The Corporate Review 2014 - A new lease on life for downtown Springfield

Editor’s note: On Tuesday, May 13, the Springfield Business Journal and Downtown Springfield, Inc. invited a small group to a business luncheon for the purpose of discussing Springfield’s downtown area. It was held at the Inn at 835 from 11:30 a.m. until 1 p.m.

The panelists included local entrepreneur Karen Conn; Kevin Kuhn, principal engineer for the firm of Kuhn & Trello; Christopher L. Nickell, developer and member of Downtown Springfield, Inc. (DSI); Larry Quenette, president and principal architect of Renaissance Architects; and DSI executive director Victoria Ringer.

The Springfield Business Journal’s editor and publisher, Fletcher Farrar, and associate editor, Scott Faingold, moderated the discussion.

The panelists all proved passionate about downtown Springfield, each with a vital stake in its redevelopment and revitalization. A variety of issues, obstacles and potential initiatives were discussed and an overall combination of optimism, dedication and pragmatic thinking came through loud and clear.  The following transcript has been edited and abridged.

The end of the TIF District

SBJ: I want to start out by asking where we’ve been and what’s been accomplished downtown. There’s been a lot of progress and the TIF [fusion_builder_container hundred_percent="yes" overflow="visible"][fusion_builder_row][fusion_builder_column type="1_1" background_position="left top" background_color="" border_size="" border_color="" border_style="solid" spacing="yes" background_image="" background_repeat="no-repeat" padding="" margin_top="0px" margin_bottom="0px" class="" id="" animation_type="" animation_speed="0.3" animation_direction="left" hide_on_mobile="no" center_content="no" min_height="none"][tax increment finance district] has certainly helped.

Victoria Ringer: “We need to embrace any project that increases the level of participation in downtown.” - PHOTO BY PATRICK YEAGLE

Victoria Ringer: More than 150 facades have been done downtown since the creation of the TIF 33 years ago. That’s huge to the overall environment and look of downtown. The assessed valuation – estimated value of buildings – has quadrupled since the TIF. A lot of TIF money has been spent on a lot of wonderful projects, both public and private. The TIF has been used for streetscaping, meaning the benches, the lighting, the sidewalks, the parkways and so forth. The downtown South Plaza was also done with TIF money.

Now we have two years left. At the end of 2016 it will be done. The Office of Planning and Economic Development is deluged with requests for TIF here at this 11th hour. A downtown that was full of offices for many years, over the last 10 years has experienced a vacancy of about 600,000 square feet of space. That is DCFS, Public Aid, a lot of Human Services, Central Management Services, many state offices, that have vacated the downtown area. We approximate that about 2,300 office workers have left the downtown area. I worked downtown in the Myers building in the early ’90s and you couldn’t go to the South Plaza and find a place to sit on the wall and have lunch because it was super-crowded. It’s not crowded now. That’s an estimated 200,000 visits a year that aren’t being made by those bodies every day, 250 days a year. So that’s a person not buying a card, not parking their car, not having lunch at Robbie’s.

Fortunately, the (Abraham Lincoln) museum had an impact on the downtown area. A lot of businesses felt that moving downtown during the launch of this world-class museum would be great, and I think it has been. We have one million visitors a year, and that has leveled off in the last five years.

So tourism is still our bread and butter, but we need to think outside the box and also bring Springfield residents downtown, to live, to work, to eat, to drink, everything. Our push is to get housing. Our push in the next five years will be to put residents in those spaces that had been primarily used for offices. There are 600,000 square feet available, and the great majority of the space can be adapted for use as residential.

Larry Quenette: “The big disincentive for downtown Springfield is the fact that nobody knows when the State of Illinois is actually going to hit bottom.” - PHOTO BY PATRICK YEAGLE

Larry Quenette: That whole process started when I was just looking for a different place for an office, 3,000 square feet was all I needed. I went downtown and saw dozens of buildings that were 30,000 square feet. But being an architect I can walk into something and I can imagine what this could be. When I found out that TIF money was available I said, this is a piece of cake. As an architect this is what I do every day. I can make up budgets, I can make up schedules, I can do a conceptual plan and put it all together.

The TIF money was key, because, as an architect, our business goes up and down, like the economy, all the time. So not having a reserve of cash, I was able to go to the bank and say, look, if I get this TIF money, will you loan the rest of it? Everybody I talked to said, well sure, if you’re actually getting $1.2 million out of the city. It was the easiest thing I ever did.

As that TIF incentive goes away, development becomes more and more difficult.

