La Grange Today

Special board session to finalize theater TIF grant

UPDATED 03/02: The La Grange village board tonight approved the theater-aid legislation detailed below by a vote of 4 to 2. Trustee Barb Wolf did not attend as she was out of town. Trustees Mike Horvath and Jim Palermo voiced strong dissents before the vote. Steve Wolf, a trustee on the library board, angrily criticized President Elizabeth Asperger for not allowing public comment before the vote. David May, president of the District 102 school board, was in attendance. May said he intended to address the board but changed his mind after learning that comment before the vote would not be allowed.

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The La Grange village board of trustees will meet in special session Monday night to review and likely approve final legislation extending $1 million in financial aid to the La Grange Theatre.

Awaiting board action are two resolutions that would approve:

• An intercreditor and subordination agreement between the village, the theater owners and First National of La Grange, which holds a $1.4 million mortgage on the theater
• The use of tax increment financing (TIF) funds to acquire a façade preservation easement on the theater entrance and to pay project costs related to the renovation of the theater

Trustees also will vote on an ordinance authorizing the purchase of the façade easement.

The  latter resolution is a revision one approved by trustees Nov. 9. Changes became necessary after the theater's owners, John Rot and David Rizner, told village officials they would face unwanted capital gains taxes if they received the $1 million entirely as a payment for the façade easement, as originally agreed.

The revised arrangements would have the village pay only $237,500 for the easement with the remaining $762,500 to be provided as a loan. The loan would be repaid only if the theater ceased operating as a motion-picture venue, at which time repurchase of the easement also would be required.

The intercreditor agreement offers the village some security on its investment in the theater. Under its terms, the bank agrees to subordinate its senior mortgage on the theater property to the façade easement, and also acknowledges a junior lien held by the village in the amount of the loan.

Revision of theater financing is opportunity to rework the deal, Horvath says, but board shows no support

As the La Grange village board Monday night reviewed proposed revisions to an agreement that extends $1 million in financial aid to the La Grange Theatre, Village President Liz Asperger noted that the changes would provide the village with more security in the event the downtown theater failed.

Trustee Michael Horvath, on the other hand, said he was more concerned about the "upside" of the village's investment in the theater's renovation and that he believes the deal denies La Grange taxpayers the opportunity to fully share in any success that might bloom from it.

"The million dollars can bring the theater back to life and it can be wildly successful," Horvath said. "The theater owners can take lots of profits out of it and at the end of the day the taxpayer will get nothing back and will not share in those profits. Why shouldn't the taxpayer as the catalyst investor [...] share in that success in some way, shape or form?"

Horvath said he wanted to reconsider charging an entertainment tax on each theater ticket sold. That idea was seriously discussed  by the board during hearings held last year, but later discarded.

Horvath described the theater deal as a "bailout" similar to those being hammered out on the federal level for the banking and automotive industries. The difference, he said, is that taxpayers will profit if the federal efforts are successful.

Asperger bristled at the "bailout" comparison and chided Horvath for attempting to resurrect a debate that she said was put to rest Nov. 9 when the board in a close vote agreed to allocate $1 million in tax increment financing (TIF) funds to pay for structural renovations to the theater that its owners say are necessary to continue operating as a movie venue.

"Your question is one that you have asked on several occasions before," Asperger said to Horvath. "My short answer is that your desire to participate through some sort of repayment mechanism, as you have suggested, is simply not part of the transaction that the board structured with the owners."

"Well, that deal was a purchase, not a loan," Horvath retorted. "These are new terms, so I am suggesting a new term as part of the loan."

Under the revised terms of the million-dollar agreement reviewed by the board Monday night, the village would purchase an easement on the theater's facade for $237,500 and provide the remaining $762,500 in the form of a loan that would be repaid only if the theater ceases to operate as a movie venue. Originally, the board agreed to pay the entire $1 million in return for the facade easement, but the theater's owners, John Rot and David Rizner, asked for the revisions after realizing that receiving payment in excess of the facade's appraised value likely would result in taxable capital gains.

Asperger argued that the revisions were more about the form of the financing, not its substance. "We still have a million-dollar investment," she said. "We still invest our money into the theater through the same escrow vehicle with the same protections, the same operating covenants and the same repayment obligation should the theater cease to operate, as we did originally. We simply have structured it as a loan actually to provide additional security to the village in the form of a junior mortgage."

