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DeKalb City Council hears overview of downtown development

DeKalb City Council hears overview of downtown development

DeKALB – Many remain optimistic that a plan to redevelop several downtown buildings, including the vacant Otto’s nightclub building, could be a transformative project for the community, although some raised concerns of its overall effect during Monday’s City Council meeting.

The $7.5 million project, dubbed Cornerstone DeKalb, calls for the city to contribute $3 million in tax increment financing funds to demolish buildings at 122, 124 and 112-118 E. Lincoln Highway and 122 S. First St. to make way for a four-story apartment building with commercial space on the first floor.

John Pappas, the principal developer behind the plan, said he believes there is a market for this type of project in downtown DeKalb.

“I’ve never seen the city more pro-business than I have in the last year or year and a half,” Pappas said. “I want to give something back, and redeveloping DeKalb would be amazing. I would like to be the guy that can make a difference at that intersection.”

The plan is to demolish the buildings on Lincoln Highway first to build the apartment building that would feature 51 fully furnished single-bedroom units with washers and dryers.

Once the building is completed, the First Street property, which holds Barb City Bagels, would be torn down to create a parking area for apartment tenants. This would allow Barb City Bagels to operate until its new location within the commercial area of the apartment building is complete.

The Otto’s building at 112-118 E. Lincoln Highway has been uninhabitable for three years after it was flooded by a burst overhead sprinkler pipe. The building has suffered substantial flood damage and has asbestos and mold issues.

The city filed a petition in October asking a judge to order the owner of the building to either remediate or demolish the property, or allow the city to level it.

City Manager Anne Marie Gaura said the Otto’s building must come down sooner or later, and asked if it would be better to have an empty lot or a project that could have a domino effect of development in the downtown area.

In the first year after its completion, the new building could generate more than $60,000 in sales taxes and $157,000 to $256,000 in property taxes, DeKalb Economic Development Planner Jason Michnick estimated.

Also, by having 51 residential units with rents estimated at $950 a month for tenants, Michnick said that there could be another $1.1 million to $2.3 million of annual income going toward downtown businesses.

Michael Embrey, an April 4 mayoral candidate, voiced concerns that the project could cut into the profits of other area restaurants and from local property owners who could lose tenants to one of the 51 new units.

He recommended that the council not rush into a decision on the project.

“I really don’t question the merit of the project, but the timing,” Embrey said.

First Ward Alderman Dave Jacobson doubted the transformational potential of the project. He said similar investments have been unable to increase values of DeKalb properties over the past 30 years.

“The reality is that when you do spot developments and hope it’s going to change the overall picture of the landscape, often you don’t get the results you intended or expected,” Jacobson said. “To bill it as a transformational project is a bit premature.”

The city’s Planning and Zoning Commission will hold a public hearing on the redevelopment plan at 6 p.m. Wednesday at the DeKalb Municipal Building, 200 S. Fourth St.

DeKalb Mayor John Rey said that depending on the outcome of the hearing, the council may rule on moving the project forward during its next meeting Feb. 27.

Pappas owns the property at 124 E. Lincoln Highway and has purchase contracts on the others. He hopes to consolidate all of the buildings by early March, before the due diligence period of the contracts expires.

OUTBOX – Timeline

Wednesday: Public hearing on redevelopment
Feb. 27: City Council meeting to approve moving forward
30 days after council approval: Move forward demolition of Lincoln properties and construction of apartment complex
Eight to 10 months later: Apartment building completed, start demolition of First Street property and building of surface parking, expected to take about a week.

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