ACTION REQUESTED:
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Communication from the City Manager with a Request to ADOPT an ORDINANCE Approving the PROJECT 812 DEVELOPMENT LLC REDEVELOPMENT AGREEMENT. (Council District 1)
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BACKGROUND: Peoria 812 Development LLC, a development team from Chicago led by David Dubin and Naganathan Guru, is seeking to redevelop 812 SW Washington (Project 812). The Project consists of converting a 7 story, approximately 94,000 square foot, brick warehouse (14,000 sf. floor plates) building into 124 market rate apartment units. The building was formerly known as the “Churchill Drug Company” building, and is currently a certified historic structure and listed individually on the National Register of Historic Places. It is currently known as the “Builders Warehouse” building.
The Developers, Dubin & Guru, have been working collaboratively for over 18 years, and developed over 25 projects predominantly in Chicago but also in Evanston, IL and Duluth, MN. Developments were primarily mixed-used and have ranged from $3.0 to $53 million. Most notably the Shoemaker Lofts (175 units) and Shops of Shoemaker Square (30,000 sf) in Chicago received a Landmark Award for Preservation excellence from the City of Chicago in 2008. With respect to Project 812, the Developer has been in communication with the City since January of 2014, when they secured a purchase agreement on the property.
Project 812 represents the largest redevelopment project in the Warehouse District with 124 residential units at a project cost of over $21 million, of which $17.7 million (83%) would be a TIF eligible expense. The proposed financing for Project 812 will include debt and equity split of 50% each. Of the equity portion the Developer plans to secure Federal and State Historical Tax Credits in the amount of $7.3 million, representing 34% of the entire project cost. The 124 market rate units will consist of a mixture of studios, 1 and 2 bedroom units, with the majority being 1-bedroom. Per City code, Project 812 will require significant parking (140 parking spaces within 800 feet per City code). Since adequate parking is not within a reasonable distance of the Project, the Developer requested a collaborative parking solution for which the City would make available on a fee basis.
FINANCIAL IMPACT: Generally, developments in TIF districts are presented with a 50% rebate of incremental property taxes for the remaining life of the TIF, but can request more if they can demonstrate a need to close a financial gap. A Redevelopment Agreement was mutually prepared to close a financial gap and address the parking requirement for this Project.
The Developer has requested a 50% rebate of incremental property taxes annually for the life of the TIF with continued payments should the TIF life be extended. City staff reviewed the project financials and agree the level of incentive is warranted.
The proposed parking solution would require the City to upgrade its existing parking lot across the street at 815 SW Washington and make available, via a lease, 50 dedicated parking spaces to Developer. In addition, the City would provide at least 90 on-street, overnight-parking passes on a fee basis to tenants. To maximize the number of parking spaces, Council will be asked to waive the 30 foot setback requirement upon redevelopment of the parking lot. A financial analysis of the collaborative parking solution showed that TIF revenues and parking fees generated from this Project would offset the initial cost and annual maintenance cost.
The economic impact of adding 124 market rate apartments in the Warehouse District would support existing businesses and attract new ones to downtown, which would add additional jobs and tax revenues to the City.
NEIGHBORHOOD CONCERNS: Redevelopment of buildings in the Warehouse District is a widely held community goal. Parking will continue to be of concern and will need to be closely managed to accommodate residents, businesses, and visitors in the Downtown area.
IMPACT IF APPROVED: The Project would proceed and the fiscal and economic impact would be significant and create more opportunity for retail stores and restaurants in Downtown.
IMPACT IF DENIED: The Project would be delayed or cancelled, and the building may continue to be underutilized and/or deteriorate if not redeveloped.
ALTERNATIVES: Council could direct staff to adjust the terms of the Redevelopment Agreement.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Vibrant Downtown: Riverfront/ Central Business District/ Warehouse District
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Reinvest in neighborhoods.
DEPARTMENT: City Manager's Office