Illinois Business Journal - Caseyville gets green light on upscale development

With a letter of credit, nearly $31 million in tax increment financing and a nationally recognized home builder at the helm, a California developer has signaled a green light on the largest upscale residential and retail community yet in Southwestern Illinois.

Bakersfield, Calif.-based Sport Choice LLC - known for its recreational developments across the U.S. - is preparing to do what several other developers could not achieve: a $400 million, 480-acre, 625-home development in the village of Caseyville, population 4,200.

Known as Forest Lakes, the giant-scale community will span the lion's share of Caseyville, from Illinois Route 157 eastward to 159. Caseyville sits five minutes from four major interstates: 55 and 70, 64 and 255.

Caseyville Mayor George Chance said in his 18 years in office, this project is the biggest boost the tiny community has ever known.

"We've been trying to do this for about seven years and have watched other developers try but not succeed in it," said Chance, "but these guys are the real deal. These people (Sport Choice LLC) spent over a million dollars before the deal was done. They've already handed the village a check for $250,000 to reimburse us for engineering work and other things we had done before they (developer) even arrived."

Caseyville Sport Choice LLC chief executive officer Glen Hierlmeier and president Michael Egan said tree removal and massive grating of the property is expected to begin in early January. In mid December, the developer announced the home builders who will erect residences ranging from $275,000 to $1 million.

"We're extremely honored and excited to be working with the good team of people we've had involved in this effort already," Egan said. "The village has been wonderful and it really negotiated well for the residents of Caseyville."

Merrill Lynch, Allstate, Nuveen and Oppenheimer bought the TIF revenue bonds via A.G. Edwards.

Backing the project with a letter of credit are Wells Fargo and National City Bank of the Midwest. The letter of credit is the document guaranteeing the payment of the village of Caseyville's financial obligation, should the project not come to fruition as projected.

An original TIF agreement, adopted by the village in 1998, was revised and expanded - along with expansion of the TIF itself - to accommodate the new development. Village treasurer Rick Casey said Caseyville's ultimate tax increment will total approximately $87 million once the project is completed over the next five to 10 years.

This marks Sport Choice's first project in the Midwest.

Hierlmeier has more than 20 years' background in real estate consulting; as head of Calif.-based Castle & Cooke Homes Inc. and Castle & Cooke Development Corp., he led the development of five master-planned communities in Arizona, California and Florida.

Egan's credentials reflect 18 years' experience developing more than 13 turf farms across the U.S.; he currently holds four patents and has three pending.

Also a player in Forest Lakes is John Nicholson, co-managing principal of the Nicholson Co., a development and construction firm in Santa Clara Valley, Calif. Nicholson's company has established more than 25 real estate development partnerships.

Missouri-based American Heritage Homes, a mid-sized regional builder, is the project's main builder. Belleville-based Padgett Building & Remodeling Co. Inc. and Edwardsville-based Phelps Construction Inc. are also participating in the construction, according to Casey.

"We've been working on this for 18 months," said Sean Flower, president of American Heritage Homes. "The last nine months have been intense because we've faced a number of development issues."

Caseyville is the fourth municipality in Southwestern Illinois to host American Heritage's work. Belleville, Columbia and O'Fallon are also recipients of the company's product.

Flower said his company plans to build 170 units from the $200,000s and up, most of them to the south of the main parkway along with a few closer to the front entrance.

"A lot of times we work with developers who don't have specific ideas about how the lots should look," he said. "But in this community, we've had the privilege of being involved with Sport Choice much earlier on in the planning process. We were actually able to help design the lots, keeping the grades functional and yet beautiful, too. It's really neat."

The project's key players estimated that Forest Lakes will spur the creation of 300 to 400 jobs on site during the lengthy construction period, pumping more dollars into the local economies of Caseyville and bordering Collinsville.

Flower said the TIF was one of the big reasons American Heritage signed on.

"There has been a perception out there for some time that you shouldn't do a TIF for a residential base, but our feeling is that this (TIF) will drive Caseyville's future commercial base," he said. "By putting this residential TIF in place first, you're going to attract commercial activity that would not have been attracted otherwise. We're hoping other cities will see this TIF success and decide to do it," he added.

Mark Everett, manager of project engineer Burns & McDonnell Co. Inc.'s O'Fallon office, said the first major task will be to demolish all the buildings - many of them dilapidated - on the site, and to clear off abandoned homes. Large amounts of concrete, illegally dumped over the years, also need to be hauled off.

Project planner and architect Peckham Guyton Albers & Viets Inc. site designer Brian Yansen said the wide variance in elevation of Caseyville's future community - from zero to 180 feet - is making Forest Lakes an enjoyable yet formidable challenge.

"The plans call for 30 to 40 acres' worth of lakes that are larger than they need to be in order to fulfill their detention purpose," he said. "We're essentially leaving Canteen Creek as it is, and there will be a 50-foot corridor on either side of its banks devoted to wildlife and to flood protection."