Shodeen awaits financing for Batavia’s One Washington Place project

Work could still start this year

BATAVIA – Bank loan officers now hold the fate of Batavia’s One Washington Place downtown redevelopment project in their hands.

Shodeen Construction President Dave Patzelt told Batavia city aldermen on Aug. 17 that he expects approval of a $30 million loan by the end of the week.

If that happens, excavation for the mammoth building could yet get underway before the end of the year, Patzelt said, or certainly by next spring. If the loan is denied, the project will be dead.

Aldermen, already frustrated by years of delay, grilled Patzelt on the Geneva-based firm’s failure to submit construction drawings and a building permit application by a July 13 deadline specified in a redevelopment agreement.

Patzelt said the increased cost of building materials and worldwide supply-chain problems caused by the pandemic were at the root of the problem.

The developer has not yet given the go-ahead for its architects to produce construction drawings, at an estimated cost of $650,000, because financing is not yet in place, Patzelt told aldermen.

One Washington Place is a $50 million mixed-use project, which includes a 333-space two-level parking garage, 186 apartments, 14,180 square feet of commercial space and 2,370 square feet for offices.

The six-level building is to cover most of a city block bounded by North Washington Avenue, East Wilson, North River and State streets in the heart of the downtown.

The city has committed $16 million for the parking garage, which it will own and operate when construction is complete. Work on the building is expected to take two years.

Patzelt said that once financing is approved, Shodeen will seek a new timetable for submitting plans, filing a building permit application and beginning construction.

“I’m not asking for time to delay or kick the can down the road,” Patzelt said.

However, Shodeen will seek a “comfort letter” from the city assuring the lender, Fifth Third Bank, that Batavia officials are not finding Shodeen in breach of the redevelopment agreement and are committed to the project.

Some aldermen bristled at that idea, because Shodeen is technically in violation of the agreement for failing to meet the July 13 deadline.

“How do we square this when there is a breach?” 4th Ward Alderman Joe Knopp said.

“This has just taken far too long,” 5th Ward Alderman Mark Uher said.

“We have to do something instead of letting this drag out,” 7th Ward Alderman Keenan Miller said.

Second Ward Alderman Alan Wolff, who has been one of the project’s strongest supporters, told Patzelt that Shodeen must move quickly.

Wolff threatened to ask for the council to terminate the redevelopment agreement next week if Shodeen does not have the financing in hand.

“Either we have an answer or we move on,” Wolff said. “The frustration is real.”

City Administrator Laura Newman sought to place the delays into perspective. She allowed that the first delay was Shodeen’s fault, because the firm miscalculated the cost of constructing the parking garage.

However, subsequent delays resulted when the city discovered lead contamination in the soil and later when it was determined that the time remaining on the tax-increment financing district designed to cover the city’s costs was no longer sufficient.

“Not all of the blame lies at the feet of the developer,” Newman said.

The city’s top staffer implored the aldermen to stick with the plan, because to abandon it would result in a further delay.

“Consider what this means to downtown Batavia,” Newman said. “If this project goes away, there will be another but not next year.”

Yet Knopp’s 4th Ward colleague, Alderman Tony Malay, said the city should declare Shodeen in breach of the agreement.

Both Knopp and Malay, in whose ward the project is located, noted that time and again the redevelopment plan has survived on 7-7 council votes that were decided by Mayor Jeff Schielke.

The two aldermen pointed out that since those votes, four new aldermen have joined the council after last April’s election.

“We need to see where this council stands and see if this council supports it,” Malay said.

For his part, Schielke urged aldermen to be patient and keep their eyes on the goal.

“We should stay with Mr. Patzelt and see if we can get this done,” Schielke said.

Sixth Ward Alderman Michael Russotto, a banker by profession, indicated that he was not surprised by the drawn-out loan approval process.

“These are extraordinary times,” Russotto said, citing the supply-chain difficulties mentioned earlier by Patzelt. “This is not unexpected at this point in time.”

Patzelt is to appear before aldermen again next week.

One Washington Place has been in the planning stages for five years.

After Shodeen’s miscalculation of the cost for the parking garage, the city increased its commitment to the project by $2 million, bringing the total to $16 million.

Later, city officials discovered that the building site is contaminated with lead, requiring a lengthy approval process with the Illinois Environmental Protection Agency for a plan to clean up the property during excavation.

Last year, city officials determined that there was not enough time left on the existing TIF district to generate enough revenues to repay the bonds that will be issued to fund the public improvements, including the parking garage.

They waited until the start of this year to approve a new TIF district in order to maximize the 23-year period as specified in the state law.

A TIF district is a method widely used by municipalities to redevelop areas that are considered blighted or economically stagnant.

Within the boundaries of the district, property tax payment levels to units of local government are frozen, with the additional value generated by development placed into a fund to pay for public improvements.

The city purchased and then razed several commercial buildings on the proposed redevelopment site to make way for One Washington Place. A church building which the city had acquired many years earlier also was torn down.

The size and height of the proposed building has been a major source of controversy.

On the eastern side of the property along North Washington Avenue, the building will be four levels.

The property slopes downward toward the western end, where the building will rise up six stories, towering over North River Street.

The parking garage, with access at two points along the sloping State Street, will take up most of the two lowest levels of the building, although the commercial spaces will be located at ground level along the North River and East Wilson building fronts.