There’s good news and bad news about Springfield. The good news is it’s known as an affordable place to live. The bad news is it’s known as an affordable place to live. You have to charge more when you put more money in. I think everybody thought I was crazy for buying a building in 2010 when the economy was doing this [thumb down] and said I’m going to build upscale apartments and this is my target rate for what those are going to rent for. But I had no trouble leasing my apartments because I built quality and I had a great location and a wonderful old building. I think there are a lot more opportunities like that.

Christopher Nickell: “I want to attract people who want to live and stay downtown.” - PHOTO BY PATRICK YEAGLE

Christopher L. Nickell: No, actually, it’s been the other way. I’ve gotten more compliments than I have accusations of craziness, although maybe I’ve bitten off a little more than a normal person would want to chew. The good news is that they’re purchased in such a manner that we’re not under pressure to get them developed quickly.

Nickell: The one that I live in is called Lincoln Place, it’s 118 S. Fourth. It was actually originally attempted to be developed as condominiums in 2007, I believe. That business plan, and or the people attempting to put that business plan into the works, fell apart somehow. They were able to sell two of the eight that they built before they went under. So the bank had to take the building back and I purchased from the bank. I built two more residential units on the first floor, so now there are 10 in the building.

The next one was the Café Moxo building at 409 and 411 Adams, essentially right around the corner.

The next one everybody knows as the Bridge building, the old jewelry store, it’s 215 S. Fifth, that has Bentoh’s. We’re expanding the first floor for Jimmy, for Bentoh’s, and then residential upstairs.

And then most recently is the Kerasotes building at Sixth and Washington.

Nickell: I’ve never used TIF except for their architectural assistance program, which is a small amount of money they offer up front for you to pay an architect to determine if a project is viable. I have found it to be very valuable. That’s a relatively small amount of money but it gives you some very valuable knowledge. But except for the building that I’m in, the other three are still in the development stage, we haven’t actually started construction. So I haven’t completely counted out the TIF program. But the bids that I’ve gotten on the work that we look like we’re going to be doing over the next six or eight months, it looks like it will be done without the TIF.

Incentives beyond the TIF

Ringer: Yes, there has to be something besides the TIF. This TIF is going to expire and the new TIF, more than likely, will use the YWCA block, between Fourth and Fifth, Jackson and Capitol, as its anchor, which means it can probably go east, west or south. It’s probably not going to come back into the cornerstone of downtown, which is the Old State Capitol area. When you develop a TIF, you can use former parcels but you have to also deem them blighted, so you’d have to go to an area that’s blighted. That being said, TIF not being in action, I think there are opportunities much like we use on the perimeter of the city to offer utility abatements and property tax abatements. The city could say, folks, if you buy this $500,000 building and you’re going to put 40 apartments in it, you know what? We own the utility, so you don’t have to pay for utilities for a few years. Let’s get you up and running. I think that’s a great option.

Also, maybe the city could offer property tax abatement. But then you’d go up against all kinds of things, much like you do with TIF. But it would be temporary, just to get those folks off the ground.

We have a lease reimbursement program for retail downtown now. If you give a commitment to downtown and sign a two-year lease, your 13th month you get half your rent back for the year. What a great incentive. That same thing needs to be done for developers to come downtown.

Quenette: The big disincentive for downtown Springfield is the fact that nobody knows when the State of Illinois is actually going to hit bottom. Everybody that’s got a job in Springfield and works for the state has got some stress about whether they’re going to have a job tomorrow. If you’re a shopkeeper downtown that happens to be next door to what used to be a state office building and you don’t know whether those people are going to be there in the future, there’s reluctance to expand your business. So right now the biggest problem is the State of Illinois.

They need to get their financial house in order. It’s going to be painful. But until they balance their budget, nothing’s going to be for sure. Look at any business news that ranks states in different categories about being business-friendly. Illinois is in the bottom five on everything. If you had a business in Illinois that now employs 25 people and you had an opportunity to expand it to 100, would you do it in Illinois? Most business people are saying no.

When you’re a business you look at what provides quality of life for employees. How am I going to recruit people? You have young families that are looking for a place to live. If the news is, this is how much money Illinois is cutting from education, that’s no incentive for a family to move here and put their kids in schools in Illinois, when right next door, Indiana has a state surplus and they’re pumping money into education.

Eliminating disincentives

Quenette: I work with building departments all over the state. I don’t think Springfield has disincentives as far as regulations and city approvals and all that go. I think developers just like to complain, like farmers. When you’re in an urban environment, there are just certain things that you have to do to make a building safe and the community safe, and the people in Springfield are doing their job. I’ve got no complaints with the City of Springfield.