Asperger also disputed Horvath's contention that taxpayers would not share the wealth in the theater's success. "I think a majority of the board approved participation in this project because of their stringent belief that in fact it was a very beneficial transaction to the taxpayers, and that there were multiple ways in which members of our community and taxpayers would benefit as a result of our involvement in the project."

Trustee Mark Langan agreed with Asperger and identified specific ways he thought the project would profit both taxpayers and the community at large. "The benefit we're going to get, should it be successful, is increased sales taxes, increased activity in the village and continued success of our downtown," he said. "Those are the pieces we're going to get by this moving forward.

"We talked about [the deal] for six months," Langan said. "We had a very difficult vote. We voted 4-3 to move forward. Let's move on. We've got other business to handle."

When Horvath proposed polling the board to see if other trustees shared his sentiments, no one seconded the notion.

"It sounds like the majority is saying 'no'," Horvath said.

Actually, there will be a vote on the matter, likely at the board's Feb. 23 regular meeting, when trustees will be asked to formally approve the revisions and an intercreditor agreement with First National Bank of La Grange, which holds a mortgage on the theater.

Revisions proposed in theater renovation financing

A revised agreement to extend $1 million in financial aid to help renovate the La Grange Theatre was presented Monday night to the village board of trustees.

Under new terms outlined in a report from the village manager, Bob Pilipiszyn, the village would purchase an easement on the theater's façade for $237,500 and provide the remaining $762,500 as a loan that would be repaid, along with easement monies, only if the theater ceased operating as a movie venue.

If approved by the board, the revised agreement would replace one adopted Nov. 10 in which the entire $1 million was to be used for purchase of the façade easement.

The source of the village monies remains tax increment financing (TIF) funds, which will be placed in an escrow account along with $650,000 to be deposited by the theater's owners, John Rot and David Rizner.

The two partners proposed revising the agreement when they realized that receiving all of the money in exchange for the easement would increase their tax liability. An appraisal they ordered said the fair market value of the easement is $237,500.

The new agreement also "better secures the Village's 'investment' in the theater to a degree" because the loan portion will be secured by a junior mortgage on the theater property, Pilipiszyn wrote in his report.

A letter attached to the report from the village attorney, Mark Burkland, noted that the Rot and Rizner transferred ownership of the theater to 80 South Lagrange Inc. from Seamus Knolls LLC. Both are Illinois corporations that they control.

Village board schedules open meetings training

The La Grange village board of trustees Monday night will participate in a training session to review the Illinois Open Meetings Act (OMA) in an effort to ensure compliance when convening closed sessions to discuss public business.

Village officials agreed to undergo OMA training after the Illinois Attorney General last July determined that the board had violated that law in a meeting with owners of the La Grange Theatre to discuss extending financial aid to the downtown movie house.

The session will be conducted by Richard A. Martens, an attorney with a private practice based in Chicago. Martens was chosen after representatives of the attorney general's office said they could not accommodate the village's requirement that the session be held in the evening.

The training session will take place during the board's Monday night meeting at Village Hall following the conclusion of regular business.

Village board has yet to schedule OMA workshop

The La Grange village board has yet to schedule a workshop it agreed to attend in order to better understand compliance with the Illinois Open Meetings Act (OMA), Liz Asperger, board president, said. But she promised that the workshop would be held "sometime after the New Year."

The village board agreed last summer to attend OMA training after the attorney general's office found the board in violation of the law when in it improperly discussed in closed session various scenarios for extending financial aid to the La Grange Theatre.

Asperger addressed the delay last month in response to a question raised by a resident at a meeting of the La Grange Citizens Council, from whom Asperger was seeking endorsement of her bid for re-election in April.

"The [Illinois] attorney general, who encouraged us to have a training session, unfortunately after we tried to set one up reported back to us that they really have no time or no one who can provide us that training session," Asperger said at Dec. 10 meeting.

That is not entirely true, according to Heather Kimmons, an assistant attorney general for public access, who conducts many of the workshops.

In 2007, the last year for which numbers have been reported, the attorney general's office held 51 OMA seminars, according to its website. (See postscript below.)

