance
are true, correct and complete and are hereby
incorporated by reference thereto and are made a
Section 2. Public Purpose. The financing of the
Improvements, the funding of capitalized interest
on the Series 2002 Bonds, the funding of the Debt
Service Reserve Account and the Making and Levying
Fund under the Bond Indenture and the payment of
necessary expenses incidental to the Improvements
and the issuance of the Series 2002 Bonds are
hereby authorized and determined to be in the
public interest and in furtherance of the public
purposes of the City.
Section 3. Authorization of Bonds. In order to
provide funds to carry out the public purposes set
forth in Section 2 hereof, there are hereby
authorized to be issued the limited obligation
special assessment improvement bonds of the City
in the aggregate principal amount of not to exceed
$60,000,000, which bonds shall be designated
"Special Assessment Improvement Bonds, Series 2002 (Lakeshore East Project)." The Series 2002 Bonds shall be authorized and issued pursuant to Division 2 of
Article 9 of the Illinois Municipal Code, the Special
Assessment Supplemental Bond and Procedures Act and
the Local Government Debt Reform Act, 30 Illinois
Compiled Statutes 350 and an ordinance of the City
entitled "Amendment of Title 2, Chapter 102 of the
Municipal Code of Chicago by Addition of New Section
075 Regarding Home Rule Powers in Special Assessment
Proceedings" passed by the Corporate Authorities of
the City on July 25, 2001 (collectively, the
"Authorizing Acts"). The City elects to apply to
the Series 2002 Bonds the provisions of the Special
Assessment Supplemental Bond and Procedures Act.
Authority is granted to the Mayor or the Chief
Financial Officer to determine to sell the
Series 2002 Bonds on such terms, subject to
Section 5 hereof, as and to the extent such officers
determine that such sale is desirable and in the best
financial interest of the City.
As used in this Ordinance, the term "Chief Financial
Officer" means the Chief Financial Officer of the City
appointed by the Mayor of the City or, if there is no
such officer then holding the office, the City
The Series 2002 Bonds shall be issuable as fully
registered bonds without coupons; shall be dated,
executed and authenticated in the manner set forth
in the Bond Indenture; shall bear interest from
their date on the unpaid principal thereof at the
rate not to exceed 9% per annum; shall be payable
as to principal and interest at the times and in
the amounts set forth in the Bond Indenture; shall
mature not later than December 1, 2035; and shall
be subject to redemption prior to maturity at the
times, under the circumstances, in the manner and
at the redemption prices set forth in the Bond
The Series 2002 Bonds, together with the interest
payable thereon, shall be limited obligations of
the City, payable from and secured as to the payment
of the principal of or redemption price thereof and
interest thereon, in accordance with their terms and
the provisions of the Bond Indenture solely by the
Trust Estate (as defined in the Bond Indenture)
which includes the Assessment (as defined in the
Bond Indenture) and other funds of the City held
pursuant to, and as provided in, the Bond Indenture;
and, pursuant to Section 13 of the Local Government
Debt Reform Act, the Trust Estate is pledged to the
Trustee for the benefit of the owners of the Series
2002 Bonds, subject only to the provisions of the
Bond Indenture permitting the application thereof
for the purposes and on the terms and conditions
set forth in the Bond Indenture.
Neither the State of Illinois nor any political
subdivision thereof (other than the City) shall
be obligated to pay the principal of or purchase
or redemption price thereof or interest on the
Series 2002 Bonds, and neither the full faith and
credit nor the taxing power of the State or any
political subdivision thereof (including the City)
is pledged to the payment of the principal of or
redemption price or interest on, the Series 2002
Bonds. The Series 2002 Bonds do not constitute
a debt of the City within any constitutional or
statutory limit. No Bondholder or receiver or
trustee in connection with the payment of the
Series 2002 Bonds shall have any right to compel
the State or any political subdivision thereof
(including the City) to exercise its appropriation
or taxing powers.
The Series 2002 Bonds shall be issued in compliance
with and under authority of the provisions of the
Authorizing Acts, this Ordinance and the Bond
Indenture. The Series 2002 Bonds shall be executed
on behalf of the City with the official manual or
facsimile signatures of the Mayor and the City Clerk
and shall have printed thereon a facsimile of its
corporate seal or impressed thereon manually its
corporate seal. In case any officer who shall have
signed (whether manually or in facsimile) any of the
Series 2002 Bonds shall cease to be such officer of
the City before the Series 2002 Bonds have been
authenticated by the Trustee or delivered or sold,
such Series 2002 Bonds with the signatures thereto
affixed may, nevertheless, be authenticated by the
Trustee, and delivered, and may be sold by the City,
as though the person or persons who signed such
Series 2002 Bonds had remained in office. The
appointment of BNY Midwest Trust Company as trustee
under the Bond Indenture is hereby approved.
