A developer could get up to $13.75 million in public money for its proposed $100 million residential and commercial transformation of a blighted shopping center in Arlington Heights.
But village officials and residents have debated whether Schaumburg-based UrbanStreet Group should get any of the tax increment financing district funds, as its plan to contain cheaper senior apartments to a building of its own would violate the letter — if not the spirit — of a local affordable housing ordinance.
UrbanStreet is in negotiations with another developer, Oshkosh, Wisconsin-based Northpointe Development Corp., to build 37 units of age-restricted senior housing, as part of the 17.6-acre facelift of the northeast corner of Golf and Arlington Heights roads. That includes seven village-owned parcels and the International Plaza shopping center, where prospects for redevelopment have stalled for two decades.
But questions remain about whether the project can secure the necessary federal low-income housing tax credits.
If the deal with Northpointe falls through, UrbanStreet will use “good faith efforts” to get another developer on board, according to a memorandum of understanding with the village.
And if that doesn’t come to fruition, the village can take back a pad-ready parcel and find an affordable housing developer on its own, according to the agreement.
Meanwhile, UrbanStreet is planning to build six four-story apartment buildings totaling 266 units and rent them at market rates. As many as four commercial outlots along Golf Road — with some 34,000 square feet of space for retail, a restaurant and a day care center — also are proposed.
Arlington Heights village Trustee Wendy Dunnington sought changes to the 18-page memorandum, which has been negotiated behind closed doors over the past year between the developer and village staff.
She pointed to the village’s inclusionary housing ordinance, approved in 2020, which requires any development receiving public assistance to set aside 10% of units as affordable. The ordinance calls for the cheaper units to be dispersed among market rate units — and that they must be built concurrently.
But the village board also has the power to grant relief to those requirements.
“I’m concerned about the precedent it sets for future developments if we’re not taking those things into consideration,” Dunnington said.
Trustee Nicolle Grasse, who voted for Dunnington’s amendments, noted that residents of the senior building would have access to most, but not all, of the amenities of the neighboring market rate apartment complex.
“It’s not inclusive. It is separate. It’s not being built at the same time,” Grasse said. “You either are inclusionary or you are not.”
Jon Dennis, senior vice president of UrbanStreet, said seniors would be able to use outside amenities of the apartment buildings, like a pool. But liability and other issues arise when residents of one building enter a building of another property owner.
Dennis said the proposed senior apartment building on the northwest corner of the site is a “creative solution” to compliance with the village ordinance, and a way to get the needed funding.
“We’re not only trying to comply with it, but we’re trying to exceed what code says. And this is the solution we found. We found a way to attract other capital — federal tax credits — to build this building to exceed and honor your ordinance,” Dennis said.
The village ordinance in this case requires 27 affordable units; the developers have proposed 37.
But if those below-market rate units were interspersed in the other buildings, “We simply can’t do it,” Dennis said. “It’s not feasible. If it was, we would have already.”
Board members voted down Dunnington’s proposal and eventually OK’d the overall memorandum, with Dunnington casting the lone “no” vote.
Mayor Tom Hayes said the plan would provide at least a “dent” in the need for affordable senior housing in the area.
“This is not a developer that’s trying to run away from the ordinance. This is a developer that is really trying to meet at least the spirit of it,” Hayes said. “I want to work with them. I don’t want them to walk away.”
Village officials characterized the memo as a nonbinding, table-setting exercise that could lead to a formal redevelopment agreement. That would include guarantees allowing the developer to dip into the village’s TIF 4 fund, in which property taxes above a certain level have been diverted from schools and other taxing bodies.
The developer would get $3.3 million from TIF reserves, and a $5.3 million revenue bond and $2.79 million junior note to be paid off from revenues generated from the development, under terms of the deal.
The project also would be subject to review by the advisory housing, design and plan commissions. The village board would have final say.
Under the preliminary timeline, construction on the apartments would begin by next October, with initial occupancy by December 2025. Groundbreaking on the senior housing would occur by September 2025 and move-ins by March 2027. Construction of the commercial outlots would begin by May 2025 and be complete within two years.