PEORIA — OSF HealthCare's footprint in Downtown Peoria is going to be larger than expected, and work will soon be underway on the headquarters facility there.
The organization plans to purchase another Caterpillar Inc.-owned property two blocks south of its planned headquarters facility to house additional operations and several hundred more employees, OSF's CEO, Bob Sehring, said in an interview.
Meanwhile, OSF officials also say work will soon begin in earnest on the headquarters site at 124 SW Adams St. now that they've received conditional approval for renovation plans making them eligible for federal historic tax credits on the 114-year-old building.
And City Council members will vote Tuesday on an agreement that resolves the quandary of where hundreds of employees at both OSF buildings will park Downtown.
"From the City Council side and also as a proud Peorian, it's really exciting to see this energy coming back to our Downtown," Mayor Jim Ardis said Friday. "There's been a void there for quite some time. ... The original announcement had the community really excited about the potential for the project, and now they can have the confidence that it's actually starting and actually going to happen, and it's going to be bigger than it started with."
Caterpillar to OSF
Caterpillar will also sell its Building LD at 330 SW Adams to OSF for $1 million, a company spokesman said. It's been vacant since October 2016 when workers there were moved into other Caterpillar buildings across the Peoria area.
"We think this will be another piece of Peoria's growth and development," said Henry Vicary, Caterpillar's guest and community relations director. "We're very happy it's going to get use again."
He said the sale price is below what they believe the market value would be.
That deal is expected to close within the next two months, and result in several hundred OSF employees working there, OSF said.
The information packet provided to City Council members about the OSF project states the new property will be used as a "virtual care center" and involve about $12 million worth of work, though Sehring said that OSF's governing board still had to discuss and vote on that proposal at a meeting on April 29.
"From my perspective, it really is a continuation on the focus on innovation," Sehring said, promising to disclose more details on how such a facility would work if the board approves moving forward with it.
He also noted the layout of the building "lends itself" to being a more innovative space with an interior that "is really quite open."
That open-plan model is part of plans for the headquarters, and is being used at the Jump Trading and Simulation Center on OSF's main campus.
The Building LD prospects mean health facilities could end up on three consecutive blocks of Adams Street, between the OSF headquarters in the 100 block; a University of Illinois innovation hub still on the drawing board for the former Illinois Central College building in the 200 block; and LD in the 300 block.
Ardis called that an "extremely exciting" development for the city.
"The energy with that, moving a little bit closer to the Warehouse District and what we've got going on there, really helps us connect the dots," he said. " ... The council is very excited about the additional spin-off that will probably come from this $130-million to $140-million investment (by OSF),"
Sehring said that he hoped the proximity of the OSF buildings and the innovation hub will help create "attractive spaces" for other startup companies to consider as well, even those growing out of the hub itself.
That innovation hub is still in the development process, with an application submitted to the state for consideration to be one of several downstate locations. Under Gov. JB Pritzker's proposed budget, all the sites would be developed using both donated private funds as well as state funds.
National Park Service approval for renovation plans making OSF eligible for historic tax credits was delayed delayed slightly because of the federal government shutdown, during which the review of the health care organization's application languished.
Interior demolition work had already been underway starting last year, but with the tax credits now in the mix, work is likely to begin to pick up. That will include working on replacing the historic windows in the building, which is key to the project's timetable, Sehring said.
"Presuming we can get those all in place before the end of this year, then the interior work can be conducted all throughout the winter," he said.
If there are other delays, that might push construction into spring 2021, rather than the current target date of beginning to move employees into the headquarters by fall 2020.
OSF is eligible for the tax credits because the subsidiary that technically owns the property during renovation is being operated as a for-profit entity. Caterpillar donated the property on that block to OSF last year. It had formerly been planned for a new Caterpillar world headquarters.
Where to park?
Council members will be asked to consider a parking agreement that involves the One Technology Plaza parking deck at 211 Fulton St.
Resolving the question of how 700-plus employees would park Downtown was something left unanswered — but which OSF, Caterpillar and city officials agreed to discuss — when the headquarters move was first announced in January 2018. That only increased in importance with the addition of a second building nearby.
Caterpillar plans to sell its 450 spaces in the deck to the city — giving them control of all the spaces in the deck — at a price of $2 million, payable in five installments of $400,000 beginning next year. OSF will then lease the deck at a cost of $19,193 per month over 20 years, according to the briefing prepared for the council. Overflow parking for employees at the headquarters and Building LD will also be available in the city's Niagara and Jefferson decks at a cost of $33 per month over a 20-year period.
OSF also has an option to purchase the One Tech deck from the city.
"For us it was always an important aspect to ensure that our mission partners had access to sufficient parking," Sehring said.
He also said the length of the lease term should be read a signal of OSF's commitment to remaining Downtown.
"We do foresee OSF being a part of the city landscape and part of that block for many, many years to come," he said.
Crafting additional plans
Plans are also still developing for other portions of the headquarters block, Sehring said.
Though the detail for councilors suggests a coffee shop in the former Caterpillar Merchandise Center and a restaurant at the corner of Washington and Fulton streets, Sehring said those ideas are conceptual only at this stage.
Both options are "in play," he said as well as consideration of other options, "whether it's retail or other aspects that would be attractive to 1,000-plus ministry employees."
Likewise, discussions are ongoing over what will replace the Peoria Professional Building and parking deck that fill the remainder of the block on which the headquarters will sit.
Chris Kaergard is Journal Star associate editor. He can be reached at firstname.lastname@example.org. Follow him on Twitter @ChrisKaergard.