A proposed 72-unit affordable housing development slated for Batavia has officially secured $1 million in financial support from the city to help the project get going.
On Monday, the Batavia City Council approved a redevelopment agreement with developer Fox River Affordable Housing, including a $1 million TIF incentive.
Called the Residences at River Pointe, the proposal for the subsidized, multi-family housing project is being brought forward by Fox River Affordable Housing, a nonprofit development entity of the Housing Authority of Elgin.
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It’s set to be built at 400 S. River St., which the city of Batavia says is a former limestone quarry site. The property is bordered by parks along the Fox River to the west, an industrial area to the south and single-family housing to the north and east.
The proposed development would include 72 units — 52 one-bedroom units, 17 two-bedroom units and three three-bedroom units. Of those, 18 would be set aside for households earning at or below 30% of the area median income, or AMI, 38 units would be set aside for households earning at or below 60% of the area median income and 16 for those earning at or below 80% of the AMI.
The project got its first green light from the city just over a year ago, when the City Council said it intended to fund $1.2 million in land acquisition and engineering costs for the project using the city’s TIF, or tax increment financing, reserves.
A TIF district essentially freezes the amount of property tax revenue each taxing body receives from an area at the point at which the TIF is instituted. The extra or “increment” taxes created by the development of the property go into a special fund used to pay for costs related to improving the area.
The project would be located mostly in the city’s TIF District 3, according to a city memo included in Monday’s meeting agenda.
The city’s initial green light last year, however, was merely a promise of funding down the line, once the project was determined to be feasible. That promise of financial support from the city last year was part of the developer’s application for the Illinois Housing Development Authority’s Low Income Housing Tax Credit, which is expected to provide the project with a considerable portion of its total funding.
The Low Income Housing Tax Credit is a dollar-for-dollar federal tax credit, according to IHDA’s website, that helps move affordable housing projects forward. The maximum rent that can be charged on a property that receives this tax credit is 80% of the AMI — which is why there are no market-rate units in the proposed development. Rents are typically capped for a 30-year period in Illinois.
The project has secured a commitment for tax credits by IHDA, the Housing Authority of Elgin’s Executive Director and Chief Executive Officer Martell Armstrong previously said. The tax credits are expected to be awarded after construction of the development has been completed and has achieved its threshold occupancy goals.
The city’s commitment to awarding the project financial support, however, was conditioned on the proposal being taxable, city staff have said. Since its proposed location is within the city’s TIF District 3, the development would generate back TIF funding.
But, because it’s an affordable housing development, the project could obtain certain property tax incentives and abatements, meaning the property tax revenue the city gets would be partially abated for 15 years, per the city memo included in Monday’s meeting agenda.
Because of that, the city negotiated a reduced incentive, down from $1.2 million to $1 million. The agreed-upon funds are to be used for land acquisition and “development soft costs” like engineering and architecture work, per the city. Batavia has also negotiated a payment in lieu of taxes — amounting to $15,000 in the first assessment year, which would increase by 3% in future years.
The development is projected to cost more than $28 million in total, and, after the 15-year abatement period, is expected to provide more than $155,000 annually in tax revenue for all taxing bodies, per the city.
If the project isn’t completed within five years, the developer will have to, under the redevelopment agreement approved Monday, either pay the incentive back or deed the property to the city.
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The project is expected to help fill what the City Council has said is a need in the city for more affordable housing units.
A 2023 statewide report from the Illinois Housing Development Authority indicated that Batavia’s share of affordable housing — defined as being within the means of homebuyers making 80% of the regional median household income or renters making 60% of the regional median household income, per the authority — was at 23.5%. That’s well above the 10% threshold that requires communities with low levels of affordable housing to submit a plan to the state as to how they’ll build out a diverse housing supply. In Kane County, for example, Campton Hills, Lily Lake and Geneva all fell below 10%, according to the report.
But the percentage of affordable housing in Batavia is still significantly lower than some of its surrounding cities, like Aurora and Elgin, whose affordable housing stock is each over 50%, according to the 2023 report.
Earlier this year, the project secured zoning entitlements, and, following Monday’s approval, the next step is for the developer to close on the property.
The developer is planning to close on the land in July, and is looking to start construction “as soon as possible after closing,” Armstrong told The Beacon-News on Tuesday. That timeline, however, will depend on the timing of securing permits and remaining entitlement approvals, he said. The anticipated construction timeline for the project is around 14 months.