An organization that tries to stimulate economic development in central Illinois says it can help address the housing shortage in McLean County. The Tri-County River Valley Development Authority (TRVDA) helps issue lower cost bonds.
“Our bond programs can lower your capital costs and reduce the debt service,” said TRVDA director Warren Ribley.
Lawmakers last spring added McLean County to TRVDA’s existing territory of Peoria, Woodford, and Tazewell counties, at the behest of state Sen. Dave Koehler, D-Peoria, who now represents part of McLean County. The housing shortage in Bloomington-Normal was one of the precipitating factors in the decision to add the county.
“This is really the latest tool that's been added to your economic development toolkit," said Ribley, a former director of the state Department of Commerce and Economic Opportunity.
He told an Economic Development Council audience this week the authority can issue up to $250 million in bonds. Ribley said there's plenty of room under that cap right now, adding it's the only entity in state to have both state and federal tax exemptions for the bonds that can shave 2.25% off the cost of financing.
"It is a lower cost, and probably about the lowest cost source of financing that's out there," said Ribley.
Bonds for multifamily housing projects have become the authority’s most popular product. To qualify for the tax-exempt financing, developers must set aside at least 20% of apartment units for people who earn no more than half the area median income. That is close to $40,000.
“They're not just for quote 'low income' renters. It has really become more of a product for what we call workforce housing. Those are people who are teachers, entry-level teachers. They are first responders. They are health care workers. People that are really just getting their start,” said Ribley.
If a developer designates 40% or more of the units as affordable, the threshold for renters is 60% of the average median income.
What else qualifies
It's not just housing that can qualify. Manufacturers, municipalities, and even some private colleges can get financing through the authority across six different programs. Not-for-profit 501(c)(3) entities are eligible. Ribley said that includes most hospitals, behavioral health centers, continuing care centers, community centers, and charter schools.
For much of its existence since 1986, TRVDA concentrated on manufacturing projects. The bonding limit for each business creation or expansion is $10 million.
“It's not for the Rivians or the John Deeres and Caterpillars of the of the world. They’re really geared to your smaller manufacturers,” said Ribley. “One of the things that's so fun about this job is there's just so many of these manufacturers across the state. You rarely hear too much about them and they add such economic impact to our economy. That's pretty amazing.”
Industrial revenue bonds through the authority can be used for renovation or new construction, land, building, machinery, and equipment.
Municipalities, of course, can issue their own bonds. So can most school districts. But Ribley said they may find it advantageous to go through TRVDA in some cases.
“This is our day job. A lot of times, particularly with smaller units of government, they're just not that experienced in going into the debt markets, working with investment banking firms, and choosing bond counsel. We have a network that's pretty well set up, where we have all those sorts of resources already in place. It's just more efficient for the unit of government,” said Ribley.
School districts might save on interest costs because of the quarter-point state tax exemption on bonds through TRVDA.
The addition of McLean County to TRVDA means it now has two representatives on the board. Bloomington appointed EDC director Patrick Hoban and Normal selected city manager Pam Reece. The authority was created to encourage recovery from the recessions of the 1980s. The governor has three appointees on the board and each major city in the four-county area has representation.
“Local control makes these decisions. We really like to have board members that are boots on the ground,” said Ribley. “These are people that are aware of economic development projects happening in the community and can bring those potential projects to us.”
There are 10 such authorities in the state. They are units of government, but they do not get tax revenue. The authorities are self-supporting by charging fees on the bonds they help issue, though those fees are less than market rate, said Ribley.
Ninety-five of the state’s 102 counties are in the service area of an authority.
