Shodeen gets loan commitment for Batavia’s One Washington Place project

BATAVIA – Time and again, planning for Batavia’s One Washington Place downtown redevelopment project has teetered on the brink of failure.

Yet every time, just as it looked as though frustrated city aldermen were about to give up, the project was rescued in the nick of time.

It happened again last week.

During a committee meeting on Aug. 17, aldermen threatened to declare Geneva-based Shodeen Construction in violation of a redevelopment agreement if the builder did not obtain financing for the project by the end of the week.

Three days later, Shodeen President Dave Patzelt said he had received a letter of commitment from the firm’s bank.

Patzelt said he is now working with the city’s Community Development Department to create a new schedule for Shodeen to submit construction drawings, bid documents and a building permit application.

City Administrator Laura Newman confirmed that Patzelt had received commitment for the loan and that efforts are underway to establish a new timetable.

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.

Shodeen had missed a July 13 deadline to begin submitting the necessary construction documents, meaning the company was technically in breach of its redevelopment agreement with the city.

The Batavia City Council was already bitterly divided over the project and even proponents were frustrated by endless delays.

At last week’s committee meeting, Patzelt told aldermen that the latest delay had resulted from increases in the cost of building materials, as well as the uncertainties caused by supply-chain shipping problems, both caused by the pandemic.

The higher building materials costs, particularly for lumber, forced Shodeen to revise its budget and therefore to increase the loan amount it was seeking from the bank, Patzelt said.

While successive committees of bank loan officers weighed the new loan request, Patzelt said, he was unwilling to invest the $650,000 it will cost for architects to prepare detailed construction drawings and bid documents for the project.

However, the bank’s letter of commitment for the $30 million loan means that the builder can give its architects the go-ahead.

It also means that when Patzelt makes his return appearance before aldermen on Aug. 24, he will have satisfied the key demand made of him the previous week.

However, that does not mean it will be smooth sailing with the council.

Patzelt told aldermen that the lender, Fifth Third Bank, would be seeking a “comfort letter,” confirming that Batavia officials are not finding Shodeen in breach of the redevelopment agreement and are committed to the project.

Some members of the council indicated discomfort with the idea, noting that Shodeen has in fact breached the agreement because of the missed deadline.

The letter is expected to be in the form of legal boilerplate from the bank, to which the city would sign off.

Newman said the city has not yet received the letter from the bank.

Another source of contention between Patzelt and the aldermen is likely to be the new schedule. Many aldermen, particularly those in support of the project, indicated they want to see excavation get underway this year.

Work on the building is expected to take two years.

One Washington Place has been in the planning stages for five years. Council votes to move the project forward frequently have been tied at 7-7, leaving it to Mayor Jeff Schielke to rescue the plan.

After Shodeen miscalculated of the cost for the parking garage, the city increased its commitment to the project by $2 million, bringing the total to $16 million, but delaying the project by a year.

The city will own and operate the parking garage when construction is complete.

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, causing another year-long delay.

Last year, city officials determined that there was not enough time left on the existing tax-increment financing 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.