Once-Underutilized Shops Become Part of Revitalization Strategy

When the Edgewater Community Council on Chicago’s North Side began looking in 1994 for a housing developer to take on the Belle Shore and Bryn Mawr apartments, the two buildings were rundown and crime-ridden. The Edgewater area had experienced a surge of residential redevelopment over the previous 15 years, but community leaders were concerned. Despite their proximity to Lake Michigan, convenience to public transportation, and distinctive architecture, these two large apartment buildings had been untouched by the North Side revitalization trend and were holding the neighborhood back. The main barriers to investment in the Belle Shore and Bryn Mawr, according to Matthew Roddy, executive vice president of Holsten Real Estate Development Corporation in Chicago, were the retail spaces at ground level in both buildings. Many investors who are willing to take a risk on properties located on vintage residential side streets are reluctant to invest in older urban commercial areas, he explains. The shops at street level at the Belle Shore and Bryn Mawr were in poor shape. Some were occupied by "marginal operations, living hand to mouth, putting in no upkeep," recalls Roddy. Others were vacant. The community council chose Holsten to do the restoration. "We knew we wanted to do it," comments Roddy. The Holsten Real Estate Development Corporation, founded by current president Peter Holsten in 1974, specializes in affordable housing and community development. In its 25 years of operation, Holsten has carried out approximately $60 million in redevelopment work and renovated approximately 2,000 units in 25 projects in Chicago, Roddy estimates. The Holsten Management Corporation, an arm of the developer, now manages the Belle Shore and Bryn Mawr. The restoration of the Belle Shore won Holsten the 1999 National Trust for Historic Preservation/HUD Secretary’s Award for Excellence in Historic Preservation. The joint annual award recognizes excellence in advancing the goals of historic preservation while providing affordable housing. Today, the restored, 8-story Belle Shore Apartments’ 139 units provide affordable housing for approximately 170 low- and moderate-income residents, including the elderly, people with disabilities, and the formerly homeless. The apartments—all studio or one-bedroom units—have been renovated, including new kitchens and bathrooms. Twenty percent of the apartments are now wheelchair accessible. The Belle Shore, which began leasing in June 1998, is operating at 98-percent occupancy. The Bryn Mawr, which opened in 1999, has 240 units and is approximately 50-percent occupied. The Belle Shore, an elegant, airy, corner building, retains its original art deco facade with green terra cotta tiles, a gold fringe above the storefront level, copper flashing, and an abundance of bright yellow brickwork. It sits in the center of the West Bryn Mawr Avenue historic district, designated in 1995. Located about 5 miles north of Chicago’s downtown, the Belle Shore is within easy walking distance of Lake Michigan. Many of its upper floor apartments have lake views. Revitalizing blighted storefronts. The success of the entire redevelopment effort turned on Holsten’s finding a strategy to make the ground-level shops viable again. Shortly after agreeing to take on the Belle Shore and Bryn Mawr restoration, the developer began to tackle the problem of the buildings’ underutilized storefronts. Holsten staff met with the Edgewater Community Council, the Edgewater Development Council, and the Bryn Mawr Task Force to discuss the kinds of businesses the community needed. Since a parking shortage in the neighborhood was a realistic constraint, the council also looked for businesses that could be supported primarily by pedestrian traffic from nearby apartments. "We generated a master list of potential businesses, then went out to successful enterprises and recruited them," says Roddy. As an inducement, Holsten offered free renovation of retail space to promising commercial tenants. Holsten also offered existing businesses the opportunity to move back in after redevelopment, but most chose to sell out and leave. Only one, a grocery store in the Bryn Mawr Apartments, returned. The Belle Shore’s current tenants include a branch office of the Uptown Bank, the Johnny Sprocket Bike Shop, a hair salon, a coffee bar, and Julie Mai’s French-Vietnamese restaurant. The neighborhood has welcomed the revitalized shops, which are doing well, Roddy reports. Holsten also carried out a relocation plan for residents, temporarily placing them in apartments in the community and bringing them back as units were renovated. In the process, the company used police background checks to screen out any former residents with criminal records. Financial headaches and thermal panes. The Belle Shore-Bryn Mawr project involved $9.22 million in tax-exempt Federal Housing Administration-insured bonds, $8.82 million in city of Chicago HOME funds, $7.18 million in historic and low-income tax credits, $1.75 million in taxable Tax Increment Financing bonds, a $500,000 Illinois Housing Development Authority Trust Fund Loan, and a $500,000 Federal Home Loan Bank grant. The tax credits were syndicated through Edison Capital, an arm of Commonwealth Edison in California. "It took us close to 3 years to get the deal closed and almost another 3 to get it completed and reoccupied," says Roddy. City redevelopment officials acknowledged the project—involving two large apartment buildings, more than 370 residential units, 10 commercial units, and 9 layers of financing—as the most complicated affordable housing deal that Chicago had seen up to that time. The size of the project justified the complex financial arrangements and paved the way for additional complex financing in the future for affordable housing renovations. To restore the Belle Shore and Bryn Mawr apartments, Holsten worked with the Illinois Historic Preservation Agency and the National Park Service, which administer the historic tax credit program, as well as with HUD’s affordable housing tax credits. The divergent goals of these two tax credit programs were sometimes at odds. One clash occurred over window restoration. The question was whether the redevelopment would preserve the original look of the period (a historic preservation goal) or install modern windows for energy efficiency (an affordable housing management goal). The issue was resolved by an agreement to retain as many original windows as possible and concentrate them on the lower two floors—the area most visible from the street. The remaining floors would have new thermal pane windows from a specialized local supplier, designed with the divided-light, small-pane style and historic detail of the original windows. The developer’s role often involves resolving many issues and points of view, and the National Trust/HUD award is symbolic of successful compromise in inner-city development, says Roddy. "This award represents to me both sides saying, ‘You did a good job on this building,’" he comments. "And I like that. A combination award—it bodes well for the combination of historic preservation and low-income tax credits." For more information, contact: Matthew Roddy, Executive Vice President, Holsten Real Estate Development Corporation, 1333 North Kingsbury Street, Suite 305, Chicago, IL 60622, (312) 337-5339. Or see: "Cuomo Announces Award for Historic Preservation to Belle Shore Apartments in Chicago," HUD Press Release No. 99-215, October 22, 1999. Previous                 Contents                 Next