JOLIET – The city is negotiating a deal that could give $400,000 and tax rebates to a private developer converting two downtown buildings into apartments.
City officials said the project fits what the city wants to see downtown – people living there.
However, developers who renovate buildings into apartments and condos can’t get enough money from bank loans to cover the costs of the projects, Joliet economic development director Steve Jones said.
Two other downtown developers face the same challenge, and the city might consider similar grants for those projects, Jones said.
“The motivation here is our downtown plan calls for multifamily (development),” Jones told the Joliet City Council Economic Development Committee on Thursday when he presented the plan.
The committee voted, 3-0, to authorize city staff to negotiate an agreement with developer Mike Petry, who has redeveloped other property downtown for residences. The agreement eventually would have to be approved by the City Council.
“If we’re going to be committed downtown, we’re going to be committed,” committee chairman Larry Hug said.
Mayor Bob O’Dekirk also expressed his support for the agreement with Petry.
“It’s really a nice building,” O’Dekirk said. “[Petry is] going to restore it as much as he can to its original condition.”
Petry is rehabilitating the Barber Building, a five-story, brick-and-stone structure at 66-74 N. Chicago St. and a neighboring three-story, brick building at 76 N. Chicago St. He plans to put 35 apartments in the two buildings and use the first floors for commercial space.
The agreement outlined Thursday would provide Petry with $250,000 from a downtown tax increment financing fund, which is funded with property tax dollars that otherwise would go to local government. He would get another $150,000 from the City Center Partnership, which is funded through a downtown business property tax that was expanded last year to include neighboring business corridors.
The city also would rebate property taxes from the project to reimburse eligible redevelopment costs.
At one time, the city considered granting a $950,000 loan to Petry, but that deal was pulled back.
The problem developers face, Jones said, is that the downtown redevelopment projects cost more than the value of the buildings, based on current rents downtown. Banks will not provide enough financing to cover the costs.
Petry could continue to redevelop the building without city money, but at a slower pace than what the city would like to see, Jones said, because Petry would have to generate money for the project as he moved tenants in and collected rent.
The city plans to put a timetable into the agreement to have apartments ready by June 2019, Jones said.