Artistic Finance
The Old Moline High School Loft Apartments will be a haven for the creative class. The building, expected to be completed in spring 2006, will feature a darkroom, workroom, and gallery space to attract working artists as residents. But the most creative aspect of this project may be the financing, which includes many layers of tax credits and other funding sources.
Some are local. The city of Moline, for example, extended a city enterprise zone for this project–so no sales tax will be paid on purchases, such as cabinets and rough lumber, used in the physical redevelopment of the building. “The city also waived the building permit fees,” says Chris Laurent, senior development manager for Gorman & Co. in Madison, Wis., “saving the project several hundred thousand dollars.”
The project will also benefit from tax increment financing. For Old Moline High School, this means that the project gets a rebate based on how much the tax base increases as a result of the project. For example, no taxes are currently collected from Old Moline High School. As the property produces income, though, it will pay taxes. The difference between the property’s current rate of zero and its future tax rate will be applied to the project’s debt, according to Laurent.
The state also kicked in. Every time real estate sells in-state, the Illinois Housing Development Authority collects a fee. That money goes into a trust fund, which lends money to developments that promise a benefit for the larger community. Old Moline High School received one of these loans.
Finally, the project also turned to the National Park Service, which offers tax credits for historically significant structures. They do come with restrictions, though. The finished building must “look, feel, and smell like a school,” according to Laurent, whose firm is spearheading the work on Old Moline High School Loft Apartments. With all the unique community amenities like the darkroom, workshop, and kiln, living in Old Moline will be a little like living in art class.
–Julie Swenson is a freelance writer in Minnetonka, Minn.