Section 4. Approval of Documents. The forms, terms
and provisions of the Purchase Agreement attached
hereto as Exhibit A, the Servicing Agreement
attached hereto as Exhibit B and the Bond Indenture
attached hereto as Exhibit C are hereby in all
respects approved, and any of the Mayor, Chief
Financial Officer, Comptroller, Director of Revenue
(in connection with the Servicing Agreement) and
Clerk of the City are hereby authorized, empowered
and directed to execute and deliver the Purchase
Agreement, the Servicing Agreement and the Bond
Indenture in the name and on behalf of the City.
The Purchase Agreement, the Servicing Agreement
and the Bond Indenture, as executed and delivered,
shall be in substantially the forms now before this
meeting and hereby approved, or with such changes
therein as shall be approved by the officers of
the City executing the same, their execution thereof
to constitute conclusive evidence of their approval
of any and all changes or revisions therein from
the forms of the Purchase Agreement, the Servicing
Agreement and the Bond Indenture now before this
meeting. The officers, agents and employees of
the City are hereby authorized, empowered and
directed to do all such acts and things and to
execute all such documents as may be necessary
to carry out the intent and accomplish the purposes
of this Ordinance and to comply with and make
effective the provisions of the Purchase Agreement,
the Servicing Agreement and the Bond Indenture, as
executed. The compensation to be paid to the
Servicing Agent under the Servicing Agreement
shall be subject to the approval of the Director
of Revenue subject to applicable law.
Section 5. Bond Sale. The sale of the Series 2002
Bonds pursuant to the Purchase Agreement to the
Underwriter, at a price of not less than 96% of
the original principal amount thereof to be issued,
exclusive of any original issue discount on the
Series 2002 Bonds, plus accrued interest to the
date of delivery, is hereby authorized and approved.
The use and distribution of the Preliminary Limited
Offering Memorandum by the Underwriter, prepared with
respect to the Series 2002 Bonds is hereby ratified
and approved. Any of the Mayor, Chief Financial
Officer, Comptroller and Clerk of the City are
hereby authorized, empowered and directed to execute
and deliver a final Limited Offering Memorandum,
substantially in the form of the Preliminary Limited
Offering Memorandum attached hereto as Exhibit D
or with such additions, changes or deletions therein
as shall be approved by the officer of the City
executing the same and as are necessary to reflect
the final terms of the Series 2002 Bonds, his or
her execution thereof to constitute conclusive
evidence of his or her approval of any and all
changes or revisions therein from the form of the
Preliminary Limited Offering Memorandum now before
Section 6. Notification of Sale. Subsequent to the
sale of the Series 2002 Bonds, the Chief Financial
Officer shall file in the Office of the City Clerk
a notification of sale directed to the City Council
setting forth (i) the original principal amount of,
maturity schedule and redemption provisions for the
Series 2002 Bonds sold, (ii) the interest rates on
the Series 2002 Bonds sold, (iii) the compensation
paid to the Underwriter in connection with such sale
and (iv) the amount of the proceeds of the Bonds to
be applied as set forth in Section 7 of this Ordinance.
There shall be attached to such notification the
final form of the Bond Indenture, the Purchase
Agreement and the Limited Offering Memorandum.
Section 7. Use of the Proceeds of Series 2002 Bonds.
The proceeds from the sale of any of the Series 2002
Bonds shall be applied to (i) pay for the Improvement,
(ii) pay a portion of the interest accruing on the
Series 2002 Bonds for a period estimated to end on
the later of (a) six months after the estimated date
of completion of construction of the Improvements or
(b) two years after the date the Series 2002 Bonds
are issued, (iii) pay certain expenses incurred in
connection with the issuance of the Series 2002 Bonds,
and (iv) provide any required deposit in the Debt
Service Reserve Account and the Making and Levying
Fund, all as shall be set forth in the Bond Indenture,
and such proceeds are hereby appropriated for such
Section 8. Proxies. The Mayor and the Chief
Financial Officer may each designate another to
act as their respective proxy and to affix their
respective signatures to each Bond, whether in
temporary or definitive form, and to any other
instrument, certificate or document required to be
signed by the Mayor or the Chief Financial Officer
pursuant to this Ordinance, the Bond Indenture or
any Supplemental Indenture. In each case, each
shall send to the City Council written notice of
the person so designated by each, such notice
stating the name of the person so selected and
identifying the instruments, certificates and
documents which such person shall be authorized to
sign as proxy for the Mayor and the Chief Financial
Officer, respectively. A written signature of the
Mayor or the Chief Financial Officer, respectively,
executed by the person so designated underneath,
shall be attached to each notice. Each notice, with
signatures attached, shall be recorded in the Journal
of the Proceedings of the City Council and filed
with the City Clerk. When the signature of the Mayor
is placed on an instrument, certificate or document
at the direction of the Mayor in the specified manner,
the same, in all respects, shall be as binding on the
City as if signed by the Mayor in person.
