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Valparaiso City Hall

Valparaiso City Hall

VALPARAISO — For the last 16 years, the city has been working on redeveloping its downtown.

And, for the most part, it has been working. There's more retail, more eateries, more quality-of-life amenities, meeting recommendations of a plan from adviser HyettPalma in 2002 and updated several times in recent years.

Still lacking, however, is the development of new housing units in the downtown in an effort to make it more sustainable, Patrick Lyp, legal counsel for the city's Redevelopment Commission, told the commission last week.

"We have been looking for ways property can be developed," said Lyp, adding it has to meet city codes and standards.

Lyp proposed and the commission approved a plan to offer incentives to developers for construction of housing in the downtown area.

The commission, he said, can monetize tax increment financing district funds as that incentive. 

In essence, a developer interested in a downtown residential project could approach the RDC and request the creation of an allocation area to cover the proposed project area. A portion of future TIF funds generated from the project could be reinvested into the project.

Lyp said the incentive would allow the RDC to collect the TIF funds. A certain portion would be paid back to the developer to retire debt of a bond purchased by the developer for the project.

The TIF funds, he said, would only be allowed for certain items, including demolition, environmental remediation, infrastructure improvements, utility/stormwater items which benefit the proposed project and surrounding properties, city-required enhancements and on-site parking.

They would also not cover 100 percent of the project.

Lyp said the city would not be responsible for any costs of the bond or if the developer defaulted on the bond.

The incentive, however, according to the HyettPalma report, would likely not attract affordable housing to the city's downtown.

"While it is understood that most caring communities desire to provide adequate shelter for residents of all income levels, the introduction of affordable housing into the economic fabric of an older commercial district like Downtown Valparaiso is most difficult due to the high cost of housing rehabilitation and new construction in an established commercial district, particularly one that has marginal or weak demand for all types of uses, as was the case back in 2002 in Downtown Valparaiso," according to the report.

The RDC downtown housing incentive policy must now go before the City Council for action. It will likely be presented to the council at its Aug. 27 meeting.

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Porter County Reporter

Joyce has been a reporter for more than 38 years, including 23 years with The Times. She covers municipal and school government in Valparaiso and Portage.