The scheduling conflict arose when village officials insisted on holding the workshop in the evening, Kimmons said, adding that she had phone conversations on the matter with Village Manager Bob Pilipiszyn and Mark Burkland, the village attorney.

Because a state instructor would have to travel three hours to La Grange from Springfield, where the state's public access counselors are based, Kimmons said she told village officials that the workshop would have to occur on a weekday sometime between 9 a.m. and 4 p.m., she said.

"They expressed to me that they were not willing or able to do that as most of the trustees had full-time jobs," she said.

Kimmons confirmed an additional comment made by Asperger that the village would as an alternative seek to contract with a third-party instructor to conduct the workshop.

"My preference would be for [the attorney general's office] to do it, as we are charged enforcing the OMA and know the law," Kimmons said. "But as long as they come up with a viable alternative, that is acceptable to us."

Kimmons said she would contact Burkland to see what progress was being made in that regard. She said she last communicated with him in October.

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POSTSCRIPT: Among the 51 OMA workshops conducted in 2007 by the Illinois attorney general's office was one held Oct. 18 of that year for the board of trustees in nearby Hinsdale. It commenced at 6:30 p.m., an evening scheduling not extended to the La Grange board.

Also of note, that workshop was conducted by Terry Mutschler, who at that time supervised public access counseling operations on behalf of the attorney general. Mutschler later resigned that position to return to her home state of Pennsylvania, where she is overseeing implementation of that state's new Right-to-Know Law.

Heather Kimmons explains why Hinsdale got an evening workshop:

In the case of the Hinsdale training you mention, there were some special considerations. As Public Access Counselor, Ms. Mutchler often agreed to evening trainings, as they were suitable to her schedule; furthermore, it is my understanding that our office had received numerous, repeated and validated complaints concerning the Village of Hinsdale in a concentrated period of time, emphasizing the necessity to promptly educate its public officials.

Since Ms. Mutchler’s departure, our training times have been limited to business hours, Monday through Friday, with rare exception. We have found that most public bodies, recognizing the importance of Open Meetings Act compliance, are cooperative in scheduling trainings during these hours.

Trustees approve theater renovation agreement

UPDATED 11/10: Trustees last night voted to approve the agreement as described below despite the fact that significant issues remain unresolved. The tally was 4 to 3 with Village President Elizabeth Asperger casting the tie-breaking vote. Check back later in the week for more details.

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A draft of an agreement between the Village of La Grange and the owners of the La Grange Theatre, under which $1 million in tax increment financing (TIF) would be spent renovating the landmark movie house, will be discussed by village trustees at their regular meeting Monday night.

For its money, the village would purchase a development easement preserving the theater's façade, and get a commitment from the building's owners, Seamus Knolls LLC, to continue operating the movie theater as a “sub-first run” venue for at least ten years.

The agreement calls for Seamus Knolls to contribute $650,000 towards the renovation costs. John Rot and David Rizner, principals of Seamus Knolls, said they already had spent $350,000 on renovations prior to approaching the village for assistance.

Before any agreement can be formalized, village officials first must obtain consent for the easement from the bank that holds a first mortgage on the property, according to a staff report presented to trustees with the agreement draft.

Trustees to consider $1.35 million 'loan' to theater

Correction: Tonight's board workshop begins at 7:00 p.m. An earlier version of this report incorrectly stated that the meeting was scheduled for 7:30 pm.

The La Grange village board Monday night will consider a proposal to extend $1.35 million in financial assistance to the owners of the La Grange Theatre, according to two trustees who briefly discussed the plan with the daily.

The amount is less than the $1.7 million figure initially requested by theater owners John Rot and David Rizner, reflecting some modifications in the restoration plan the pair presented at an Aug. 25 board workshop.

Mike Horvath and Jim Palermo both cited a memo, sent last week to trustees from Village Manager Robert Pilipiszyn, that says $1 million dollars would come from existing funds generated through the village's tax increment financing (TIF) district, which covers most of the central business district. The remaining $350,000 would come from the village's general fund.

The money would be provided in the form of a no-interest "loan" to theater owners John Rot and David Rizner, and would be "repaid" through an amusement tax of 50 cents that would be applied to each movie ticket sold by the theater.

Both Horvath and Palermo questioned how such an arrangement could be described as a "loan."

