Clearing away C-U blight easier said than done
CHAMPAIGN — There are a lot of people happy to see what's happening on Neil Street.
The Hyatt Place hotel underway at Neil and Church streets is filling that "hole in the ground" in the heart of downtown Champaign after the Metropolitan Building burned down in 2008. The distressed Gateway Studios once described by a city councilman as a "black eye" on the community is coming down after its residents were evacuated in 2009.
Highly visible vacant properties like these catch a lot of grief from locals, so many breathed a sigh of relief when those two deals went through. The hotel and Gateway Studios projects, however, might not have moved forward without nudges from the city — and there are plenty more notoriously empty commercial buildings throughout Champaign-Urbana.
And after years of recession and shrinking or closing businesses, local officials say Champaign is overbuilt in a few areas. There's no sign of new retail filling the empty storefronts in the Country Fair Shopping Center anytime soon, and the old Circuit City on North Prospect is near unusable.
That has all kinds of effects, city officials say — it can depress surrounding property values and generate fire hazards. Entire blocks have burned down from fires that started in empty buildings. Sometimes it just plain looks bad.
"If we don't in-fill properties, then they actually become a negative for the city," said Planning and Development Director Bruce Knight. "They detract from property values; they aren't generating revenue themselves. So it becomes a bigger and bigger problem for the city to deal with."
The old AC Humko property on North Mattis Avenue soon will become a new warehouse for Kraft Foods, but it's another project that required special incentives from the city. Incentives for high-profile development projects seem to have become common lately, but they are not a magic bullet to rid the city of blight.
'Very few tools'
The problem is that the city actually does not have a whole lot of pull in getting these kinds of properties redeveloped. While it can provide a nudge in the form of incentives or tax rebates when a deal comes along, the hard part is getting the deal to come along.
It is easier for the city to solicit interest in a property when it actually owns the property. That is the case for an empty lot on the southeast corner of Neil Street and Bradley Avenue.
City officials hope to seek proposals for that lot soon. It will be rolled in to the Bristol Park redevelopment, Knight said, which is still in the planning stages.
When a private owner has control of a property, city officials cannot really step in until things start getting out of hand. It is up to the private owner and that person's real-estate agents to drum up some action.
"We have very few tools to work with," Knight said. "If a property reaches a certain condition, you can declare it a dangerous condition."
That's what happened with the Gateway Studios. It was first declared unlivable in 2009, when its residents were evacuated. But there it stood, empty for four years, before demolition finally started this month — largely because the city spent time getting a court order to tear it down.
With that court order, city officials would have been able to demolish the Gateway Studios themselves, and they very nearly spent hundreds of thousands of dollars upfront to do so. Then a new owner, Kelly Dillard, got his proposal in just under the deadline and started the project himself.
Dillard already has much of the building in pieces on the ground. It's a welcome sight to city officials and police, who spent a lot of time and effort — and about $14,000 — to keep it from getting out of hand for four years.
Dillard said he plans to have the building completely down no later than May of next year. Some areas still need asbestos removal and will take longer than the sections already torn down.
But just because the building is torn down does not mean it will be easily redeveloped. Dillard is asking for help from the city — help that Knight said the city likely will provide — to find an interested developer once the site is cleared and ready for new construction.
Dillard said he does not yet know what kind of development might take the place of the infamous Gateway Studios. City officials had estimated the land could be worth $1.2 million once it's ready.
"We'll sell it to anyone who wants to buy it," Dillard said.
Another hurdle for redeveloping or reusing existing space is that it is not always competitive with building a new facility on the edge of town. The Circuit City on North Prospect Avenue, which closed in 2009, is a good example.
Knight said the city has heard of interest in the Circuit City location — but the place is such a mess that it does not make complete sense for the prospective buyer to locate there.
"They've indicated that it's gotten into such a condition that they would need assistance to get it up to condition," Knight said.
Without that assistance, Knight said, getting the old Circuit City location ready for re-use might not be competitive with moving into a "greenfield" location, or new construction on previously undeveloped land.
