Businesses are finding economic advantages to using local grants to restore architecturally significant buildings in suburban centers.
Frederick J. Steffen, a 67-year-old lawyer with a thriving practice in downtown Elgin, is set to launch a new career as owner of Cafe Magdalena restaurant. He owes his start, in part, to a little-noticed municipal grant program that allowed him to restore the façade of his century-old building.
Thinking he would preserve a piece of Elgin's past, Mr. Steffen acquired the mostly vacant downtown building, constructed in 1883. As he began tearing off the 1970s-era false front, he discovered architecturally significant old brick and sandstone crying for rehabilitation. But the estimate was $161,000 for just the first phase of reconstruction.
Elgin's Downtown Façade Improvement Program came to his rescue, paying close to 36% of that cost, almost $58,000. The city also agreed to pony up a similar amount for a second phase, installing new windows and replacing old steel cornices. The total tab for exterior renovations approached $400,000.
"The work cost a lot more than I expected," Mr. Steffen says. "The city assistance was crucial in getting the project done."
That refrain has been repeated in many Chicago-area municipalities with façade improvement programs, some of which provide outright grants, while others offer low- or no-interest loans.
Small projects, big impact
Diane Williams, manager of the Chicago office of Illinois Main Street, a downtown revitalization consulting arm of the state's Department of Commerce and Community Affairs, estimates that 80% of the 53 towns in Illinois that use its services have façade improvement programs. Other observers believe 75 suburbs provide some kind of assistance. Chicago has various programs, too, some managed by neighborhood groups.
"One community after another is eager to fix up its downtown," Ms. Williams says. "These grants don't have to be large. Some are as small as $300 and involve just buying paint or putting up a new awning. Sometimes, it doesn't take a lot to make a difference."
The results can be an economic shot in the arm. Façade-revived buildings draw small businesses because rents often are lower than in newer commercial strips and the distinctive design enhances the occupant's image.
There's scant statistical evidence that restored buildings contribute to higher revenues, but most observers agree that the restorations have allowed businesses to thrive in places that were without promise before.
"These façade improvements are a crucial starting point for the redevelopment of older downtowns," says Ellen Shubart, manager of the Campaign for Sensible Growth at the Metropolitan Planning Council in Chicago.
Moreover, façade improvement is rarely controversial. Most programs are funded with local money, often from tax-increment financing district revenues or sales taxes. A few towns use proceeds from the Community Development Block Grant program, administered by the U.S. Department of Housing and Urban Development.
"People seem to agree that façade improvement assistance is the least objectionable way to provide financial assistance to downtown property owners," says Nick Kalogeresis, a program associate in the Loop office of National Main Street Center, a program administered by the National Trust for Historic Preservation.
Aurora, which has promoted downtown restoration for nearly two decades, provides outright grants of $4,000 to $16,000 for architectural assistance, then offers one-for-one matching grants of up to $100,000 for façade improvement.
Speeding up improvements
Recently, Aurora offered zero-interest loans. "Our analysis found that on a 10-year loan the city was spending as much as $40,000 to subsidize the interest," says Karen Christensen, Aurora's downtown development coordinator. "If we can give applicants the money up front, when they really need it, it's likely to facilitate the project moving forward much faster."
Since 1994, Aurora's program, with an annual budget of nearly $200,000, has funded 47 projects, according to Ms. Christensen.
Procrastinating building owners are sometimes pushed into the program by an aggressive building inspection department that can levy fines for anything from peeling paint to crumbling masonry. But strings are attached, including a ban on selling a property within five years of receipt of a façade grant.
"We aren't just providing an open checkbook. We have some pretty tight controls," Ms. Christensen says. "The project must fit with what we are doing in the rest of our downtown."
Joseph Dispensa Jr., a retired schoolteacher, acquired a former Buick dealership in Aurora 12 years ago using a city-sponsored, no-interest $12,000 façade loan to put in new windows and tuck-point a leaky brick façade. The building, previously empty, soon housed a computer software design company and a commercial photographer.
Pleased, Mr. Dispensa bought and rehabbed a second building, this time with the help of a $60,000 grant.
"I couldn't have made these projects turn around nearly as quickly without the extra money from the city," Mr. Dispensa says. "Something as simple as a free loan allows my buildings to become cash-flow positive."
City money bridges the gap
Also in Aurora is Ciara's Place, a soul food restaurant in a building that dates to 1848. Owner Pamela Dandridge figures she spent close to $500,000 on renovation, with city assistance of more than $100,000.
"I went to Bank One, and they told me they don't do restaurant financing," Ms. Dandridge says. "But when they saw we had city backing and a (U.S. Small Business Administration) guarantee, they came through with the loan. The city money put us over the hump."
Ms. Dandridge is now encouraging other neighborhood business owners to fix up their storefronts: "First impressions mean everything. If that impression is negative, you lose customers. It's as simple as that."
In some towns, however, the process isn't that simple. Libertyville's façade improvement program, which allows building owners to borrow up to $100,000 at low interest (3.8% in a pool sponsored by seven local banks), demands rigorous oversight. Even a new sign funded by the program must be scrutinized by a local historic preservation group and an appearance review commission.
Nevertheless, "this program has been so popular that almost every new business that comes to our town uses it," says Carolyn Dellutri, executive director of Main Street Libertyville, a non-profit affiliate of Illinois Main Street. "Our downtown is in pretty good shape now. We have the façade improvement program to thank, in large part, for that."
Sarosh Saher, an Elgin city planner who oversees preservation, says façade improvement has far-reaching impact.
"Anecdotal evidence tells us that companies that fix up their façades enjoy an increase in business," Mr. Saher says. "And there is a ripple effect: One façade gets fixed up, and other businesses up and down the street are soon encouraged to do the same thing. Before you know it, the whole neighborhood looks beautiful again."