When the signature of the Chief Financial Officer
is so affixed to an instrument, certificate or
document at the direction of the Chief Financial
Officer, the same, in all respects, shall be binding
on the City as if signed by the Chief Financial
Officer in person.
Section 9. Modification of Exhibit L to Special
Assessment Ordinance. Exhibit L to the Special
Assessment Ordinance is hereby amended to read as
set forth in Exhibit E hereto.
Section 10. Enactment. The provisions of this
Ordinance are hereby declared to be separable and
if any section, phrase or provision shall for any
reason be declared by a court of competent
jurisdiction to be invalid or unenforceable,
such declaration shall not affect the validity or
enforceability of the remainder of the sections,
phrases and provisions hereof.
All ordinances, orders and resolutions and parts
thereof in conflict herewith are to the extent of
such conflict hereby repealed, and this Ordinance
shall take effect and be in full force immediately
upon its adoption. No provision of the Municipal
Code or violation of any provision of the Municipal
Code shall be deemed to impair the validity of this
Ordinance or the instruments authorized by this
Ordinance or to impair the security for or payment
of the instruments authorized by this Ordinance;
provided further, however, that the foregoing
shall not be deemed to affect the availability
of any other remedy or penalty for any violation
of any provision of the Municipal Code.
A copy of this Ordinance shall be published in
pamphlet form, filed in the office of the Clerk
of the City and made available for public
This Ordinance shall become effective upon
its passage and approval.
Lakeshore East Special Assessment
Author Is Columbus Tower Exempt from Park Assessment? (currently 647 views) Lee
Posted: February 14th, 2006,
I have heard this building is exempt from paying the special park tax assessment? �Does anyone know if this is true?
Oct. 15, 2005
80-story tower eyed for Chicago River site
Developers plan an 80-story tower for the $4-billion Lake-shore East development on Lake Shore Drive south of the Chicago River. The high-rise, to be on Columbus Drive across from the Fairmont Hotel, is being designed by Chicago architect Jeanne Gang. Plans include about 500 apartments, nearly 300 condos and possibly a hotel with 195 units, says Joel Carlins, CEO of Magellan Development, which is developing Lakeshore East with Near North Properties. The Chicago-based firms are in talks with hotel operators and aim to market the condo units next year, Mr. Carlins says.
Posted: February 14th, 2006, 1:41pm
I have not heard anything on this. The proposed building has been in the works for some time and it will not be the only mixed use building in LSE.
Maybe someone from Magellan will chime in. In the meantime, I will check with the other forums and post when I get a reliable word on the subject.
Lee Posted: February 17th, 2006,
Money approved for Lakeshore E. park on Oct 10, 2002 - Note the money to pay off the 30-year bonds will come from the special assessment, a tax added only to the bills of those who buy property in Lakeshore East. The developers are spending about $11 million up front.
The Chicago Park District Board has approved the sale of $67 million in city bonds backed by a special assessment to build a park at Lakeshore East, a $2.5 billion development on an unused portion of the massive Illinois Center complex.
The bond issue will allow developers to construct the park and infrastructure expected to cost $78 million. The 30-year bonds will be paid off with a special assessment only on the bills of property buyers at Lakeshore East. The developers, Magellan Development Group and Near North Properties, are fronting $11 million on the construction, which already is underway.
Tentatively called Harbor Park, the 5.3-acre park will be the centerpiece of Lakeshore East, surrounded by condos, apartments and "park homes."
Lakeshore East is planned for close to 5,000 units on 28 acres, giving it a projected population larger than that of many municipalities. It is the last piece of undeveloped land that was part of Illinois Center, the massive mixed-use project next door, and it should take 12 to 15 years to complete.
Development plans call for:
� Five rental towers totaling 2,300 apartments.
� Seven to 10 highrises with a total of 2,350 condominiums.
� About 118 "park homes."
� Hotels with up to 2,000 rooms.
� A 60,000-square-foot public elementary school and community center.
� Retail, public parking and storage facilities.
� New roads and infrastructure.
The park will include extensive landscaping, water features, a children's playground and a protected area for dogs. Green space is a prime ingredient in planning Lakeshore East, according to Joel Carlins, president of Magellan Development Group.
"When you go across the river, it's all concrete," Carlins says of Streeterville, the neighborhood immediately north. "One building looks at another building across cement. Here, we've preserved 45 percent of the land as open space. People are attracted to water and greenery. There's only so much you can build and keep it special."
Lee Posted: February 23rd, 2006, 1:55am
Apparently David Carlins of Magellan said at a meeting with owners of the Lancaster that both towers on Columbus are exempt from the special park assessment tax because they were not part of the original Lakeshore East plan. �Sales are targeted to begin this Spring.
