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TO: Mayor Robert J. O’Connor
FROM: Rick Guzman, Asst. Chief of Staff
DATE: Nov. 8, 2016
SUBJECT:
A Resolution urging the State of Illinois to extend the River Edge Redevelopment Zone (RERZ) State Historic Tax Credit
PURPOSE:
The RERZ State Historic Tax Credit has been a valuable tool in past redevelopment projects and would be an invaluable resource for the redevelopment of several older, vacant or underutilized structures in the downtown or within Aurora's River Edge Zone. Unfortunately the credit is set to expire on December 31st of this year and so there is no longer sufficient time for this valuable credit to benefit any additional projects unless the credit is extended beyond its current expiration date.
BACKGROUND:
The RERZ State Historic Tax Credit was the most important funding component that made the redevelopment of the former St. Charles Hospital possible. Without it, there would have been at least a $3 million gap in funding and the project would not have moved forward leaving this historic structure vulnerable to further deterioration and possible demolition. Several other downtown buildings would be eligible to use this credit if it were renewed and developer interest is high.
DISCUSSION:
The cost of rehabilitating older, historic buildings is often prohibitive. While Federal Historic Tax Credits are available, they are often insufficient to make the redevelopment of historic structures feasible or affordable without extra assistance. Federal credits can cover up to 20% of eligible renovation/preservation expenses, while the State Credits can cover an additional 25% of eligible costs.
IMPACT STATEMENT:
There is developer interest in using these credits for several buildings--including, but not limited to: the Hobbs Building; the Terminal Building; the Galena Hotel; the former District 129 administration building and several more in the downtown, along River St. and along the Fox River. The extra 25% credit could make the difference in whether many of these buildings are redeveloped--just as it did with the former St. Charles Hospital.
RECOMMENDATIONS:
I recommend the adoption of the enclosed resolution to urge the State of Illinois to extend the life of this important resource."
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
title
A Resolution urging the State of Illinois to extend the River Edge Redevelopment Zone (RERZ) State Historic Tax Credit.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the River Edge Redevelopment Zone (RERZ) program was created by the State of Illinois to stimulate the safe and cost-effective development of environmentally challenged and/or historic properties adjacent to or surrounding rivers using tax incentives and grants; and:
WHEREAS, the RERZ State Historic Tax Credit can be layered with the Federal Historic Tax Credit making it far more likely that vacant, historic structures can be redeveloped, but that the RERZ State Historic Tax Credit is scheduled to sunset on December 31, 2016 after just four years and at a time when private developer interest in the program has reached an all-time high; and
WHEREAS, the RERZ State Historic Tax Credit was the key to redevelopment of the long-vacant, former St. Charles Hospital, a building listed on the National Historic Registry, and that without said credit, the former St. Charles Hospital would still be sitting vacant and deteriorating today, but because of the credit, a ribbon cutting on the nearly $25 million project is planned for next month;
WHEREAS, the RERZ State Historic Tax Credit would be an invaluable resource that could very likely make the difference in saving and redeveloping several historic buildings within Aurora’s designated River Edge Zone-including, but not limited to the Hobbs Building, the Terminal Building, the Galena Hotel and many others; and
WHEREAS, the extension of the RERZ State Historic Tax Credit would not only benefit Aurora, but would benefit other historic, river cities with large numbers of historic buildings that would otherwise be difficult or even impossible to redevelop-including Rockford, Peoria, Elgin and East St. Louis;
WHEREAS, there has been bipartisan support for the extension of this critical tax credit because: (1) it creates jobs and economic activity far beyond the level of tax credit; (2) a University of Illinois Springfield study found that the credit has a return on investment of up to $10 for every $1 invested; and (3) the credit creates an encouragement of private investment in vacant or underutilized buildings putting neglected properties back on the tax rolls at higher values and catalyzing investment in surrounding areas;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows: that the City Council of the City of Aurora hereby calls upon State of Illinois officials to renew or extend the River Edge Redevelopment Zone state historic tax credit that is due to expire on December 31, 2016.