City of Evanston's Exclusivity Agreement Regarding the New Civic Center Lease (909 Davis)

Today, we venture from FOIA to the Open Meetings Act (from FOIAGRAS to OMAKASE?)

FOIAGRAS is a free newsletter run by Tom Hayden (FOIA GRAS LLC) that explores various topics in local Evanston Governance. I publish and share all my data and reports. Subscribing is free, so please subscribe or share. Email (tom@foiagras.com) or comment with issues or mistakes.

---

Anyone who has purchased a house or worked with a real estate agent knows that the most shady part of the process is the exclusivity contract. Before an agent will work with you, they make you sign a contract, binding you into an exclusive relationship for buying and selling with them. Here’s the one I stupidly signed in 2015.¹

The theory is that the agent will help you find a property for “free”, will show you listings, print things off the MLS, drive you around, kiss your ass, and in exchange, they will take a cut of everything at the end.

I find these contracts to be exploitative for a number of reasons:

• They take advantage of the buyer’s urgency in finding and purchasing a property.

• Buyers don’t have a complete set of information on fair commissions, so when you’re looking at the contract, it is hard or impossible to evaluate whether you are getting a fair deal.

• They incentive agents to care more about closing the deal than getting the best price for the buyers. I believe this to be especially true on the sale of the property.

I believe that this system is partially responsible for the rapid inflation in home prices, especially in places like Evanston because it incentivizes the agents to most fast instead of acting in their buyer/seller’s best interest. In fact, the Supreme Court just found that brokerages have been illegally colluding on contracts like this for years.

909 Davis Street

Now suppose you are the City of Evanston. I guess a lot of folks, particularly some building staff, don’t like the current City Hall. So in 2021, the City kicks off a feasibility study to figure something out.

• June 2021: The City of Evanston issues the Request for Proposal (RFP) for the Civic Center and Police/Fire Headquarters Relocation Feasibility Study

• October 2021: The RFP for the Civic Center and Police/Fire Headquarters Relocation Feasibility Study is awarded to AECOM. The total cost for this phase is $367,249.30.

• June 2022: Approval of Change Order No. 2 for the Civic Center and Police/Fire Headquarters Relocation Feasibility Study, adding $31,025.41 to the contract, increasing the overall amount to $398,274.71.

• January 2024: Delivery of the final AECOM Reports to the public. You can view the short slide deck here or the longer report here. Neither report spends much time talking about 909 Davis - they mostly consist of plans to build, although 909 Davis is detailed in the “Alternatives Section”

• January 2024: City Council votes to authorize the City Manager to start the process of negotiating the move to 909 Davis Street with a 15 year lease. It passes 6-3.

• February 2024: Lots of stuff happening, including debates over a 10 year lease, complaints from the finance committee, and letters to the editor.

OK so the city spends all this money on the feasibility report but ultimately decides that they want to rent space at 909 Davis. If you’re not familiar, 909 Davis is the building that is wedged between the Davis L stop the Davis Metra stop. It was recently bought by a New Jersey investor for $28 million in January 2023.

The City’s Exclusivity Agreement

Hidden during this whole process is a note from the October 16, 2023 meeting minutes. You can read it below.

I’ll spare you the details but the Open Meetings Act exemption they cite 2(a)(c)5 permits governments to discuss real estate transactions in closed session. The intent is so people don’t listen to the city’s negotiations in public and then front-run them to drive up prices.²

The next day, on October 17, 2023, the city manager executed an exclusivity agreement with Jones Lang Lasalle. As far as I am aware, there is or was no discussion in public regarding this exclusivity agreement.³

What’s in the exclusivity agreement? Essentially, the City of Evanston is agreeing to pay a commission to JLL in the case the current Civic Center is sold and even if it is sold by another broker!

Building Disposition: In the event of a disposition transaction that involves a procuring broker, Client shall pay a fee to JLL in the amount of six percent (6%) of gross sales proceeds. This fee shall be split between JLL and procuring broker and JLL shall be responsible for paying procuring broker once payment has been received from Client. Procuring broker shall be defined as anyone other than Chris Cummins and Steven Spinell of JLL. In the event of a transaction where Chris Cummins and Steven Spinell of JLL are the procuring broker, Client shall pay a fee in the amount of five percent (5%) of gross sales proceeds. In the event of a transaction that doesn’t involve a procuring broker, Client shall pay a fee in the amount of five percent (5%) of gross proceeds. Fee shall be due and payable at the time of closing.

