The Aurora City Council this week voted unanimously to increase incentives for redevelopment of the historic Keystone and Terminal buildings downtown.
Aldermen approved amendments to the redevelopment agreements for Urban Equity Properties, of Rockford, which is redeveloping the historic Keystone Building, 30 S. Stolp Ave., and the Terminal Building, Galena Boulevard and Broadway.
Officials with both the city and the developer have said the projects encountered higher costs related to the coronavirus pandemic during the past year and a half.
Mayor Richard Irvin said because Urban Equity wanted to stay in Aurora, finish the projects and continue operating them, it indicates the city and the company have a successful relationship.
“The relationship is important to (Urban Equity) and definitely important to the city of Aurora,” he said.
He pointed out that the projects are breathing new life into old buildings. In the case of the Terminal Building, it is a building whose upper floors have not been occupied for 70 years. They soon will be apartments.
The Keystone was a working building, but underutilized, the mayor said. That building soon will have 33 occupied apartment units and six retail units on the first floor.
Justin Fern, founding principal of Urban Equity Properties, said the relationship between the company and the city is such that “we’re hoping to move on our third project here in a year.”
Urban Equity acquired the Keystone and the Terminal, which are both on the National Register of Historic Places, in 2018, and in mid-2019, they struck the agreements that included equity from the company, with incentives from the city. The company spent only $1 to purchase the Terminal Building from the city, but Keystone was privately owned, and the company spent $1.3 million to buy it.
The pandemic affected pricing on labor and materials. It also affected the ability to get certain items, such as the necessary historic windows for the Terminal Building, because companies halted manufacturing at times, concerned about their workers.
Because some of the private money for the project was being raised by selling state and federal historic tax credits, the developers could not just close up and wait things out. There were deadlines to meet to get the credits, as well as seasonal work that had to be done.
At times, there were delays with getting necessary approvals from the state and federal governments because offices were closed due to the pandemic.
“No one was home,” said David Dibo, Aurora’s Economic Development director.
The Keystone Building went from being about a $6.5 million project to about a $10 million one, and the Terminal Building jumped from about $10.9 million to about $14.6 million, according to city officials.
The amendments to both agreements involve the city forgiving some loans and outright dropping interest on some of the loans that would be paid back.
In the Keystone Building, the city is putting in about $375,000 more than planned, but Urban Equity is kicking in $2.3 million more in equity, according to Martin Lyons, acting as an economic development specialist for the city. He was until recently the city’s chief financial officer, and developed the money side of the redevelopment agreements.
At the Terminal Building, Urban Equity is putting in $1.2 million more in equity, and deferring its general contractor fee of $612,702. The city is kicking in about $500,000 more in incentives, forgiving about $200,000 in interest.
The money the developers will have access to from tax increment financing districts on both properties will not change, officials said. In those cases, that money does not materialize until the developer creates something on the project.
John Curley, Aurora’s chief development officer, told aldermen this week that after inspecting the buildings, he could say the developer was truthful in saying how much has been completed in them.
The Terminal Building is about 81% finished, he said. The Keystone Building is 98% finished. The company already has begun leasing apartments there, and expects to have all units leased by October.
“We expect the Keystone to be issued its temporary certificate of occupancy next week,” Curley said.
