Aurora officials are recommending a $5.75 million increase in the contribution the city would make to an apartment development between North Broadway and the Fox River downtown.
Aldermen on the City Council Finance Committee on Thursday recommended the additional inducement as part of an amendment to a redevelopment agreement the city approved with DAC Developments LLC, of Chicago, in 2022.
The full City Council still needs to vote on the proposed additional contribution.
The overall $87 million development would be for a 343,421-square-foot building with 258 apartments to be called the East Bank Apartments.
The development is already underway on property between the Aurora Township building and Jake’s Bagels along North Broadway downtown.
Developers said they have already put $8 million into the project and have $75 million in private funding in place for it.
“It’s a massive undertaking,” said Daniel Rezco, president of DAC. “We’re really proud to be here. We’re fully committed to it.”
The $5.75 million would take the city’s overall contribution to the project from about $6.84 million to about $12.6 million. When the project plans started as far back as 2021, the original overall cost of the development was to be about $70 million. That is now up to about $87 million.
The city’s contribution would be paid from the tax increment financing district that is already on the property.
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David Dibo, the city’s Economic Development director, said the increase in the project cost is from a number of factors, some of which are affecting developments across the country, and some of which are peculiar to the specific site.
He said nationally, construction costs in the post-COVID world have increased by 20% to 25%, coupled with steep increases in interest rates for borrowing. The high interest rates have tightened lending, with some lenders leaving the marketplace altogether.
“As a result, many projects have been delayed or terminated,” he said. “That’s true in the western suburbs, Chicago, all over.”
He also said the market for apartments continues to grow, but it’s “harder and harder to get apartments built.”
Besides the general building economics, developers encountered problems when they started digging at the site. Despite doing 330 soil borings in several phases and submitting a 1,000-page report to the state before digging, once they started, they found even more problems with the site.
“You never really know until you start digging,” Rezco said.
The site has held several industrial uses beginning in 1880 for about 100 years before being torn down in the 1980s. Developers said tearing down a building then was not done as it now. Today, building remains are taken off site and disposed of in a landfill licensed for that kind of refuse. In the 1980s, demolition workers dug a hole on site and buried the refuse.
Then, after finding that, developers found even deeper steam lines and vaults.
“A whole bunch of problems arose because the building wasn’t property demolished back in the 1980s,” a company spokesman said.
Dibo said DAC encountered things from “when you don’t touch something for all these years.”
“If it wasn’t DAC, it would have been someone else,” he said.
Dibo said the return the city gets from the money it will spend includes an improved site along the riverfront; improved value for the surrounding properties, including improved property values; and jobs, both short-term and long-term.
He said the concept of residential uses along the riverfront has been a goal of Aurora planning for a long time.
“It leads to a vibrant riverfront,” he said. “It’s executing a long-held vision.”
The development plans have primarily studio and one-bedroom apartments, although some 40 units would be two- and three-bedroom apartments. The rents would run from about $1,700 or $1,800 a month up to $2,200 a month.
Ald. Brandon Tolliver, 7th Ward, said he is “not crazy” about the rents, and said he hopes future developments will look at “more affordable” rents.
“I do understand for this type of apartment; all in all, I’m still for it,” he said.
Ald. Edward Bugg, 9th Ward, said it is good for the city that the development was able to go forward when others were not.
“I’m happy we’re at the point where we can stay in this and make it right,” he said. “We’ll keep our eyes open and go forward.”
Developers said they are looking at a completion date in the spring of 2026.