"It doesn't fit my description," Palermo said, noting that it would take "13 or 14 years" for the theater to sell the 2.7 million tickets needed to repay the money through the tax, using attendance figures provided by Rot and Rizner.

The village's TIF program is scheduled to shut down at the end of next year. Any loans from the fund would have to be repaid by then.

Horvath said the funding proposal may be premature as he believes the board has yet to articulate a coherent policy that would justify the village making a substantial investment in the operation of a private business.

"If we do it for the theater, other businesses in the community could ask us for similar help," he said. "What's our policy going to be? There are still a lot of questions that need to be answered."

Monday's board workshop is scheduled for 7:00 p.m. in the Village Hall auditorium.

Burkland says reports are private because president never cited them in public; video shows otherwise

In a letter to the Illinois attorney general explaining why the Village of La Grange refused to make public three reports requested under the Freedom of Information Act (FOIA), village attorney Mark Burkland asserts that the documents are confidential because village president Elizabeth Asperger "did not cite or identify the reports" in a public setting.

Burkland's statement is at odds with video-recorded remarks made by Asperger at a May 19 executive committee workshop in which village trustees discussed all three reports at length while considering a proposal to provide financial assistance to the La Grange Theatre. The workshop was open to the public.

The three documents, which were requested by Thom Rae, publisher of everythinglagrange.com, include an analysis of the theater's operation and finances prepared by Kane McKenna & Associates; a memo to village manager Robert Pilipiszyn from Holland & Knight, the law firm represented by Burkland; and a report to the board regarding the theater from village staff.

The staff report was released in response to Rae's request but most of its content was redacted.

"I have been advised by Village representatives that the head of the public body (the Village president) did not cite or identify the reports," Burkland wrote in a Aug. 14 letter to Amanda Lundeen, a public access counselor for the attorney general's office. Therefore, he maintained, the reports were "opinions and matters related to the formulation of policy ... thus exempt from inspection and copying under Subsection 7(1)(f) of the [Freedom of Information] Act."

Subsection 7(1)(f) states:

Drafts, notes, recommendations and other documents expressing opinions or suggesting policy decisions, including preliminary legislative documents. The record is not exempt, however, if it is “publicly cited” and “identified by the head of the public body.”

In remarks made by Asperger commencing the workshop, she clearly identifies all three documents and encourages trustees to openly discuss their contents.

The workshop was recorded on video by the village and broadcast live, and again on several later dates, on the Comcast public access cable channel.

A DVD copy of the broadcast was obtained from the village's community development office, which routinely provides videos of board meetings to the public on request.

On the workshop video, Asperger introduces Phil McKenna, principal of Kane McKenna, who subsequently discusses at length with trustees the findings and opinions contained in his report.

Asperger also references the staff report in her invitation to trustees to discuss the "small group tours" they took of the theater before attending the workshop. A section heading in the redacted report provided to Rae mentions the tours, but all related content that follows is blacked out.

"We have been provided a memo from Mr. Burkland's office with respect to various options for security ... recouping public dollars invested ... entertainment tax and the like," Asperger can be seen telling the trustees in the video. "Mark obviously is not here, but we have able counsel in Barb [Adams]. Are there questions, thoughts?"

Burkland was not in attendance at the workshop. Adams, an associate of Holland & Knight, represented the law firm in his absence.

In his letter to the attorney general, Burkland argued that his firm's memo, which he co-authored, was protected by attorney-client privilege.

"The memorandum is marked on the first page as confidential and attorney-client privileged," he wrote. "As you know, the mere mention of a document does not constitute a waiver of that privilege."

In his FOIA request, Rae contended that the village board's discussion of it in an open session constituted a waiver.

Rae told the attorney general that he requested the documents only because learned about them while attending the workshop.

Burkland in his letter cited two other FOIA exemptions he believes cover the reports. One applies because they "relate to real estate purchase negotiations that have not been completed or terminated," he wrote.

The village board used "the purchase, sale or lease of real property" as the reason for adjourning to closed session April 21 to discuss the theater's finances. The attorney general determined that the board violated the Open Meetings Act when Burkland later admitted that the board's conversation had strayed beyond discussion of a possible purchase to explore other options for helping the theater through "investments, securities or investment contracts."

