City Council Continues to Mull Downtown Luxury Apartment Project

City officials held off Monday night on a formal decision for a downtown apartment complex proposal.

The debate centered on the city's participation in offering financial assistance to the developer, Morningside Equities, as well as assurances the city would be protected financially should the project not come to fruition. Council members differed on the need for a letter of credit to minimize the city's financial risks for laying out approximately $500,000 in upfront infrastructure costs.

City Attorney James Knippen said final details of a letter of credit would be ironed out between the city and Morningside's lender, which is investing $42 million on the project, according to Morningside President David Strosberg. With the letter of credit issue presumably out of the way this week, the city council plans to meet again Monday where both the redevelopment agreement and project proposal would be considered.

Meanwhile, Strosberg scoffed at the length of time it has taken to sort out a deal to get the project moving forward. He noted the lender is losing "faith" in Morningside's proposal.

"This process has been going on for quite a long time," Strosberg said. "We've been diligently working with (city staff). We're finding it very difficult to keep all of this together ... to keep momentum going."

Morningside Equities proposal, called Wheaton 121, would build a 306-unit apartment complex at 218 Wesley Street, on the vacant block bounded by Wesley, Cross, Front and Scott streets in downtown Wheaton. The with Tax Increment Financing (TIF) District 2 funds for public improvements, including public plazas, street lighting, curb improvements and public benches.

The most expensive public improvement will be the burial of overhead utility lines along the west and north sides of the property for an estimated $500,000, City Manager Don Rose told Council at a May 8 meeting.

, Morningside initially requested $2.3 million for assistance with several planned improvement projects, including utility relocation and improvements, site amenities such as light poles, benches, trash, recycling receptacles and bike racks, public plazas with fountain features and seating, a detention and lift station required because of the depth of Wheaton’s sewers, environmental remediation, design, construction and management. Rent for the apartment complex is expected to range between $1,000 and $2,300 per month, excluding utilities.

Without the TIF funding to support the development, Nancy Hill of Ehlers and Associates, the city’s financial adviser, said the developers would not be able to seek investors to help with construction due to a low rate of return. With TIF support though, the site could generate an annual return of 8.5 percent, or about $700,000.

Ehlers’ data speculated that Morningside could pay back the TIF funds within seven years following completion of the project and assuming full occupancy.