PEORIA — Downtown is getting a new headquarters, but instead of Caterpillar Inc., the building at 124 SW Adams St., the former site of the Block & Kuhl store, Carson's and, later, Chase Bank, will be refurbished by the largest member of the area’s medical community.
OSF HealthCare announced Thursday plans to take over the entire block that Caterpillar had designated for a new headquarters site until nixing those plans last year. That announcement occurred Thursday morning at the Caterpillar administration building in Downtown Peoria, and will return OSF's headquarters to within blocks of where the ministry first began in 1876 on Adams Street.
OSF plans to place between 700 and 750 employees at the site after remodeling the building's interior and exterior, an effort expected to take several years and cost between $80 million and $100 million, said Bob Sehring, OSF HealthCare's CEO, in an interview ahead of the announcement.
The Downtown deal occurred with a lot of help from Caterpillar, said Sehring. "Cat's involvement was substantial. They were generous in moving the block to OSF."
Sehring noted the purchase price for the property was $1. In addition, Caterpillar pledged to provide OSF with the funds that would have gone into razing the structure, a figure that Caterpillar estimated at $3 million at the Thursday news conference. In addition, Caterpillar was acquiring federal historic tax credits that make renovating a building built in 1905 feasible for OSF, Sehring said.
"The tax credits — worth millions — were critical. Without them, it would have changed our ability to do the project. Otherwise, you just couldn't make the numbers work," said Ryan Spain, OSF's VP of economic development.
City officials will work on crafting a proposal to designate the building as part of a historic district in the next several months — key to accessing federal credits — and a host of local governments will be asked to sign off on extending the boundaries of the zone where buildings are eligible for state historic tax credits that all four Peoria lawmakers worked across party lines to see renewed last year.
Renovations to the building will begin after that and continue during 2019 and likely beyond, Sehring suggested.
While plans are to reuse and refurbish the building at 124 SW Adams St., Sehring said that other structures on the block — the Peoria Professional Building and the parking deck — will be demolished. "They have no historical value," he said.
Sehring said OSF will consider other uses for the property, perhaps in partnership with other entities. He noted that many discussions still have to take place and would look at the overall needs of the community.
Caterpillar Inc. touted the plan as a partnership that will benefit employees of both companies.
"The region will benefit once this property is redeveloped, including the thousands of Caterpillar employees who work in the Peoria area every day," read a statement from Caterpillar. "Caterpillar is looking forward to partnering with OSF to help revitalize the block."
Sehring said that after Caterpillar's decision left the block vacant, OSF decided to explore the idea of establishing its own headquarters in the heart of Downtown. "Our Sisters felt that it could bring synergy to the workforce, that it could help momentum Downtown," he said.
The decision to use the seven-story building with its 225,000 square feet of space will help organize OSF's own sprawling enterprise. "(OSF employees) are spread around in eight or nine different sites in the area," said Sehring, adding that administrative growth of the organization has increased along with medical advancements.
"In my 16 years we've gone from 8,000 employees to 19,000 employees, from five hospitals to 11, and soon, 13," he said.
Sehring said the new headquarters will replace area buildings that OSF leases but wouldn't affect the status of OSF-owned sites in the region. He said discussions are beginning on which employees will make the move to the Downtown facility.
"You don't usually jump up and say that it was a great idea when the suggestion is made to renovate a 105-year-old building, but I like the idea of being Downtown, of having Caterpillar as a next-door neighbor. We hope to attract other business Downtown. We see great potential not just on the block but around it," he said.
"It's a lot of work to rehab the structure, but it's a blank canvas. That's exciting," said Sehring, explaining that creating traditional offices won't be in plans that are still being made. Instead, he pointed to the Jump Trading Simulation & Education center, where OSF installed meeting places and places for conferences rather than offices on that building's third and fourth floors.
