The residential/retail building proposed for the fire station remnant parcel in the Village met a setback last week when negotiations with the developer failed to reduce the financing expected from the city to a level seen as acceptable by a city panel.
Falling interest rates and a net drop in construction costs have cut total costs for the project, at 1463 Underwood Ave., from $8.1 million to $7.5 million in recent months, city Finance Director John Ruggini said. While this has reduced the financing gap to be filled by the city from $1.8 million to $1.4 million, it does not meet the Community Development Authority's threshold of $1 million.
"We were not able to achieve the CDA's desire to get it to $1 million, and my observation to you is, in my opinion, this is as low as it's going to get," Ruggini said.
Ruggini has said that a $1 million gap could have been filled without special financing, but, stuck with a gap of $1.4 million, "there's not a recommendation that I'm comfortable making to do that without TIF financing."
Through tax-incremental financing, a city investment in a project is repaid through property tax increases as the site gains value.
The city's agreement a few weeks ago to use TIF financing to build a $2 million parking structure for a privately owned property in Innovation Campus has created an atmosphere of resistance to TIF financing among Common Council members, as Alderman Craig Wilson acknowledged a the March 28 CDA meeting. Wilson, a CDA member, has led the discussion about the Village project.
Project pared down
The mixed-use proposal has proceeded by fits and starts and undergone significant revision since its acceptance by the CDA as the preferred proposal for the fire station remnant parcel last summer. The original plan was to build four stories, with 36 residential units on the upper floors and first-floor retail. It projected using the fire station parcel, and a parcel just south, which holds a building owned by Linda Craite, who operates the Cody & Co. salon there.
The mass, height and proximity of the building to residential backyards on Church Street ignited passionate resistance among homeowners, and the proposal was scaled back to three stories with 30 units and less space for retail, still using the Cody & Co. site.
As explained by the developers, Sean Phelan of Phelan Development and Blair Williams of WiRED Properties, the four-story project was a more efficient structure to build, and would have resulted in a city outlay of $1.4 million, below the original $1.8 million financing gap of the smaller, less-efficient, three-story building.
The updated calculations provided last week by Ruggini move the three-story gap from $1.8 million to $1.4 million. Williams estimated the gap on a four-story building to have come down from $1.4 million to possibly less than $1 million - which would meet the CDA's maximum city outlay.
When asked by resident Betty Ragale if, because of that lower city cost figure, the authority might again pursue the four-story building, Wilson said he had asked about the four-story cost just as a point of information. Reverting to the four-story plan may risk renewed objection from the residents.
Building acquisition plan
Ruggini said that if the city provides financing, $600,000 of it will be used to create public parking, with the balance functioning as a loan to the developers. He said at last week's meeting that the $1.4 million gap was attributable to the need for parking, and to the costs of acquiring the adjacent parcel, occupied by the salon.
Craite has signed a letter of intent to convey her property to Phelan and WiRED.
An expenditure breakdown by the developers several months ago put the total costs related to the salon at $830,000, including acquiring the property, a temporary relocation of the business, renovation and rent for the temporary space, and finally moving the business into built-out space in the new building.
The project has the support of the Village Business Improvement District. It has been criticized by others as too dense and as a destination that would complicate Village traffic patterns.
The members of the CDA did not act. Some members sought a meeting in closed session, but it had not been noticed properly.
The CDA's next scheduled meeting is April 11, but it is possible the group may meet before that date.
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