After years of waiting through a pandemic, difficult credit, and big inflation, the owner of the former State Farm building in downtown Bloomington is moving ahead with a $68 million redevelopment.
Urban Equity Properties [UEP] is pitching a renovation of the building into 183 residential units to the city council on Monday. There also would be ground-floor retail and a destination restaurant on the 13th floor, according to a city statement.
The building would be dubbed G.J. Lofts, according to UEP's website. That appears to be a nod to State Farm founder G.J. Mecherle.
The Rockford-based UEP bought the building from State Farm in 2019. UEP specializes in redeveloping historic buildings. It has 20 properties in five cities, and has over $200 million in assets under management, said the city.
“Urban Equity Properties has certainly shown in Rockford their capacity for first-rate redevelopment that is successful. This proposal certainly takes a chunk of the issue of how we deal with housing shortages by creatively redeveloping a landmark building into new uses,” said former Bloomington Historic Preservation Commission Chair Greg Koos, who was a member in 2019 of an ad hoc group focused on saving the State Farm building.
“I think this gives the City of Bloomington an opportunity to not only deal with the housing crisis but to revitalize the downtown, which requires no heavier investment in infrastructure. It’s already there,” said Koos.
Outgoing Mayor Mboka Mwilambwe said bringing the project to the finish line was difficult.
“Staff had been working with them and a number of different proposals to see if the numbers could work both for them and the city but ultimately, we landed on what works for all parties,” said Mwilambwe. “It’s fantastic for downtown because this is another building that is going to be occupied and renovated.”
He said the restaurant on the top floor is, as yet, unknown but should be something ‘"really nice." There will be retail on the bottom floor.
“The opportunity to have so many people living downtown will be great for the businesses downtown and the traffic they see,” said the mayor.
City incentives
Under the proposal, UEP will get city incentives, including planning and fee waivers. More significant is a reimbursement of 92% of property taxes flowing from the gain in value. That is the tax increment financing [TIF] money generated by the project through 2048.
TIF is an economic development tool that allows a city to capture and spend the new tax revenue generated in a specific area on that area – in this case downtown. Taxing bodies still keep getting what they were getting before, but all of the new tax money (the "increment") is diverted into a pot of redevelopment money for up to 23 years.
The city also will reimburse Urban Equity 60% of the city sales, food and beverage, and retailers occupation taxes generated by activity in the building.
The city will pay UEP more than $128,000 per year through 2048. That equals the TIF base amount. UEP is applying for a state grant and if that comes through, the city will loan it to the company and forgive the loan.
The company also will get 30 parking passes to downtown parking locations
UEP is interested in doing more business with the city.
If nothing happens to the old Coachman Motel property at 408 E. Washington St. in the next year, the city agrees to sell it to UEP for $1 for a new project. If UEP doesn’t put up a building within five years on the Coachman site, the city would get the land back.
When Urban Equity bought the State Farm building, founding principal Justin Fern estimated the project scope at $40 million to convert the building into 230 luxury apartments. The new proposal is smaller and costlier.
“All of our projects typically involve fitness centers, tenant lounges, communal space and this particular one even a café and a restaurant will likely be on the ground floor as well,” Fern said in 2019.
Patrick Hoban, executive director of the Bloomington-Normal Economic Development Council, said the effort to revive the project is the culmination of ongoing work from multiple local economic development professionals.
"Breathing life back into a landmark building in the heart of our community will assist with our housing crisis while increasing foot traffic for our downtown businesses," said Hoban. "Kudos to the City of Bloomington’s economic development staff for keeping this on track over the past few years. We look forward to seeing the economic impact of new residents downtown.”
Holladay Properties project
Also on Monday, the Bloomington City Council will take up a redevelopment agreement for a previously announced $42 million housing project near Eastland Mall. Holladay Properties wants to build apartments on the old Verizon site on East Empire Street, which is also in a TIF district.
The Holladay project will now include 210 market-rate units in a mix of studio to three-bedroom layouts; that's an increase from the previously announced 180 units. Plans include seven, three-story buildings, green space, a dog park, indoor and surface parking, and on-site leasing and management.
The city is offering Holladay several incentives for the project:
- $500,000 reimbursement for developer expenses, using TIF money.
- Up to $4.1 million in reimbursements or up to 9.8% of the total project cost [whichever is less], also using TIF money.
- Waiving permitting and plan review fees.
If approved, both projects could break ground as early as this year.
