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5th Avenue proposal: Is a competitive process or an appraisal the best way to move forward? The City




We’ve previously noted the City of Naperville shortcutting the process it seemed to establish for itself on the potential 5th Avenue development, involving the potential transfer of some or all of 13.3 acres of public, resident-owned land. A Committee chosen by the Mayor that met behind closed doors picked the developer, Ryan Companies (“Ryan”) to engage the community and develop concepts for the proposed development. The local representative of Ryan, Jim McDonald, is a Vice Chairman and Executive Committee member of the Naperville Development Partnership (“NDP”) . Four members of the closed-door Committee which picked Ryan happen to be on the NDP. Mayor Chirico and Doug Krieger also happen to be on the Executive Committee of the NDP along with Mr. McDonald.

The process of community engagement appears to be nearing completion. The next step will be developing concepts and plans and, once approved by Council, proceeding to contracts with Ryan and skipping the Request For Proposal (“RFP”) part of the process originally outlined by the City itself.


We questioned the process of choosing Ryan and seemingly skipping the RFP process, noting that it seemed to be backward: Shouldn’t the process be to agree upon the vision and scope of the project and then enter into a competitive process to choose a developer? Instead, the City chose Ryan to develop the “Community engagement and concept creation” and, once finalized and approved by Council, to proceed with “Development contracts and entitlements (Zoning variances).” At the August 28th, 2017 City Council workshop, it was clear that some Council members believed a competitive process would be appropriate. The Mayor did not.



City Attorney Michael DiSanto nicely summarized it. Councilman Krummen was spot on with his question, and the Mayor’s response was, unfortunately, not surprising.




Again, Mayor, those are economic terms. The best way to determine one is getting the most favorable economic terms is through a competitive, market-driven process. The most favorable economic terms are not obtained by the direction this appears to be going, which is granting a contract to the guy you know from the NDP and getting an appraisal for the value of the public, resident-owned land.


At the next City Council meeting on July 17th, Ryan will seek approval to proceed with the development of concepts for the proposed project. Council will also be asked to approve the concept principles to help guide those concept drawings.

If Council is being asked to approve concept principles to guide concept drawings, that would be the time to open the process up to competition. Approve the principles and go to a competitive RFP process.


Why not? How does the City know it will obtain the maximum value for the residents for their 13.3 acres of land without doing so? Without a competitive process, how does the City know another developer won’t come up with a more creative and dynamic proposal with better economic terms? Again, this is public, resident-owned land.


The Mayor appears to see no value in finalizing the concepts of the proposed development and putting those concepts through a competitive process. It appears as if the Mayor believes that an appraisal will work just fine in determining the value of the public, resident-owned land.


At the June 5, 2018 meeting, City Council approved the sale of 8.2 acres of surplus land at 540 Frontenac Road, in the City’s Industrial District . City documents indicate “The subject property was dually (sic) posted for sale, and IPT is the highest bidder. The Purchase and Sale Agreement provides for the subject property to be conveyed to the developer for $2,150,000 which is higher than the appraised value of $1,900,000.”


The City seems to believe it is good practice to get competitive bids on property, and rightly so. That appraisal came in at $1,900,000, while the competitive bidding process resulted in the highest bid of $2,150,000, over 13% higher. Yet the Mayor and apparently some members of Council seem to not see the value of a similar process on a larger parcel of land in what would certainly seem to be a much more valuable area.


A development the City itself in an internal document states “will make a memorable mark on Naperville’s development legacy” is not subject to a similar competitive bidding process as vacant industrial land?


Why?


Why is a competitive process a good practice to follow on the publicly-owned industrial land on Frontenac, but not the larger parcel of public, resident-owned land much closer to downtown and surrounded by neighborhoods?


If the City approves the concepts and proceeds with Ryan without a competitive process, how will we know what the best economics to the residents of the City from the proposed development of public, resident-owned land could have been?


Simple: We won’t.

Ever.


Through the sale of the Frontenac property, the City itself has provided the answer for the best way to proceed.


If the City won’t follow its own example, ask yourself:


Why?



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