Kone project facing snarl

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By Dustin Lemmon | Wednesday, June 25, 2008 |

UPDATED: Plans to build an 18-story tower in downtown Moline that was expected to be breaking ground this month hit a snag Tuesday night when developer Rodney Blackwell failed to show up to a City Council meeting and answer concerns about the project from aldermen.

It was announced in September that the mixed-use residential and commercial tower called Kone Centre would be built at 17th Street and River Drive. A new hotel is also part of the project.

Aldermen were expecting Blackwell to show at Tuesday’s Committee-of-the-Whole meeting to answer questions they’ve had since a meeting in May. When Blackwell didn’t show, council members decided not to take any action on whether to approve an agreement with Blackwell and Financial

District Properties K.P. that would give them a 90 percent rebate on new property taxes generated by the project, which equates to $17.5 million over 23 years.

City staff were asked to continue negotiations with Blackwell. Ray Forsythe, Moline’s economic development director, said he will try to contact Blackwell, continue negotiations and bring an agreement back to the committee next month.

Blackwell could not be reached for comment Tuesday night.

A motion from At-large Alderman Kent Breecher to approve the agreement died for lack of a second and several aldermen said they want to see more financial details from Blackwell, including a more detailed pro forma than one he previously provided that outlines his income and expenses.

“It seems to me Mr. Blackwell is never around when you need him most,” said Alderwoman Dorothy Armstrong, 7th Ward. “I think the lack of a second (motion) should reflect (the council’s frustration) to Mr. Blackwell.”

Armstrong noted that plans for the building also keep changing, including its height which she said dropped a few stories from the original proposal in December and construction, which was to have started already.

Alderman Scott Raes, Ward 3, was among those concerned about the amount of the rebate proposed, which exceeds the amount the city has rebated for past projects.

“I think it’s important we treat all the developments equally,” he said. “It’s a great project but I think we have to act prudently.”

If Blackwell chooses not to continue negotiations with the city and the project fails Raes said he would be willing to accept that.

“If that’s the result so be it,” he said.

Under the agreement proposed Tuesday a new Tax-Increment Financing district would have been created to cover the four-acre area surrounding the construction site. The TIF already in place there expires in 2021 and the project needs it to last 23 years to provide the rebate, Forsythe said.

In a TIF district, any increase in property taxes generated by the new development can be used as a rebate or for eligible building costs. TIF money in Illinois can pay for acquiring property; architectural, design and engineering work and interest on a loan. It does not cover construction costs, Forsythe said.

The project’s total cost is expected to be over $55.7 million with condo and hotel sales expected to top $15.6 million, leaving the project cost at $40.1 million. Financial District Properties K.P. will finance $37.1 million, according to the proposed agreement.

In December, the city council agreed to sell $7.5 million in bonds to fund a loan to Blackwell, managing principal of Financial District Properties K.P., so he could purchase downtown buildings owned by Kone, the elevator company involved in the deal. City staff said payments are up to date on the loan.

Officials said the agreement Blackwell reached with Kone calls for the company to lease space in Blackwell’s new office tower and for Blackwell to buy all of Kone’s downtown properties. Kone will lease back its property from Blackwell while the new tower is being built.

Forsythe noted that the tower is important in the city’s efforts to keep Kone’s headquarters and about 200 jobs located in downtown Moline.

“The city’s goal with this project is to keep Kone’s international headquarters in Moline,” he said. “It gives us a chance to bring Moline a first class building.”

After Tuesday’s meeting Forsythe said it’s been two weeks since he talked to Blackwell and noted that is an unusual gap in time given the project’s size and scope.

“I expected Rodney to be here to answer questions,” Forsythe said.

Moline City Administrator Lew Steinbrecher told council members that city staff have placed safeguards in their plans with Blackwell, including a requirement that property taxes have to be paid before a rebate is issued. He said the safeguards have been used because Renew Moline has pressured the city to move forward on the project, including approving the large rebate.

Jim Bowman, executive director of Renew Moline, had said in May that he expected the project to break ground by the middle of this month. Bowman was not present at Tuesday’s meeting and could not be reached for comment.

Alderman John Knaack, Ward 1, hopes Blackwell will meet with city staff. “I just don’t think we can make the decision (based) on what we already have,” he said. “That’s something that really needs to be relayed to him. The city is working very hard on this.”

Dustin Lemmon can be contacted at (563) 383-2493 or dlemmon@qctimes.com.

Moline council concerned about future of Kone high-rise

EARLIER STORY: Plans to build the new 18-story Kone Centre hit a snag Tuesday night when the Moline City Council chose to take no action on an agreement with developer Rodney Blackwell concerning rebate incentives.

Several aldermen said they have more questions about the mixed-use project that Blackwell hasn’t answered and were upset that he did not appear at Tuesday’s council meeting to address their concerns.

Council members were voting at the committee-of-the-whole meeting on whether to approve an agreement with Blackwell and Financial District Properties K.P. that would give them a 90 percent rebate on new property taxes generated by the project, which equates to $17.5 million over 23 years. The agreement would establish a new tax-increment financing district for the project.

A motion from At-large Alderman Kent Breecher to approve the agreement died for lack of a second and several aldermen said they want to see more financial details from Blackwell, including a more detailed pro forma than one he previously provided that outlines his income and expenses.

“It seems to me Mr. Blackwell is never around when you need him most,” said Alderwoman Dorothy Armstrong, 7th Ward. “I think the lack of a second (motion) should reflect that to Mr. Blackwell.”

City staff were asked to continue negotiations with Blackwell.

Dustin Lemmon can be contacted at (563) 383-2493 or dlemmon@qctimes.com.