Those who say Pappas Development is getting rich on the public’s dime are looking at the situation entirely wrong.
Principal developer John Pappas, whose company has completed a mixed-use building in downtown DeKalb, is in the process of building a second and plans a third, is among the few people now investing in downtown.
In return, the city has subsidized some – but by no means all – of the cost of this work with millions in tax increment financing funds. The
$3 million the city may award to his latest plan would bring the total to almost $8 million.
What are taxpayers getting for their money? Redevelopment and revitalization of downtown DeKalb, along with an expanded tax base.
Pappas’ projects downtown include the Cornerstone building, a $7.5 million project that added about 55 apartments and retail space, and the under-construction Plaza DeKalb building, a
$6 million project that will add about 20 apartments and retail.
His latest plan is for a more than $13 million project to tear down a hulking former auto dealership building near Fourth and Locust streets, removing asbestos and other hazardous waste inside, and replace it with mixed-use apartment and commercial buildings. The City Council has agreed to provide another $3 million in tax increment financing funds for the project.
Redevelopment of blighted properties such as this is the purpose of tax increment financing.
Some question whether downtown DeKalb needs more apartments. It does.
Many buildings downtown were built as prime commercial space, some with a couple of apartments above. Anyone who wanted a highly visible storefront on Lincoln HIghway would pay for it, and that rent would cover much of the building maintenance and profit for the landlord. Commercial real estate is now a buyer’s market, and the landlords have less ability to consistently collect substantial rents from commercial tenants.
People, however, still need places to live, and many of them prefer walkable neighborhoods. Businesses, meanwhile, benefit from having a ready supply of customers. Pappas said he has found renters to fully lease the Cornerstone building and the demand exists for more.
The building now targeted for redevelopment, originally built as a barbed wire factory in the 19th century, has been foreclosed on. It has been vacant for years, and an auction earlier this year generated no bids.
If the redevelopment plan succeeds, both Pappas and DeKalb will benefit from putting the property back into productive use. The city is right to offer incentives to make that happen.