Pappas could get $2.5M in TIF funds for Mooney property development
DeKALB – Now that $2.5 million in tax increment finance money has been denied to developers trying to turn a hospital into a hotel, John Pappas is looking to the city to assist in a project to turn the old Mooney property into a mixed used residential and commercial retail space.
According to the agenda for Friday's Joint Review Board meeting, City Manager Bill Nicklas will propose $2.5 million in TIF funds from the tax increment finance district known as TIF 2 be instead awarded to Pappas Development.
"This would be for a project that promises much more return on investment," Nicklas said Wednesday, referring to the city council's decision Monday to terminate the preliminary incentive agreement for 145 Fisk LLC based on a lack of proven financial documentation.
"It's viable," Nicklas said of Pappas' new plan. "We have a developer that's proven that he can accomplish projects. It just seems to be an easy fit from where we sit."
When reached via phone Wednesday, Foti Pappas, vice president of development at Pappas Development, said he could not comment on the matter at this time.
On March 22, John Pappas and Heartland Real Estate Holdings entered a 90-day purchase and sale agreement for the properties at 204 N. Fourth St. and 423/420 Oak St. in DeKalb, what used to be the former Mooney dealership, the agenda shows. Nicklas said the 90-day window is to allow Pappas to determine whether he wants to move forward with a planned $13.8 million overhaul of the site. Pappas has asked for $3 million in TIF funds, more than what the city has available at this time.
Nicklas said the city could give the $2.5 million to the project, and the remaining $500,000 could come from future increment from TIF 3 once it becomes available.
"Long before I got here, the Mooney property was of interest for redevelopment," Nicklas said. "That was considered one of the key centers in the downtown area. It's for a long time been on the list and it's been at the top of the list because it's not going to be cheap to do it."
The site would be Pappas's third mixed-use space downtown. The existing dealership buildings would undergo complete demolition, and be rebuilt as two separate 56,000-square-foot buildings. Each building would include 10,000 square feet of commercial retail space on the ground floor, and 38 one-bedroom and two-bedroom executive suites on the upper floor. Each building would also have hospitality rooms, a fitness center, and outdoor terraces, the agenda shows.
Nicklas said he's seen rent rolls for Cornerstone DeKalb, which he said only has three out of 51 units vacant. Even though Plaza DeKalb, another mixed-use space, is not yet completed, the city manager said continued projects like this one are "elemental" to downtown redevelopment these days.
"It's all about foot traffic," he said. "What we don't have and they have in Geneva, St. Charles, Elburn, is the ready-at-hand population that could be half-a-million, a million, or more.
"In this town, we have a wide range of quality in our housing," Nicklas continued. "What we haven't had in the downtown area is a place for people who are on the lower end of the economic scale, graduate students who are just starting their careers, or people who have done a career and are just tired of mowing the lawn."
Nicklas said Pappas's site plans for the Mooney property include "a sea of parking" so no street-side parking will be needed.
According to the agenda, Pappas says the project would take two-and-a-half years to complete. Pappas has already presented the city's Community Development Department with a conceptual development plan, scheduled for a Planning and Zoning Commission review on May 22.