The Burnham redevelopment project has not been without its major setbacks, including concerns about the apartment issue.

In October 2001, the city council selected the Stone Arch Group as the primary developer of the site. But in February, the city council directed staff to end negotiations with the Stone Arch Group because they could not reach an agreement that met the city's goals for the project.

"It was the mix of units principally," said Bruce Knight, Champaign city planning director. "They wanted to limit the number of four-bedroom units. We wanted to promote the development of an urban neighborhood."

In addition, the $50 million price tag was too high. Knight said $50 million would have required more investment than the council was prepared to accept. Under the current plan, the final cost of the project is estimated at between $35 million and $40 million.

The current cost is lower than the old projection because the scale of the buildings in the new plan is three to five stories, as opposed to six to ten in the old design. The old plan also called for the construction of underground parking garages that were projected to cost between $8 million and $9 million. Under the new plan, there will be no underground parking. Surface parking will be available, however.

Demolition of the hospital, environmental cleanup and participation in infrastructure development is estimated to cost the city $6 million. But all expenses will be paid for by property taxes generated from the project.

Before the redevelopment begins, the city will pay for the demolition by issuing a bond. After the property is developed, the property tax generated by the new development will go toward repaying the initial bond.

"It's sort of a timing thing where we borrow money up front and the tax revenues are set aside to repay that instead of going to the general fund," said Colleen Braun, assistant to the city manager for development.

The site of the redevelopment is located in a tax increment financing (TIF) district. The city collects property taxes on buildings in the TIF district and reinvests the money in the district. In this case, the money will pay for demolition, environmental cleanup and infrastructure repair of the site. The money can also go toward beautifying the surrounding area and other projects such as the Boneyard Creek.

— Jacob Dallek