Old DeKalb Municipal Building demolition begins, paves way for new Pappas luxury apartments

DeKALB – Demolition began for the city of DeKalb’s old municipal building at 200 S. Fourth St. on Monday and is expected to continue in the coming days, said Foti Pappas, vice-president of Pappas Development.

Pappas said Monday the demolition is expected to last “all week” and that construction completion is anticipated for “late 2022.”

Pappas said the property development company is “thrilled” and “excited” for the demolition to begin and is “looking forward to getting this moving.”

“We know it’ll be another great addition to the area,” Pappas said.

DeKalb City Manager Bill Nicklas said underground work – including upsizing water and sewer mains and removing city fiber network lines – was underway about a month and a half ago. He said that work “has been going in a steady fashion” and the fence around the property’s perimeter went up “a couple of weeks ago” before actual demolition began Monday.

“And it’s going pretty quickly,” Nicklas said.

Known as Johann Executive Suites, the $7.5 million development received the City Council’s blessing, along with a $750,000 tax increment finance incentive, in 2020. The building was sold to Pappas Development for $600,000 about a year ago.

According to a Monday social media post from city of DeKalb, the revitalization project “returned the property to the tax rolls” as a result of the property sale to Pappas. Nicklas said “it’s the first time” that property has been on tax rolls “since the 1960s.”

“While the municipal building served the city well for more than 50 years, it needed extensive repairs,” city officials wrote in the Monday post. “In 2013, the repairs were estimated at more than $3 million. Overhauling the heating and cooling systems alone was expected to cost $1.1 million.”

The update comes after the DeKalb City Council unanimously approved the redevelopment agreement for Pappas to demolish the former city hall and turn it into 78 high-end apartments in multiple buildings during the council’s Oct. 26, 2020 meeting.

City officials “struggled with the question of what to do about the municipal building since at least 2011,” according to the social media post. In 2019, the City Council agreed to move City Hall to the historic Nehring Building at 164 East Lincoln Highway.

“A far less costly option than repairing the municipal building or constructing a new City Hall,” city officials wrote in the post.

City officials wrote that, under an agreement with Pappas, “a forgivable TIF loan for the project must be repaid with new tax revenue.” Nicklas said that “all TIF loans are forgivable” if the EAV, or equalized assessed value, “created by project meets the original proposal” and Pappas would owe money for the loan if the expected EAV isn’t reached.

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Crews began demolition of the former DeKalb Municipal Building, the site of the City of DeKalb's government on Monday, Sept. 13, 2021 along South Fourth Street. The site was sold to DeKalb-based Pappas Development and will soon be turned into a residential rental complex called Johann Executive Suites. (Kelsey Rettke)

According to city documents, the development’s projected market value is $5,311,974 “and an estimated EAV of $1,770,658 upon completion.”

“At full build-out, the project is expected to generate an aggregate property tax of $210,000 per year,” the city documents state.

Nicklas said Pappas originally planned for the project to include four buildings, but it has since turned into three. He said Pappas previously anticipated the old municipal building to be demolished by Dec. 31, 2020.

“I think the reinvestment in that neighborhood is welcomed and the redevelopment will bring new value and new residences that will be very comfortable for a range of people, a range of ages, a range of lifestyles,” Nicklas said. “And right near downtown, too.”