The paradox of America's deserted downtowns and the affordable housing crisis has been reported on by well-known media outlets such as PBS, CNN, The New York Times and Slate magazine. One potential solution to this problem is to convert vacant commercial space into residential housing. Although this potential solution comes with many barriers, it's not stopping progress in some larger cities that have a vibrant rental market, a lack of affordable housing and abundant vacant commercial buildings.
But according to Mike Jackson, who has decades of experience with the downtown-revitalization movement throughout the country, Springfield is like numerous other cities that present a dichotomy of challenges to downtown office transformation. Prior to his retirement, Jackson was director of the Historic Preservation Division of the Illinois Department of Natural Resources and is quite familiar with the challenges of working with older properties that require modern updates.
Many developers find there to be a financing gap in commercial to residential conversion projects due to high upfront construction costs that do not support the return on investment, according to Jackson. Most government-incentive grant programs or low-interest loans come linked to prevailing wage requirements which add to the high cost of construction.
Fortunately, Springfield has an array of low-rise, pre-war, multistory vacant office structures that can, without costly redesign, be efficiently transformed into places where people could live. But developers feel a squeeze in financing options since the city's downtown TIF funds are mostly spent down. Government grant programs require community support and can become unwieldy to manage, even for well-intentioned, competent developers and investors.
The Myers Building at
the southwest corner of East Washington and Fifth streets is one such
distinctive jewel of downtown. Configured with open floor plans and plenty of
operable windows on each floor, it offers beautiful wood trim, high ceilings,
natural lighting and airflow, making it a good candidate for residential living
units, according to Richard Myers. His ancestors founded Myer Brothers and he
currently serves as chair of the executive committee for the family’s real estate holdings.
Built in 1925, the 10-story Myers
Building was designed with lower-level retail and traditional offices on upper
floors, which have slowly dwindled to around 50% occupancy. The Myers family is
exploring ways that the building can continue to contribute to Springfield’s downtown vibrancy well into the future.
However, by 2022 the project was scrapped after hitting some financing obstacles. To offset the differential of relatively low rent potential and high overall construction costs, the IHDA program – which offered tax credit incentives to meet the funding gap – would have required 100% of the units to be priced for “workforce housing.”
According to Myers, “The mayor at that time was resistant
to supporting the project with all lower-rent and no market-rate units. With a
more than $5 million doughnut hole, the IHDA financing would have been the only
way to make the project feasible.”
From his perspective, Myers suggests
that the best configuration for the property might be a mixed-use project,
combining both commercial and residential elements. At this point, the Myerses are looking for a developer and have met with city official and council members, who seem supportive of their efforts.
Rick Lawrence, president of the commercial construction firm Siciliano Inc.,
has devoted years to bringing life back to three century-old downtown Springfield
buildings at the southwest corner of Sixth and Monroe streets. The Ferguson, Bateman-Kennedy and Booth buildings combined
represent 61,844 square feet of vacant Springfield downtown space. Begun as a
planned residential and retail development, the project has hit multiple obstacles
since its inception more than a decade ago.
According
to Lawrence, the Booth building exterior is now 90% complete and in the process
of historic restoration review. The Booth interior was approximately
40% complete before work was halted.
At
one point the plan was to create 16 apartment units in the eight-story Booth
building and four units in the central three-story Bateman-Kennedy buildings.
Several luxury loft-style units could be configured in the upper floors of the
Ferguson building, which also has first floor corner restaurant space that has
housed popular eateries over the years.
Lawrence
hopes that space will soon house a restaurant again and has been working with
Corey Dickerson and Smarjesse Taylor, who plan to own and operate Aunt Lou’s
Soul Food. “They have both been graciously hanging on while I have worked
through issues with the city,” Lawrence said. “At this time, they have all the
approvals that are required and are working hard to make a soft opening happen
for the annual St. Patrick’s Day parade on March 16.”
In addition, Lawrence is currently
completing structural renovations and working with designers to create a functional plan for the
trio of buildings, which he envisions will be turned over to a new development
team for completion. Lawrence suggests innovative design elements such as a rooftop bar and restaurant and event spaces on upper floors
that could be rented for wedding receptions and other gatherings would make the
project more viable for the current market.