City officials prefer in-fill development over greenfield development because the city gets a higher return — extra tax revenue without having to extend city services like roads, sewers, police and fire coverage to a new location.
"Inherently, it's more efficient for us to serve an in-fill site than a greenfield site," Knight said.
Another consideration is that Champaign County has some of the richest agricultural land in the world, Knight said. Greenfield development often means the end for a piece of farmland.
The city has an "in-fill development program," which it uses to offer tax rebates to people willing to rebuild or re-use previously developed land. For example, the hotel underway at Neil and Church streets will have new tax revenues rebated for up to $3 million or seven years after it opens.
The city also approved up to $200,000 in tax rebates to help along the $1.3 million renovation of the Illinois Central Railroad Depot on the eastern part of downtown Champaign. That is where Black Dog Smoke & Ale House is expected to open a second location.
The program does not offer cash upfront — it only takes the new city revenue that would not have existed had the project never moved forward and returns it to the builder. The goal, Knight said, is to "overcome the market deficiency that's keeping that property from being developed otherwise."
"Basically you're looking at a property that has more risk than reward," Knight said.
Another perfect candidate for the program: the Gateway Studios property.
'A lot of space'
The parking lot of Country Fair Shopping Center off University and Mattis avenues does not fill up. There are a lot of parking spaces — and a lot of empty storefronts.
The challenge there, Knight said, is that there's just not a market for retail in that area. The problem was so apparent that, several years ago, the city conducted a market study.
"It showed there was more commercial square footage in that area than the demographics could support by double," Knight said. "One of the challenges there is there's a lot of space."
Space for retail or similar types of business is the city's realm, but the Champaign County Economic Development Corporation often fields requests for companies looking for office or industrial space.
The problem: Like retail space at Country Fair, there's too much vacant office space in Champaign County, said EDC Deputy Director Erik Kotewa. It's overbuilt by about 400,000 square feet, he said.
"When people talk about the commercial vacancy rate here, it's a problem," he said.
He said that abundance of space can be attributed to a number of factors. Some call centers closed right around the time the recession hit. Businesses started shrinking, which meant they needed less space.
"I think eventually we'll start to come out, but I think some of these companies have learned to be leaner," Kotewa said.
When the EDC gets a "lead" on a business looking for space, it tries to steer them to existing vacant office space: the County Plaza building in downtown Urbana or the M2 building in downtown Champaign are good options. Rantoul has some space, too.
Sometimes that does not work. For whatever reason, the existing options do not fit.
"Sometimes they just have to have new space," Kotewa said.
That being the case, getting a "lead" to lease existing space isn't all that difficult. The problem is getting a lead at all.
"It's not too hard to get people to take the existing space," Kotewa said. "It's getting people to want the existing space."
Address: 1505 N. Neil St., C.
Status: Demolition in process.
New owner Kelly Dillard said the building will be torn down by May at the latest. He will then seek to redevelop the property with city assistance. What might go in is still up in the air.
Address: 2006 N. Prospect Ave.
Status: No action.
The old Circuit City would need some help to attract a new tenant. City officials say that, without some kind of financial assistance, the cost to fix it up might make it noncompetitive with new development.
Pages For All Ages
Address: 1201 Savoy Plaza Lane, Savoy.
Status: No action.
Bookstore Pages For All Ages became a victim of recession in 2009, and Savoy Village Manager Richard Helton said, as far as he knows, there's nothing new to report other than mild interest over the past few months without any results.
Neil and Bradley lot
Address: 1100 block of North Neil St.
Status: In planning.
The city owns the empty lot on the southeast corner of Neil Street and Bradley Avenue and hopes to develop it as part of its Bristol Park project. The project remains in the planning stages, but the city hopes to attract a developer to build.
Country Fair Shopping Center
Address: 200 block of South Mattis Avenue.
Status: No action.
While the shopping center is home to a number of retail stores, many of its storefronts are empty. A Champaign report revealed there is double the retail square footage in the immediate area than what the market can support.