1	UPSTAIRS DOWNTOWN: ROCK ISLAND, IL APRIL 7 & 8, 2005
2	Presenters Alan Carmen – Rock Island Planning & Redevelopment Administrator Rick Daley – Rock Island Construction Officer
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4	Downtown Evolution Working and living in Downtown – 19^th & 20^th Centuries Things changed after World War II Decline continued through 1980’s & ’90s Renaissance started in 1990’s and continues Downtown as a 24 hour activity center Bring people back
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7	City Of Rock Island Planning And Redevelopment Division DOWNTOWN TIF UPPER STORY HOUSING LOAN PROGRAM Program Purpose: To increase the number of residential units, upgrade existing units and enhance the appearance of facades in the Downtown Rock Island Tax Increment Financing District in conformance with City Council goals and the Downtown 2000 Plan
8	The Need Rent supports how much debt? Fill the financial gap Fill the knowledge and skills gap – building codes, construction & project management GROWTH – bigger projects; City – smaller projects City filling a niche
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10	The Response City Council approves program in 2002 $160,000 in Downtown TIF funds budgeted annually since then
11	Eligibility Located in Downtown TIF Existing residential only; no new construction Units must be vacant Owner or tenant occupied Market rate First floor must be viable commercial use
12	Use of Funds All interior or exterior rehabilitation costs and appliances Soft costs – architectural and design fees, appraisals, plan review and permit fees
13	Development Agreement Approved by City Council Identifies tenant parking Specifies minimum private investment Ownership for 5 years following investment or City share is repaid Loan closing – recorded mortgage, note, development agreement, preconstruction conference First floor use must remain viable for 5 years after renovation Insurance, property taxes and City utilities must be paid and current
14	Funding 0% 5 Year Forgivable Loan $20,000 per newly rehabbed unit $10,000 per unit if occupied within last 5 years TIF not more than 40% of total project 10% construction contingency required Private funds deposited with City at loan closing
15	More About Funding Cost averaging allowed for multi-unit projects No displacement $160,000 budgeted per year Program started in 2002 TIF $ used to cover staff costs – actual tracking by hour (two employees)
16	Even More About Funding Can and have linked to Façade Improvement Program Downtown Design Guidelines applied to influence exterior appearance 12 units complete (3 projects); 20 units in pipeline
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20	The Process Market program News release, handouts, email, GROWTH & District (Dan Carmody), word-of-mouth Work through waiting list – first come, first served, if ready to proceed Complete application – use City’s standard loan application Owner must secure at least 60% of financing (bank, credit union, equity)
21	More Process Inspect property – Code inspection & program by two City divisions Code inspection requirements (2003 IBC Chapter 34 Summary Sheet) Program Inspection – to meet program and code standards, including historic preservation objectives Fire separation Energy savings
22	Handholding I Selecting architect Working with architect & City Selecting contractor General: be your own or hire one Working with subcontractors Options: 1) Architect / construction manager & general contractor 2) Architect / owner as general contractor 3) Architect / construction manager / general contractor
23	Handholding II Construction management skills – pay for it or do it yourself Financial skills – managing a $200,000 - $300,000+ rehab budget (by City); requires building trust with client Assist owner to determine rehab cost relative to rent, long-term maintenance expenses Once a client, always a client
24	Property Renovation Stage Rehab is a snap NOT Progress payments O.K., no limit to number of payouts (but $5,000 minimum; average @ $20,000) Change orders – they happen and that’s why you have a 10% contingency Need for mediation – owner / City / contractors / Inspectors
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33	More Process Property Management skills needed by owner – they may run their own business, but have not been rental property managers Long-term commitment by City and owner Celebrate and publicize successes
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35	Lessons Learned I Problems – skill set match Noise of rehab and impact on business Dealing with contractors & construction managers Rent levels & financing / operating costs when you have a $70,000 per unit average rehab cost
36	Lessons Learned II Impact on property taxes We’ve seen 72% – 224% increases in property values; 200% – 1800% increase in after-rehab TIF increment. Account for this in the pro forma! Parking – always a challenge and needs to be negotiated with owner and provided for tenants Success rate of active cases (inquiry to completion) – approximately 75%
37	What Others Are Doing Lots of Façade Programs – housing impact is incidental Springfield – Downtown Residential Assistance Program (dedicated housing program): Only 4 – 5 projects between 1981 – 1993, then 4 or 5 per year since then. Usually 1 or 2 unit projects, but some bigger ones are on the horizon. Program evolved from $35,000, not to exceed 50%, to 50% of project as negotiated with staff and approved by Council. Rent rebate and design consult incentives used. Can mix and match programs and blend interest rates. Biggest challenge is dealing with increasing rehab costs relative to housing market and rent levels.
38	What Others Are Doing II Bloomington – uses façade program, with incidental housing impact and then only exterior changes. Limit of $20,000 and 50% per project and no more than 2 projects in any year. Several mixed use prospects that will be negotiated separately. Elgin – Facade program used since 1991, mostly retail, but with a few upper story apartments. TIF projects are negotiated independently with a target of not more than 15% public incentive cap.
39	What Others Are Doing III Check out the websites listed in the resource binder for more program information – structure, contacts and impacts.
40	Conclusions It’s good for property owners to fully use their buildings It’s good for downtown’s vitality – as a 24 hour activity center It’s good for the urban dwellers – provides housing choices It’s good for the city – more revenues!
41	Questions and Discussion