SPRINGFIELD – The City is negotiating with the development team to exercise the loan forgiveness route in the contract regarding the Blue McKenzie project: a $34 million initiative to transform the parking lot between the old Buick dealership and the U.S. Post Office on A Street into a mixed-use residential building, which was deemed infeasable.
The project had previously received a $2.1 million pre-development loan from Springfield Economic Development Agency (SEDA) board in November 2022 meant to assist with market research, design, engineering, and land use.
Buick building owner Robert Scherer said the $2.1 million was fully used for architectural plans, design work, construction estimates, permits, geotech surveys, and many other necessities to prepare to construct a building.
He added that “everything was completely detailed before any of the funds were borrowed or spent. It was very, very specific. It wasn’t like it was a blank check.”
An agreement, which includes loan forgiveness, states SEDA and the Blue McKenzie Project can agree “in concert together that the loan can be forgiven in exchange for the deed to the property and related loan documents.”
“What that clause says in the contract is that the loan which SEDA has provided for them, if the project is determined infeasible, we can provide loan forgiveness in exchange for assets of the project. We are moving through active negotiations with that clause right now,” said Allie Camp, the economic development manager.
Some assets to be considered are: the plans created, the contracts with the consultants, any studies completed, any surveys done, and any physical work on the property, according to Camp.
Because the City is working on negotiations, it has no comment at this time. Camp did clarify that the negotiations are between SEDA and Blue McKenzie Apartments LLC.
The City does not own the property, as it is still privately owned by Scherer. Scherer told The Chronicle that his family retains ownership of the Buick Building and the parking lot behind it along B Street.
The value of the proposed site was $400,000 for the 0.27 acres. Camp said the City’s expertise is not determining market value, and that they often hire consultants in these circumstances – especially since it is private property.
Obtaining the property would provide SEDA “with site control, which allows for more control and flexibility for the future development.”