Many
of you may have read the article in the Northwest Herald, stating U-Haul was
approved by the City Council to conduct a truck and trailer rental and indoor
storage facility, agreed to set aside just over an acre of property for a
future outlot along Richmond Road and was set to purchase the former Wal-Mart
building and site at 2019 N Richmond Road.
The City learned a few days ago
U-Haul is not moving forward with the purchase; why? Consider these points:
In real estate transactions such as this there
are several steps, and a transaction of this size is very complex. It should be noted that all of these
steps are not ubiquitous to all real estate transactions and
lease/purchase can be interchangeable depending on the situation. Also, the City is not privy to or have
knowledge pertaining to the various details of any private real estate
transaction.
First, in many real estate transactions, there is
often a letter of intent, which is submitted by the interested party to
the seller. The letter of intent or
LOI is a non-binding step which signifies an interest in a property. Defined by the International Council of
Shopping Center’s (ICSC) Dictionary of Shopping Center Terms Fourth
Edition: “letter of intent
(LOI): Generally a document submitted
prior to a formal lease. It serves
to delineate the intentions between the landlord and a tenant. Basic issues, including minimum rent,
percentage rent, pass-through expenses, and other major points of
negotiation, are outlined.
Generally subject to execution of a complete contract. The expression of a desire to enter into
a contract without actually doing so.”
Following the LOI the prospective purchaser will often
enter into a real estate contract with the seller. Defined by the International Council of
Shopping Center’s (ICSC) Dictionary of Shopping Center Terms Fourth
Edition: “contract: An agreement by which two legally
competent persons promise to obligate each other to do something.” The
contract typically includes: a due
diligence period (specified time period a prospective buyer has to
complete all their entitlement work on the property which provides them a
comfort level to proceed with the transaction) and may include: provisions for earnest money, how much
and when and if earnest money is required and becomes non-refundable; ensuring
there is a clean title report on the property; ordering a survey of the
site and often conducting a site and building assessment, broker
compensation, obtaining a financing and title commitment and necessary
approvals from third parties (governmental and private entities); 99.9% of
real estate transactions similar to U-Haul and Wal-Mart include numerous contractual
contingencies and more often than not one is obtaining zoning
approval for the use which the buyer intends to utilize the property prior to the real estate transaction being finalized.
Following receipt of zoning approval and prior to
expiration of the due diligence period, which often can be extended, the
real estate transaction between the buyer and seller is formally
consummated at a closing similar to buying a house. In this instance, the City Council
approved U-Haul’s zoning request on January 18, 2016 and U-Haul and
Wal-Mart anticipated formally closing and finalizing the purchase of the
former Wal-Mart site within one to two weeks thereafter. The City was informed by the broker for
Wal-Mart a few days ago the purchase of the former Wal-Mart site by U-Haul
will not occur.
Why?
Similar to buying a house, from the initial walk-thru, building
inspection, environmental testing, through obtaining financing and a title
commitment and the final walk-thru so many things can occur which can
influence one or both parties and not provide the needed comfort level (to
one or both parties) to move forward and result in a real estate
transaction from not occurring. Is
this unusual? No it is definitely
frustrating and disappointing for all parties involved but also a distinct
realty which happens more often than you may think in transactions such as
this.
Did the City of McHenry have anything to do with
this and could the City have prevented this from occurring? Is U-Haul definitely not purchasing the
former Wal-Mart site or is this merely a delay? As previously stated, following City
Council approval of a project the private real estate transaction between
the buyer and seller still needs to occur.
The City is not responsible the purchase of the property will not
occur, and while the City can attempt to mediate or “intervene” if some
issue(s) between the private parties is not resolved the City’s role is
minor and only occurs if requested to do so by one or both of the two
private entities because at the end of the day it’s a private real estate transaction.
It is also normal for a newspaper to
report the City Council’s approval of the request made by U-Haul which
often provides excitement and positive emotional buildup within the
community but at the same time the City Council is only approving the
zoning on the property and has nothing to do with actual real estate
transaction. Finally, the City has
confirmed with the Wal-Mart broker that the transaction between U-Haul and
Wal-Mart has been officially terminated.
Where do we go from here? The good news, although as previously
stated, this is very disappointing for all parties involved, particularly
City residents and businesses, the City has already been exploring alternative
avenues with the Wal-Mart broker which are currently being pursued. However, it will take some time to
complete the aforementioned steps with any new buyer interested in the site
although the City is very optimistic about the former Wal-Mart site being
purchased by another party in the near future. The City has a great relationship with
the Wal-Mart broker and he is extremely tenacious and the City will
continue to collaborate and work until this site is sold. We can promise you that!
MEAT AND POTATO EATERY TO OPEN AT 400
S ILLINOIS ROUTE 31
Meat and Potato Eatery, a new
restaurant concept which will include video gaming, will soon open at 400 S
Illinois Route 31 (formerly Blue Cherry Yogurt).
The same restaurateurs who operate Brunch Café will open a new
restaurant concept directly to the west and in the same building as Brunch
Café. This will provide another dining option and compliment Brunch Café and
the incredible success that restaurant has enjoyed. Hours of operation will be Sunday through
Thursday, 11:00 a.m. to 9:00 p.m. and Friday and Saturday from 11:00 a.m. to 11:00 p.m.
Seating capacity will be approximately 50 to 60. Anticipated opening is late February/early
March 2016.
MINOR DETAILS!
NEW RESTAURANT IS IN THE WORKS AND
COMING SOON TO 4621 ELM STREET!!!
MCHENRY RECREATION CENTER WILL OPEN TO
THE PUBLIC ON FEBRUARY 29, 2016!!!!!!!
THANK YOU TO EVERY BUSINESS WHO HAS
MADE A COMMITMENT TO LOCATE THEIR BUSINESS, EXPAND THEIR BUSINESS OR KEEP THEIR
BUSINESS IN THE CITY OF MCHENRY!!! EVERY
ONE COUNTS!!!
Remember even if all buildings were
occupied economic development would nonetheless always remain a top priority
for the City due to its dynamic nature. Economic development in a holistic sense: business growth,
expansion and retention, community events and festivals, (eco, heritage and
agri-tourism, education, healthcare) all contribute to an environment
conducive to sustaining and growing a healthy local economy!!!!!!!!!!
Remember, economic development is
continually changing and adapting to meet the needs of consumers and producers. Many uses are finite and vacant
buildings in any community are a normal part of the business/economic development
lifecycle but those vacant buildings will be filled, some quicker than others,
as companies, market and economy continually evolve.
CONTINUE THE DISCUSSION…EVERY ONE
CONTRIBUTES!!!!!
Please help us keep our community vibrant and strong to the greatest
extent practical for businesses, residents and visitors alike! The City Council is continually evaluating
ways to assist in promoting business, tourism, community events and
service! Economic development is an
ongoing effort the City is committed to and is a community-wide effort. At the end of the day the entire community
and everyone who is a part of it benefits!
Douglas P. Martin
Director of Economic
Development
City of McHenry
333 S Green Street
McHenry, IL 60050
815.363.2110 (d)
815.363.2173 (f)
815.790.4752 (c)
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