Peoria’s Warehouse District and Downtown have seen $214 million in redevelopment in the last five years, thanks to two tax credits, one of which was recently extended by the Illinois General Assembly. With the extension in place, Peoria could soon see its total redevelopment hit $300 million. City officials tout the River’s Edge Redevelopment Zone credit, extended for five more years by
Peoria’s Warehouse District and Downtown have seen $214 million in redevelopment in the last five years, thanks to two tax credits, one of which was recently extended by the Illinois General Assembly.
With the extension in place, Peoria could soon see its total redevelopment hit $300 million.
City officials tout the River’s Edge Redevelopment Zone credit, extended for five more years by state lawmakers last month, as catalyst that, combined with a federal historic tax credit, brought an influx of redevelopment to downtown Peoria.
Redevelopment projects like Obed & Isaac’s Microbrewery and Eatery, OSF HealthCare’s new headquarters, Murray Place on Walnut Street, the Marquette Apartments on Main Street, Winkler Lofts on Washington Street, all serve as redevelopment success stories that city leaders said were made possible by the tax credits.
“Having that tax credit in place really does allow for the redevelopment and the growth we have seen in the Warehouse District in properties we have seen being turned back over from warehouses or empty structures back into viable tax-paying entities,” said Peoria City Manager Patrick Urich.
Having been passed in the Illinois General Assembly in an effort led by Peoria lawmakers Sen. Dave Koehler, D-Peoria; Rep. Jehan Gordon-Booth, D-Peoria and Rep. Ryan Spain, R-Peoria, the tax credits, which appear in SB 1822, await a signature from Governor JB Pritzker to be extended another five years.
Peoria already has another $60 million in new work pending, as developers wait for Pritzker to sign the bill, which passed 112-4 in the House and 57-0 in the Senate.
“Developers are really excited because one of the things this (tax credit) does is it provides some stability in terms of their ability to continue to seek financing to push projects,” said Peoria’s senior economic engagement specialist Kevin Evans.
Urich also credits the development from the tax credits with drawing in an additional $25 million of investment that did not use the tax credits. When added all together, in Urich’s estimation, these tax credits will have been worth around $300 million to Peoria.
Peoria’s city government asked its delegation of lawmakers in Springfield to get these tax credits extended. Koehler, who sponsored the Senate bill, said he worked with Gordon-Booth and Spain to make the city’s wish a reality.
As far as getting the bill passed, Gordon-Booth said it was fairly easy this time around. To convince other lawmakers to vote yes, she said she just told them the story of Downtown Peoria, specifically the Warehouse District, where this tax credit has led to significant redevelopment.
“Our story is an easy one to understand,” Gordon-Booth said. “We have seen massive success as a result of the tax credit. Literally, we have been able to leverage over $200 million if you think of the OSF headquarters, all of the development in the Warehouse District.”
How the tax credits work
There are essentially three potential tax credits at play for developers who wish to redevelop a property in Downtown Peoria or the Warehouse District.
One is the existing federal historic preservation tax credit. This incentivizes developers to give a facelift to a building that qualifies as a “historic place.” It applies to many of the buildings in Peoria’s Warehouse District, along with others like the Block & Kuhl building being refurbished into the new Downtown headquarters for OSF. Using it, developers can get a tax credit of 20% on all their building expenses.
The other tax credit in play is the River’s Edge historic tax program which applies to specific parts of Peoria, Rockford, Elgin, Aurora and East St. Louis. If a developer is seeking to redevelop a historic property located in one of these zones, they can take a 25% state income tax credit on their building expenditures.
If a property in Peoria qualifies for the federal historic tax credit and is located inside Peoria’s River’s Edge zone, a developer can have a credit applied to nearly half of their redevelopment costs.
Couple those credits with an additional 5% to 10% allowed from Peoria’s tax increment financing district, and a developer could be looking at up to 55% of their expenditures qualifying for a tax credit. In short, the city believes there is plenty of financial incentive for developers to work in Downtown Peoria.
“That’s something we’re really excited about is that this extension, and the extension of the TIF, if signed by the governor, will allow us to move forward with continued redevelopment of these magnificent structures in Downtown,” Urich said. “I am really excited about the direction this is headed.”
Evans said securing the tax credits offers developers stability in knowing their window for completing and starting projects is extended. This he believes is crucial to luring developers Downtown.
In short, while someone might begin looking at a project now, construction might not begin for a year or two, and might take a year or more. So knowing the credits will continue for five more years keeps the area appealing for developers.
“In the example of the River’s Edge Redevelopment financing zone, being able to maximize taking advantage of that benefit often becomes the difference,” Evans said. “And again, it can be the difference between one or two years in whether or not that’s available and it makes that feasible.”
Developer David Dubin, whose company is refurbishing the building at 812 SW Washington Street into residential apartments, said the tax credit is the key for developers like him to come to Peoria. Plain and simple, it makes Peoria competitive with other markets and offers developers a chance to cash in.
“With the tax credit we can make a viable deal so we can get a return on equity for investors,” Dubin said. “It makes sense.”
Securing the credits and the future of downtown
While Peoria’ has already seen $214 million in development with another $60 million pending, state lawmakers, city officials and developers have no plans on slowing development anytime soon.
Developer Katie Kim believes this kind of development can elevate Peoria’s status as a city and help attract a younger workforce to the city.
“I love Peoria — it has a lot of parks and running trails — but we need to make sure we’re stepping up our game and being competitive,” Kim said. “They want those amenities that come with being in a bigger city, food options and things to do.”
The tax credit is by no means a giveaway for developers, to utilize it, they must show proof of their projects being completed. This is another aspect Kim says is a plus for the credit.
“You don’t get the tax credits until you do the job,” Kim said. “You have to perform before you get it. It’s not something that somebody can fake.”
Gordon-Booth, who calls this legislation her “baby,” first brought it to the House 10 years ago and has so far been elated with the progress she has seen. But like the others, she doesn’t believe Peoria is done growing from this tax credit and said she is “excited” for what is to come.
“I am really looking forward to creating a strong quality of life for Peorians, central Illinoisans and visitors who can come to a strong, vibrant downtown,” Gordon-Booth said.
Dubin said he anticipates doing more development in Peoria now that the tax credit has been extended, but with a caveat; Peoria has to fix its parking problem.
“Without a static, for-sure parking plan, its going to be hard for any large projects to get off the ground,” Dubin said.