Grant money eases financial burden of removing eye-sores for municipalities

Getting rid of “eye-sores” is an essential part of rejuvenating the regional economy, yet it becomes an insurmountable roadblock when cities and townships lack the money to pay for structural demolitions.

Private investors often shy away from acquisitions when cost-increasing health hazards such as mold and asbestos come into play because they don’t want to take on the burden of the site purchase, the demolition as well as the new build.

The IRRRB’s Commercial Redevelopment Program aids municipalities in demolishing dilapidated commercial or industrial buildings located within the agency’s six-county service area in order to make way for new development.

“It provides an incentive for private developers,” explained IRRRB’s Community Development Representative Chris Ismil. “It affords an opportunity for our municipalities to work with the private sector.”

The long-running grant program has seen an influx of applications after its guidelines were expanded in 2016.

“The agency recognized a need in its service area when communities made requests for internal demolitions in order to transform aging buildings to pave the way for new development. The commercial redevelopment grant was an ideal fit for this type of economic progress,” Ismil said.

Formerly strictly used to finance the tearing down and removal of blighted commercial buildings, the program now also considers grant proposals for partial demolitions (interior or exterior) of existing commercial structures to assist with expansion or remodeling projects.

The program’s funding for the current fiscal year (July 1, 2017 through June 30, 2018) has a pot of $800,000. Of that, $500,000 is allotted for 14 grants. Three pending grant requests will consume the remaining $300,000 within this month, Ismil anticipates.

The 17 grant approvals for the 2018 fiscal year mirror the agency’s average for the Commercial Redevelopment Program. During the fiscal year of 2017, the Commercial Redevelopment Program had a budget of $1 million set aside. That money was distributed among 13 projects of which 10 led to immediate new development.

Two highly visible demolitions in the town of Virginia included the former One Hour Photo/Golden Boy Market on Second Avenue as well as the former Kmart building.

After being abandoned by its owner for eight years, the One Hour Photo property went tax forfeit and the structure became beyond repair. With a $30,250 contribution by the IRRRB, the blighted site was cleaned up and city officials are now marketing the vacant 3,000-square-foot lot as a potential spot for a small retail or service shop such as a coffee shop, cafe, boutique or bike repair shop.

To assist in the demolition of the former Kmart building, $350,000 was given as part of the redevelopment of Virginia’s Thunderbird Mall. National farm and ranch retailer Tractor Supply Co. will erect a new storefront on the property.

“Since the demolition, residents have expressed their excitement about the positive change they see ahead in this area of Virginia,” said city administrator Britt See-Benes in the IRRRB’s December 2017 issue of “The Ranger.” “Reduction of blight and the number of vacant buildings paves the way for new development and decreases vandalism,” she stated. “It strengthens Virginia’s community and economy.”

The maximum grant award for the Commercial Redevelopment Program is $200,000, but Ismil concedes that the agency makes exceptions in cases where outstanding economic impact is demonstrated - like that of the partial demolition of the Thunderbird Mall.

“The private entity (RockStep Capital Real Estate Investments) invested millions of dollars to remodel that mall. We’ve seen four new businesses opening up in that space since. Because of the impact the new development would have, the board went ahead and approved the grant request.”

The IRRRB requires a 2:1 financial match per project.  All proposals must be planned to be completed within 12 months of the award.

Grant applications are evaluated on economic impact criteria (new development or potential new development, job creation), project readiness and timeliness, blight removal, alignment with community’s comprehensive plan and prior awarded funding.

The city of Eveleth received funding to demolish the former Day’s Inn on Hat Trick Avenue. After years of remaining vacant, the property ultimately tax-forfeited to St. Louis County. Situated right along Highway 53, the main corridor that runs north and south through the Iron Range, the seven-acre property will be ideal for new retail or other commercial use once the clean-up is completed.

 “I’ve had many inquiries about the property over the years, and now the site marketing and planning can move forward,” said Eveleth Mayor Robert Vlaisavljevich in The Ranger. “Preparing this site for redevelopment was an excellent partnership between city of Eveleth, Iron Range Resources & Rehabilitation and St. Louis County.”

Another grantee of the 2017 grant cycle was the city of Grand Rapids. For the partial demolition and renovation of its long-time vacant Block 19, the administration received a $96,140 contribution by the IRRRB. The site will be the future home of Rapids Brewing.

In 2017, the IRRRB invested $979,811 of tax dollars for the redevelopment of previously used commercial sites into viable development sites, spurring $14,000,461 of total project investments.

The agency facilitates a similar grant program for residential structures.  The Residential Redevelopment Grant Program aids municipalities in the demolition of domestic structures such as single-unit residential homes, residential duplex homes, garages and accessory structures.