Elgin to spend $1.65M more on Tower Building; work to begin next week
It was either Elgin forking out more money or the death of a plan to redevelop the Tower Building downtown — and the city chose to invest in the future of the iconic structure.
City council members voted 6-2 Wednesday to contribute an additional $1.65 million — on top of $4.7 million already agreed upon — to the project by Capstone Development Group of St. Louis and developer Richard Souyoul of Chicago.
With the city's contribution in place, work will start next week to turn the vacant, 15-story building into 45 apartments, Capstone owner Bill Luchini said. Capstone has reached an agreement with the building's owner, the Stickling Foundation, to move forward with the purchase, he said.
The $16.6 million project must be done by year's end or it will lose an essential $2.6 million in state historic tax credits that expire in December, Luchini said.
“We have vetted out every possible solution,” he said, adding Capstone was not asking for any more than what it needs to get the project done. “Not a penny more.”
The city will use tax increment financing funds for the project. In a TIF district, property taxes going to local units of government are frozen for a number of years, and during that time, any additional tax revenues are funneled into improvements within the district.
Negotiations between Capstone and the Stickling Foundation began in 2014 and took longer than anticipated, partly due to lawsuits filed by a local downtown bar owner. Only one other developer has expressed real interest in the building in the last four years.
“We may never see another developer if this agreement is not approved,” Mayor David Kaptain said.
Councilwoman Rose Martinez agreed. “If we don't do anything quick, this whole project is going to fall apart — and it's going to be a shame,” she said.
The project initially was estimated at $13 million, including $8 million in construction costs, but in the last 18 months costs have increased by $3.6 million or so, officials said.
Councilmen John Prigge and Rich Dunne voted no. “It is TIF money that affects every single person downtown that owns property,” Prigge said. “That kind of bothers me.”
Dunne objected to giving public money to the Stickling Foundation, which has ignored the city's requests to make fire and other safety improvements since 2006, he said. Capstone is buying the building for $900,000.
Councilman John Steffen, a past board member for the foundation, abstained.
Marco Muscarello, owner of the now-closed Gasthaus Zur Linde bar, objected to the city's approval of the redevelopment and filed two lawsuits. A Kane County lawsuit was dismissed and Muscarello's appeal is pending before the Second District Appellate Court, which hasn't scheduled oral arguments yet. A federal lawsuit is due in court on April 26 for a status hearing before U.S. Judge Andrea R. Wood.
Pieces of facade have been falling off the Tower Building since late January. The city got a court order last week to install a protective canopy but couldn't demolish the building — a cost estimated at $2 million at least — until it meets the “open, dangerous and unsafe” standards required by state law, Corporation Counsel Bill Cogley said.
While much of the project's costs come from public dollars, including city money plus state and federal tax credits, the development will attract more people and investments to downtown, Councilman Toby Shaw said. City officials estimate it will bring $1.4 million in impact fees and taxes in the next 10 years.
Wednesday's was “a historic decision,” Councilman Terry Gavin said. “We won't know for 10, 15, or 20 years whether we made the right decision or the wrong decision.”
Building: Pieces of facade have been falling from building since January