Five local banks are pledging $25 million to a loan program intended to help finance development around current and future commuter rail stations along the South Shore Line and its proposed West Lake Corridor.
The One Region-organized program is the first public pledge of private money to an effort that's seen as a catalyst for redevelopment in communities that are home to train stations. Horizon, 1st Source, First Financial, Peoples and Centier banks have joined the transit-oriented development initiative, which was organized by One Region through its Northwest Indiana Regional Opportunities Council, a group of more than 20 Region CEOs.
Leah Konrady, president and CEO of the two organizations, said One Region trips to New Jersey, Pittsburgh and Denver over the past three years allowed participants to see first-hand the contribution private investment funds can make in kick-starting redevelopment.
NIROC members have established the goal of boosting population and enhancing quality of life in Northwest Indiana by "developing multi-family housing and mixed-use development in core urban areas," according to Konrady.
"We want to fund the first, integral projects that are really game-changers," Konrady said. "Those first projects that serve as anchor projects and are catalysts need the most assistance."
Horizon Bank CEO Craig Dwight said executives at the five banks were inspired by the One Region trips.
"We were really impressed with all three regions," he said.
The loan program will allow them to target the types of mixed-use developments — including relatively high-density housing, retail and professional uses — while sharing the risk involved with redevelopment projects.
"We think the combination offered by mixed-use is a success," Dwight said, pointing to the ArtSpace development in Michigan City as an example. "We'll offer competitive rates and terms to encourage developers to come into those areas."
Peoples Bank CEO Benjamin Bochnowski said Hammond, Michigan City and the Miller neighborhood in Gary are prime sites for potential transit-oriented development, or TOD.
The goal is to assist "anything that's going to drive population to these areas we've identified," he said. "The program's really set up to drive housing density and retail business density around transit."
Bridging the public and private
The One Region loan program adds to a set of financial resources and incentives that could help spur TOD, including transit development districts, which were authorized by the state last year specifically for the South Shore project, and which would make available local tax dollars to support development by leveraging future growth in property and income taxes within the TDDs.
Other programs include state and federal initiatives that offer tax breaks to investors in areas designated to be in need of a boost in private investment. Federal opportunity zones present capital-gains tax incentives in various census tracts, and an Indiana redevelopment incentive offers an income tax credit to investors in designated areas, as approved by the Indiana Economic Development Corp.
The Northwest Indiana Regional Development Authority is in the process of mapping the transit-development districts, or TDDs, which can cover one-half square mile. The incremental growth in property and income taxes within each TDD will go to development authorities to support projects.
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Konrady said NIROC hopes the loan program can assist developers who take advantage of those and other public programs. She said private TOD loans can help the coordination among public agencies, municipal governments and private developers.
"We want alignment with what the public sector is looking for," she said. "This is a way to bridge the two sectors."
Many regions around the country have established private funds for similar purposes. Cities including Denver and Indianapolis have "equitable transit-oriented development funds" that help keep housing affordable while promoting redevelopment. And the One Region group that traveled to Pittsburgh saw the impact of its Strategic Investment Fund in bridging the space between the public sector's goals and the needs of developers.
"It was instrumental in filling those gaps," Konrady said of the fund.
Walkability and vibrancy
The ultimate goal is to create "walkable" neighborhoods with a variety of housing serving owners and renters of various income levels, and businesses focused on retail, restaurants and other quality-of-life amenities.
Michael Schneider, the Northwest Indiana market president for First Financial Bank, said the investments in commuter rail will only pay off if these goals are met.
"Laying down the rails is truly just the start," Schneider said. "I’ve seen first-hand how TOD projects can be a remarkable enhancement to the communities they serve, in many different ways."
Economics is a starting point, he said, but "as a lifelong resident of NWI, I’m truly excited about how these projects can enhance our sense of community and quality of life."
Bochnowski said the focus on transit also helps bring resources to underserved areas.
"This has the opportunity to bring people into markets that haven't been served," he said.
Konrady said NIROC members also are focused on other lessons learned around the country, including promoting the inclusion of arts, public gathering spaces and recreation in developments — things that create "vibrancy."
Loans will be available to projects within a quarter-mile of new and future stations, with the hope that developers will take vacant lots and unoccupied and underused buildings and rehabilitate them.
The key questions moving forward, Konrady said, are, "How can we leverage what's already there? How do you take the existing assets we have and build on them?"