Champaign City Council backs incentives for 'M2 on Neil' mixed-use development
(News-Gazette, The (Champaign-Urbana, IL) (KRT) Via Thomson Dialog NewsEdge) Dec. 13--CHAMPAIGN City council members decided Tuesday night that $5.5 million in financial incentives isn't too big a price to pay for a new downtown anchor building.
In an 8-0 vote, council members generally approved the outlines of a development agreement for the proposed $40 million "M2 on Neil" project.
A final development agreement is expected to come before the city council in January, with a groundbreaking on the 230,000-square-foot, nine- to 10-story building targeted for March 15. Completion of the project is expected in early 2009.
City staff will negotiate with One Main Development officials over the next month to hammer out the final details of a development agreement.
One Main Development is headed by Chief Executive Officer Jon "Cody" Sokolski, who developed the One Main building downtown. He, Mike Royse and Mary Ann Royse are the primary investors in the project, which would be at the northwest corner of Neil and Church streets.
M2 on Neil will consist of retail on the first floor and office and commercial space on floors two through five. Some 50 residential condominiums will be located on floors six through nine.
"We do believe this project will be the tipping point in our downtown revitalization," Sokolski said. "We are convinced Champaign is ready and eager for the next phase."
Council members seemed excited about the project.
Council member Tom Bruno said that while some people are questioning the financial incentives being given to "wealthy developers," the better question to ask is if the community will be better off 20 years from now from entering into such a public-private partnership.
"I would much rather being hearing this debate than what the Kankakee City Council, the Decatur City Council or the Danville City Council are hearing," Bruno said. "They're not up at 11:30 (p.m.) at night because of a ($40 million) downtown project."
Tuesday night's study session, with several agenda items, lasted until nearly midnight.
Council member Michael La Due noted that 20 years ago, "downtown was just about dead. Downtown was not considered a destination.
"Now we're taking this to a new level ... by making our downtown not only a destination, but also a point of departure for people who want to live there," he said.
Even with the incentives, the developers anticipate only a 10 percent rate of return from the project, according to the city.
"There are deficiencies in our market that make a public-private partnership necessary," Sokolski said.
Council member Ken Pirok sounded one of the few notes of caution, saying his initial reaction was that providing $5.5 million in incentives to get $6 million in tax increment financing income from the project over the next 11 years didn't impress him. M2 on Neil will be located in the downtown tax increment financing district.
City incentives for the project would include:
--$3.7 million in direct incentive payments from the tax increment financing district.
--$600,000 in payments for purchasing the Piano People property at 322 N. Randolph St.
--$850,000 in abated state and local sales taxes by extending the city enterprise zone to the project.
--Turning over city parking lots on Neil Street between Hill and Church streets at no cost, while the property is valued at $400,000.
Pirok said that "initially, that didn't sound like a very good deal to me."
But he said the sales tax abatements are mostly coming from the state and paying $600,000 for the Piano People property, the actual cost for the developers, is reasonable.
Subtracting those two items, "that's not a horrible deal," Pirok said. "It's a net positive for the city. I don't, however, remember our giving that good a deal to any other developer."
Sokolski is the husband of council member Marci Dodds, who announced she would not participate or vote in council debate on the project. She left the council meeting room while the project was discussed.
Besides the financial incentives, the city is also agreeing to provide, at its own cost, an $11 million, 500-space parking garage to serve the development and the downtown area. Parking meter rates would increase to 75 cents an hour in the core downtown and 50 cents an hour nearby to partially pay for the garage.
To see more of The News-Gazette, or to subscribe to the newspaper, go to http://www.news-gazette.com.
Copyright (c) 2006, The News-Gazette, Champaign-Urbana, Ill.
Distributed by McClatchy-Tribune Business News.
For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
[ Back To Cloud Computing 's Homepage ]