Two months ago, St. Charles aldermen decided smaller was better if it meant the third phase of the long-delayed First Street project would be built. But on Monday, they learned big pays the bills -- mostly.
City staff members told aldermen the project must come as close to the size of the original plan as possible. If not, the new retail, condos and apartments won't generate enough profit for the city to pay back the $38 million of bond debt it has incurred on the project.
Finance Director Chris Minick said even in the best case scenario, St. Charles taxpayers will end up subsidizing some of the project. Minick said he is still working on the financial forecast for the project, so he was not ready to say exactly how much of a subsidy taxpayers would have to provide through the city's general fund.
That best case scenario came in the form of another new plan for Phase III. The plan retains the three buildings envisioned in the plan aldermen said they liked in August.
All three buildings would still have first-floor office/retail space. Two of the buildings would still have a total of 72 one- and two-bedroom apartments on the second, third and fourth floors.
It's the third building, adjacent to the river, that would see the changes. That building would now climb to five stories with 32 condos of 1,400 square feet each.
The original First Street plans called for five-story buildings with first-floor retail and office space on the second floors. There were only 61 total residential units, all condos, in the original plan.
The layout of the parking garage would also change to provide 120 public parking spaces and 228 total, including the underground parking for residents.
"I'm not a real big fan of five floors," Alderman Maureen Lewis said. "You got everyone on board with what your proposed (in August), and now it's, 'Oh, that's not going to happen.'"
Bob Rasmussen, the private developer involved with the project, said the fifth floor is needed to make the finances work.
"If you're going to have a five-story building, the one on the river is the one to do," Rasmussen said.
That's because enlarging either of the other two buildings would increase Rasmussen's construction costs. Problems financing the project in the down economy has been the major stumbling block to breaking ground for several years now.
Aldermen and Mayor Ray Rogina told Rasmussen they wanted to talk to a representative from the bank offering the financing before any final agreement is made.
Any failure to actually construct all parts of the project would leave the city in a major financial bind for the outstanding bonds. They come due in 2027.
Minick said in an interview that the only way taxpayers wouldn't end up subsidizing part of the project is for the state legislature to extend the life span of the tax increment finance district, which limits the tax money going to local governments and sends excess revenue back into the development.
"That might be difficult, but it's not unheard of," Minick said.
Aldermen will get a status update on Rasmussen's financing and construction plans in mid-November.