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No Doubt

By Ted Gaty · May 14, 2026
No Doubt

This is Part III of the series evaluating Economic Revitalization and the Hometown Deal

Part I: https://engagenorthbrook.com/blog/f/stepping-up-standing-by

Part II: https://engagenorthbrook.com/blog/f/a-closer-look-at-the-hometown-deal

 

At my first company, we had a philosophy that everyone deserved the benefit of the doubt. A partner used to remind us, though, that the benefit of the doubt ends when there is no longer any doubt.

I've run out of doubt.

In Parts I and II of this series, I worked hard to be fair. When the Hometown Coffee deal was announced and the boardroom filled with angry residents, I pushed back against the loudest critiques. I presented the financial mechanics and modeled the scenarios. I defended the structure — a creative, interest-bearing loan that protected taxpayer dollars, held Hometown accountable, and was genuinely better than anything the Village could earn parking the same restricted surplus dollars elsewhere. There was upside benefit and downside protection.

I said it was a good deal. I said the Board deserved credit for trying something new. People told me I was wrong, naive and even borderline crazy.

Under the original agreement, Hometown would be loaned $1.5M for renovation work on the long vacant Katz Eye Care building. They would be allowed to reduce the principal by the amount of sales tax they generated and would pay 6% annually on the remaining principal. The money was sourced from excess reserves in the General Fund, which could only be used for one-time investments and not general operations. To access the capital, Hometown was supposed to start construction by July 2025 and be open no later than December 31, 2025.

Neither happened.

Instead, the agreement has been amended twice, without any meaningful scrutiny.

The first amendment came on December 9th, nearly six months after the agreement should have been nullified. Village staff presented this as a natural adjustment so that Hometown could take advantage of enhancements to the Village Code. The amendment, approved on the Consent Agenda with no discussion, extended the construction and opening deadlines by roughly one year.

The second was last month, shortly after Hometown announced they would be opening a new location in Hinsdale. They approached Village staff and indicated that their business was doing well and so they no longer needed the $1.5M loan upfront. Apparently, their business was doing well enough to turn down the loan, but not well enough to turn down the rebate. That amendment was also initially placed on the Consent Agenda.

To the Board's credit, someone pulled it off for discussion. Village staff did a brief presentation and then opened it to the Board for comments and questions. Unfortunately, not one trustee used that opportunity to dig in.

One trustee immediately declared full speed ahead. Three trustees expressed surprise that this had come back to them at all but quickly came to grips with it and expressed relief that the Village no longer was assuming the risk of extending the money upfront. One expressed admiration that she could not find parking over the weekend at Hometown Glenview, as if a crowded street in Glenview was the solution to our economic questions in Northbrook. One praised the business for its integrity in turning down the loan, without questioning how that integrity did not extend to the need for the continued sales tax rebate. The same Trustee then asked about hours of operation. The President closed by praising staff for protecting the Village's tax dollars. The Board voted unanimously to pass the amendment.

To put this in perspective, Village staff had originally estimated that Hometown would generate between $60–80K in annual sales tax for Northbrook. Under the initial agreement, at the low end, that translates to Hometown paying us $918K in total interest with a $600K balloon payment at the end. In this scenario, the interest payments would exceed the sales tax generation in each of the first eight years of the agreement. At the high end, Hometown would have paid $774K in interest with a $300K balloon payment.

What is interesting is that Glenview projected their larger, better located Hometown to generate less annual revenue than Northbrook staff projected for our location. If we use Glenview's experience as a more conservative benchmark, the annual sales tax generation would be $50K.

In this scenario, interest payments would actually exceed sales tax for thirteen years — generating nearly $990K in overall interest and a $750K balloon payment at the end.

Put simply, not only was this an excellent return for $1.5M of taxpayer money which could only be spent on one-time investments, it also provided direct motivation for Hometown to drive as much traffic to the Northbrook store as soon as possible. We also would have gotten a refurbished building at the north end of our downtown and had control of that building should Hometown not meet its obligation.

I continue to maintain that this was an excellent deal for us.

Now, the loan is gone, the stream of interest payments is gone, the guaranty is gone, and the security interest is gone. What remains is only a promise to rebate up to $1.5 million in future sales tax over the next 15 years.

And our Board was doing virtual high fives like this was somehow a win for Northbrook?

Nobody asked why, if the operator was doing so well that the upfront capital is no longer needed, the sales tax rebate is still necessary.

Nobody asked what kind of return we would typically get on reserve funds that could only be used for one-time investments, like this one.

Nobody noted that the dynamics had changed — Bean Bar was now open after self-funding renovations. Were we now risking simply cannibalizing sales tax revenue from that business as well as Georgie V's and Leonidas with even average performance?

Nobody asked what success now looked like under the new agreement, without the downside protections previously in place.

Nobody raised the idea of making corresponding changes to the rebate structure, perhaps implementing a tiered approach similar to what the Village uses with car dealerships, to better protect Northbrook's interests.

