JOLIET – The city might need to consider financing projects if it wants more residential development downtown, Joliet Economic Development Director Steve Jones told a City Council committee Thursday.
Making downtown hospitable to housing is a part of the city’s plan for adding economic vitality to the area.
But Jones said that banks have been reluctant to finance two recent plans to rehabilitate older buildings for residential use because the cost of renovations were higher than the appraised values of the property.
“That’s a dilemma I see out there, and I think how it plays out depends on our willingness to take on some of this risk,” Jones told the Economic Development Committee.
Jones made his comments at a meeting in which the committee was considering a proposal to provide as much as $950,000 to finance renovations of the Barber Building for residences.
The proposal was removed from the agenda, however, and Jones said developer Mike Petry is pursuing other funding arrangements.
The proposal was to use tax increment financing incentives to repay the city for its loan to the developer.
That would be a sharp departure from past use of TIF funds, when typically the developer makes the initial investment and recovers money in time through the incentive.
But Jones said other cities have taken steps to spur urban redevelopment.
Committee members said they would be open to such an idea, depending on the project.
“It’s going to depend on the actual development – the development plan,” committee Chairman Larry Hug said.
Councilman Terry Morris, however, questioned whether the city would take on too much risk.
“If it fails, the property goes to the bank. The city has nothing,” Morris said. “It doesn’t even have the property.”
Jones said the city could continue to repay itself in time through property taxes on the building, but he acknowledged risks.
“Part of it is more the political risk,” he said. “If the city puts up $700,000 and the project fails, you have a fiasco.”
In other business, the city gave staff the OK to negotiate a redevelopment agreement for the old Crabigale’s comedy club building at 1 E. Cass St.
A group including local developer John Harmon has plans to move a restaurant, a chiropractic office and apartments into the downtown building. The city owns the property, but wants to turn it over to private control.