St. Charles on verge of new First Street deal with same developer

After a 12-year relationship, St. Charles officials broke up with First Street LLC in April hoping to lure a new development team for the crown jewel project of the city's downtown. Despite the breakup, First Street LLC never moved out. And now city officials are poised to give the relationship another try.

A deal that will come before the city council in February would see First Street LLC become the principal developer of the site again.

The deal would look very similar to the proposal First Street LLC pitched the city about a year ago with one key exception: The main building would rise four stories. It would have retail on the first floor and three floors of office space.

That office space would contain the new headquarters of ALE Solutions. The company currently operates out of cramped quarters at 1 Illinois Ave., where the business's parking woes nearly fueled the departure of the company from the city earlier this year.

Mayor Ray Rogina said he wouldn't exactly call it kissing and making up with First Street LLC. He said there were lingering "ramifications" from not giving First Street LLC another extension to work on the project that would be difficult to work out if the city moved on to another developer.

Rogina would not get into the details of those ramifications, but language in the original contracts indicate there may have been some dispute about handing over ownership of some of the land involved in the project.

Rogina said he believes the city council will be impressed with the new version of First Street LLC's plan. It includes much more architectural detail and eye-pleasing renderings of the new buildings.

"They've already made a presentation to the plan commission that I was very impressed with," Rogina said. "I'm optimistic that this may finally be what we're looking for down there. I'm pretty confident that (the developers) will be able to rent those retail spaces pretty easily. I never thought for a second that, if the economy started to thaw, this town wouldn't be able to attract new business."

Another view

But not everyone sees the plan as a vision that attracts new business.

Local businessman and former mayoral candidate John Rabchuk has pushed city officials to embrace the Fox River as the key attraction in the downtown. That includes activities on the river, such as white water rafting, and building customers for those activities and existing businesses by adding more housing.

Rabchuk said the pending deal with First Street LLC will have "a negative impact for sure" on active use of the river. He believes residents and businesses would much prefer a Millennium Park-type space on the river to the two-story parking garage envisioned in First Street LLC's plan.

"They are hitting the wrong side of the customer," Rabchuk said. "They are creating more retail space, but not creating any demand for the retail. You have to create a reason to bring people into the downtown. We've got empty retail space up the kazoo in the downtown already."

There is another financial decision associated with the pending deal that may also have its detractors. It involves re-engineering a the tax increment finance district involved on the property and surrounding area.

A TIF district functions by the city borrowing money through bonds and giving the cash to a developer to offset construction costs. The new property tax money generated by the improvements then goes to pay off the bonds, rather than to local governments.

The existing TIF is part of the reason local officials are pushing to get development on the site as soon as possible. If all development died, local taxpayers would be on the hook for more than $30 million.

The new plan maintains the existing TIF, established in the early 2000s. The TIF would have expired in 2027, but the new deal essentially refinances the TIF to extend the expiration date to 2038.

In addition, the geographic area to the east of First Street is being detached from the TIF. At the same time, a new TIF district is created to the east of First Street extending out to the block that contains the Arcada Theater, the block across the street from the theater, the riverside plaza area and the block behind the Arcada.

During a meeting of local taxing bodies to discuss the creation of the new TIF district, St. Charles Unit District 303 officials voted against the TIF. Meanwhile, officials from the St. Charles Park District abstained from the vote.