There was no serious discussion in the workshop of the village purchasing the theater. A loan or grant involving TIF monies were cited as the primary instruments being considered.

Burkland also cited an exemption related to "records dealing with public financing or marketing transactions" as further reason not to disclose the records.

Rae said that Lundeen sent him a copy of Burkland's response Aug. 18, along with a copy of a letter she subsequently sent to Burkland on that date acknowledging receipt of his response. But Rae said there was no indication what further action, if any, the attorney general intends to pursue.

Rae said he has since forwarded excerpted transcripts of the workshop to Lundeen for review and expects to discuss them with her sometime this week.

Closed session minutes reveal nothing of substance

The minutes of a closed session held April 21 by the La Grange board of trustees to discuss possibly extending financial aid to the La Grange Theatre reveal nothing beyond that which was already known.

The minutes were made public last week by Village officials under an agreement with the Illinois Attorney General, whose investigation of the closed session determined that the meeting had been improperly convened, thereby violating the state's Open Meetings Act.

Amanda Lundeen of the Attorney General's public access office initially asked the Village to make public both the minutes and an audio recording of the closed session, but relented on the recording after strong lobbying from the Village's attorney, Mark Burkland.

After reviewing the minutes, Lundeen said that while they "appear to contain all of the required elements ... more detailed minutes of closed meetings may aid in the type of governmental transparency the Act was intended to promote."

The Doings newspaper was less reserved in its assessment. In an editorial published Aug. 14, the paper ripped Village officials, calling the minutes "so vague ... they can hardly be called minutes."

"It's difficult to understand where La Grange village officials are coming from in their simultaneous denial of Freedom of Information requests and the specifics of closed-door meetings, while at the same time talking about how they run a transparent government," the editorial said. "It's clear their words don't match their actions."

The FOIA request referred to by the newspaper is one made May 23 by Thom Rae, publisher of everythinglagrange.com, for copies of documents discussed in a public workshop on theatre held May 19 by the Village board. The request was denied.

The Attorney General interceded Aug. 4 after receiving a complaint filed by Rae. The Village was expected to respond last week to its request for an explanation of the denial.

An earlier complaint by Rae, made following the April 21 closed session, prompted the Attorney General's inquiry regarding that meeting.

Attorney General to open new investigation related to theater documents village refuses to make public

The Illinois Attorney General's office today said it will launch a new investigation into the conduct of La Grange village officials involving the La Grange Theatre—this one focusing on the village's refusal to make public some documents related to its public discussions of whether to extend financial aid to the theater.

The Attorney General earlier this month concluded an investigation in which it determined that the La Grange board of trustees had violated the Open Meetings Act by failing to cite a proper exception before adjourning into a closed session April 21 to discuss the theater owners' finances.

The new inquiry was prompted by a complaint filed by Thom Rae, publisher of everythinglagrange.com, who said that village officials refused to provide documents he requested May 23 under the Freedom of Information Act.

Rae said among the documents in question were two reports commissioned by the village board to assist in their deliberations regarding loaning or granting money for infrastructure upgrades theater owners say are essential to ensure the facility's survival.

One document is a study conducted by Kane, McKenna & Associates of Chicago, "a financial services firm that specializes in municipal and economic development financing and planning services," according to the company's website.

Village officials asked the company to evaluate the business plan and financial condition of the theater's operations.

A second document officials would not release was a letter from the village's Chicago-based law firm, Holland Knight, outlining various scenarios under which the village might provide financial aid to the theater.

In denying Rae's request, Village Manager Robert Pilipiszyn said both documents were privileged  because they involved either communications between the village and its attorneys, pertained to the financing and marketing transactions of the village, or related to pending negotiations for the purchase or sale of real estate.

In his complaint to the Attorney General, Rae argued that both documents had been extensively cited in discussion during a public executive committee workshop held May 19 by the village board, thereby waiving any right to confidentiality.

"We in the audience at the workshop could hear the discussion, but there were gaps in our comprehension of what was involved because we could not see the documents being talked about," Rae later said.

Rae also said that one document the village did provide was a report Pilipiszyn sent to the board prior to its May 19 workshop. But that report was almost worthless, Rae said, as large portions of its contents had been heavily redacted, including a paragraph titled "Community Involvement."