DeKALB – DeKalb leaders gave the initial nod Monday to approve nearly $1 million in redevelopment incentives to redevelop the former DeKalb Clinic Annex and the former Small’s Furniture store.
DeKalb aldermen voted unanimously on the tax increment financing proposals from John Pappas, the owner of Pappas Development, and Bill and Joy McMahon, the owners of Lincoln Inn Restaurant.
The proposals even won the support of 1st Ward Alderman David Jacobson, a vocal critic of how tax increment financing is used.
“I am a big supporter of this plan,” Jacobson said about the McMahons’ proposal. “I have been an advocate of certain guidelines on how we spend our TIF dollars … this project meets all of those things. This project is why we need a TIF.”
The McMahons are requesting a $330,000 forgivable TIF loan, and a $25,000 architectural improvement program loan, so they can redevelop the old DeKalb Clinic Annex at 302 Grove St. into a banquet hall. They purchased the building at auction March 21. Pappas is requesting a $628,000 forgivable TIF loan to redevelop the Small’s Furniture property at 2211 Sycamore Road into either a restaurant or a retail center.
It is the same location Darden Restaurants planned to open an Olive Garden before the chain backed out.
The aldermen discussed the requests during the last business meeting of the current City Council. Any votes on the proposals would come in May, after newly elected Aldermen Bill Finucane, Robert Snow and Mayor John Rey are sworn in.
The McMahons hope to open a banquet hall called Faranda’s by September. Bill McMahon said the need for a banquet hall in DeKalb. While he’s confident he will find success, McMahon highlighted that he faces a lot of hurdles at first.
“While the upfront costs are there, the profits for this are going to be slow,” said McMahon, noting the $1.7 million price tag on the project.
The development Pappas wants to do is also costly. Counting the land costs, redeveloping the Small’s Furniture store would cost $4.2 million. Pappas said he will purchase the property regardless of what the city does, but he needs economic incentives to redevelop it.
“I am purchasing the property,” Pappas said. “I am willing to invest in the property and do whatever it takes to make it happen. Whatever happens … the city gets their money back.”
Each of the TIF loans have clawback provisions in them. If Pappas or the McMahons fail to recoup the loan amount through sales and property tax revenue within a certain period of time, the business owners have to repay the city.
Kristen Lash, 3rd Ward Alderwoman, indicated her reluctance to support the project without knowing what stores or restaurants will go there. However, it did not stop her from voting yes on the project.
The incentive money would come from TIF funds, a special tax mechanism that local governments use to redevelop blighted properties.
In these districts, the amount of property tax that local taxing bodies receive is frozen at a base level for 23 years. As the property grows in value over time, the increase in property tax payments over the base level is captured in a special fund that can be used for economic development and public improvements.