Title
New Downtown Orland Park plan - UCMC Ground Lease Letter of Intent (LOI)
History
Executive Summary
This plan strengthens Downtown Orland Park by pairing a University of Chicago Medical Center (“UCMC”) ground lease on Parcel E with an Amended & Restated RDA with E&R Development LLC, aka Edwards Realty (“Developer”) to realign responsibilities, funding, and performance triggers. It delivers predictable, recurring revenues-about $10.16 million in ground rent over 25 years plus $322,500 per year from leasing 215 garage stalls at $125/month-that the Village will earmark to offset Heroes Park construction, debt service, and Operations and Maintenance alongside a Special Service Area (SSA) when producing, thereby reducing General Fund pressure.
The RDA keeps the Village Funding Obligation at its base cap (no Parcel E/F adders when UCMC develops), adds performance safeguards (full refunds if Certificate of Need is not obtained; a 24-month structural-steel trigger to avoid project drift), and preserves evening/weekend public parking even if UCMC later exercises its garage purchase option (with credits for prior UCMC investment and rent).
The plan further advances the arts and activation strategy by prioritizing a Performing Arts Center on Parcel C (with 36-month reversion if construction does not commence) and mandating creation of the DOP East RPA/TIF within 12 months to activate parcels north of 143rd Street from LaGrange to John Humphrey Drive.
Background
The Downtown Orland Park TIF and Business District were established to catalyze the original Triangle’s redevelopment per Ordinance No. 5927 and the Original RDA (March 14, 2025). The current proposal amends/restates that RDA and assigns certain development rights on Parcels E and F to UCMC via a Village ground lease.
The attached UCMC LOI outlines the core business terms for Parcel E and related parking/expansion rights; while non-binding in many respects, it will be used to finalize the Ground Lease. Certain exclusivity, and due diligence provisions are binding until the Ground Lease is executed.
-Medical Anchor & Building Program
UCMC to develop a 3-4 story MSK Center (80k-120k sf) on Parcel E, adhering to Village zoning/appearance review
Retail activation: LOI requires 3,000-9,000 sf of complementary ground-floor retail; the RDA’s Parcel E Work Letter fixes 12,000 sf with minimum frontage/depth, utilities, service access, and signage standards to support restaurant/retail.
Parking & Public Access
Existing Parking Garage (~547 stalls): Weekdays 4:00 a.m.-5:00 p.m. exclusive to UCMC; off-hours/weekends open to the public. UCMC leases 215 stalls at $125/month each (rent starts after occupancy). UCMC retains an option to purchase the garage at fair market value less (i) all garage rent paid plus (ii) the present value of $11.5M UCMC invested in the garage; Village retains off-hour public parking with proportional O&M cost share after any purchase.
Surface Lot (207 stalls): 100 stalls exclusive to UCMC 24/7; remaining 107 exclusive on weekdays 4:00 a.m.-5:00 p.m., open to public off-hours/weekends.
Future Healthcare Expansion (Parking Lot North of current UCMC facility)
UCMC may build an additional 80k-120k sf healthcare building on the current Parking Lot with required structured parking; Village receives non-exclusive off-hours parking rights and shares maintenance/repair O&M proportionally.
Exclusivity / Land Use Protections
Village will, to the extent lawful, restrict competing medical systems in the Triangle while allowing small non-system practices ≤5,000 sf; specific service-line exclusivities (e.g., orthopedics, cardiology, oncology) apply if provided in UCMC’s building.
Stormwater & Site Delivery
UCMC responsible for stormwater detention/retention design/construction (potentially under Heroes Park/Jefferson Ave); Village maintains detention/retention facilities, with SSA pass-throughs and a separate agreement for UCMC’s share. Delivery conditions include commercial-standard environmental compliance, with a remediation process and Soil Management Plan.
Lease Term & Rent Commencement
25-year Ground Lease; rent commences upon Permanent CO and opening. Interim: starting January 1, 2027, UCMC pays ½ Ground Rent until rent commencement; if State Certificate of Need (CON) not obtained, all Ground Rent and the Redevelopment Contribution are refunded.
-Key Changes Versus the Original RDA
Rights on Parcels E & F
Developer waives rights to acquire/develop Parcels E and F; UCMC becomes the developer via Ground Lease. The RDA preserves public parking access windows in the garage (Parcel F) and grants the Developer a Parcel E Retail Right of ≥9,000 sf (10% of UCMC’s leased space), further detailed by the 12,000 sf Work Letter standards and signage rights. If the Parcel E Retail Right is not obtained within 9 months of the RDA’s Effective Date, Village pays the Developer $1,400,000 (2026 dollars) within 60 days thereafter.
Performance Trigger (UCMC Construction)
If structural steel for Parcel E is not installed within 24 months of the RDA’s Effective Date, the UCMC Ground Lease and Developer’s waiver terminate and the Developer regains rights to present plans for Parcels E/F (with TIF reimbursement eligibility per the Original RDA).
Village Funding Obligation (VFO) & Bonds
VFO is capped at $27,785,012 (base) when Parcels E/F are UCMC-developed and Parcel C is the Arts Center; adders apply only if Developer acquires those parcels: Parcel C $2,298,873; Parcel E $1,868,518; Parcel F $408,891. VFO funded via Special Revenue Bonds with GO backstop, repaid from 100% TIF increment and 100% Business District sales/hotel taxes.
Heroes Park
Village pays 100% of Public Work Costs and provides a $2,760,000 deposit (~20%) before construction; Heroes Park is defined as public, programmed/maintained by Village, with an ice rink requirement and perpetual Park Covenant.
