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ELGIN, IL-A $28-million condominium and townhouse project north of the Grand Victoria riverboat casino is expected to jump-start redevelopment of the moribund Downtown in this city 40 miles northwest of Chicago. City council members Wednesday night approved staff recommendations to pursue a development agreement with PAR Development Inc. and Rental Systems LLC of nearby East Dundee, IL as well as explore ways to preserve the façade of a historically dubious theatre that’s part of the site of the proposed 176-unit development.

The development agreement includes a controversial $4.2 million in incentives, $3.1 million of it being the value of a parking lot on Grove Street between Prairie and Lake slated for 116 two- and three-bedroom townhouse units. The city will also buy railroad right-of-way east of the site, as well as costs of preserving the terra cotta façade of the Crocker Theatre. Fees and permit costs also would be waived.

Mayor Ed Schock says the city’s out-of-pocket costs would be relatively low, and the current $3.1 million value of the parking lot overlooking the Fox River is greater than what the city paid for the property. The city’s incentive package is in line to the 15% guideline used in smaller Downtown projects, he adds.

Although the Grand Victoria is the most profitable riverboat among Illinois gaming facilities and has delivered a windfall to city coffers, it has failed to spur significant redevelopment of a Downtown area just to the north, as well as a residential neighborhood up a bluff to the east. With the developers’ River Park Place, that will change, a consultant promises.

“There will be more projects,” says Scott R. Chesney, principal of Colorado Springs, CO-based Vandewalle & Associates. “This development will light up the real estate world in Chicago and tell the market that Elgin is back.”

The city’s enthusiasm is based on a “dream team” assembled by lead developer David Plote, whose Elgin-based Plote Construction Inc. is general contractor. His team includes George Pappageorge of Chicago-based Pappageorge/Haymes Ltd., whose recent condominium projects include Kinzie Park Downtown, Orchard Park on the Near North Side, Museum Park west of Soldier Field and University Park on the Near West Side. The Elgin project should look similar to University Park, Pappageorge says, though with one major difference.

“If these townhouses were in Chicago, they’d sell for a couple hundred thousand dollars more,” Pappageorge claims.

Instead, one-bedroom condos in the six-story mid-rise with views of the river and Heritage Park will start at $125,000, Plote says, while the larger townhouses will be priced in the $200,000 range. The incentives help keep the prices down, he adds.

“In order to pull it off with the quality we’re presenting, we’re pouring in dollars we wouldn’t regain without assistance from the city,” Plote says. Adds Chesney, “You have to have incentives for urban redevelopment to work early on… You can’t do urban development without development incentives.”

Those incentives should decrease with subsequent projects, Chesney adds.

“We’ve had some smaller projects in Downtown. It’s been encouraging,” says Leo Nelson of the city council’s advisory project management team. “But this is the large project we’ve all been waiting for. We believe others will follow.”

Some of the public investment in the city’s Downtown has included $600,000 to buy the Crocker Theatre plus another $60,000 to rehab it. Now, it’s estimated another $250,000 will be spent to preserve the façade, costs some council members consider wasteful.

“You’ve got a $1-million lot with nothing on it,” says City Councilman Robert Gilliam. “It’s insane.”

Council members were urged not to let the debate over the fate of the Crocker stand in the way of the redevelopment plan, the first phase to include building the condominiums and small retail area just south of the theater. They agreed to consider storing the façade elsewhere before a final decision is made.

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