Phase 1 site plan.jpg

A site plan for the proposed mixed-use development on the Dorn Hardware site.

The Village of Oregon is considering spending nearly $1 million to help a redevelopment project on North Main Street get started.

The Dorn Plaza project – which the Village Board approved a general development plan for in 2016, and again this past May – would be located on the corner of West Richards Road and North Main Street.

The plan calls for a three-phase development that would eventually move the current Dorn True Value Hardware and Hometown Pharmacy to another location on the same parcel of land.

The first phase would add a three-story building with 30 apartments above a 12,000 square foot retail space.

The GDP is part of a three-step process called a planned district development that allows for different types of building uses and zoning variations on a single site.

On Monday, Dec. 2, village administrator Mike Gracz updated the board on the village’s analysis of the project. The board took no action on the project, but rather provided some direction for how to analyze it going forward.

Trustees discussed how quickly the village could and should pay the $950,000 in tax-increment financing the developer has asked for and how this project would fit in with other expected obligations the village has in the future — including the library.

TIF is a public financing tool that allows a municipality to collect increased taxes on new or improved developments from multiple taxing jurisdictions. It can be used, among other ways, to clear or renew aging or neglected property, to make an area of a municipality competitive or to close a gap in financing capability.

The village’s financial adviser has analyzed whether the project could cover the TIF request, Gracz told the board. It still needs to determine whether it meets the “but for” test required of every TIF project — that is, the project would not happen “but for” the funding.

Phase I, which would build the new building and expand the parking lot is valued at $5 million, Gracz told the Observer after the meeting.

Gracz told the board the analysis showed paying that amount over five years would not be feasible.

Dorn’s president Tom Dorn told the Observer in February 2018 the project was on the “back burner” for him at the time, but he was in the process of working with his partners to see who wanted to be a part of it. Dorn had said once he started the project, it would be developed by Verona based KSW Construction, which provided the GDP documentation in May.

The question for trustees, Gracz said, was how much of the increment generated the board would be willing to send back.

The request would have required sending back 100 percent, which would pay off the project in 10 years, something Dorn staff was workable. Limiting the payback to 80 percent, which the board favored, would extend it to 12 years.

Email Emilie Heidemann at or follow her on Twitter at @HeidemannEmilie.