Here is one improvement that the city of Springfield could do. When you submit a set of plans for review it has to go through the building department, has to go through fire safety, has to go through public works for streets. When it leaves one office and goes to another one, everyone seems to lose track of it. Until it comes back, they never know where it is or why it’s not back yet. There ought to be at least one person, out of one of those three departments, whose sole job is to keep track of where that approval process is. You can have the simplest plan in the world, and it can languish up there for weeks.

Ringer: Or months.

Quenette: Or months.

Ringer: I talk to a lot of developers. They understand that there are certain challenges to developing a historic property. But there’s a couple things that have come to the surface from all of these people that could be really helpful. Number one, the city needs an expediter. Have one person who is solely responsible for monitoring the permitting process. That person keeps a log of where the project is in the process, and you have metrics to decide how many days out it’s been. OK, it’s been two weeks and it’s only gotten through one of our steps? We need to expedite this, boom, boom. If developers have certain circumstances that are going to cost them more money, be sensitive to that. Developers have lost money because of delays.

Karen Conn: “There are huge opportunities to make downtown an arts and entertainment mecca.” - PHOTO BY PATRICK YEAGLE

Karen Conn: We also need consistency in the review process. You’ve received your permit. Now you’re actually trying to accomplish an occupancy permit. You had Life Safety come through and the person who reviewed the plan approved the plan. And you installed fire safety devices. The next guy walks through and says, no, you need this, this, this and this. You make those changes, you get a third person coming through and they say, why did you do that?  You didn’t need to do that. The plans say this and this and you’ve altered it. I was told to. Well, who told you? You shouldn’t have to prove your innocence in something, you’re just assumed guilty. We need to have consistency.

Ringer: Consistency of someone starting with your project and ending with your project and being the one that’s on site to check so that they have a certain amount of files and that’s all they do. Interpretation is a big part of the inspection process and regulation process, so consistency of one person starting with a project and ending with a project, it’s going to be huge.

Quenette: This is a universal problem, it’s not unique to Springfield. They’re not sensitive to the fact that if you’re a developer, time is money. It’s serious money. If you’re doing a $1 million project and you’re paying interest on money that you’re having to borrow, every delay costs somebody some money.

Kevin Kuhn: “I think the ideal downtown would be mixed use.” - PHOTO BY PATRICK YEAGLE

Kevin Kuhn: Normally if a site inspector comes out and says, well that’s wrong, you need to do this, the first thing you do is call the plan inspector and say, which one’s right? We argue our case. It depends on the inspector  you get. There’s always the one inspector nobody wants.

Nickell:  I can’t say I’ve had major problems with the inspectors. But it would be nice if it would be better handled on the timeframes and the tracking, especially if you’ve got a couple projects going and you’re trying to juggle your contractors. Like, can I get the drywallers in next week? Well, I don’t know because they haven’t said if the way we have the fire alarm is OK and you don’t want to cover it up until that guy comes through. So you’ve got contractors on hold. If you’ve got people standing around waiting to work it can be a pain.

Ringer: We all know that the city has a large workload. But they do need to set up some reasonable metrics where you know when you file your permit, it’s not going to be more than three weeks or something. So you can at least plan that your maximum delay is going to be three weeks.

Ringer: That is a description that’s been used. [Laughter.] I understand that they haven’t had a full capacity of attorneys for a very long time. My understanding is that they’ve just come on board with a full roster of attorneys. And we’ve had different chief counsels. Hopefully with this new roster of folks they will get everyone up to speed – and hopefully they can make business development decisions and prioritize accordingly. When you have someone on the line who is wanting to invest in your city, to me that should go to the top of the pile. And I’m not sure that is happening.

Conn: I’m not a developer, I’m just a businessperson and I like to do things that are a little out of the box. So when I decided I wanted to do a bocce ball garden in downtown Springfield. . . Was that truly appropriate for downtown Springfield? I was lost with City Legal for six months because they were trying to determine, would there be ramifications to the city if we did this and, two, is it really appropriate for downtown to have an outdoor recreation space that’s serving beer, outside? So it stalled with City Legal. I was on the phone every week with the City Legal director at the time and it just never went anywhere. So I had to go over his head and it budged a little but I was still lost in limbo. So I was in the black hole for six months before we had to actually call them and say, “Can I get some help?” We need to change the ethics, we need to become business friendly.

Ringer: It’s the attitude in our approach.

Conn: There are going to be creative people with this development of the YWCA block. They’re going to want to come in and do things that are out of the box. Let’s welcome those ideas. Then maybe we can get some young, new, fresh blood living downtown, making downtown a livable, workable neighborhood, where you don’t need cars, you’re pedestrian- and you’re bike- and you’re pet-friendly. So we have to welcome those ideas.

