There’s a lot to like – and one big thing not to like – in the proposal for a new four-story, 51-unit luxury apartment building near the intersection of First Street and Lincoln Highway in downtown DeKalb.
Developer John Pappas’ “Cornerstone DeKalb” plan would solve the lingering problem of having a large vacant building at the entrance to downtown. It also would replace four aging buildings whose value mostly has fallen or stagnated over the past 30 years.
The project would create a new, attractive building with new retail space, including a restaurant, and add full-time residents to the downtown area, boosting the customer base for other area businesses. The residents would also have their own dedicated parking area, a problem that has derailed other residential proposals in the area.
The project also presumably would end the city’s quest to have the vacant building demolished – which is estimated to cost more than $400,000.
Instead, Pappas wants the city to contribute $3 million in tax increment financing funds.
According to data supplied by the city, two of the four properties Pappas plans to demolish have declined in value since 1985, and only one has seen any significant appreciation. Replacing them with new apartments and retail space would improve property values and raise rental values.
City officials expect that replacing the old buildings with a new one would generate enough property tax revenue to recoup the $3 million investment in less than a decade, a long-view estimate that seems plausible.
The plan is to split the city’s contribution into two parts, $1.5 million to help with building acquisition, site work and remediation, and a later $1.5 million contribution to offset construction costs.
City estimates that the redevelopment would generate $500,000 to $900,000 in TIF revenue if completed on schedule. An outside consultant has evaluated the project and considers a $3 million incentive reasonable, according to city documents.
The only thing not to like is that it’s a squeeze play. The city is being asked to make a $3 million investment in a project that it will have about three weeks to consider.
According to city documents, the due diligence period on the contracts to buy the buildings – purchases – expires in early March. So the city will embark on a hasty approval process, with a zoning hearing on the plan set for today, and the council to consider the plan Feb. 27.
There is a lot of public financing at stake in this deal, not to mention the prestige of downtown DeKalb. It is a once-in-a-generation type of project, and it feels wrong to be asked to consider it under an artificially imposed deadline.
This plan presents a rare opportunity for DeKalb, but even under an expedited timeline, it requires thorough evaluation. It’s too important to rush through the process without making sure it’s right for the city.