Council backs Pappas’ plan to raze former DeKalb city hall and build 78 luxury apartments on site

DeKALB – The DeKalb City Council on Monday expressed strong support of the Pappas Development plan to demolish the former city hall and turn it into 78 high-end apartments in four separate buildings.

The complex – dubbed Johann Executive Suites after the famed Baron Johann DeKalb, a french man who joined the Revolutionary War and served under George Washington – would cost $7.5 million to build on the site after the DeKalb Municipal Building, 200 S. Fourth St. is demolished, documents show. Under the proposal, presented Monday by Foti Pappas, Vice President of Pappas Development, the former city hall property would be purchase by Pappas for $600,000, and come with a tax increment finance request of $750,000, demolished by Dec. 31 and completed by the end of 2022.

If approved, Johann Executive Suites would be the fourth high-end apartment complex to be built by Pappas, the owner and developer of three mixed-use luxury apartment complexes at Cornerstone DeKalb, Plaza DeKalb and Agora Tower in downtown DeKalb.

The suites, like those at Cornerstone, would be fully furnished, include utilities and wi-fi as well as a gym, yoga studio, bike storage, hospitality room and outdoor covered picnic areas for each building.

Foti Pappas said Cornerstone and Plaza DeKalb are rented to capacity, and he often loses renters out to Geneva or St. Charles due to lack of demand for that type of housing in DeKalb.

"We always knew this market was in DeKalb, there's a lot of multi-family but not luxury-family," Pappas said. "The new high-end Facebook employees, candy factor employees, there's a lot more industry here than we sometimes give ourselves credit for. We're losing them to Geneva and surrounding areas."

Pappas said contrary to popular opinion, the Pappas apartments aren't serving college students, but rather younger professionals looking for a turn-key place to live.

"We're not relying on the university," he said. "I would say on a good day, were 20%, visiting professor from another country, or a graduate student that's done with 15 roommates. The rest of it is just professionals. They don't bring their cars with, they don't bring their families with, they don't want to deal with furniture shopping, calling ComEd, Nicor, almost turn-key hotel style amenity."

He said DeKalb has too few luxury apartment units, rather than too many.

“Back to the thought of having too many luxury units, we’re at 100%, sometimes 110% occupancy,” Pappas said. “With the new Facebook announcement, I’m having to turn away way three to four people a day. And again, I’m not losing them to somebody across town. I’m losing them to Geneva, Naperville.” Two other developers, Steve Irving of Irving Construction Company and Jim Mason of Mason Properties, also presented development plans Monday as council deliberated. The city’s preference is for Pappas’ plan, citing the return on investment as critical during financially burdened times due to the COVID-19 pandemic, said City Manager Bill Nicklas.

"The Pappas family has been able to provide in the last couple of years what no one thought was provable, that the proof is in what they have generated at Cornerstone and Plaza," Nicklas said. "I didn't see it two to three years ago. It's palpable, it's very clear. When you see next week how we stand financially, you'll see how important return on investment is."

Though council expressed support for Pappas' plan, they also praised Irving and Mason's, heralding the interest by all to redevelop downtown DeKalb and aid in the city's revitalization, in light of recent industry booms brought on by Ferrara Candy Company and Facebook announcing major developments on the city's south side.

"My proposal is to provide the American Dream for existing an new residents of DeKalb," Irving said.

He spoke about the need for affordable single-family homes in DeKalb over high-end rentals that workers at Ferrara Candy Company or other manufacturing industries may not be able to afford.

"The average employee at the candy company, Target, Nestle, Goodyear, 3M, these are people who want to live here, but can they live here?" Irving said. "Their average pay [is] less than $40,000 a year. When was the last time DeKalb invested in affordable single family housing?"

Irving's plan would demilish the existing building and create 18 detached, single-story, single family homes for sale on the land. Nine of the homes would face South Fourth Street and the other nine would face South Fifth Street, with detached two-car garages. Irving’s proposal would buy the 2.5-acre property for $9,000 and include a TIF request of $1.6 million to be paid out over three years, documents show. According to city documents, the look of the homes would be similar to Irving’s DeKalb/Pond/Fisk development project from the 1990s.

Mason’s proposal – which includes an amended purchase offer of $600,000 he said Monday, and a TIF request of $636,000 for roof replacement, excavation of paving and installation for new utilities, upgrading and repairing the HVAC system and landscaping – is the only one that does not include a demolition of the building. Nicklas has said a demolition would be the city’s preference because of the age and condition of the building.

Mason argued the city doesn't need more apartment complexes the size Pappas was proposing, and said he'd advertise his Mason Executive Suites to doctors and lawyers.

"They will be only for families, not for students," Mason said. "And my cost will be $1.6 million. If I don't get it rented in two years, I'll tear it down and put 11 new townhouses on the street and on the east side at my expense. What I'm offering is 22 units of the finest construction you can see and I want to save the city for the people of DeKalb."

Council is set to vote on the plans at an upcoming city council meeting.

“The numbers here are really promising,” said Ward 1 Alderman Carolyn Morris, referring to Pappas’ plan. “We have seen that higher-end market opening up and that it’s definitely an attractive market. When you look at the purchase price, the TIF amount, the value upon build-out, the EAV upon build-out, it’s a no-brainer. This is the wisest investment choice that we could make with the tax dollars that we are entrusted with managing.”