John Bays' Latest Project: City Unveils Tax Incentives

JOLIET, IL - It's been more than six months since prominent Joliet businessman John Bays acquired the six-story downtown building and the two-story annex known as Two Rialto Square. The property at 110-116 N. Chicago St. was the subject of multiple water main breaks in 2018, prompting several office tenants to cancel their leases and move elsewhere.

"Since the acquisition, he has initiated interior demolition efforts, roof repairs and replacement of deficient mechanical systems that required attention," a city memo advises.

This week, Joliet's Economic Development Committee will review a proposal from city economic development director Steve Jones recommending Tax Increment Finance incentives for Bays, who is in the process of a $5.3 million renovation to the building.

Last December, Bays bought the property from the Will County Metropolitan Exposition and Auditorium Authority as is. According to city documents, Bays plans "to have the building completely renovated by August 2020. If full occupancy does not occur within 12 months, I would convert the 4th through 6th floors to a hotel or apartments. The extra cost to convert to a hotel would be $1.3 million."

At the moment, Bays projects his ongoing renovations to the Two Rialto Square building will cost him more than $5.3 million.

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At any rate, the city's economic development committee has been asked to approve the proposed tax incentives for Bays.

"However, in lieu of receiving a 100 percent rebate, the city will retain $25,000 of incremental property taxes per year, with the remaining amount being rebated," Jones informed the city. "The incentive is payable through the remaining 22 years of the TIF District."

According to Jones, "Past TIF agreements provided private developers with 100 percent of the incremental tax revenues generated from projects ... As the downtown is experiencing positive momentum with regard to both office and residential development, staff has taken the approach that 100 percent deals are not always necessary to ensure projects happen."

Jones also explained how "it is very difficult to determine the level of property tax that will be generated upon full build out and lease. Several comparable and nearby Bays-owned buildings that have been updated and redeveloped are generating taxes in the range of $68,000 to $100,000 per year."

As for Bays' plans, "the owner is contemplating redevelopment ... to create a newly modernized office building within the six-story structure and a new restaurant lounge in the southernmost structure. Mr. Bays is also keeping his options open as to the potential for a hotel or multi-family use on floors four, five and six if office tenants are not located within twelve months of completing the renovations," the memo from Jones explains.

Joliet's economic development committee will review the agreement with John Bays at 5 p.m. Tuesday, July 9 at City Hall.