cover
TO: Mayor Richard C. Irvin
FROM: David Dibo, Executive Director, Mayor’s Office of Economic Development
Alex Minnella, Senior Planner, Mayor’s Office of Economic Development
Martin Lyons, Economic Development Consultant, Mayor's Office of Economic
Development
DATE: January 27, 2025
SUBJECT:
A Resolution authorizing a Redevelopment Agreement (RDA) between the City of Aurora and JH Real Estate Partners, LLC (JH) for the redevelopment of the property located at 62 S Broadway, commonly known as the Franz building, and the vacant lot located at 66 S Broadway.
PURPOSE:
The RDA will facilitate JH plans to redevelop the formerly known Frantz building at 62 S Broadway into a mixed-use building composed of ten brand-new market rate apartments, and a brand-new restaurant on the ground floor of the building, with an outdoor patio on the vacant lot.
The RDA codifies the commitments from JH that trigger City incentives that will be repaid to the City as described below
.
BACKGROUND:
The City, with the intent of divesting vacant surplus properties, on March 31, 2024 published a Request for Qualifications (RFQ) attached herein. The RFQ sought experienced residential and commercial developers willing to enter into a public-private partnership to repurpose a defined real estate asset for retail, restaurants, apartments and other uses that could complement and capitalize on their location in the heart of downtown Aurora.
The RFQ process required substantial work to qualify for participation including the submission of plans, costs, and projections. While a number of verbal inquiries were received, no other applicant was willing to invest the resources that JH Real Estate Partners, LLC (JH) did to present the vision for Frantz that was supported by extensive due diligence. As a result, JH, whose managing members are Jay Punukollu and Harish Ananthapadmanabhan was the compelling choice. JH is a known experienced developer which has successfully taken on the long vacant Hobbs challenge to much acclaim residential leasing success. JH has also proven records of successful restaurants reassuring Aurora downtown is a regional destination.
From the City’s standpoint, we have a rare opportunity to fill a demand and repopulate Downtown, reactivate a vacant building and an empty lot on the Southend of Broadway corridor; gateway to Downtown.
JH, differently than the model applied to Hobbs, will be solely the landlord and the catalyst for a new restaurant tenant to occupy the ground floor
.
DISCUSSION:
The combined development is comprised of approximately 15,558 square feet at Frantz located at 62 S Broadway, and approximately 5,821 square feet at the vacant parcels to the south, addressed 66 S Broadway. The redevelopment plan calls for 10 residential units above the ground floor, with a combined above grade retail space of about 5,186 square feet. Limited residential parking will be made available through a parking agreement with COA, on the vacant site addressed 54 S Broadway.
COA owns the Franz building and has had title for almost 30 years after the gym was closed. The building is currently valued at $6,000 although this does not include the extraordinary (and partially unknown) costs of stabilizing the old building. The City plans on donating the building to the developer as part of the bundle of rights and obligations laid out in the RDA. This donation will occur after all building working drawings have been completed, building permits have been approved and financing has been verified. The timing of the City’s incentives has been calibrated to dovetail a successful outcome.
The total funding package contains the following:
1) private equity in the amount of $964,887
2) Developer’s loan in the amount of $2,100,000
3) Historic Tax Credits in the amount of $2,005,651
4) Deferral of their development Fee of $ 507,054
5) 100% of the increment in a newly created Tax Increment Financing district (TIF).
JH has noted that their other downtown apartments have no students. This said this agreement provides that should one student reside at the address, then 10% of tax increment will be distributed to all taxing bodies, and if 2 or more students reside at the address then 20% of the tax increment will be distributed to all the taxing bodies.
There is no upfront City contribution or financial obligation for this project. Reimbursements to the developer for item number 5 above shall come from a proposed new TIF district for the development. The reimbursements will be limited to the incremental property tax revenue generated by the Franz Development over the life of the proposed TIF District or until the incentive cap is reached, whichever occurs sooner.
COA carefully reviewed the development team and would not greenlight the development until it satisfied itself that the team had the wherewithal to complete this complex project. Aside from JH, the development team includes Studio GWA, an architectural, design and planning firm that has proven its expertise and technical acumen to tackle the before mention and known Hobb’s project; and Brick and Birch Construction (a full-service construction company with historic restoration experience). Together with JH’s financial and entrepreneurial resources, this team possesses the construction, architectural and historic expertise warranted by this prominent development
IMPACT STATEMENT:
The residential units will complement the current landscape of housing stock and fill a proven gap. JH have actively recruited restaurant users that will expand dining choices downtown and help service existing and new residents and visitors. It will help anchor the southern sector of the downtown area and set the stage for new developments as the 100 N Broadway project (DAC), Frantz residential and Aurora National bank building are being redeveloped. Sales and Food and beverage taxes will increase. There will be a positive spillover for the emerging development on Broadway. The Paramount, the Venue and other locales will be able to increase and maintain their audience.
RECOMMENDATIONS:
Staff recommend approval of the resolution authorizing a Redevelopment Agreement (RDA) between the City of Aurora and JH Real Estate Partners, LLC (JH) for the redevelopment of the property located at 62 S Broadway, commonly known as the Frantz building, and the vacant lot located at 66 S Broadway.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution authorizing a Redevelopment Agreement (RDA) between the City of Aurora and JH Real Estate Partners, LLC (JH) for the redevelopment of the property located at 62 S Broadway, commonly known as the Franz building, and the vacant lot located at 66 S Broadway.
body
WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, JH Real Estate Partners LLC (JH) has approached the City with a proposal for the development of the City owned properties located at 62 and 66 S Broadway, respectively a vacant building and a vacant lot into ten (10) market rate apartments; an outdoor patio and landscaped area; and
WHEREAS, the subject properties at 62, 66 S Broadway are blighted, vacant and underutilized; and
WHEREAS, the City finds that 62, 66 S Broadway will not be redeveloped without some assistance and incentive from the City with respect to the costs of buildout; and
WHEREAS, Developer has acquired the property and intends to redevelop the Property as a mixed-use development of residential and commercial space in accordance with the terms and provisions hereof (the "Project"); and
WHEREAS, the City finds that as a direct result of the Project, the City will benefit through the creation of new residential units that will fill a proven gap in Downtown; and
WHEREAS, the project will strengthen the commercial environment within the City and the enhancement of its tax base, and that the Project will serve as a catalyst for the repopulation of Downtown and invigorate the landscape of hospitality businesses;
WHEREAS, the Project would not be economically viable but for the assistance and participation of the City,
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows:
pursuant to its statutory and home rule powers, as follows: that the Agreement attached to this Resolution as Exhibit A shall be and hereby is approved; and further
BE IT RESOLVED, that the Mayor is authorized to execute an Agreement that substantially and materially conforms to the provisions of the Agreement set forth in Exhibit A on behalf of the City for redevelopment of the Property as a mixed use development with 10 new market rate apartments; and the provision of economic incentives to the Developer to make the Project economically viable, as set forth in the Agreement; and further
BE IT RESOLVED, that the several City Officers and employees designated in the Agreement are authorized to perform the function and duties set forth in the Agreement; and further
BE IT RESOLVED, that the Mayor is authorized to execute such documents or agreements between the City and the Developer which are related to and subordinate to the Agreement so long as (1) such additional documents or agreements are consistent with and do not conflict with the provisions of the Agreement authorized by this Resolution (2) are necessary to carry into effect the purposes of the Agreement, and (3) do not create any additional liabilities upon the City. .