By Jim Hagerty
ROCKFORD — A bill to extend the River Edge historic tax credit program through 2022 now sits on Gov. Bruce Rauner’s desk.
The extension passed the Illinois House May 31 with a vote of 101-12. Five representatives abstained. The measure previously passed the Senate unanimously.
Supporters say River Edge credits have helped generate more than $125 million in private investment across town, mostly buildings on the stretch of State Street from City Hall to the upcoming Amerock Embassy Suites.
The program is aimed to spark renovation in Illinois’ River Edge Redevelopment Zones, areas adjacent to rivers in Aurora, East St. Louis, Elgin, Peoria and Rockford. It provides a number of sales tax exemptions and property tax relief, including the River Edge Environmental Remediation Tax Credit, which pays 25 cents on the dollar for non-reimbursed remediation expenses.
Developers can also utilize deductions for income earned, interest and sales taxes on building materials.
Rauner extended River Edge for one year last December, but its future was still somewhat uncertain, making projects like Amerock, where tax credits are slated for a significant portion of the capital stack, a bit tricky. Gorman & Company already had millions into the project and earlier this year the developer asked the city to redo its agreement to turn the building into a skyrise hotel.
The company paid $250,000 for the property and hundreds of thousands more in planning and remediation. And when he begins turning dirt later this year, CEO Gary Gorman said those costs will increase even more, making the tax credits especially handy during the two-year construction period.
“The tax credits are based on dollars expended in a calendar year,” Gorman said.
Wisconsin-based Gorman is not the only developer to utilize the program in Rockford. River Edge credits have already been applied to several downtown buildings.
The renovation of the Rockford Trust Building into 62 upscale apartments now known as the Burnham Lofts by developer Urban Equity Properties included more than $2 million in tax credits. Urban Equity has also used River Edge on mixed-used projects on the east side of the Rock River and in the Midtown District.
And the $12 million Prairie Street Brewhouse, now a staple downtown attraction, utilized credits of about $800,000, much of that thanks to the efforts of architect Gary Anderson, who has been a keen proponent of the credits.
“The extension is critically important to our community,” Mayor Tom McNamara said. “I greatly appreciate the work our local delegation put forth to secure a long-term commitment to River Edge. The new extension will allow developers to create and plan new projects that may not be feasible without such an extension.”
State Rep. Litesa Wallace, D-Rockford, helped champion the program in Springfield and urged fellow lawmakers to see the importance in cities on the rebound, fighting to provide jobs and create sustainable development.
“This tax credit has been crucial in creating jobs and attracting investment for downtown Rockford,” Wallace said. “I thank local advocates, Rockford officials and my fellow legislators who worked hard to keep this economic generator for our community and our state.”
The River Edge credits had become a political football of sorts in Springfield, with many concerned that an extension of the package could become a casualty of the ongoing budget proposal. But State Sen. Steve Stadelman, another Rockford Democrat, worked to see the bill through to Rauner’s desk.
“The tax credit has already incentivized hundreds of millions of dollars of development in Rockford alone,” Stadelman said last week. “This will help put crumbling infrastructure back to use, grow the economy and increase revenue.”
Aurora was one the first to create a River Edge zone and undertake a number of flagship projects, such as a $24 million redevelopment of a vacant senior living center and other blighted downtown buildings.
Like Rockford, Aurora property owners are sometimes caught in difficult situations when they are unable to recoup construction costs with rental income. Tax credits help ease those disadvantages in towns trying to compete with those with already favorable economic landscapes.
In downtown Elgin, River Edge credits are being applied to the $16.6 million renovation of the historic 15-story Tower Building into 45 upscale apartments. The redo of the former bank is expected to be done this fall. R.