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NORMAL — Town officials signed off on a luxury mixed-use building for uptown Monday — but not without asking if town departments should get expensive office space on the taxpayers' dime.

Before the Normal City Council passed a redevelopment agreement for a five-story building on Uptown Circle, members questioned the town's decision to lease the second floor at rents a developer called the highest in Central Illinois.

"It's our job, I think, up here to also balance the excitement of this project with the fact that it's the people of Normal's money that is going to this top-of-the-market rent," said council member Scott Preston.

Normal will lease 13,780 square feet of office space for its engineering, inspections and planning operations for 15 years, with renewal options, at a base rent of $20 per square foot. After construction reimbursement and other fees, the town could be on the hook for $28.50 per square foot — $5.9 million for the 15 years.

Preston and council member Kathleen Lorenz hesitated before voting "yes" on the agreement, which passed unanimously.

Doug Reichl, president of developer Tartan Realty Group, told Lorenz the project — a $14 million, 65,000-square-foot building with basement parking, a first-floor restaurant and three upper floors of apartments — struggled to get financing without a guaranteed office tenant, and it remains financially risky.

"As we've gone through this (project), it really hasn't been viable. ... The revenue isn't enough to achieve the return (needed)," Reichl said. "There's still a gap. We're still fighting costs."

The town plans to sell the plot of land to Tartan for $1. The town will also loan Tartan $2.75 million for the project that's expected to be repaid over 25 years with new tax increment financing, sales tax, food and beverage tax and hotel/motel tax money.

Council member Cheryl Gaines said she supports the development and critics are "thinking about the pennies when we have to be thinking about the dollars in the long run."

She pointed to the "extreme success" of uptown as a district; the need for Normal to move the departments, which are currently in town-owned buildings off South Linden Street, for future Uptown South redevelopment; and the need to fill the long-standing hole on the site.

The town expects to move the departments next August. The building could be done next spring, but Tartan has 18 months after construction starts "early summer of this year" to finish the project.

Council member R.C. McBride said the town should consider the project not only on its own merits but as a pilot for office and residential space in uptown.

"It eliminates maybe the only sore point that we've had throughout the uptown development to this point, and it's the first domino ... for Uptown 2.0, so I'm pretty excited," he said.

In other business, the council approved a 2 percent water rate increase expected to cost the average household user $15.60 per year.

The hike will raise $183,000 during the next fiscal year for the town's water fund, which would otherwise fall below a recommended 20 percent savings threshold. The town could pass similar increases in future years.

Follow Derek Beigh on Twitter: @pg_beigh


Normal and McLean County Reporter

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