Nobody likes vacant storefronts.
Storefront housing sometimes creates its own set of issues that impact neighbors – parking, noise and trash. Vacant storefronts deaden street life and send a message of economic decline. However, there is a silver-lining – opportunity for economic growth and money, in the forms of grants, to help business districts become the vibrant commercial destinations they once were.
“We think downtown development is true economic development and it’s really important for all cities to do to have strong, healthy downtowns,” said Jim Engel, director of the Iowa Downtown Resource Center at the Iowa Economic Development Authority (IEDA).
Engel said 54 communities in Iowa are currently participating in the Iowa Main Street Program, which is a four-point approach to downtown development.
Jim Thompson, economic development, business and housing specialist with the IEDA, said his organization has worked with communities as small as 300 to larger communities such as Des Moines, Waterloo and Fort Dodge.
“One of the hottest things lately is downtown housing,” said Engel. “We see it all over. The communities that are really clicking with their downtowns usually have people living in the downtowns.
However, Engels and Thompson said, based on case studies of other communities across the nation, there are places where housing should exist in commercial districts, and places it shouldn’t.
“We do not encourage storefront residential housing,” said Thompson. “The reason we don’t is, partly what I witnessed when we got here and were able to drive around your downtown. There are vacancies in your downtown district, correct?”
“When you allow storefront residential housing, they effectively serve just like a vacant building,” said Thompson. “The reason I say they resemble vacancies, because, as a customer comes into your downtown and parks, the goal is to park once and walk more. Vacancies and store front housing, create a subconscious pedestrian barrier.”
Thompson said, when these pedestrian barriers are lifted, they spend more money as they walk by stores. Storefront housing also deters potential businesses from moving in next door.
“It’s a thing we’ve studied a lot over the years. It’s not just Iowa, it’s all over the country,” said Thompson.
How can we create a pedestrian friendly environment?
Thompson said one service the Iowa Downtown Resource Center offers is a community assessment, where professionals study the community and publicly present their findings and provide a “meaty” report for planning. The report offers recommendations and addresses technical issues, promotional events, historic preservation, building and facade improvement, marketing, organizational structure, fundraising, volunteer development and business development of the downtown area of a city.
When it comes to real estate development, Thompson said all partners – the city, developers and property owners – should have to get a return on their investments.
“If you get it, and the property owner doesn’t, the project should not happen. Okay? Is that clear?” said Thompson.
Thompson said vacant properties in the Uptown district are costing the city money by losing assessed value. However, sometimes it takes a partner, such as the city, to help property owners, who might not otherwise have the money to complete improvement projects.
“So, it has to be good for both sides,” said Thompson.
How do cities usually get their money? Property taxes.
“Downtown buildings that are commercial, have a 10 percent roll back ... if it’s assessed at $100,000, that property owner pays taxes like it’s $90,000. That’s the highest return on investment that you will get on any property classification in town,” said Thompson.
How do we encourage this?
“I’m looking at your urban renewal and TIF map. If you create an increment, you can share it back with the property owner with an annual rebate.” Thompson said. “In my career, that is the best incentive I’ve ever seen to encourage housing. Because on leased space, in downtown, you have the authority by Iowa code to do up to a 10 year, 100 percent abatement to encourage someone to create housing.”
Thompson said he works closely with school districts as well. One strategy to create growth is to create safe and alternative housing for seniors.
“My mom is 86 years old. If she were to live in a two-story, single family detached, it is not safe for my mom to walk up and down the stairs,” said Thompson. “So if we were able to find an appropriate housing tool for her, where she could age in place safely, we’re not kicking her out of her home. We’re saying, ‘Mom, would you like to consider something that’s safer?’”
Thompson said that strategy helps open up homes for new families, which add additional revenue streams to the school district, as the state pays the districts approximately $6,500 per pupil.
Some “progressive” communities are offering tax abatements of 100 or 50 percent for five years, which gives some money back to all the consolidated levy recipients – school, county, city, so that they can get some dollars to help support that.
“We’re saying, encouraging property owners that are willing to reinvest and adding to their increment,” said Thompson.
Three towns in southwest Iowa that have taken advantage of the Community Catalyst program – a grant program that offers $100,000 to be used for a downtown building that is under performing.
“So, there’s bigger and better use that could happen there and it happening today,” said Thompson. “Cities, you, must be the applicant. We would love it to go to assisting a private building owner, because now we know the city is a partner in a private development. Because it’s going to go on the tax roles and it’s going to increase the value of that property, meaning they are going to pay more property tax – should be your jobs.”
Stanton, Lenox and Clearfield were successful recipients who were awarded $100,000 each for building improvements in their downtowns.
Thompson said Stanton’s renovation of a former Masonic lodge was “inspiring.”
“Because of that property, they took us into three other buildings that were spin-offs for that project for economic development,” said Thompson.
In Lenox, two connected buildings are being converted to four apartments – two front-facing three-bedroom apartments, and two, two-bedroom apartments.
“They all have lofts, because its a huge building ... they are going to have a restaurant downstairs. It’s an awesome thing,” said Thompson.
Thompson said it’s possible to turn around struggling downtown areas, and small towns are taking the charge.
“It’s fun to see tiny little towns really setting the example for the state of Iowa,” he said.