Rock Island Economic Growth Corporation, which has long been a model of progressive development in the Quad Cities, is starting to ruffle a few feathers - with quite a few more likely to follow. That's because the not-for-profit organization has delved into the development of affordable housing, building 71 units for the Rock Island Housing Authority in the coming years, including six scattered-site homes this year in established - although still sensitive - neighborhoods.

In addition, Rock Island Economic Growth's sister organization, the Development Association of Rock Island, is consulting on Moline's downtown-redevelopment strategy.

While branching out into Quad Cities consulting and public housing, Rock Island Economic Growth Corporation (RIEGC) is stepping up its housing-development activities. Beyond the 71 units it's building for the housing authority, the organization is involved in projects with at least 61 additional units. That's more than the 120 units that RIEGC has built in the past five years.

"They are starting a major shift in direction," said Ed Hanna, president of the Broadway Historic District. The Broadway neighborhood has been a key beneficiary of RIEGC's work over the years, particularly through the funding of historic restoration. But now some Broadway residents are bristling at a scattered-site public-housing project in their neighborhood.

Over the past five years, RIEGC has moved from an organization that facilitated projects such as rehabilitating historic housing to becoming a developer of housing products untested in the Quad Cities market. With its Moline and public-housing contracts, the organization is now extending its reach to another city and into the realm of publicly owned affordable housing.

Dan Carmody, president of RIEGC and the Development Association of Rock Island (DARI), claims his organization isn't looking to become a major housing developer. "We consider ourselves the developer of last resort," he said. "Our hope ... is that we'll become a facilitator of private development." RIEGC wants to show developers that there's a market for unique housing products that work with the neighborhoods surrounding them.

Yet Carmody's statement seems to contradict the volume of RIEGC's current housing-development projects.

Accelerating Housing

RIEGC got into the housing-development business only in the past five years. It started with six townhomes in the Broadway Historic District and 52 downtown housing units in the Goldman and Renaissance rental projects. The upscale Clipper Condos in downtown Rock Island were completed earlier this year, with nine residential units and two commercial spaces. Six of the condos are sold, and the remaining three range from $137,000 (900 square feet) to $198,000 (1,350 square feet).

That central-city development strategy is continuing with the Sala building, a presently vacant apartment building that will feature 33 units of rental housing behind Circa '21, and the McKesson warehouse at 19th Street and First Avenue, with 28 owner-occupied units. Renovation of the Sala space is already underway, while construction on the McKesson building will start later this year, Carmody said. That project will include housing units from 1,200 to 2,500 square feet, in the $150,000 to $250,000 range. It will also be distinguished by its "green roof," river views, and a "very industrial feel," Carmody said.

All told, Carmody estimated that RIEGC has between $20 million and $40 million of projects presently in the works.

But Renaissance Rock Island - which encompasses RIEGC, DARI, and The District of Rock Island - is branching out. It has a contract with the Rock Island Housing Authority to build 71 units of housing. The organization also has a contract with the Moline Centre Development Corporation to adopt a "Main Street" - or incremental, compared to relying on big-ticket developments - approach to downtown revitalization.

These two developments could signal that Renaissance Rock Island is enlarging its scope, from being a champion of preservation of historic neighborhoods and developer of creative projects that re-use urban buildings to an organization with a larger role in guiding development in the Quad Cities beyond Rock Island.

One reason for this growth approach might be economic reality and diversification. Three key partners for RIEGC have been the City of Rock Island, the Illinois Housing Development Authority (a state agency), and the business community. Carmody said that it will be a challenge for the city and state to maintain their financial support of RIEGC. "The state and city are under huge financial pressure right now," he said.

Moving into other areas - public housing and Moline - is a way of tapping into new sources of funding. While the Department of Housing & Urban Development has cut the Rock Island Housing Authority's funding, the public-housing body does have money for the development of replacement units for the scheduled-to-be-demolished Valley Homes.

Carmody said that the RIEGC board has held discussions about expanding its service area.

"Maybe the Easy Part's Done"

Another factor at work might be that the building-by-building strategies that have gotten Rock Island this far have borne all the fruit they can.

Carmody said that Rock Island has focused on incremental development over the past decade, and now it needs to think bigger - which is one reason that the River Vision process is so exciting. "Each of the downtowns has had success in the past 10 years," Carmody said. "Maybe the easy part's done. We've reached a plateau." The Quad Cities have "nice downtowns, but it's not compelling enough."

The Quad Cities need to employ development strategies with an eye toward drawing people from outside the area, Carmody said. He noted that 700,000 people live within a one-hour drive of the Quad Cities.