Nobody asked what would happen if the Board declined to pass the amendment and held the operator to the deal they had already amended once before.

I know the Board hates the perception that decisions are made behind closed doors. Yet that perception is clearly prevalent. The number one answer on the BerryDunn Social Pinpoint Community Survey — asking what barriers might prevent residents from fully engaging in Village life — was perceived partisanship, closed-door decisions, and an unresponsive board.

It is discussions like the one they had about Hometown Coffee on April 28th that cement that perception.

This was in stark contrast to the two meetings that led up to the initial vote in 2024, where every trustee spoke at length. One trustee was explicit that he had been a firm no until the week before the vote, when the strengthened loan terms convinced him the Village's interests were protected. The outcome may have felt predetermined then, and perhaps the critical thinking lacked rigor, but at least they spoke at length and seemed to wrestle with their decision. They made specific commitments to restaurant owners sitting in the audience about incentive programs, roundtables, and support that would follow. With the exception of the streetscape project, those commitments have not materialized, and seem to have been forgotten.

In fairness to the Board, Village staff presented the latest amendment in the agenda packet as follows:

"As the existing property currently generates no sales tax revenue for the Village, this amended and restated incentive agreement provides the same sales tax rebate as previously approved and removes the loan provision. This will have no negative impact to the Village's cash flow projections in the adopted FY27 budget."

It is hard to understand how a memo outlining a fundamental restructuring of a $1.5M agreement makes no mention of the total economic impact to the Village, nor of the removal of protections that some Trustees were so proud to have baked into the original agreement.

Equally striking is that the FY27 budget — which indicated that $1M of the loan would be paid out in FY26 — carried no corresponding expectation for loan repayments, which would have started one year after the first disbursement.

The reality that nobody wanted to say out loud — but that we all now know — is that Village leadership firmly believes Northbrook needs Hometown Coffee more than Hometown Coffee needs us. Why Hometown signed the deal they did to begin with is beyond me. After all, we don't have the density that their other locations have and we are not a natural destination for surrounding communities. Eighteen months later, it should be clear to all that having Hometown Coffee in Northbrook is the cornerstone of our overall Downtown Revitalization plan — obviously they would need a deal that removes all the risk for them.

Of course we were going to do whatever they asked us to.

And yes, perhaps Bean Bar is on a short-term lease in a shopping center that is likely to be redeveloped. At the same time, their owners might simply be looking at this location as a small investment in a prototype to prove the concept works — and judging by the traffic every time I go in, it does. If the property is redeveloped, the question is whether they replant their flag here in Northbrook or take it to communities they find more welcoming. Given the very public statements the owners made in 2024 and what appears to be no effort by Village leadership to mend those fences since, it seems doubtful they would choose to re-establish here.

At the same time, why would Hometown stop with this request and not ask for more? After the way staff and the Board applauded a move that incinerated every Village protection, it is hard to imagine we won't see requests for more concessions. And while Hometown is quite popular, it is worth reminding ourselves that they still have only four stores and are hardly a can't-miss brand.

In the end, as I have written about, I have serious financial concerns for Northbrook over the next ten years. The least painful remedy is significant growth in our sales tax base — both in absolute dollars and in its composition — and downtown revitalization is an essential component of doing this. The only way this latest adjustment works for Northbrook is if Hometown pulls a significant number of patrons from outside the Village — enough to more than offset whatever sales it cannibalizes from Bean Bar, Georgie V's and Leonidas.

While I am incredibly appreciative of the time each trustee gives to their role — and I do believe they are earnest and genuine public servants who want what is best for Northbrook — my confidence is very low that we will see the analysis, transparency, and critical thinking necessary to drive the results we need.

The Grainger property is a far larger and more consequential decision — and the President has publicly promised we will make money on it. I genuinely hope we do, and I hope we have chosen a developer who can execute on the project. Details have been very light so far, but I have my doubts about whether the due diligence has been comprehensive or whether the project is headed in the right direction.

I hope I am wrong about that, and about the latest amendment to the Hometown deal. What is clear to me is that this Board is not going to change their approach on their own. My hope is that more residents get involved — especially with four seats up for grabs in the April 2027 election.

 

Sources & Further Reading

Meeting Recordings (Village of Northbrook Website)

  • August 27, 2024 Board Meeting — Hometown Coffee first introduced; public comment. [Link] — Hometown discussion begins at approximately [0:25:59]
  • November 12, 2024 Board Meeting — ESC presentation and final vote on original agreement. [Link] — ESC presentation begins at approximately [0:31:00]; Hometown vote at approximately [1:02:00]
  • December 9, 2025 Board Meeting — First Amendment approved on Consent Agenda. [Link] — Consent Agenda item at approximately [0:44:59]
  • April 28, 2026 Board Meeting — Second Amendment discussion and vote. [Link] — Hometown discussion begins at approximately [1:30:00]

Documents (Village of Northbrook Website)