PEORIA — When the Cub Foods store at 1800 N. Knoxville Ave. closed in 2009, the worst fears of detractors of the city-backed MidTown Plaza project were realized.
The plaza was a $15 million project with the city providing $5.5 million. Just seven years after its opening in 2002, the store was shuttered, raising questions about the city's involvement in an economic development project that was controversial from the start. The city still is paying for the project. The final payment of just more than a million dollars on the city's $2.1 million share still owed won't be completed until January 2020.
In addition to involving millions in city money, the demolition of dozens of homes on Dechman Avenue was required to establish the nine-acre site that became MidTown Plaza. The Cub project not only had an impact on area residents but on business. Not long after the 65,000-square-foot Cub Foods store opened, two East Bluff groceries— the John Bee store and Sullivan's— closed.
Lueshand Nunn, board president of East Bluff Neighborhood Housing Services Inc., recalled the project that had such a dramatic effect on the East Bluff.
"They made a lot of people move," she said, referring to East Bluff residents who had to sell their homes to make way for the store. One of those was Nunn's mother, who sold her home at 1704 Dechman Ave. before relocating to Memphis, Tenn.
"They didn't pay a lot of money for the home, either," said Nunn. "Now the (Cub) building is still sitting empty. The city has to be more careful in planning big projects."
In looking back on the MidTown project, the warning signs were there. Along with neighbors who resented being forced from their homes, there were questions about the viability of the project from the start. An independent study by the St. Louis consulting firm, Development Strategies Inc., warned MidTown Plaza would take money away from other retailers and from city coffers. Other studies were then commissioned that refuted those charges.
The MidTown project was the brainchild of developer David Joseph, who previously organized Glen Hollow Shopping Center and the Campustown development in Peoria. His lease with the Minnesota-based SuperValu chain, owner of Cub Foods, assures him a monthly rent that still will be paid for years to come.
That lease arrangement was one of the reasons former City Councilman Gary Sandberg, who died in August 2013, opposed the project. "The developer protects him or herself with extended years rent/lease payments to assure minimum impact to the revenue stream owed to the developer," Sandberg noted in a 2009 email.
Sandberg, who called the Cub Foods plan "a poster project for an economic development strategy gone wrong," was the lone opposing voice on the Peoria City Council to the MidTown TIF. He drew the distinction of the city's adoption of general obligation bonds being used over the less-risky and higher-interest revenue bonds. "Recent councils acting in the interests of the developer and not the taxpayer have used general obligation bonds and all the other 'incentives' like eminent domain which consolidate large land parcels and hand the land value over to the developer," he stated in 2009.
"What everyone also has to understand is that in a TIF area that remains as a revenue source to pay off the bonds, all sales tax that should be paying for basic essential services is used to pay off the bonds. With respect to MidTown Plaza, approximately $550,000 every year for 20 years ended up paying for land/clearing costs instead of city services," noted Sandberg in 2009.
Richard Mitchell, president of the East Bluff United Neighborhood Association, recalled the sentiment that preceded the building of MidTown Plaza.
"They thought it might bring in business but it didn't do anything for the community," he said.
As for future prospects for the MidTown TIF, Mitchell, who has lived in the East Bluff for 25 years, is not optimistic.
"No one will come in there until Cub stops paying rent," he said.
Mitchell points to another East Bluff initiative that is getting results.
"The new East Village Growth Cell is completely different from the MidTown TIF that was forced on us by the city. In the case of MidTown, the city wasn't listening to the people who lived here," he said.
"This time we've got the neighborhood involved, building new homes and working to attract business.
Mitchell also praised the Kroger store on Wisconsin Avenue for its support of East Bluff business. "Kroger has expanded and will probably expand again."
Chuck Grayeb, now the 2nd District Councilman and an at-large representative on the City Council from 1995 to 2007, defended the concept behind the formation of the MidTown TIF.
"People forget that all development was going on north of War Memorial Drive. We thought the (Cub) project would clean up an area that was being blighted," he said.
"Overall, Peoria has not abused its TIF districts. Enterprise zones have helped," said Grayeb, who added that he remains "bullish" on growth along the commercial corridor of Knoxville Avenue around the former Cub Foods store. "There's a new car wash and the prospect of a new restaurant in the area. We've under-performed but eventually I think we'll be successful."
Steve Tarter covers Peoria city and county government for the Journal Star. He can be reached at 686-3260 and starter@pjstar.com. Follow him at twitter.com/SteveTarter and facebook.com/tartersource.
Eight years ago this month, Cub Foods announced its Midtown Plaza store would close. The space has never been filled, and the effects continue to reverberate for neighbors, taxpayers and city government.
• $1.1M: Peoria will make this final loan payment on Jan. 1, 2020
• 8: number of years left on the empty Cub Foods building lease
• $2.1M: city loans still due when Cub Foods closed eight years ago
MidTown Plaza update
