Apartment plans for vacant DeKalb building get positive response

DeKALB – Members of the city’s Joint Review Board responded positively Friday to a new proposal to contribute $3 million in public funds to a nearly $14 million overhaul of the former Mooney auto-dealership property.

Now that $2.5 million in tax increment finance money has been denied to developers trying to turn a hospital into a hotel, Pappas Development LLC is looking to the city to assist in a $13.8 million project to turn the old Mooney property into a mixed-use residential and commercial retail space.

The DeKalb-based developer on March 22 entered a 90-day purchase and sale agreement for the properties at 204 N. Fourth St. and 423/420 Oak St. in DeKalb, which has been mostly vacant since 2002.

City Manager Bill Nicklas is proposing $2 million in funds from the TIF district known as TIF 2 be instead awarded to Pappas, and its principal, John Pappas, with an additional $1 million to come from TIF 3 surplus in 2020 and 2021.

Jim Mitchell, who said he represents the property owners of 145 Fisk Ave., questioned the City Council’s decision Monday to terminate the $2.5 million preliminary incentive agreement for the property, which led to the developers suing Nicklas.

“What’s the fate of 145 Fisk?” Mitchell asked. “Is someone going to come in with deep pockets? I don’t think so. Its fate is to die and rot in the ground.”

DeKalb Mayor Jerry Smith said the Mooney property could “add to the viability and visibility” of the area.

We can discuss all the merits or potential shortcomings of TIF all day long,” Smith said. “Personally, I appreciate the input, even the negative input. I would respectfully ask you to visualize if you can about how this community can improve itself in the weeks and months and years ahead. TIF can work and it can work well.”

Nicklas said Friday he will present the proposal to the Council as a consideration May 13.
"I stuck my neck out and made a proposal," Nicklas said of his decision to designate the $2.5 million elsewhere.

DeKalb Park District Executive Director Amy Doll asked Nicklas to clarify the legal justification for distributing the TIF money to other projects, as opposed to declaring it surplus and distributing it to the taxing bodies.

“There’s nothing in the TIF Act that says money ported for projects, if that project doesn’t happen, has to be surplussed back out,” Nicklas said. “Council has authority to invest it in property development. I’m looking to put it back to work.”

Peter Stefan, finance director for DeKalb County, read a statement on behalf of County Administrator Gary Hanson and DeKalb County Board Chairman Mark Pietrowski Jr. He said DeKalb County State’s Attorney Rick Amato and Pietrowski had the opportunity to speak on the matter after reading about it in the Daily Chronicle.

“In terms of individual decisions in how the TIF money is being spent, that has always been a city of DeKalb function,” Stefan read. “We have made a previous statement about the funds being returned to taxing bodies, and would still desire that, but acknowledge the city can make their own decision and pursue other projects.”

Kishwaukee College board chairman Bob Johnson said he spoke with college President Laurie Borowicz about the Mooney property.

“Our view is long-term is more important than short-term,” Johnson said. “The kind of return on investment that could be coming if this project comes to fruition would be much better for our college and maybe most taxing bodies long-term.”

Nicklas said current equalized assessed value estimates for what Pappas wants to do with the site would value the property at 16 times higher than its current EAV. Instead of bringing in about $36,000 in taxes every year, which Nicklas said are the current numbers, if Pappas’ $13.8 million project came to fruition, it could bring in an estimated $576,000 a year in property taxes.

Mark Eddington, district manager for the Kishwaukee Water Reclamation District, said the proposed redevelopment offers much more value to his organization, because they receive most of their revenue from user fees.

“The Mooney property as it is now is really providing us no revenue, or very small revenue,” Eddington said. “As it’s outlined here, that would be $20,000 to $25,000 a year in user fees. That would be a huge benefit for us.”