You could be excused for not believing it at first. A Rick Guzman led project turned a City of Aurora $500,000 investment into $35,000,000 of development commitments: a 70 to 1 return! It’s just one reason Guzman for Aurora is pushing so hard to make Guzman the next mayor of Aurora:
He has brought in more development money to Aurora in the last five years than the other three candidates for mayor combined.
And his recent 70 to 1 return on investment gets even better.
Because of this project—which turns an empty building next to the Paramount Arts Center into a school of the arts, a restaurant complex, and loft apartments—on September 16th, 2016, the Illinois Housing and Development Authority announced a tax credit award to the city that’s worth over $15,000,000. (See headline pictures above and below.)
It’s not alchemy, but Rick Guzman did lead in putting together a complex economic formula that leverages smaller dollars to create huge returns. Only he among the other candidates for mayor has demonstrated a thorough understanding of such processes.
Though supported by Mayor Tom Weisner and the overwhelming majority of the city council, the plan initially drew sharp criticism from some because Guzman seemed to be proposing using $5,000,000 of city money. In the end that would still have been a 7 to 1 return on investment, but even that wasn’t good enough for Rick.
Here’s the way he led in working it out. 1) Use only $500,000 of locally collected taxes, which are TIF dollars only paid by downtown property tax payers. 2) Use $1.3 mil in Federal “pass through” funds ($600,000 from one HUD source, $700,000 from another HUD source), which are specifically targeted for the type of housing and job creation the project will bring. 3) Create a $3 mil loan to the Paramount—which the city could even use a federal loan fund pool to bridge if it wanted to—and which will be completely recouped through the revenues and savings the project itself creates, including: a) $500,000 of new property tax increment; b) $1 mil of already identified savings the Paramount will realize over the term of the load; c) $1.5 mil in uncommitted lease revenue from the restaurant complex and the loft residences. This doesn’t even count the $15,000,000 tax credit mentioned above.
Seeing this package and this commitment, developers came in to the tune of $35,000,000. Seeing the formula was not magic, but solid economics, the city council overwhelmingly approved it.
Amid all these numbers one could forget that this is about the ARTS. But arts and economics are no strangers. This plan to use the arts for economic revitalization follows a highly successful trend I report on HERE. For more on the reaction of the press and civic leaders to this Rick Guzman led project, go HERE (this link will go live soon).
♦ Read about another Rick Guzman led initiative, the St. Charles Hospital renovation, that leveraged an even smaller city commitment into $24,000,000 of development dollars.