Talking about RIEGC's relationship with the Moline Centre Development Corporation (MCDC) and the City of Moline, Carmody noted that both of the major Illinois Quad Cities could learn from each other. "What they can learn from us is small ball," he said, referring to incremental development. What Rock Island can gain from Moline is "to dream a little bit bigger dream."

That's being done in part with the River Vision process in Rock Island and Davenport, designed to develop connections across the Mississippi River between the cities and to capitalize on the area's waterfront property. Implementing recommendations from the River Vision plan would cost hundreds of millions of dollars, both public and private.

And money has been a big issue in Rock Island; incremental development has been a function of not having a vast funding pool such as the state (for the River Renaissance projects in Davenport) or a corporate benefactor (Deere & Company in Moline).

But the collection of smaller projects in Rock Island has been amazingly successful, and Moline wants to tap into it.

Jim Bowman, assistant city administrator for economic development in Moline, is clearly excited about bringing DARI on board. DARI has a contract with the Moline Centre Development Corporation for $7,200 to develop an organizational work plan by July 15. This plan will embrace the four points of the national "Main Street" program, which Rock Island has employed since the late 1980s: design, organization, promotion, and economic restructuring. "We've never taken that comprehensive approach," Bowman said.

Amy Trimble, president of the MCDC, said the Main Street program is "tried and true and proven" throughout the country, and that Moline's challenges are "no different than any other town in the U.S."

Carmody said the organization understands that the status quo isn't working. "MCDC recognizes that although the organization has been here a while, it needs to re-invent itself," he said.

Bowman added that he expects the plan will result in "a whole new entity with the MCDC's corporate structure." This new organization - it will probably shed the MCDC name, Bowman said - will not swallow up existing organizations such as the Property Owners Group and Renew Moline but will work beside them. The model is similar to Renaissance Rock Island, with coordination among the member groups.

This organizational shift would be spurred by "the City of Moline bellying up to the bar first," Bowman said. The city is prepared to give between $50,000 and $70,000 "just for the organization," he said. That would enable the hiring of full-time downtown manager in Moline.

Trimble said her organization looked at the Main Street program several years ago but didn't have the money to hire a full-time administrator. On that front, she said, "now we have the leadership from the city."

The appearance of a conflict of interest was one reason MCDC and the city hired DARI instead of just Carmody, who has for the past six years - with the DARI board's blessing - consulted with cities around the country, but always outside the Quad Cities.

Trimble said she was surprised that DARI agreed to consult with Moline. "We are all competing for the same businesses," she said.

But Bowman doesn't believe it's inappropriate for Rock Island to help Moline develop its downtown development strategy. "I see it as an opportunity to really join hands," he said. "We're joined already at the hip."

Carmody, who is also helping to lead the River Vision process, sees that the good of the greater Quad Cities area is going to depend on the health of the component parts - that vibrant downtowns in all the Quad Cities will benefit all the communities. "We could have three compelling downtowns, each a little different," he said.

"There are substantial benefits to Rock Island ... to coordinate" with Moline, Carmody added. While there is enough demand to support certain types of development in all the downtowns - Carmody cited housing and restaurants - "sometimes there just isn't enough market share to go around," he said. Specialty retail is one example, he said. So coordination becomes important.

He acknowledged that there might be situations in which downtown Moline and Rock Island compete against each other.

DARI's contract in Moline is, of course, very small and with a limited scope. But Bowman said it could be the start of a long-term relationship. "We'll have to see how DARI delivers on the contract," he said.

Affordable Housing That Doesn't Look Like Affordable Housing

While MCDC wants to change the way it does business, the Rock Island Housing Authority is looking to RIEGC to help it change image of public housing, and the way people think about it.

"The term we're trying to promote is 'affordable housing' that looks like the rest of the neighborhood," said Susan Anderson, executive director of the Rock Island Housing Authority for the past four years.

"The goal here is to build affordable housing that doesn't look like affordable housing," Carmody said.

RIEGC, essentially, is helping to replace the 57-unit Valley Homes complex (where Ninth Avenue and 25th Street join), which is targeted for gradual demolition from 2006 through 2009, Anderson said.

Rock Island Economic Growth is under contract to build:

• six scattered-site homes for use with Section 8 vouchers, with the goal of home ownership within five years;

• 35 mixed-income units in the Voss Brothers building at Third Avenue between 21st and 22nd streets, above the housing-authority office, with construction slated to begin as soon as fall 2004; and

• a 30-unit mixed-income subdivision whose location is yet to be determined.

Of those 71 units, roughly three-quarters will be subsidized housing for low- and moderate-income families. Carmody said the three projects will cost about $9.4 million.

