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Downtown Elkhart Inc. acquires 11 neighborhood properties near downtown Elkhart

Director says improving or tearing down run-down houses could beautify the area and boost business district.

Posted on April 4, 2014 at 6:16 p.m.

ELKHART — Expansion into neighborhood revitalization by Downtown Elkhart Inc. has been finalized, representing the first phase of a new era for the agency and the city.

The plan pulls together money and support from three sources, appears to be a unique strategy to boost the downtown and could hit the ground running within weeks, if not sooner.

DEI has been studying the idea of acquiring 11 residential properties near the downtown for a year or so with a belief that revitalizing neighborhoods adjacent to the downtown will benefit the business district.

The homes are found in several clusters amid some of the most run-down, challenged neighborhoods in the city. But in several cases, those are near other revitalization projects — public and private — that may give the plan an added boost.

Dan Boecher, executive director of DEI, admits there’s some risk involved, but the financial arrangements helped spread the risk and made it possible.

“It’s a tough project. This is not for the faint of heart and it’s why the private sector has not stepped in … and done these already.”

Funding to purchase the 11 properties — including four that will be demolished — comes from Lake City Bank, which provided a $370,000 loan. DEI also secured a $100,000 loan from Aurora Capital Fund, which is operated by the city of Elkhart.

Boecher has been working for months to finalize the plans. In December, he left his position at Lake City to take the full-time job with DEI.

Indiana Landmarks, a statewide organization that works with historic properties, agreed to provide a $100,000 loan guarantee for houses in the State and Division historic district where five of the 11 properties are located. Aurora also agreed to provide a loan guarantee of the same amount for the other properties.

The acquisition was a package deal through Talmer West Bank, formerly known as Indiana Community Bank.

Total cost of acquiring the properties was about $222,000, according to Boecher. That leaves about $250,000 for renovations, which falls far short from the amount that will be needed.

A look at the clusters

DEI’s residential properties can be found in clusters near downtown Elkhart.
■  The biggest collection of buildings is found in the State-Division historic district, where four of the five properties will be renovated, while a six-unit building at 527 East St. will be demolished. Renovations will be made at 223, 320 and 419 State St. A large four-unit building at 201-203 Division St. will be renovated.
■ The area with possibly the most investment involves four properties all near the intersection of NorthSecond and Jefferson streets. Two are adjacent to each other. A two-story house at 223 N. Second St. will be demolished, and that lot will serve as off-street parking for future residents of 227-229 N. Second St., which will be renovated.
To the south is a six-unit apartment building being renovated by the city with federal dollars. Just around the corner, at 212 W. Jefferson St., is a DEI project already in the final stages of renovation. That will be a three-unit building. The combined investment between the four is estimated to be close to $1 million.
■ Two houses targeted for demolition are near Vistula and Lexington. Those include 426 Jackson Place and 117 Brady St.
■ Further to the south are two more buildings that will be rehabbed. Those include a large apartment building at 509-515 High St., and a small house at 510½ Franklin Court. DEI is also looking to acquire an apartment building adjacent to the High Street property, that's not part of the current plan.

Boecher said DEI is depending on and working with private sources to cover much of the remaining renovation costs. They’ll also be relying on groups to help with some of the renovations, but those plans are still coming together. He declined to discuss those details.

But the overall plan will be bigger than the recent acquisition.

In addition to those properties, DEI is close to finishing renovations to a three-unit building at 212 W. Jefferson that it acquired. DEI would also like to assume ownership of a six-unit apartment building just a few houses away on North Second Street that is being renovated with federal money and overseen by the city’s community development department. Plans to transfer the property, though, are tentative.

On top of that, Boecher confirmed DEI is looking at acquiring and renovating a large apartment building on West High Street adjacent to one of its 11 properties — an equally large multi-unit at 509 W. High Street.

If all those plans come to fruition – eventually – DEI would own 10 properties with nearly 40 apartment units, he said.

Rent from the units will provide a revenue stream to make the agency self-sufficient.

“They have to be able to contribute money back to the organization so we can continue to do more and more things,” Boecher said.

The real estate will eventually be overseen by Assurance Property Management of New Paris, he said.

Boecher tamps down expectations, though, saying the work will be done in phases.

While the improvements will help eliminate some blight and long-term neglect, the second, over-arching aim is much loftier: Officials hope it will entice further private investment in the neighborhoods and in the business district.

“We feel the private sector will respond better to a larger project as opposed to a smaller project,” Boecher said. “A small effort is not going to move the needle to the degree that we need it moved to have the private sector move in and invest money down here.”

“Once the blight is addressed in some of these gateways that we’re working on, I think the commercial environment will have further confidence,” he said.

The blending of private money with local government support is unique, several people said.

“It’s a new model that I think we’ll be using in the future,” said Crystal Welsh, director of community development for the city. “I think it’s critical that we think creatively in funding these projects moving forward because the large subsidies that were available through federal programs are obviously becoming less available.”

While Indiana Landmarks has previously provided loan guarantees in other communities, the Elkhart arrangement is different because it involves numerous partners, said Tim Shelly, the group’s chairman of the board of directors who lives in Elkhart.

“In that regard, it’s pretty unique for Indiana Landmarks,” Shelly said

The process of acquiring the 11 properties was not without headaches, though.

Boecher said they had initially thought the 11 properties were worth rehabilitating, but realized that four of the homes had deteriorated beyond repair as a result of vandalism.

The bank, hoping to unload the properties, required DEI to take the four as well, he said.

Boecher said they hope the four buildings will be among many the city hopes to tear down with money from a federal grant program known as the Hardest Hit fund the city is applying for jointly with Elkhart County and other communities.

Eventually, Boecher said, they hope three of the future vacant lots will be sold to adjoining property owners.

In one case the lot will be used for off-street parking to accommodate future residents of an adjacent apartment building on North Second Street.

Renovations to the first four properties could begin soon, but Boecher declined to identify which ones since he had not yet informed tenants.

 


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