Medical and student housing

Quenette: The biggest potential for increase in activity, whether it’s housing or businesses, is the medical district. They’re spending hundreds of millions of dollars four blocks north of downtown and downtown is not reaping the benefit from it. Those people are going to be hiring hundreds of medical technicians, nurses, the mid-level medical people. Where are they going to live? Do they have to go out to the west side? Many of those people are on shiftwork. Wouldn’t it be great if they could walk back and forth to work at all these odd hours because they were just two or three blocks away?

Quenette: I am personally working on a project where we’re trying to do exactly that. What it costs to build a quality building to the expectations of current students, and what you can charge them to live in it, are in two different worlds. This is where serious public-private partnerships are required to make anything like that happen. The project that I’m working on will have a huge, significant difference in the quality of that education. UIS has hundreds of graduate-level interns in state government, in public policy, in public administration. The SIU School of Medicine has hundreds of doctors studying in the medical district at their institution and the medical district gets dozens and dozens of doctors coming into Springfield to do residency work in our quality hospitals and the School of Medicine. They all want housing and they want it downtown.

Bars as amenities, not problems

Nickell: I personally like it because the tenants that I’m attracting right now are attracted because they want to be close to the nightlife.

Quenette: Look, nobody wants to live above one of those places. They want it to be close by. My place is so perfect. I use Café Moxo and Kelly’s Pub as selling points. I say, look, we’re a block off the beaten path, it’s quiet here. But we’re only one block off, there’s a great pub half a block away, there’s a great restaurant and café a block and a half away, this is a happenin’ street on Wednesdays and Saturdays with the Farmers Market. This is the place you want to be. And their eyes light up.

Nickell: The Farmers Market is a huge selling point. The Amtrak station is another…

Quenette: And you talk about people without cars, when I point out that you’re a block and a half from the Amtrak station, you can be in Chicago or St. Louis within hours and you’re downtown. You can’t get there that fast in your car.  One of my tenants said, I don’t leave my apartment until I hear the train whistle, and I can get to the station and get on the train before it disembarks.

Visions for the future

Conn: My vision is to have downtown as a livable, working neighborhood where you don’t need your car. To do that, we need to have the residents, we need to have the green space, parks and things like that. With residents, there are huge opportunities to make it an arts and entertainment mecca.

Nickell: I think I’m a little unique in that I have a wife and a child and we live downtown, so outdoor spaces is a big issue for me. Karen, I love your garden. I love going out to play bocce ball and have a beer. Safety and security are also issues. Our kid’s going to be a year old next month, we take him outside all the time in the stroller and the backpack. People ride their bicycles on the sidewalks all the time. But when you’re pushing a stroller and you come up to a corner and somebody flies by on a bicycle, who gets hit first? Well, the stroller gets hit first. I want to attract people who want to live and stay downtown. If you don’t have the feeling of safety and the outdoor spaces for them to enjoy the area, I think that takes a lot away from it.

Kuhn: I think the ideal downtown would be mixed use. Mixed-use buildings, mixed-use blocks. You need residential apartments with commercial down below, you need office spaces all in the same building, with pocket parks all around. Those are the downtown areas that I like, where it’s all jumbled up.

Quenette: Success breeds success. Somebody a long time ago told me that if you want to open a shoe store, find the best shoe store in town and go right next door. People like to comparison shop. You know, you’ll get the people who can’t find what they want in that store and they’ll come spend their money in your store. So I think that as Chris and maybe myself and others continue to do good work downtown, it’s going to become contagious. Suddenly it’s going to be more cost-effective to redevelop downtown than it is to keep buying up acreage on the perimeter of town. Residential is the key to that because as you get more and more people downtown, they’re going to demand more and more services and they’re not going to be content without pocket parks and bicycles off the sidewalk and so forth. You develop an urban expectation. Quality of life is the goal.

Ringer: It’s not hard to be optimistic. In various interest groups that I work with all the time, I see the passion for downtown. I think the residents of downtown are going to play a huge role. Whether they be students or artists or in the medical profession, Springfield needs to embrace them. We need to embrace any project that increases the level of participation in downtown, and they’ll make it a 24/7 city. There are several great organizations working, several young risk-takers out there who are doing great things. I think there’s going to be one or two more projects that are going to be catalysts to take this all further. Then I think after that it’s going to domino, because we are really full, the inn is full. We are at 99.3 occupancy rate for apartments. As soon as we get a couple more of those brave people who believe in downtown like we do, nothing will stop us.