UCMC Rent Offsets Heroes Park Costs. To strengthen the Village’s long-term operating plan for Heroes Park, the UCMC ground rent and garage stall rent will be earmarked to offset Heroes Park costs-including Public Work debt service and ongoing maintenance/programming-alongside Special Service Area (SSA) revenues once the SSA is producing sufficient funds. The LOI establishes recurring rent streams (Parcel E ground rent with a defined schedule and $125/month per leased garage stall), and the RDA codifies the Village’s responsibility for Heroes Park and broader public-realm O&M with SSA reimbursement when available; earmarking these UCMC rents directly reduces the net burden on the General Fund over time.
Construction commences late Summer with work completed in Summer 2027.
Developer Repayment Obligation & Open-Book TIF
RDA codifies open-book accounting for TIF-eligible reimbursement and a Developer Repayment Obligation structured around Phased VFO Notes and subsequent credit/cancellation reporting (IRS 1099-C) timing.
Parcel C Plan: Performing Arts Center First; Reversion if Not Accomplished
Parcel C is removed from the Developer’s acquisition/development sequence under the amended RDA so the Village can pursue a Performing Arts Center (Arts Center) as a public anchor. The RDA sets an “Arts Center Period” during which the Village may deliver an Arts Center Commitment (design, permits, funding ordinance); if delivered, the Developer may elect to serve as general contractor with all Arts Center costs reimbursed as Public Works. If the Village does not deliver the Arts Center Commitment by the end of the Arts Center Period or does not commence construction within 36 months thereafter, Parcel C reverts to the Developer, who may then proceed under the commercial/residential development paths specified in the RDA.
Downtown Orland Park East TIF District (DOP East): Activation Strategy
To immediately activate the parcels north of 143rd Street between LaGrange Road and John Humphrey Drive, the amended RDA directs the Village to establish the Downtown Orland Park East Redevelopment Project Area (DOP East RPA/TIF District) within 12 months of the Agreement’s Effective Date, adopt the DOP East Special Use for a Planned Development, and enter into a DOP East RDA to reimburse TIF-eligible costs from tax increment generated in that corridor.
If the Village does not establish the DOP East RPA and TIF District, nor enter into the DOP East RDA in a form reasonably acceptable to the Developer within the required timeframe, the Village must pay the Developer $1,000,000 within 14 months of the Effective Date.
The DOP East Property-the area immediately north of 143rd Street from LaGrange to John Humphrey Drive-as the geography for early activation, consistent with our 143rd Street redevelopment vision and adjacent private investment momentum.
Other Fiscal Adjustments
Village reimburses Initial Development Costs of $3,046,118.67 and pays a $1,000,000 Waiver of Rights Payment; Parcel pricing totals $3,825,000 across A/B/C/E/F/H should Developer purchase.
-Total Financials Summary (Village Perspective)
SEE ATTACHMENT “A”
-How This Plan Improves on the Original Plan
Stronger, Longer-Term Anchor: A premier UCMC MSK Center replaces a small-format restaurant plan on Parcel F and uncertain timing on Parcel E-bringing high-frequency, daytime foot traffic, complementary retail, and regional brand draw.
Guaranteed Public Parking Windows: Clear off-hours public access to the garage and surface lot, even if UCMC later purchases the garage, preserving event and evening activation for Heroes Park and restaurants.
Defined Fiscal Streams: Ground rent (~$10.16M total) plus stall rent ($322.5k/yr) create recurring revenues absent in the prior restaurant concept; exclusivity limits protect UCMC investment and stabilize tenancy.
Enforceable Performance & Reversion: If UCMC doesn’t start structural steel within 24 months, rights revert to the Developer, avoiding indefinite site stasis and enabling alternative build-out.
Retail Activation Along Heroes Park: Work Letter standards (frontage/depth, utilities, service corridor, clear heights) reduce build-out friction and enable robust restaurant/retail lining the park.
Transparent Funding & Fiscal Safeguards: Open-book TIF, phased notes, and repayment-credit mechanics provide better control and auditability than the 2025 framework, while VFO adders are disabled when UCMC (not the Developer) does E/F.
Park & Public Realm Guarantees: Heroes Park is funded and protected (ice rink seasonality; Park Covenant), with SSA to backstop maintenance-improving community amenities and ensuring programming continuity.
Right-Sized Risk: The garage purchase option credits prior UCMC investment and rent paid, limiting speculative price risk while preserving Village off-hours access and cost-share proportionality.
Financial Impact
The new plan improves the Village’s financial position by replacing uncertain revenues with predictable, recurring streams-about $10.16 million in Parcel E ground rent over 25 years plus $322,500 per year from leasing 215 garage stalls at $125/month-that the Village can apply to offset Heroes Park Construction and Operation and Maintenance within the RDA’s SSA framework, thereby reducing the net burden on general funds; at the same time, the Village Funding Obligation remains at the base cap (with no Parcel E/F adders when UCMC develops), lowering future outlays, and the plan embeds risk controls (full refunds if Certificate of Need is not obtained, a 24-month structural-steel commencement trigger to avoid idle capital, and purchase-option credits on the garage) that further protect cash flow and downside exposure compared with the original approach.
Recommended Action/Motion
I move to approve the University of Chicago Medical Center Ground Lease Letter of Intent, and as fully presented below.
(Full motion - not necessary to be read)
I move to approve the Ground Lease Letter of Intent between the Village of Orland Park and the University of Chicago Medical Center;
AND
Authorize the Village Manager to execute said Ground Lease Letter of Intent;
AND
Authorize the negotiation of a final Ground Lease between the Village of Orland Park and the University of Chicago Medical Center for Downtown Orland Park.