Elgin plans for worst case on Tower Building
If a lawsuit succeeds in stopping the proposed redevelopment of the Elgin Tower Building, the city of Elgin will at a minimum end up owning the project's design and architectural engineering plans.
The city council agreed Wednesday to a contingency plan of reimbursing Capstone Development Group for up to $121,600 in estimated costs for the plans. Capstone, in partnership with Chicago developer Richard Souyoul, wants to convert the 15-story empty building at 100 E. Chicago St. into 45 one- and two-bedroom apartments.
The city will reimburse Capstone only if the lawsuit prevents the developer from getting financing or marketing historic tax credits it expects to receive for the project, Assistant City Manager Rick Kozal said.
The funds would come from the city's Central Area Tax Increment Financing District, which also would pay for $4.7 million the city will contribute to the estimated $14 million project - if it gets done.
Marco Muscarello, owner of the Gasthaus Zur Linde bar at down the street from the Tower Building, filed the lawsuit in March, claiming the city engaged in illegal spot zoning and violated municipal code, the state constitution and its tax increment financing district rules when it approved conditional-use zoning for the project in January.
The lawsuit has no merit, according to Souyoul and city officials.
The design and engineering plans will address basics like the building's HVAC and mechanical systems, so they could be used by any other developer interested in a similar project, Kozal said.
"If push came to shove and for whatever reason, due to litigation, we did not move forward, we still have these plans and they would be reusable, or recyclable," Councilman Terry Gavin said. "I think that's a plus."
Councilman Rich Dunne pointed out the Tower Building is unique. "There's not much you can do with the tower with the way the tower is designed," he said.
Capstone plans to buy the building for $1 million. Without the lawsuit, Souyoul said, the closing would have taken place later this month or in early May.
A status hearing is scheduled for Friday. "Hopefully in a couple of months the lawsuit matter will be a little more clear," Souyoul said.
Meanwhile, the project should inch forward as much as possible, he said.
The state tax credits available to the project - as part of the River Edge redevelopment zone that includes Aurora, Rockford, Peoria and East St. Louis - are set to expire in Dec. 2016, Souyoul said.
Construction should start no later than August to make that deadline, he said.
A pending state bill would extend the state tax credits to 2022.