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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 The Barrera Organization LLC for the redevelopment of the property located at 251 S River Street, commonly known as the Company 251 building into a 48-unit apartment complex.
PURPOSE:
The RDA will facilitate the developer's plans to redevelop the formerly known Company 251 building at 251 S River Street into brand-new 48 market rate apartments.
The RDA codifies the commitments from the developer that trigger City incentives that will be repaid to the City as described below.
BACKGROUND:
The City of Aurora has seen substantial development and redevelopment in all corners of the city. This includes the downtown and its various submarkets that encompasses plans now underway for a reimagination /redesign of Broadway, the theater/Stolp District dotted with new restaurants and entertainment, River Street with its historic residential renovations including the Esser Lofts and the Hobbs apartments and restaurants, the land on the west side of the river north of New York being master planned as the Riverfront North neighborhood, the transit-oriented development surrounding the Aurora Transportation Center anchored by the DAC apartments, etc.
This RDA relates to a key property within the burgeoning Warehouse District defined as the area south of Benton to North Avenue. The seeds of the redevelopment of this stretch are visible in the Society 57 coffeehouse/gathering destination, the revitalization of the commercial spaces and coveted waterfront residential units at River Street Plaza, the almost completed apartments at 110 Cross and the Foreign Exchange Brewery.
The Developer, Ferando Barrera is an Aurora native with over 10 years of real estate industry experience. Mr. Barrera's portfolio of real estate currently consists of 150 residential units.
The owner of company 251 has decided to sell after renovating two of the four stories as a banquet facility. Despite early success, post COVID changes in the business that include couples looking for less traditional wedding locales together with inefficiencies of using only half the building (the top two floors were never touched and remain in raw condition) prompted the pending sale. The goal is to create a TIF that includes this building as well as the areas immediately adjacent to the property. That will help spur reuse of nearby buildings, many of which are vacant or operating at low capacity.
DISCUSSION:
Consistent with the second wave development that takes advantage of the increased residential rents that in turn have increased values, the proposal is to offer an “upfront TIF” to the developer. Simply put, this means that COA will advance $2,000,000.00 to ( BARRERA) subject to conditions outlined in the RDA and get paid back with a return on this investment by the increased taxes created by redeveloping these 48 units as shown in the Pro Forma attachment to this report. The current real estate taxes on the property are only $15,000.00. As perspective, 48 units would be the larger than any of the four historic rehabs that have occurred over the last six years (Terminal, Hobbs, Keystone and 80 South River) Facilitating this redevelopment will anchor the southern portion of the district and prompt a filling in of the buildings between. Based on the Developer Pro Forma the revised taxes are projected to be $115,000.00 upon completion and complete lease up and reassessment.
The funding for this development comes from the following sources:
1)Property Acquisition loan - $2,000,000.00
2)Property Acquisition equity - $500,000.00
3)Construction loan - $2,723,000.00
4)Historic Tax Credits - $3,515,000.00
5)Owner Equity for Construction - $3,134,935.00
6)Deferred Developer Fee - $1,076,278.00
7)City TIF Loan - $2,000,000.00
Funds for the City TIF Loan are recommended to be taken from the new City Transformation Fund. As approved in resolution R24-352, which established an amount of $9.0 million for use by the Mayor's Office of Economic Development for the purposes of providing incentives that must be reimbursed to the fund. In the case of this development, the reimbursement source will be the newly created TIF district as outlined herein. A budget amendment will be presented in the future to account for the disbursement from the Transformation Fund.
This development represents the first efforts at redevelopment in the "warehouse" district immediately south of the Downtown. Unlike the first efforts of rehabilitation in the downtown beginning in 2018, this agreement does not include any grants. It is the City's goal to continue redevelopment projects with no grants, and with lesser and lesser tax incentives as values in our various districts continue to improve
IMPACT STATEMENT:
The approval of this agreement will improve property values in the areas adjacent to the downtown, provide additional residents in immediate proximity to downtown entertainment and restaurant businesses and provide for an anchor in this new district for future economic growth.
RECOMMENDATIONS:
It is recommended that this agreement and resolution be adopted.
cc: Finance Committee
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution authorizing a Redevelopment Agreement (RDA) between the City of Aurora and The Barrera Organization LLC for the redevelopment of the property located at 251 S River St.
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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, Fernando Barrera/The Barrera Organization LLC has approached the City with a proposal for the development of 251 S River St for the redevelopment of Forty-eight (48) market rate apartments; and
WHEREAS, the City finds that 251 S. River will not be redeveloped without some assistance and incentive from the City with respect to the costs of buildout; and
WHEREAS, Developer will acquired the property and intends to redevelop the Property as a residential 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 areas adjacent; 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 areas adjacent to the Downtown and invigorate the landscape of hospitality businesses;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: A Resolution authorizing a Redevelopment Agreement (RDA) between the City of Aurora and The Barrera Organization LLC
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 residential development with 48 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.