This doesn�t seem right at all. �Each Lakeshore East property owner will be paying a special park assessment somewhere in the range of $800-1500 per year for thirty years -- and we are being told that these two 80 story buildings are getting a free ride?
There is something wrong with this picture. This matter should be brought up with Alderman Naturus.
Posted: February 23rd, 2006,
Thanks for this information Lee.
There should definitely be some discussion with the Alderman and the Mayor's office on this. �I moved this info (now removed) to the front page of the website. Here is some contact information:
Alderman Burton Natarus, 42nd Ward
Mayor Daley's Office Contact Form: http://egov.cityofchicago.org/.....;topChannelName=Dept
Lee Posted: March 31st, 2006,
Response from Alderman Naturus...
The fees that you are being charged are not taxes imposed by the government. The assessment is imposed upon you by your contract with Megellan, and only Megellan can remove the assessment. If purchasers do not agree with the assessment, then they should not purchase the apartment. I wish there were something I could do, but this is all a matter of private contract.
Very truly yours,
Burton F. Natarus
Alderman, 42nd Ward
121 N. La Salle, City Hall Room 306
Chicago, IL 60602
It appears to me that Naturus is mistaken. He seems to be addressing the homeowners assessment, which would be paid to the Association istelf (not Magellan) and not the special park tax assessment, which is paid to the City. The bond was not taken out by Magellan; Magellan received payments from the bond for the development of the infrastructure of Lakeshore East.
'The Chicago Park District Board has approved the sale of $67 million in city bonds backed by a special assessment to build a park at Lakeshore East, a $2.5 billion development on an unused portion of the massive Illinois Center complex.'
The special park tax is collected by the City of Chicago to retire the bond. We need to determine what buildings are included in this assessment and which are excluded and why.
For example, how do rental buildings such as the Shoreham pay this park tax? How is it that a building that is de facto part of Lakeshore East (i.e., the Aqua) is exempt from being required to pay this park tax?
Does it make sense for the 200 unit Lancaster condo and the 340 unit OTP condo shoulder to the burden of retiring a 30 year $67 million bond when these two sister buildings are twice as large as these two condos?
Lee Posted: April 2nd, 2006,
Q. When does $60 million = $162 million?
A. When it is a special park tax assessment.
The Park at Lakeshore East is costing residents $162million when you add principal ($60M), interest ($94.5M), and other costs ($7.3M) based on the 10/21/2002 City Council Journal which is public record.
In addition, of the $60 million in principal, bond costs were $17.7 million. Net, some residents of the park are paying $162 million for a park that actually cost $42 million.
Who is paying what:
3000 Condo owners are paying $122 million ($40k/unit)
1500 Apts are paying $22 million ($14k/unit)
118 Parkhomes are paying $9.9 million ($84k/unit)
350 Hotel rooms are paying $7.3 million ($21k/unit)
A total of 4931 units are paying $162 million ($33k/unit).
I do not believe the above totals include the Aqua or the second building next to it. �Given these twin buildings are 80 stories each, why are they exempt from the special park tax assessment?
I need to find out what parcels are designated for which buildings -- I took a guess below....Parcel M is the Lancaster, Parcel N is 340OTP and Parcel G is the Shoreham. �
Lakeshore East Special Park District Tax Allocation
Parcel-Type/Name Units Unit Pct Principal Principal Pct Per Unit Interest Collection Fee Reserve Principle & Interest, Fees,Reserve Total Cost Per Unit
A Condo 142 2.86% $1,913,377 3.19% $13,474 $3,013,051 $107,493 $128,992 $5,162,913 $36,359
B Condo 174 3.50% $2,344,561 3.91% $13,474 $3,692,049 $131,717 $158,060 $6,326,388 $36,359
C Condo 172 3.46% $2,317,612 3.86% $13,474 $3,649,612 $130,203 $156,244 $6,253,670 $36,359
D Condo 174 3.50% $2,344,561 3.91% $13,474 $3,692,049 $131,717 $158,060 $6,326,388 $36,359
E Regatta 245 4.93% $3,301,249 5.50% $13,474 $5,198,574 $185,463 $222,556 $8,907,843 $36,359
H Chandler 257 5.17% $3,462,943 5.77% $13,474 $5,453,198 $194,547 $233,457 $9,344,146 $36,359
I Fronts on LSD 347 6.98% $8,416,165 14.03% $24,254 $13,253,183 $472,818 $567,382 $22,709,548 $65,445
J Fronts on LSD 264 5.31% $6,403,076 10.67% $24,254 $10,083,113 $359,723 $431,668 $17,277,580 $65,445
K Condo 284 5.71% $3,444,079 5.74% $12,127 $5,423,493 $193,488 $232,185 $9,293,244 $32,723
L Condo 359 7.22% $4,353,607 7.26% $12,127 $6,855,753 $244,585 $293,502 $11,747,447 $32,723