"We want to develop a new vision of the building (at 124 SW Adams St.)," said Sehring, noting that, along with changing the interior, OSF will return the building's exterior to what it looked like when it attracted wide attention as the Block & Kuhl department store. The Big White Store, as it was called, was purchased by Carson Pirie Scott in 1961 and has its own place in Peoria history. It was the first steel skyscraper in Downtown Peoria and one of the first in the state.
OSF employees will contribute to an urban experience that Sehring said will help OSF in the future. "We want to create an urban environment that will attract talent from across the country," he said.
Spain, a state representative and former Peoria city councilman, said the city of Peoria has been an engaged partner in working out the block's transition from Caterpillar to OSF. "We're reaching out to the city for help with parking — not just for employees but a couple of hundred visitors," he said.
OSF isn't looking for a new parking deck to be built, said Spain. "There's plenty of parking capacity in the Downtown right now," he said.
The news was well received by officials in Peoria, a city that's dealt with budget shortfalls and hotel refinancing problems in recent weeks. "This comes at a time when good news is welcome," said 1st District Councilwoman Denise Moore.
"This will definitely benefit business in the Downtown. Along with bringing good-paying jobs to the Downtown, (the announcement) may spark the interest of folks who have been on the fence about starting a business Downtown," she said.
The owner of a cafe directly across the street from the now vacant block had to choke back tears while formulating his thoughts on the development.
Joe Slyman said he was in real danger of losing Adams Street Cafe & Catering when the buildings across the street emptied ahead of anticipated construction on Caterpillar's aborted headquarters. Business has since been in a steady decline.
"Every year has been a struggle, and I didn't want to lose a 35-year-old family business," Slyman said while blinking back tears. "I felt that with everything that has been happening with Caterpillar — first the big uplift, then the tremendous letdown — people were panicking, and there were some casualties. I thank God I persisted."
Then, when he heard the news about OSF HealthCare taking over the abandoned buildings to locate its headquarters there on Thursday, he said: "I could have done cartwheels."
Meanwhile, Moore was also upbeat about what the announcement could mean for construction work in the area — particularly for minority employees.
"OSF has a history of using minority contractors and vendors. I look for that to continue as building plans come together," said Moore.
Mayor Jim Ardis, who had the unenviable task of delivering his State of the City speech last year shortly after Caterpillar announced plans to cancel its Downtown HQ complex along with moving its headquarters to a Chicago suburb, has something more positive to talk about this year.
"OSF HealthCare on the Chase Block will be a game-changer for Downtown Peoria," he said. "There will be several hundred construction jobs on that block for the next couple years followed by 700-plus OSF employees working Downtown when the ... project is completed in a couple of years."
"This investment in our Downtown tells a good story that Peoria continues to do what we've done for decades: persevere and work hard and adapt to changing economies," Ardis said.
Other members of the council said the OSF move could do more than spur growth Downtown.
“It’s not just a shot in the arm for Downtown Peoria but for the city’s real estate market as a whole,” said Zach Oyler, at-large councilman and a Realtor. “It will help our Downtown businesses that rely on foot traffic. It should be a significant improvement to the local restaurant business.”
Putting several hundred employees in the heart of Downtown would definitely help, said 3rd District Councilman Tim Riggenbach. “With Illinois Central College no longer in the Downtown, all those closed buildings takes a certain buzz off the street. We need to find a use for those buildings,” he said.
Chuck Grayeb, the 2nd District Councilman, likened the news to an injection of Vitamin B-12 that could soften the blow the city took last year when Caterpillar canceled its Downtown plans.
“We miss the 300 (Caterpillar) executives,” he said, referring to the company's top management people that relocated to the Chicago suburb. “If we have 750 people working Downtown at OSF, that helps make up for it.”
Steve Tarter can be reached at email@example.com or 686-3260. Matt Buedel can be reached at firstname.lastname@example.org or 686-3154. Chris Kaergard can be reached at email@example.com or 686-3255.