After demolishing a shopping center now down to Carson PirieScott & Co. as the lone tenant, Shaw Development would beginselling individual parcels to prospective owners, then building theelements of Fountain Square at Waukegan. Likely buyers, companypresident Dennis J. Stine says, could include restaurants, hotels,banks and office builders.

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While putting up $20 million in equity, Shaw Development Co.'sSDC Waukegan Venture LLC is seeking a tax increment financingpackage worth $30 million. In addition, the city is offering to buythe southernmost 32 acres of the site for $5.5 million for a useyet to be determined. Single-family homes is one possibility forthe land, which Chicago-based REIT AMLI Residential PropertiesTrust had eyed for multifamily rental development, which the citynixed.

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The Lake County Assessor's office pegs the market value ofLakehurst Shopping Center at less than $18 million, but 91% of thatvalue is in the land.

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"In basic terms, our plans is to start over with this property,"Shaw Development attorney Robert J. Pugliese tells the lakefrontcity's often skeptical community development commission Tuesdaynight. "There's a continuing downward spiral that's not abating.It's getting worse."

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While it may be less ambitious than local developer MartinTuohy's $800-million University Station vision, Shaw Development'splan gives the city, as well as the company, greater control overbuilding on the site, says Pugliese, an attorney with Lord BissellBrook.

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Former College of Lake County president Jack Adams, who wasinvolved with Tuohy's 2001 attempt to acquire the shopping centerfrom Jacobs Group, asked the commission for more time to present analternative proposal. He says three educational institutions arecommitted to taking 200,000 sf at the indoor mall, "with three morewaiting in the wings."

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Tuohy's plan that included education among office, condominiumand entertainment uses died when his group was unable to raiseequity, forfeiting earnest money after extensions.

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"I tell you we remain viable and are ready to go ahead," Adamssays.

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However, Pugliese tells GlobeSt.com Shaw Development Co. hasspoken to Tuohy, and the latter would be welcome to buy property inFountain Square of Waukegan.

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The community development commission postponed action until nextmonth, but members said they needed more time to study details of aplan received only in the last few days. Besides the $30-millionTIF request and Shaw Development's land sale to the city, theproject's forecasted property tax and sales tax revenues will bescrutinized.

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While the location near US 41 and the Tri-State Tollway areplusses, Lakehurst is in Warren Township. As a result, schools inneighboring Gurnee, rather than Waukegan, will benefit fromproperty taxes. As a result, some commission members are lookingfor more sales tax proceeds.

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"For the city to benefit, you need sales tax revenue," saysPeter Couvall.

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For now, Richard E. Jacobs Group is paying $537,956 this year inproperty taxes, according to county records.

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Commission chairman John Della Valle was miffed the plan went tothe city council first, rather than following normalprocedures.

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"I'm all for getting the dead fish out of there, because it'sbeen a blight on the city," Della Valle says. "I just don't wantthe city to get the short end of the deal."

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Meanwhile, Michael Melius wonders if the potential buyers willbe a significant improvement over Lakehurst's current situation."It's commercial out there now, and it ain't working," he says."Commercial use doesn't appear to work. Why would the free-standingstores work?"

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Later phases will include land on the western edge of theshopping center, which consists of free-standing Jewel grocery andAce hardware stores. Leases prevent them from being part of theinitial phase, Pugliesi says.

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