A key element of these projects is using design that fits in with the neighborhoods. Two units in Broadway are modeled after the RIEGC townhomes, while two others use a new design called Victoria's Cottage. "We think this is a cool enough house to build throughout Rock Island," Carmody said. The remaining two units will be modeled after a Rock Island Youthbuild home.

In addition to those projects, the housing authority will eventually build 38 units of housing on the site of the current Valley Homes, with six of those units reserved for low- or moderate-income families and the rest market-rate. The Rock Island Housing Authority will also build six additional scattered-site homes next year. RIEGC is not at this point involved in those projects.

Anderson said the housing authority put out a request for proposal for its construction projects and interviewed firms from Chicago, Rockford, and Springfield, Illinois, but chose RIEGC because it met the criteria, has a history in the rehabilitation of properties, and has existing relationships with Rock Island's neighborhoods.

But the neighborhoods have problems with the new scattered-site housing. Some members of the Broadway Historic District have objected to plans for two single-family public-housing townhomes at 10th Avenue and 17th Street.

"Part of the Broadway plan has always been owner-occupied property," Hanna said. Although he feels that Broadway will have to take some public-housing residents because of the Valley complex's proximity to the neighborhood, some people "don't want to see Broadway targeted for people re-located from Valley Homes," he said.

Three of the scattered-site housing units are slated to be built in the Douglas Park neighborhood, while one is planned for Longview. (Both of those areas are to the west of Broadway.) Anderson said that the housing authority is looking at a property in the Keystone neighborhood for the first site in its second round.

The scattered-site homes are "all in our older, poorer neighborhoods," said Deb Kuntzi, a member of the Broadway Historic District board who opposes the scattered-site homes in her neighborhood. The houses might be better sited in more stable areas, she said.

"The Broadway neighborhood would prefer ownership to rental," Carmody said. "We're trying to be honest about it" by communicating with the neighborhood.

Carmody presented the scattered-site project to the Broadway neighborhood at its April board meeting. "It was kind of rammed down our throats," Kuntzi said. "We're not happy about the rental aspect. ... This is not progress."

"In the past, they've been a little more up-front with their plans and got us involved a little more," Hanna said.

Anderson said the design is being altered to accommodate neighborhood concerns about attached garages, vinyl siding, and the amount of brickwork.

But that still doesn't address the fundamental issue of Section 8 housing in a sensitive neighborhood, where an unsuccessful development could have a ripple effect throughout the area.

Anderson said that the six infill houses being built this year and the six being built next year will be meant for Section 8 renters who are ready to move to home ownership. "We have a handful that are ready to go," she said. The target is to have the Broadway units - and the 10 other planned homes - owner-occupied within five years.

But Hanna countered that "they can't say [with certainty] when those units would be converted" from rented to owned; ownership is a goal, not a guarantee.

"We're trying to get rid of our out-of-town landlords, and they're building rental?" Kuntzi said. "We don't need the rental properties."

Although public housing still carries a stigma, the Rock Island Housing Authority has made great progress in the past few years. It was once considered "troubled" in the eyes of the Department of Housing and Urban Development, with 70-percent occupancy, but is now a "high performer," with 99-percent occupancy and good marks in areas such as finances and administration. "We've come a long way," Anderson said.

She added that the housing authority has a solid screening process and a lease that is "really quite stringent, and we do enforce our lease."

Anderson is "pretty sharp and runs a tight ship," Hanna said. "I wouldn't mind if the Rock Island Housing Authority managed some of the rental property in my neighborhood."

But other people in the Broadway have strong feelings against scattered-site housing in the neighborhood. Kuntzi said that while the housing authority has improved, there's no guarantee that level of performance will continue.

Carmody said that RIEGC has helped fund restoration or construction of 48 homes in the past 10 years in the Broadway district, including converting rental property into owner-occupied homes. He added that in those 10 years RIEGC took two scattered-site homes out of Broadway area. "We think it [the new Broadway-townhome project] passes the fairness test," he said.

He also said that he's sensitive to concerns about putting too much scattered-site affordable housing in the Broadway neighborhood. "I'd be fairly cautious about putting more in there," he said.

The neighborhood has come a long way, he added. "We think Broadway is to the point of being sustainable," he said. While Broadway was 37 percent owner-occupied in 1992, that rate has grown to more than 60 percent.

That's led to another transition at RIEGC. Carmody said his organization has done about all it can in Broadway. "There aren't that many opportunities," he said, adding that the organization is looking more to the Old Chicago and Douglas Park neighborhoods.

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