No Bids, Again. Hubble to Park District?

No bidders for the Hubble property at $10,000,000; no bidders (yet) at $5,000,000. However, a Lombard-based organization may put in a $5,000,000 bid this week, with plans to use the existing school buildings for a sixth through twelfth grade Islamic school.  In addition, the Wheaton Park District has approved moving forward with a proposal to pay fair market value for the site (no dollar amount has been stated).  If it can gain control of the property, the Park District would sell a parcel at the corner of Roosevelt and Naperville Roads for development as a grocery store.

The process followed by District 200 in connection with the sale of this property has been contradictory and convoluted.   The District’s initial plan was to participate in the Hubble Steering Committee process; the Committee, which included District 200 representatives, was put together by the City of Wheaton and charged with coming up with guidelines for development.  The premise underlying the Committee’s work was the very reasonable notion that District 200 would get higher bids for the property if potential developers knew what the City and the District desired, and what the City was likely to approve.  The Committee voted to recommend two options:  a Park District option and a mixed use option.

As a reminder, the City is involved because City approval for many uses would be required; this puts the City in a powerful position regarding future use of the property.   However, if a purchaser were to use it as a school, no zoning changes would be necessary and the City would have little leverage.

District 200 bailed out on the Steering Committee effort, disregarding the Committee’s recommendations, negating two years of work and $300,000 in consultant fees, and put up a for sale sign on Roosevelt.

District 200 has gotten itself into a difficult position. The failure of both auctions has demonstrated that the District has been completely wrong about the market value of the property – contrary to stated Board expectations, there was no large group of developers ready to bid up the price.  The District 200 Board has stuck to its plan of five years ago, notwithstanding the seismic change in the country's economy.   If the Lombard group does make a $5,000,000 bid, it will be difficult to turn down. The District may well argue that its intention is to get the property on the tax rolls, but a refusal to sell to the highest bidder will invite a great deal of criticism.

 The Park District offer is very interesting, and the Park District use is the highest and best use for this property.  I prefer that the entire property be used by the Park District, but if this is only way the Park District can retain the majority of the Hubble property for community use, it is the way to go.   A grocery store and pharmacy close to our downtown is a good thing, although visions of a financial windfall in real estate and sales taxes are illusory.

 Some important questions remain regarding the Park District proposal:

If the Lombard group makes a $5,000,000 offer, will the Park District match it?  Grocery stores generally do not pay a great deal for real estate – they are businesses with thin profit margins.  Will the grocery store pay enough for the corner parcel to make the deal work economically for the Park District?

Will the grocery store request sales tax rebates to assist in development costs?  Demolition and infrastructure costs will be high.  Sales tax revenue is important to the City of Wheaton; however, most of the sales tax revenue generated by a new grocery store will not be new sales tax revenue.  A large percentage of the sales will come at the expense of other grocery stores in town.  Real estate tax revenue will increase for the City, District 200 and the Park District, but the amounts will not be significant and the impact on real estate tax bills will be very small.