Exhibit A IL 2025.pdf

2012-2024 A Study of the Economic Impacts of the Illinois Historic Preservation Tax Credit and River Edge Historic Tax Credit Programs

HISTORIC

TAX CREDIT

INVESTMENT

THE IMPACT OF

IN ILLINOIS

Prepared for:

Illinois State Historic Preservation Office Illinois Department of Natural Resources By PlaceEconomics May 2025

Exhibit A

REPORT JUSTIFICATION

Authorized by the National Historic Preservation Act of 1966, State Historic Preservation Offices are charged with administering federal and state preservation programs, including nominating properties to the National Register of Historic Places; surveying historic and archaeological resources; reviewing federal projects for impacts to cultural resources; working with local governments to develop historic-preservation programs; administering rehabilitation-based tax incentives for historic buildings; and providing education, training, and technical assistance on historic preservation to the public.

The Illinois State Historic Preservation Office (SHPO) is housed within the Illinois Department of Natural Resources (IDNR), whose mission is to “manage, conserve and protect Illinois’ natural, recreational, and cultural resources; further the public’s understanding and appreciation of those resources; and promote the education, science, and public safety of Illinois’ natural resources for present and future generations.” On February 7, 2023, Governor JB Pritzker appointed IDNR Director Natalie Phelps Finnie as Illinois’ State Historic Preservation Officer. The SHPO’s Tax Incentives & Architecture Section administers the Illinois Historic Preservation Tax Credit program (IL-HTC) and the River Edge Historic Tax Credit Program (RE-HTC).

The enabling legislation for both the IL-HTC and the RE-HTC establishes the collection of fees from projects that receive state tax credits and mandates that a portion of these fees be used to fund biennial economic-impact reports.

35 ILCS 31/10(c) establishes that issuance fees from IL-HTC projects are deposited into the Historic Property Administrative Fund (HPAF). 35 ILCS 31/20(c) requires that moneys in the HPAF be used to fund IL-HTC economic impact reports and suggests their contents.

35 ILCS 5/221(b-1) establishes that issuance fees from RE-HTC projects are deposited into the HPAF. 35 ILCS 5/221(c-1) requires that moneys in the HPAF be used to fund RE-HTC economic impact reports and suggests their contents.

The commissioning of this report adhered to current State of Illinois’ procurement policies. On April 20, 2022, IDNR issued a Request for Quote under Bid Solicitation number 22-422DNR-DIREC-B-28925 for the analysis of the impacts of the RE- HTC and IL-HTC programs from 2000 through 2022. PlaceEconomics, a private-sector firm with over thirty years’ experience in analyzing the economic impacts of historic preservation, was awarded the contract on June 23, 2022. Due to the success of the first Economic Impact Report (EIR), SHPO staff was authorized to contract directly with PlaceEconomics for the second report, and that contract was executed on August 18, 2024. From September 30 through October 3, 2024, SHPO staff and three PlaceEconomics staff visited several completed and ongoing IL-HTC and RE- HTC projects throughout the state and interviewed a variety of stakeholders, from mayors to residents, developers to small-business owners.

FEDERAL HISTORIC TAX CREDIT

(F-HTC) USAGE IN ILLINOIS

CONCLUSION

APPENDIX

List of Projects Acknowledgments Photo Credits

THE ILLINOIS HISTORIC

PRESERVATION TAX CREDIT (IL-HTC)

Usage of the IL-HTC Jobs and Income Leveraging Private Investment

INTRODUCTION

Geographic Spread of Projects Lessons from a Survey of Historic Tax Credit Users

THE RIVER EDGE HISTORIC

TAX CREDIT (RE-HTC)

Usage of the RE-HTC Jobs and Income Leveraging Private Investment Property Value Analysis Sales Tax Analysis

CONTENTS

Throughout 2025 the Illinois Department of Natural Resources (IDNR) is celebrating 100 years of conservation across the state of Illinois. The agency’s predecessor, the Illinois Department of Conservation, was established on July 1, 1925.

