Committee recommends redevelopment agreement and TIF rebate for Pheasant Run industrial project

The Planning and Development Committee on March 10 recommended approval of a redevelopment agreement (RDA) for the Pheasant Run industrial development project. Staff described the project as an 84-acre industrial development with four buildings totaling about 1.1 million square feet, a projected private investment of approximately $136 million and potential employment of 500 to 1,500 jobs when fully built and occupied.

Staff said the developer (discussed in the presentation as Greco DeRosa and related entities) initially identified the electric service to the site as under capacity. To avoid long delivery delays for large transformers and related equipment, the developer fronted about $5.6 million so that the city could order the electric infrastructure; staff said that approach sped procurement and mitigated schedule risk. Under the recommended RDA, the city would provide a pay-as-you-go TIF rebate to reimburse certain TIF-eligible project costs. The agreement’s maximum rebate amount is $10,925,000, less than an earlier estimate in the project summary of $11,500,000.

The rebate schedule described to the committee starts with a 50/50 split of increment where the city’s share is used to recoup $720,000 the city had advanced for water main and electric work. After the city recoups that amount, the split would flip to a 90/10 schedule heavily favoring developer reimbursement until the developer is repaid. Staff projected developer repayment in roughly nine years under current estimates; once the developer is repaid, the city would receive the full increment, expected at that point to approximate $2 million annually.

Staff briefed the committee on the project’s current status: Building D (about 170,000 sq ft) is occupied by a logistics company; Building C (216,000 sq ft) is occupied by a manufacturing tenant (FAI Advanced Power Solutions), which had about 70 employees shortly after occupancy and expects to ramp to roughly 250 jobs within 18 months; Building B (about 300,000 sq ft) is nearly complete with no tenant announced; and Building A (about 450,000 sq ft) had grading work but was not yet permitted for construction. Staff said the previously distressed resort parcel within the district was cleared and had been sold by a receiver for about $4.3 million, and that the site remains technically in receivership while activity continues and potential buyers are negotiating.

Committee members asked whether the electric equipment paid for or ordered would serve all buildings (staff said it will serve the industrial project, including Building A, under typical industrial electrical loads), who will own and maintain the transformers and other electric facilities (staff said the facilities will be public and the city would maintain them), and who pays annexation costs for a small adjacent parcel the developer seeks to acquire (staff said the developer would bear annexation costs). Committee members also raised concerns about the provision that the developer “shall” annex an adjacent West Chicago parcel prior to substantial completion; staff said the project is buildable and operable without that parcel, and the annexation requirement was included because the proposed site plan uses that access, but the project is not dependent on the parcel for completion.

Staff summarized fiscal modeling showing expected increments to the TIF and projected distributions over time; staff said no city-issued bonds were used for this project and noted this arrangement is a pay-as-you-go rebate rather than a city-fronted bond issue.

A motion recommending approval of the RDA passed on a committee roll call.

Next steps identified by staff include final Council consideration of the RDA, continued coordination with West Chicago on the small parcel transfer, and execution of reimbursement mechanics once the project generates taxable increment.