M Lancaster 194 3.90% $2,425,408 4.04% $12,502 $3,819,361 $136,259 $163,511 $6,544,539 $33,735
N 340 OTP 383 7.70% $4,581,326 7.64% $11,962 $7,214,349 $257,378 $308,853 $12,361,906 $32,277
Total 2995 60.25% $45,307,964 75.51% $15,128 $71,347,787 $2,545,392 $3,054,470 $122,255,612 $40,820
C Apt 400 8.05% $2,802,693 4.67% $7,007 $4,413,483 $157,455 $188,946 $7,562,577 $18,906
F Tides 614 12.35% $3,099,132 5.17% $5,047 $4,880,295 $174,109 $208,930 $8,362,465 $13,620
G Shoreham 494 9.94% $2,425,408 4.04% $4,910 $3,819,361 $136,259 $163,511 $6,544,539 $13,248
Total 1,508 30.34% $8,327,233 13.88% $5,522 $13,113,139 $467,822 $561,387 $22,469,581 $14,900
A Hotel 350 7.04% $2,711,740 4.52% $7,748 $4,270,257 $152,345 $182,814 $7,317,156 $20,906
Total 350 7.04% $2,711,740 4.52% $7,748 $4,270,257 $152,345 $182,814 $7,317,156 $20,906
Parkhomes 118 2.37% $3,653,064 6.09% $30,958 $5,752,588 $205,228 $246,274 $9,857,154 $83,535
Total 118 2.37% $3,653,064 6.09% $30,958 $5,752,588 $205,228 $246,274 $9,857,154 $83,535
LSE Total 4,971 100.00% $60,000,001 00.00% $12,070 $94,483,771 $3,370,787 $4,044,944 $161,899,502 $32,569
Kiki Posted: April 4th, 2006, 12:55pm
I wonder if your list corresponds to this plan?:
It's possible that Mr. Ward would know the answer to your
question as he was involved with much of the citizen input
of the original LakeShore East plan.
Posted: April 4th, 2006,
This is a very complicated issue. �I would suggest contacting R Ward, as Kiki mentioned above. http://www.neweastsideforum.homestead.com/
The Alderman (contact info in links section) is another good resource, and of course, Magellan.
In the end - it is the first privately funded park in Chicago and the LSE residents, and guests, will be the chief beneficiaries.
The information below was copied from the 340 BLOG and is being checked for accuracy. It has NOT been checked yet. Please review it with this in mind.
This page was last updated: May 3, 2010
WEBSITE COMMENT: Note Parcel A is listed under both Condos and Hotels. Also Parcel C is listed under both Condos and Apartments.
The blog above refers to Aqua (Parcel P) as missing from sharing in the bond repayment. Also the other 900-foot approved building on Columbus (Parcel O) is missing from the repayment obligation.
The website advisors have to do more research to determine why Parcels P and O are not required to participate in the 30-year repayment. Also the "reasoning" for the significant differences in the repayment obligation per living unit from an average of $83,535 per Park Home down to $14,900 per Apartment has to be researched.
It should also be determined why Parcels I and J (directly on Lakeshore Drive) are obligated for twice the financial obligation per unit as the other condos.
All of these questions were answered by Sean Linnane of Magellan at a meeting on April 21, 2010, arranged by Alderman Reilly that included both the Chicago Finance and Planning Departments. Magellan made "business decisions" to exclude the two properties on Columbus based on the buyers demand. The property sale was not completed, however, the 2 properties were never included.
Magellan made good-faith effort to allocate the repayment responsibilities based on the planned size and value differences between commercial units, hotel rooms, apartments, condo units, and townhomes. Once the allocation was approved by the City Council, it could not be changed based on what is actually being built on each parcel.
Each real estate parcel is responsible for the semi-annual bond payments, through the Bank of New York, as trustee. As of 2010, approximately 60% of the payments remain the responsibility of the developer, including the 2 parcels on Lake Shore Drive that pay a disproportionally larger share, based on the original allocation. Within a parcel developed with condominiums, each owner pays a share of the parcel's payments based on the percentage of ownership in the declaration. Individual owners always have the option to payoff their remaining portion of the real estate parcel's responsibility. A low-cost report with the payoff amount and your individual interest rate is available from the trustee at 1-800-___________ or by email at _______________. The cash payoff is by cashiers check based on the requested date, A personal loan could be obtained at possibly a lower interest rate than the average assessment rate of 6.75%. There are three interest rates, depending on the bond issue. As of May, 2010, a refinancing of all the asscessment bonds is not cost-effective. This could be reexamined in the future if interest rates remain low and the risk is lowered by more buildings being completed. It is unlikely to obtain a favorable refinancing rate while 60% of the payoff responsibility remains with the developer.