My understanding of this agreement is that the City elected that essentially no matter what happens, we will give JLL at least 5% of the sale of the old Civic Center sales. This is some wild stuff and could be a huge windfall for JLL and the broker who signed the agreement in July 2023.⁴

I reached out to the City yesterday and received the following response;

"The agreement with JLL was signed by the City Manager on October 17, 2023, in accordance with the Evanston City Code, which authorizes the City Manager to sign agreements on behalf of the City for amounts under $25,000. Since the agreement with JLL does not involve City funds, it was within the City Manager's purview to execute the agreement without prior approval from the City Council. However, it is important to note that in the event of any sale of City property and the associated fees, the Evanston City Council will have the final approval in an open session. Similarly, any decision to lease or purchase a property would be taken in an open public session.

I disagree with the City - while this doesn’t involve city funds now but it certainly involves city funds later. Just like me in 2015, the city signed a crappy exclusivity agreement with a real estate broker. Not only that, they did it entirely outside the view of the public.

Open Meetings Act

So is this a violation of the Open Meetings Act?

I believe it is, for a few reasons:

• City Council had a closed session meeting to discuss real estate on October 16, 2023. The exclusivity agreement was signed by the City Manager the very next day.

• The city is correct that this transaction doesn’t involve city funds right now, however it does involved quite a bit of city funds later on. City Hall sits on a huge valuable piece of property, without a doubt 5% is going to add up to more than $25,000.

• The City is right that they will have to approve the transaction in public, but this is a part of it! I don’t exactly see how you can remove that later on. You can’t exactly say “Oh yeah, we didn’t mean to sign that exclusivity agreement”⁵

I will probably file a complaint with my friends at the Illinois Attorney General Public Access Counselor. I’m still waiting for their resolution on 2 FOIA request disputes that are now over a year old, so I’m not hopeful it will accomplish much.

So where are we at now?

Tonight’s Special Meeting

There’s a special City Council meeting tonight. The Evanston Roundtable usually has better coverage of meetings than I do. My understanding is that they’re going to consider two things, given that they already voted in favor of the move:

• Can they reconsider the lease - a shorter term?

• Can they reconsider other factors about the lease, including the exclusivity agreement.

This is going to sound crazy but I think they need to step back and actually read the $398,274.71 report that they bought from AECOM before signing a lease agreement for 15 years. It’s a decent study that took three years and lays out a ton of viable options that are available to the city, probably better for the taxpayers, and don’t involve enriching the New Jersey investors that own 909 Davis. Evanston is a wealthy town, we can afford to own instead of rent.

Update

I received the following information from the City on 2/22 at 1pm.

"After an extensive public engagement process, if the City Council decided to sell the Civic Center, the City would conduct an RFP process and would not utilize a broker. The RFP process would result in the city negotiating directly with a developer, not a developer broker agent.  The city’s intention with the JLL agreement was to leverage its expertise for assistance in identifying and negotiating office space to lease. In addition, the agreement expires on July 14, 2024, and also offers the City an option to terminate at any point with 30 days written notice.

The contract with JLL, while it provides for a commission if JLL procured a buyer to the City, any contract for such a sale, including the commission for JLL would first have to be approved by the City Council in open session. At this time, the City has not made any determination on the next steps for 2100 Ridge Avenue."

1. I was not selling a property at the time - moving from an apartment to a condo, so this particular one does not include terms regarding sale.

2. Exemption 2(a)(c)5 under the Illinois Open Meetings Act (5 ILCS 120/) allows a public body to hold closed meetings to consider the purchase or lease of real property for the use of the public body. Additionally, meetings held for the purpose of discussing whether a particular parcel should be acquired are also permitted to be closed under this exemption.

3. This exclusivity agreement was signed a full 6 months before the city even received the deliverables from AECOM. It’s not clear to me how anyone could be in a position to sign this agreement, without even having the final deliverables on options.

4. This is interesting in it’s own right - if he signed it back in July, were there already plans being made in private?

5. I tried that, it doesn’t work!