Breakdown of Council Concerns Re: Harley Clarke

Last November Council directed City staff to direct a 40-year-lease of the abandoned Harley Clarke property to the nonprofit Lake House and Gardens (ELHG). In March 2018, Council approved for consideration the lease, which required the nonprofit to raise $2M in 3 years and make code-related improvements.

On April 9, the Council reversed course and denied final authorization on the lease, based on the concerns outlined below.

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Quick Facts

  • The City, owns Harley Clarke property and land
  • Lease states City as Landlord, ELHG as Tenant
  • Lease was drafted by City staff, in negotiation with ELHG
  • The City is not providing funds for renovation or repair of Harley Clarke, per lease, and is not required to make building upgrades or to give additional financial support
  • City previously voted to operate property for recreation activities, allocating $250,000 for repairs
  • ELHG was the sole nonprofit in previous 7 years to propose leasing property for Public Use
  • City has not proposed alternative to ELHG lease other than building’s vacancy

Insurance / City’s Liability

The City’s liability is limited by the following:

  • City’s maximum deductible of its casualty insurance (indicated as $50,000)
  • City is not liable for costs exceeding 85% of property’s market value
  • In the above case, the City’s liability is limited to restoring Premises to code compliance
  • City is not liable for restoration of the interior upgrades or historical elements
  • City is not liable for damage, injury or casualty caused by the Tenant’s failure to keep Premises in repair, or for Tenant’s negligence or willful misconduct

The City may terminate the Lease if:

  • If Tenant does not satisfy insurance requirements (see below)
  • If Tenant fails to pay rent within 5 days of notice given
  • If Tenant does not comply with any of the contracted terms
  • Additionally, the City may recover from Tenant all of the it’s costs, charges and expenses, including the fees and costs of counsel, agents and other retained by Landlord

Tenant may terminate the Lease if:

Following Casualty Damage or Repairs:

  • The Premises cannot be fully repaired within 180 days
  • The Premises are damaged by a Casualty exceeding 33 percent of the reconstruction cost of the Premises as a whole
  • And in either case must waive all claims for improvements previously made to the property

Insurance Held by the City (Landlord)

  • City is self-insured up to $1.25M and maintains excess policies of commercial general liability insurance
  • City must maintain casualty insurance covering the Premises and any alterations, improvements, additions or changes made by the the City

Insurance Required to be Held by ELHG (Tenant), per Lease Agreement

  • ELHG must hold insurance policy acceptable to the City, with companies with a minimum of an A- rating
  • ELHG must additionally insure the City through general liability insurance
  • ELHG must hold worker’s compensation insurance
  • ELHG must hold insurance on fixtures and equipment, approved by the City, of at least 90% of replacement value of trade fixtures and personal property
  • ELHG must hold builder’s risk insurance for project improvements
  • ELHG contractors & subcontractors must hold asbestos abatement commercial general liability insurance for project improvements
  • ELHG may not claim interest or proceeds in any insurance settlement of loss where premiums are paid

Fundraising & Financial Viability

An estimated $660,000 is required to bring property to compliance and open for operation, according to City memo dated November 22, 2016

  • Lease agreement specifies fundraising benchmarks required to be met by Tenant, ELHG
  • City may cancel the lease if the Tenant fails to reach fundraising benchmarks

Donations & Pledges

ELHG has secured $100,000+ of donations and pledges for the project

As a project in partnership with the City, ELHG will not begin its capital campaign until after the City’s approval

Large donors typically require City’s approval prior to committing to projects in partnership with the City

Public Disclosure of Donor Names

  • As is standard for City fundraising, some of ELHG’s donations and pledges have been made by donors who’ve requested anonymity
  • ELHG has not disclosed the names of anonymous donors

Risk of Property Becoming Commercial Events Center

  • ELHG is prohibited by lease agreement to use premises as a Commercial Events Center
  • “Revenue-generating functions” are limited to funding of nonprofit’s operations in its uses for the public

Cost Overruns – Environmental Hazards (Asbestos)

The leases’ financial benchmarks are set with the presumption that restoration will expose presence of hazardous substances, such as asbestos

  • As such, City is not liable for these costs, nor overrun of these costs, in any amount
  • ELHG is solely liable, per lease agreement, for the associated costs and expenses of substance remediation (in accordance with applicable Environmental laws) of up to $150,000 excess of projected repair costs

Equity & Access

Three options exist in regard to proposals for use of the Harley Clarke mansion:

  1. Public Use: City’s lease to nonprofit for property renovation into community and environmental educational center, free and open to the public, with additional programming planned for District 65 students on topics such as the Great Lakes, the water cycle, Global warming, etc
  2. Sale for Private Use: City’s sale of property in the private market. Previous proposal for private use was as a Hotel
  3. Demolition: Landmarks Illinois announces Harley Clarke 4th Most Endangered Historic Properties in Illinois

ELHG has been the only nonprofit in the past seven years to submit a proposal to lease property for a public use, per City records

Evanston resident Carlis Sutton recounts the expulsion of his family from North Evanston in 1929.

Brief History of Exclusionary Practices of Northeast Evanston

African-American residents settled along Evanston’s lake front and surrounding area as early as the 1840s.

In the 1920s a real-estate boom led to the expulsion (via illegal housing restrictions, discriminatory practice ordinances and covenants in housing deeds) of the area’s nonwhite residents, concentrating the 5000 African-American residents into the west and south-central neighborhoods by 1930, according to Shorefront’s “North of Chicago” traveling exhibit and Chicago History.

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