A developer will get $17.8 million in tax increment financing incentives from Arlington Heights to help fund its $130 million residential and retail redevelopment at the south gateway to the village.
Approval of public subsidies — through agreements inked by the village board this week — is seen by developer Bradford Allen as the last hurdle to getting shovels in the ground at the southeast corner of Arlington Heights and Algonquin roads.
“We’re fighting against time, and we want to get busy on this building,” said Brian Carley, the Chicago-based real estate firm’s executive managing director of development. “And as they say, time is money.”
Dirt and ponding water are all that remain after a shuttered five-story office building and three single-story commercial buildings met the wrecking ball there earlier this year. The 3.7-acre site is where an eight-story, 301-unit apartment building with 26,000 square feet of streetside retail promises to transform the entryway to town.
Real estate firm Bradford Allen and architect/developer Moceri + Rozsak’s new apartment building in Arlington Heights calls for a mix of 49 studios, 159 one-bedroom units, 83 two-bedrooms and 10 three-bedrooms.
Courtesy of Village of Arlington Heights
After the village board granted zoning entitlements in December and demolition wrapped up in April, the developer secured construction financing and equity, inked a contract with general contractor Clark Construction, and is about to receive permits from village hall.
But officials say a groundbreaking was contingent on securing the public incentives, which will come from a special tax fund the village established in the area in 2020. Property tax payments were frozen at set levels, and incremental real estate taxes generated above went to the village fund instead of schools and other local governments.
Bradford Allen is due to receive three separate TIF payments, under terms of an economic incentive agreement: a $12.9 million senior note issued after final occupancy of the building; a $2.9 million note 18 months later; and a $2 million reimbursement of interest paid for construction, as allowed under state TIF statute.
Charles Witherington-Perkins, the village’s director of planning and community development who helped negotiate the 41-page incentive agreement and an associated 64-page development agreement with a Bradford Allen subsidiary, said no payments will be issued until the project is complete.
In the case of the second, smaller incentive, Perkins said a “true up” calculation will determine if the developer’s projected 11.42% internal rate of return was met. If it’s lower, the payment could be less than $2.9 million.
The public money is coming solely from the incremental property taxes generated by the project and parcel itself, Perkins added.
Other terms of the deal call for the developer to pay $906,720 in impact fees to local taxing bodies, including school districts, the park district and library; a requirement for 30 apartments — 10% of the building — to be rented to those making at or below 60% of the area median income, per the village’s inclusionary housing ordinance; and a prohibition on appealing property taxes below the assessed value in order to generate the TIF increment that’s paying for the public subsidies.
The agreements also set deadlines for construction to begin (October), temporary occupancy (April 2026) and final completion (July 2026), though the village manager could extend those dates.
The apartment building is just the first part of Bradford Allen’s four-phase vision to reshape a total of 16 acres near the Jane Addams Tollway off-ramp — a plan that officials say could take eight years to come to fruition.