Click on the icon above to study the 29-page pdf file that offers an in-depth explanation of the Special Assessment method of financing development projects where the infrastructure is all installed at the beginning, and then the project is actually built over 10 to 15 years, such as Lakeshore East.
ECONOMIC DEVELOPMENT INCENTIVES:
USE OF SPECIAL ASSESSMENTS,
SPECIAL SERVICE AREAS, BUSINESS DISTRICTS
AND SALES TAX REBATE AGREEMENTS
- Prepared by -
THOMAS P. BAYER
of the Law Firm of
KLEIN, THORPE AND JENKINS, LTD.
20 North Wacker Drive
Chicago, Illinois 60606-2903
Phone (312) 984-6400
Fax (312) 984-6444
CHICAGO METROPOLITAN AGENCY FOR PLANNING
Monday, March 31, 2008
Oak Brook, Illinois
The below document was discovered by Richard Ward among 7 feet of PD #70 warehoused documents that were reviewed on September 2, 2009 during 8 Illinois Freedom of Information Act (FOIA) requests.
EXCERPTS FROM City of Chicago Department of Planning and Development letter dated October 11, 2001 signed by Philip Levin, Assistant Commissioner. Note this was 7 months after the PD 70 was amended by the City Council, and 8 months before the Special Assessment was passed by the City Council. It appears that Lake Shore East set up a Delaware limited liability company called "Smith Properties Holdings Lakeshore East L.L.C." and essentially sold three parcels to themselves, and then exempted themselves from paying for the $60 million local improvement special assessment shown on the left. NEAR is still trying to determine the reasoning behind this series of transactions that were apparently approved administratively by the City of Chicago:
" October 11, 2001
Smith Properties Holdings Lakeshore East L.L.C.
c/o Charles E. Smith Residential Realty, Inc.
2345 Crystal Drive, Suite 1100
Arlington, Virginia 22202
Re: Request for Clarification regarding Parcels G1, G2 and A3 in Residential-Business Planned Development No. 70 (Illinois Center - Lakeshore East)
Please be advised that the Department of Planning and Development has considered your request for clarification and conformation of development rights and obligations under Residential-Business Planned development No. 70 as amended ("RBPD No. 70), and the Master Plan & Design Standards for Lakeshore East (the "Master Plan"). It is our understanding that Smith Properties Holdings Lakeshore East L.L.C., a Delaware limited liability company or its successors and/or assigns ("Purchaser") proposes to acquire and develop Parcel G1, Parcel G2 and a portion of Parcel A3, as such parcels are defined in the Master Plan.
... Further, the Purchaser shall have no obligation to contribute to the payment or to undertake the construction of the Public Park, Public Elementary School or other public improvements to be constructed pursuant to RBPD No. 70 on portions of the property other than Parcel G1, Parcel G2 and the portions of Parcel A3 depicted on the attached Exhibit A.
... This letter shall inure to the benefit of the Purchaser from and after its acquisition of Parcel G1, Parcel G2, and the portions of Parcel A3 depicted on attached Exhibit A, and its successors and assigns.
Very truly yours,
/s/ Philip Levin
Assistant Commissioner "
Note, as of September, 2009, Parcel G1, between Blue Cross and Aqua, is mostly empty (future building "O") with only Lake Street built; Parcel G2 contains the Aqua (building "P"), and Parcel A3 contains Swissotel addition and parking below.
www.NewEastside.org WEBSITE NOTE:
Scroll down to study spreadsheet on the allocation of repayments for the $60,000,000 Lakeshore East Special Assessment, that is now on most current new owners real estate tax bills from Cook County.
The full disclosure responsibility of the developer and/or real estate brokers, contained in the Illinois Condominium Property Act and the Chicago Consumer Protection Ordinance, are important protections for all new buyers.
CHICAGO CONDOMINIUM ORDINANCE Section 13-72-030 Misrepresentation or Omission.
"No person shall with the intent that a prospective purchaser rely on such act or omission, advertise, sell or offer for sale any condominium unit by (a) employing any statement or pictorial representation which is false or (b) omitting any material statement or pictorial representation. (Prior code 100.2-3)"
ILLINOIS CONDOMINIUM PROPERTY ACT Section 22.1 RESALES - DISCLOSURES - FEES
"(a) In the event of any resale of a condominium unit by a unit owner other than the developer such owner shall obtain from the Board of Managers and shall make available for inspection to the prospective purchaser, upon demand, the following:
(8) A statement that any improvements or alternations made to the unit, or the limited common elements assigned thereto, by the prior unit owner are in good faith believed to be in compliance with the condominium instruments."
