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$4.5M development planned for historic school
Plans are in the works for a $4.3-$4.5 million housing development that will convert the historic century-old, abandoned Garrison School and its gym into 14 mostly two bedroom, loft-style apartments.
Larry Morrissey, a local attorney, former 2001 Rockford mayoral candidate and downtown developer and his family, plan to build a 34-unit, market-rate housing development in the 900 block of North Church St.
Morrissey hopes to begin construction in October. In addition to loft apartments, Morrissey plans 20, two- to three-bedroom townhouses on 2.3 acres surrounding the school. The former school, which gained historic status in 1996, has been a magnet for illegal activity since it was all but abandoned 10 years ago. The proposed development is bounded by Salem Street on the north, John Street to the south, North Court Street on the west and North Church Street to the east.
Rockford Alderman Doug Mark (R-3), North-end Business Association member Phyllis Stone and Morrissey believe the development will preserve a historic landmark, help reduce crime in the area, offer attractive housing options for individuals and families, bring patrons to area merchants and increase the citys and schools tax base.
Morrissey hopes to sell all of the townhouses soon after construction and all of the apartments after five years. Morrissey said the apartments cannot be immediately sold because of how construction will be partially financed-through a historic preservation tax credit and a city-created Tax Increment Financing (TIF) district.
TIF districts allow local governments to attract development and businesses to statutorily defined blighted areas. According to the Illinois Tax Increment Association, In a TIF district, dollars for improvements are generated by businessesnewand oldattracted by TIF benefits. Specifically, money for infrastructure improvements and other incentives comes from growth in property tax revenuesthe tax increment, the Associations Web site reads. Morrissey said: There is currently no money in the [Garrison School area] TIF. The value of the TIF comes from the difference between the current property tax and what the tax will be after the project is completed. In other words, by constructing the development, were creating value where it didnt exist.
According to Morrissey, through TIF designation, the city can sell bonds to help finance housing construction. After construction is complete, the difference between pre and post property value tax rates are used to pay the bond debt, finance public infrastructure improvements and/or reimburse developers for their initial investment.
To obtain TIF and historic preservation tax benefits, developers must agree to certain restrictions. One of the restrictions requires the developer to own the property for five years before selling.
Mark said the TIF district has yet to be created, which will require Rockford City Council approval.
Mark is confident the council will create the TIF district by September or October. The city plans to make the district slightly bigger than Morrisseys 2.3 acres.
Critics of TIF districts argue that such areas grow slower than municipalities that do not use TIF funds. The University of Illinois published a study in March 2000 that analyzed 235 Chicago-area cities, towns and villages.
The researchers concluded state and local policymakers should revisit the issue of TIF districts as economic development tools and question whether school districts and other local governments should also have
authoritative roles in the decision to create TIF districts, the study said. Mark indicated that to a large extent, such cooperation already exists in Rockford.
University of Illinois researchers and study authors, Dr. Richard Dye and Dr. David Merriman said, generally, school districts receive 60 percent of Illinois property tax revenue, while other local governments and municipalities receive 25 percent and 15 percent of property taxes, respectively.
According to the study, TIF districts capture all incremental property tax revenue, including money that would otherwise go to schools and other local governments. Whatever the intention (of municipalities use of TIF districts), designation of a portion of a municipality as a TIF district could actually cause an increase, decrease or no change at all in the overall economic growth of the municipality, the study reads.
Morrissey said his own study of the housing market for the project is favorable and he is confident the development will succeed. To the best of Morrisseys knowledge, the proposed Garrison School area TIF district and use of the historic preservation tax credit is unique because the project preserves a historic landmark, is for market-rate housing rather than taxpayer-subsidized housing, and is not for bussinesses.
Mark supports Morrisseys efforts and said the city needs to invest more in west Rockford development efforts. The city must also examine the merits of each proposed TIF district to decide if market forces might not be a better alternative for development, rather than using TIF incentives, Mark said.
Mark specifically cited the intersection of Illinois 173 and Illinois 251 in Machesney Park that Mark asserts would have probably been better developed through market forces rather than through TIF designation. At that intersection, Machesney Park officials used threats of eminent domain procedures to seize homes and TIF incentives for construction of retail shops. The primary beneficiary of the construction was developer Sunil Puri and his First Rockford Group, Inc.
Dye and Merrimans study appears to support Marks market-force assertion and not support Machesney Parks use of TIF. However, projects such as Morrisseys do not appear to be have been analyzed by Dye and Merriman, which buttresses Morrisseys assertion that the development is unique.
Preservation tax credit Morrissey also plans to take advantage of the former Garrison Schools historic status. The school gained its historic status in 1996.
According to the Illinois Historic Preservation Agencys Web site, the federal historic preservation tax credit provides federal income-tax incentives for the rehabilitation of historic income-producing properties. The Illinois Historic Preservation Agency administers the program for Illinois properties.
Under federal tax provisions, a 20 percent tax credit is available for substantial rehabilitation of commercial, agricultural, industrial or rental residential buildings that are certified historic. The credit may be subtracted directly from federal income
taxes owed by the owner.
Morrissey said the historic tax credit, combined with TIF status and his familys own investment will make the project possible.
The Morrisseys invested $1 million to convert the former Pioneer Life Insurance storage facility into four loft apartments, a law office and other commercial space in 2000.
In the Morrisseys new project, the former Garrison School may house eight, mostly two-bedroom apartments. Plans for the old
gymnasium call for five, two and three-bedroom apartments. The rest of the 2.3 acres will be occupied by 20, two and three bedroom townhouses.
Planning for the 34-unit project has been in process for three years. The property was purchased two years ago.
Morrissey said the price range for the various townhouse units, depending on amenities, will be from $90,000 to $185,000. Amenities include options such as special flooring and countertops. Fireplaces will also be available. The for-sale units will be the new construction units. Rents for the option-to-purchase units will range approximately from $800 to $1,200. Housing inquiries may be directed to Morrisseys law and realty office at 965-5505.
Read Dye and Merrimans TIF district study at: www.igpa.uillinois.edu.