The city of Elgin is planning to contribute $4.7 million to the redevelopment of the iconic downtown Elgin Tower Building into 45 market-rate apartments.
The city council's committee of the whole agreed Wednesday night to a development agreement with St. Louis-based Capstone Development Group in an 8-0 vote.
Chicago-based developer Richard Souyoul partnered with Capstone for the estimated $13 million project to gut-rehab the former office building -- which was condemned in May and now sits empty -- and turn it into an almost even number of one- and two-bedroom apartments.
Assistant City Manager Rick Kozal, who conducted most of the negotiations with the developers, called it an "action that will refine the fabric of the city for generations to come," he said.
The city would use Central Area tax increment financing district funds -- property taxes above a frozen amount for local governments -- for the project.
Capstone and Souyoul are well-versed in projects that call for historic preservation, such as the 1929 Tower Building, Kozal said.
Capstone owner Bill Luchini said the plan is to bring "the fantastic building" back its original grandeur.
"We're looking to be a good neighbor here in Elgin," he said.
The agreement states the building will have market-rate apartments for 25 years.
"I'm really excited to see us redeveloping this property," Councilwoman Tish Powell said.
"It's fair to say for most citizens we're happy you're here, and we've been waiting for you," Councilman John Prigge said.
Rent would range from $863 to $1,200 per month. The renovation will include "nice finishes" for cabinetry, lighting and other amenities, Luchini said.
The city would provide up to 55 reserved parking spaces in municipal lots at $30 per month.
The exterior of the building will be cleaned and will have new, "strategically placed" exterior lighting, Luchini said.
A market study didn't support having retail on the first floor, Luchini said. "It's the odd shape of the building that dictates kind of what we can do," he said.
The building will have a common meeting space, an exercise facility, a media room, a leasing office and storage for residents. The construction timeline is 12 to 14 months, he said.
Capstone might look into whether the cellphone towers on the roof can be removed, he said.
The building "once again will be a gem for the city of Elgin," Councilman Rich Dunne said.
Developers are budgeting $8 million for construction and expect to use about $4.6 million in federal and state historic tax credits.
Councilman John Steffen abstained from the vote. He said he's a past board member for the Stickling Foundation, which owns the Tower Building, and a current trustee for The Palmer Foundation, which contributed money to the Tower Building in the past.
Capstone has an option to buy the property from the Stickling Foundation for $1 million.
The agreement with the city states that if the final sale is less than $1 million, the city's contribution would be reduced by a commensurate amount.
As part of the 2014 budget, the city's general fund loaned $5 million to the Central Area TIF fund anticipating it would need to contribute at least $3.5 million to the redevelopment of the Tower Building. The TIF fund is scheduled to repay the loan over the next four years.