New South Bend program offers loans up to $500,000 for vacant building reuse
SOUTH BEND — A new city program will offer low-interest loans of up to $500,000 to developers who plan to renovate vacant or partially vacant commercial buildings.
South Bend Mayor James Mueller announced Monday that his administration will place $1.5 million of American Rescue Plan money in a revolving, or perpetual, fund that will finance 40% of the cost to rehabilitate an underused building.
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The city's loans through the Vacant Building Credit Enhancement Fund will range from $200,000 to $500,000. To be eligible, a developer must pay 10% of the cost up front and get a traditional lender to cover the other 50%. Projects in major corridors like South Michigan Street and Lincoln Way West will get top priority, but all commercial buildings in city limits can get funding.
By lending money, the city reduces the risk for private lenders reluctant to put up money for projects to restore vacant buildings. City financing is to be administered in partnership with the Business Development Corporation, which aims to help infuse money into disinvested communities.
"If something were to go wrong and a property owner were to default, the city's funds are the ones most at risk, thereby taking away some of the risk from a financial institution and, hopefully, getting them to the point where they say, 'We are going to do the loan,'" said Caleb Bauer, South Bend's executive director of community investment.
The program is tailored to small-scale developers such as Penny Hill Homes, a partnership between Jennifer Henecke and Sarah Hill that has evolved in recent years from the restoration of residential properties to commercial buildings.
The pair own the 50,000 square-foot building at 435 S. Michigan St., which until 1990 was home to the Inwoods store and formerly housed a Sears department store. Today, black paint is peeling off the ceiling and piles of building debris lie around the long-vacant property.
"These aren't projects that everyone is jumping to do," Mueller said during a press conference Monday, the guts of the old building forming his backdrop. "This is folks in our community who want to see our community rise up and our neighborhoods rise up, and they've got a difficult task ahead of them."
But Henecke pointed to the occupied storefronts next door and the artists' studios overhead as examples of a resurgence they're trying to lead just south of downtown.
Since Penny Hill Homes bought the historic property for about $500,000 late last year, multiple small businesses have moved in: the home goods store House Winds, the creative design studio Zephyrlings, and a vintage shop and entertainment venue called Rocki Button. Visual artists and ceramic artists produce their wares in the Monroe Arts Studios on the above floors.
"There are many other vacant buildings or historic properties in South Bend where bringing in some commercial space and retail would really bring vibrancy and walkability to our downtown neighborhood especially," Henecke said. "We're hoping to eventually see this whole block filled."
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How to apply
To learn more about the Vacant Building Credit Enhancement Fund, developers can do one of three things:
Call South Bend's service hotline at 311
Visit southbendin.gov/south-bend-vacant-building-credit-enhancement-fund
Visit bdcloan.com/south-bend-vacant-building-credit-enhancement-fund
Contact South Bend Tribune city reporter Jordan Smith at 574-235-6480 or JTsmith@gannett.com. Follow him on Twitter: @jordantsmith09
This article originally appeared on South Bend Tribune: South Bend offers loans for restoration of vacant buildings