ADDED TO THIS WEBPAGE September 7, 2009:
FROM...........Magellan Realty Blog
"Explanation Special Assessment Disclosure for Lakeshore East
SPECIAL ASSESSMENT DISCLOSURE
LAKESHORE EAST DEVELOPMENT
You are purchasing property that is within a Special Assessment District established pursuant to a court proceeding adopted by the City of
The Assessment Confirmation authorized the levy, extension, and collection of a Special Assessment upon the Property, in connection with certain “Public Improvements” that will confer a special benefit on the Property (including, without limitation, parks, streets, storm and sanitary sewer, and a potable water system). In connection therewith, the City of
Chicago pursuant to a certain Bond Ordinance, authorized the issuance of municipal bonds to pay for the Public Improvements, including the financing and other costs associated with the funding of the Public Improvements.
These Special Assessment bonds have a 30 year life. Your property will be assessed a fee that is billed and payable semi-annually commencing in the beginning of the year 2005 and ending in the year 2032. This assessment will pay off principal and interest of the Special Assessment Improvement Bonds. Estimated initial assessments are included in the Exhibits to your Property Report. The maximum Assessment on the Property may increase on average by no more than 1.5% each year between the first year of the levy and 2032.
If you sell your property, you will be responsible to the City of
Chicago and/or the subsequent owner for the pro rata portion of the assessment for that part of the year in which you owned the property. The subsequent owner will be responsible for the assessments for the years in which he/she owns the property. The servicing agent will issue the assessment bill prior to the semi-annual due dates of each year, which will be the first business day of March and September. Additional interest and fees associated with the collection of the assessment may be added in the event you are late in making payment. The assessment is considered a lien on your property and may result in a sale of your property if not paid as required in a timely fashion.
You are purchasing the Property subject to the Special Assessment and you will not object to the Special Assessment. You agree that the City validly created the Special Assessment and that the Special Assessment is rationally related to the benefit that the Public Improvements confer on the Property. You will be responsible for the Special Assessment on your Property from and after the Closing Date.
By taking title to the Property, you hereby agree to accept title subject to the Special Assessment and all rights and impositions and obligations thereby imposed, including, without limitation, the Special Assessment, which obligations shall be covenants running with the land. The deed that you, the Purchaser(s), will receive at Closing shall contain a recitation of such covenants, conditions, and restrictions as a permitted exception to title.
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4 Responses to “Explanation Special Assessment Disclosure for Lakeshore East”
1. Michael Says:
June 22nd, 2009 at 10:29 am
Which buildings in LSE are obligated to pay this special assessment tax?
2. admin Says:
June 22nd, 2009 at 5:57 pm
All Buildings in Lakeshore East except Aqua Tower (aqua townhomes are obligated) and Site O which is now undeveloped.
3. Don Whitmore Says:
June 25th, 2009 at 2:11 pm
How were buyers informed about this? What sort of disclosure is there? What is the formula being used and is this shown to buyers before purchase?
4. admin Says:
June 26th, 2009 at 3:04 pm
The information regarding the special assessment tax was disclosed to Purchasers as part of their Property Report, which is given to a Purchaser at the time of contract signing. The amount of the assessment that is attributable to each building has been pre-set pursuant to a determination made by a judge of the predicted parcel value for each building. The amount of the assessment attributable to each unit is then simply calculated by multiplying the percentage of ownership for that unit times the condominium association’s percentage of the assessment (which may be less than 100% if there are other uses in the building) times the actual assessment. The estimated amounts of these assessments, on a unit by unit basis, are also disclosed in the Property Report, right next to the estimates for the condominium monthly assessments.
FROM June 27, 2001 MAYORAL ORDINANCES' WEBSITE
#15 Lakeshore East Special Assessment Bonds An inducement ordinance concerning Lakeshore East Special Assessment Bonds
WHEREAS, the City of Chicago (the "City") is a municipal
corporation and a home rule unit of government, pursuant to
Article VII, Section 6 of the Illinois Constitution of
WHEREAS, the City wishes to design, acquire, construct and
install certain municipal improvements within a portion of
the City commonly known as Lakeshore East and the City wishes
to issue its special assessment bonds to finance said
WHEREAS, the City hereby finds and determines that the
financing of the improvements described below by the City
will serve the public purposes of the City; now, therefore,
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:
SECTION 1. The above recitals are incorporated herein and
made a part hereof.
SECTION 2. The City intends to issue obligations (the
"Bonds") for the purpose of financing the design, acquisition,
construction and installation of improvements consisting of
streets, parks, utilities, stormwater management facilities,
sanitary sewer, engineering and consulting services, and
other eligible costs within Lakeshore East and the acquisition
of land on which such improvements are to be built (the
"Project") and including without limitation, related
expenses for making and levying the special assessments,
costs of issuance, capitalized interest and a debt service
reserve. The total amount which the City intends to borrow
through the issuance of the Bonds for the Project will not
SECTION 3. Certain costs will be incurred by the City in
connection with the Project prior to the issuance of the Bonds.
The City reasonably expects to reimburse such costs with
proceeds of the Bonds.
