ACTION REQUESTED:
Title
Communication from the City Manager with a Request for the Following:
A. ADOPT an ORDINANCE Amending the City of Peoria 2021 REVISED ANNUAL BUDGET Relating to the Use of the Central Business District TIF Fund Balance to Reimburse OSF HEALTHCARE SYSTEM and 124 ADAMS PROPERTY HOLDINGS, LLC up to $1.25 Million for Public Improvements to the Corners of FULTON STREET, and ADAMS STREET, and WASHINGTON STREET; and,
B. APPROVE the FIRST AMENDMENT to the REVISED REDEVELOPMENT AGREEMENT and PARKING DECK LEASE with OSF HEALTHCARE SYSTEM and 124 SW ADAMS PROPERTY HOLDING, LLC.
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BACKGROUND: On August 27, 2019, the City of Peoria approved a revised redevelopment agreement with OSF Healthcare Systems (OSF).
OSF Healthcare Systems (OSF) and Caterpillar have formed 124 SW Adams LLC to redevelop the Block and Kuhl department store building, built in 1905, into the OSF Ministry Headquarters. The estimated cost of the project is $127 million The OSF Ministry Headquarters will consist of collaborative administrative office space housing medical professionals, attorneys, financial professionals, and C-suite officers, among others. In total, approximately 700 OSF Mission Partners (employees) will occupy and utilize the former Block and Kuhl Building to provide support services for OSF HealthCare hospitals and outpatient centers throughout the Midwest. The Project will also include site amenities to benefit OSF Mission Partners and the Downtown public. The former Caterpillar Merchandise Center will be programmed with a public facing coffee shop. The former A&P grocery store at the corner of Washington and Fulton will be programmed with a public facing restaurant. Redevelopment of the former Block and Kuhl Building created more than 300 construction jobs. It is anticipated that OSF Mission Partners will provide an impact of $2 million per year to Downtown Peoria through increased economic activity. Construction of the project will commence in 2019. OSF Healthcare plans to complete construction of the project by December 31, 2022.
The revised redevelopment agreement contemplated $127 million of investment by OSF Healthcare. As part of that agreement, $1 million was anticipated to be spent on public improvements around the block. As construction has commenced, the City has determined that the corner of Adams and Fulton needs to be modified to accommodate the conversion to two-way traffic. Further, and that due to the staging of construction, it may be advantageous for OSF to finance the planned reconstruction of the southwest bound lanes of Washington Street from Main to Fulton as part of their construction activities. The Washington Street improvements are currently planned for 2024.
The attached amendment to the revised redevelopment agreement would treat these additional public improvements as part of the project to be designed and/or constructed by the OSF, with the costs (up to $1.25 million) to be reimbursed by the City. The funds would come from the Central Business District TIF.
The balance of the above block is owned by the OSF Healthcare and would still be part of future negotiations between the City and OSF Healthcare regarding a mixed-use development on the balance of the block to be completed within the next 3-5 years.
FINANCIAL IMPACT: The estimated investment by OSF in the building will be $127 million. The City will see the portion of Washington Street adjacent to the OSF project improved 2 years ahead of schedule. The Downtown TIF has sufficient funds to repay OSF for the planned improvements.
NEIGHBORHOOD CONCERNS: The OSF redevelopment is a significant improvement to the Central Business District.
IMPACT IF APPROVED: OSF will make the additional public improvements.
IMPACT IF DENIED: Washington Street will have to wait until 2024 to be improved.
ALTERNATIVES: N/A
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2017 - 2032 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Financially Sound City
2. Grow Peoria
3. Beautiful Peoria
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Grow employers and jobs.
2. Invest in our infrastructure and transportation.
3. Reinvest in neighborhoods.
DEPARTMENT: City Manager's Office