CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
title
Pass the ordinance approving a second amendment to the site development agreement for the resubdivided South Forty Property
body
DEPARTMENT: Transportation, Engineering and Development
SUBMITTED BY: Jennifer Louden, Director of TED
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
The City is in the process of working with Gorman and Life Time Fitness (LTF) to complete certain work associated with the resubdivided portion of the City’s South Forty property located at the southeast corner of Route 59 and 103rd Street.
The Resubdivision resulted in the creation of Lot 1, which was sold to LTF in July of this year for construction of a fitness facility. At closing, the City received approximately $6.6 million from LTF for the purchase price of its land and share of the stormwater management system and for reimbursement for certain utility improvements previously made by the City.
The Resubdivision also resulted in the creation of Lot 2 of which the City retains ownership; Lot 3 is under contract for sale to a subsidiary of Gorman known as Tower Court Naperville, LLC (or “TCN”) to be developed for affordable housing for seniors and individuals with intellectual and developmental disabilities; and Outlot A, which will become part of a shared stormwater management system for Lots 1-3 and well as for two City-owned lots located on the east side of Tower Court which house Fire Station #6 and a Water Utilities water tank.
On April 15, 2025, the City Council passed an ordinance approving a Site Development Agreement with LTF for the resubdivided South Forty Property. The Site Development Agreement is needed to implement the consolidated stormwater management system by which each property owner funds an agreed upon share of the full site mass grading, construction of the shared stormwater detention basin and related facilities, installation of a lift station with associated storm sewer utilities, and construction of a north-south shared access drive from the new access off of Illinois Route 59 along the western edge of the property.
LTF has assumed responsibility for construction of the improvements required by the Site Development Agreement since they are proceeding with construction on Lot 1 with the intent of opening their fitness facility by late 2026.
On June 17, 2025, the City Council passed an ordinance approving an amendment to the site development agreement to account for shared design and construction costs not previously included in the cost summary set forth on Exhibit D of the site development agreement which are necessary to complete the full scope of work. The original costs provided by LTF were missing an actual contractor bid cost, contractor soft costs, permit fees, and the electrical service fee for the stormwater pond lift station. The City’s cost increase for the work totaled $133,729.66, with future reimbursement from TCN in the amount of $83,035.40. These additional costs are reflected on Exhibits D1 and D2 of the Second Amendment to the Site Development and Escrow Agreement.
DISCUSSION:
Construction Costs:
As construction progressed on the South Forty property, several unforeseen complications arose, resulting in the need for additional work to complete the scope outlined in the Site Development Agreement.
A significant factor contributing to these complications has been the delay in the property closing and initiation of construction activities on the TCN property, due to ongoing environmental site remediation and required reviews by the Illinois Environmental Protection Agency (IEPA). The City had committed to obtaining a Remedial Action Plan (RAP) and a No Further Remediation (NFR) letter from the IEPA to support the TCN development and its related funding sources. The City is still in the process of securing an approved RAP, anticipated by mid-December 2025. This would enable construction to begin on the TCN site in the second quarter of 2026, with the NFR letter required prior to occupancy.
Due to these environmental constraints, construction activities on both the TCN property and portions of the shared detention basin have been restricted. As a result, alternative and less efficient construction methods had to be employed to avoid work in these areas, leading to increased time and costs.
Additional factors contributing to the need for change orders and added costs include:
1. Soil Conditions:
o Widespread poor soil conditions across the South Forty site required over-excavation and soil stabilization efforts.
2. Excess Topsoil:
o A greater-than-expected amount of topsoil was discovered during topsoil stripping activities. To help manage and reduce the excess, the following additional work items were implemented:
§ Enlarging the berm along the southern property line.
§ Over-excavating the detention basin to create usable structural fill while burying excess topsoil in its place.
o A significant volume of topsoil remains and will need to be hauled off-site and disposed of, further adding to the cost.
3. Other Items:
o Additional tree removal to accommodate berm enlargement.
o Adjustments to water and sanitary manholes/vaults.
o Remediation of unsuitable soils in multiple areas.
o Surety and costs required for the contractor.
o Additional engineering services to finalize the site design and facilitate project close-out.
The City’s cost increase totals $562,274.59, with possible reimbursement from TCN for Lot 3. These additional costs are detailed on Exhibits D1 and D2 of the Second Amendment of the Site Development and Escrow Agreement (which Agreement is attached as Exhibit C).
Amendment of Section 7 of the Site Development Agreement:
In addition, LTF and TCN agreed to the amendment of Section 7 of the Site Development and Escrow Agreement to eliminate City owned parcels to the east of Tower Court, which benefit from the stormwater management system, from having any obligation for ongoing stormwater management system operational costs or costs of maintenance, repair and reconstruction.
Staff recommends approval of the Second Amendment to the Site Development and Escrow Agreement attached as Exhibit C.
FISCAL IMPACT:
The City and LTF will pay the increased costs for additional work required on the South Forty property with possible future reimbursement from TCN for Lot 3. While these costs were not contemplated at the outset of the project, they can be fully funded through the proceeds of the $6.6 million land sale to LTF.