SECTION 4. This Ordinance constitutes a declaration of
official intent under Treasury Regulation Section 1.150-2
and the Internal Revenue Code of 1986, as amended.
SECTION 5. To the extent that any ordinance, resolution,
rule, order or provision of the Municipal Code of Chicago,
or part thereof, is in conflict with the provisions of
this Ordinance, the provisions of this Ordinance shall
control. If any section, paragraph, clause or provision
of this Ordinance shall be held invalid, the invalidity
of such section, paragraph, clause or provision shall not
affect any of the other provisions of this Ordinance.
SECTION 6. This Ordinance shall be effective as of the
date of its passage.
#16 LakeShore East Special Assessment Bonds An ordinance concerning the exercise of home rule authority in connection with LakeShore East Special Assessment Bonds
ORDINANCE AMENDING CHAPTER 2-102 OF THE MUNICIPAL CODE
IN REGARD TO SPECIAL ASSESSMENTS
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF CHICAGO:
SECTION 1. The foregoing recitals are adopted as the findings of
the City Council.
SECTION 2. That Chapter 2-102 of the Municipal Code is amended
by adding a new Section 2-102-075 thereto which shall read in its
entirety as follows:
2-102-075 Exercise of Home Rule Powers in Relation to
Special Assessment Proceedings
Pursuant to the City's home rule powers, as provided by
Article VII, Section 6 of the 1970 Illinois Constitution,
any proceeding under the provisions of the Local Improvement
Act, 65 ILCS 5/9-2-1 et seq. and the Special Assessment
Supplemental Bond and Procedures Act, 50 ILCS 460/1 et seq.
may be initiated and may proceed in accordance with the
(a) Notwithstanding 65 ILCS 5/9-2-9 as amended, the
following provisions shall apply to the proceeding:
"The proposed local improvement may consist of the acquisition of the
necessary interests in real property and the construction of any public
improvement or any combination of public improvements, including, but not
limited to, sreets, storm sewers, watermains, sanitary sewers,
sidewalks, walkways, bike paths, parks, landscaping, recreation areas,
lighting improvements, signage improvements, vehicular parking improvements,
any additional improvements necessary to provide access to the public
improvements and all necessary appurtenances, in a local area pursuant
to a single special assessment project, provided that in assessing each
lot, block, tract and parcel of property, the commissioner so assessing
shall take into consideration whether each lot, block, tract or parcel is benefitted by all or only some of the improvements combined into the single special assessment project. For purposes hereof, a local area shall
be defined as an area in which all of the lots, blocks, tracts or parcels
located within the boundaries thereof will be benifitted by one or more of
the proposed improvements. The fact that more than one improvement is being
constructed as part of a single special assessment project shall not be
grounds for an objection by an assessee to the special assessment proceeding
(b) Notwithstanding 65 ILCS 5/9-2-62 as amended, the following provisions
"No special assessment or special tax shall be levied for any local
improvement until the City, or another unit of local government pursuant to
an intergovernmental agreement between the City and said other unit of
local government, has obtained, or has entered into a binding contractual
agreement to obtain, an appropriate permanent interest in the land
necessary therefor, as determined by the City. An apropriate permanent
interest in the land necessary for a local improvement shall include,
but shall not be limited to, fee title, a permanent easement, an easement
which converts to fee title after the passage of a specific period of
time, a dedication, a limited dedication of air rights at a specific
height above ground level, or any combination thereof."
(c) Notwithstanding 50 ILCS 460/55 as amended, the following
provisions shall apply:
"In the event that the county clerk does not agree to mail such bills, or
in the event that the City declines to request the county clerk to mail
said bills, the City still may bill the annual amount due as of January
2nd in two (2) even installments to become due on or about the due dates
for the real estate tax bills issued by the county clerk during the
year in which such January 2nd date occurs, thus deferring to later dates
in said year the obligation to pay the assessment installment."
(d) In addition, the City Council may on a case by case basis, provide for
further amendments to the application of other provisions of the Local
Improvement Act, 65 ILCS/9-2-1 et seq. and the Special Assessment
Supplemental Bond and Procedures Act, 50 ILCS 460/1 et seq. to City
proceedings that are necessary in order to facilitate a specific special
assessment project. Any such further amendments shall be specifically set
forth in the ordinance authorizing the specific special assessment project.
In the event of a conflict between the language of the Local Improvement Act,
65 ILCS 5/9-2-1 et seq. and/or the Special Assessment Supplemental Bond and
Procedures Act, 50 ILCS 460/1 et seq. with the foregoing, the foregoing
provisions shall prevail.
SECTION 3. That this Ordinance shall be effective upon its passage.
528 page - 23.9MB OFFERING MEMORANDUM EMAIL ATTACHMENT on May 3, 2010
Peter Raphael, Debt Finance
William Blair & Company, L.L.C. | 222 West Adams St.,