Managing, conserving, and protecting Illinois’ natural, recreational, and cultural resources remains a critical part of IDNR’s mission, and helping steward Illinois’ cultural resources is a core function of the State Historic Preservation Office (SHPO). Its programs complement and overlap with IDNR’s other programs, offices, and projects.

I’m proud to share the hard work that my SHPO Architecture and Tax Incentives staff have accomplished with their management of the Illinois Historic Preservation Tax Credit Program (IL-HTC) and the River Edge Historic Tax Credit Program (RE-HTC).

Since 2019, when the IL-HTC program began and the SHPO began administering the RE-HTC program, staff have continued to improve application processes to help those who are investing in Illinois’ historic buildings, their communities, and their future. With more towns establishing River Edge Redevelopment Zones and historic districts, the demand for the RE-HTC is compelling, as is the program’s success.

But don’t just take my word for it. This report provides persuasive analyses for both programs and fascinating stories of a few of these projects.

Although relatively new compared to IDNR’s centennial legacy, both incentive programs have already transformed many buildings and communities, improved quality of life, and spurred economic growth. I trust you’ll find this report useful and informative, and I look forward to sharing more successes with you in the future.

Message from Director Natalie Phelps Finnie

ILLINOIS DEPARTMENT OF NATURAL RESOURCES

KEY FINDINGS

The Federal Historic Tax Credit, the River Edge Historic Tax Credit, and the Illinois Historic Preservation Tax Credit have attracted private investment that has created ripple effects through the economy.

• The River Edge Historic Tax Credit (RE-HTC) continues to be very effective in encouraging commercial investment in those cities that qualify.

• The Illinois Historic Preservation Tax Credit Program (IL-HTC) has certainly helped the projects that have received state-credit allocations, and the increase to the programmatic cap approved in 2023 allows more projects to take advantage of the credit.

• Almost half of the State’s counties (49 of 102) are home to a certified historic tax credit project.

• Historic tax credits generate advanced revenues for state and local governments. For every $100 of state tax credits issued, the Illinois Treasury will have already received $22.38, and local governments will have already received $16.65 in tax revenues, Thus, $39.03 of state and local tax revenues have been received before $100 of state tax credits are even issued.

• Every $100 that the State of Illinois provides in historic tax credits spurs an additional $467.60 in direct private investment and an additional $375.33 in indirect and induced economic activity.

• Based on the three River Edge cities examined, every one-time investment of $250,000 in tax credits by the State of Illinois results in $28,046 of additional, annually recurring, property-tax revenue to local governments.

HISTORIC TAX

CREDITS ARE

GENERATING

JOBS, LABOR

INCOME,

PROPERTY AND

SALES TAX

REVENUES,

AND MORE

THROUGHOUT

ILLINOIS.

IL-HTC Key Findings

RE-HTC Key Findings

• Since its enactment in 2012, 41 RE-

HTC projects have been completed, and 32 are underway.

• Certified RE-HTC projects represent a private investment of over $643 million

• Projects utilizing the RE-HTC have generated an average of 290.1 direct jobs and an additional 233.8 indirect and induced jobs each year.

• These jobs have generated $19,825,644 in direct labor income and $15,692,442 in indirect and induced labor income every year.

• Retail sales in historic districts within River Edge Redevelopment Zones increased by 44%, 13% more than in the non-historic parts of the Zones and 27.3% more than in the rest of the municipalities.

THE RE-HTC

HAS GENERATED

OVER $30

MILLION IN

LABOR INCOME

EACH YEAR.

THE IL-HTC IS

GENERATING

NEW UNITS OF

AFFORDABLE

HOUSING.

• Since taking effect on January 1, 2019, 14 IL-HTC projects have been completed, and 26 additional projects have received a tax-credit allocation.

• Over $263 million of private investment has been made in Illinois’ historic buildings through certified IL-HTC projects.

• An additional $597 million of private investment is being made in projects that have received an IL-HTC allocation but have not yet been completed.

• IL-HTC projects have generated an average of 245.6 direct jobs and 197.9 indirect and induced jobs each year.

• These jobs have yielded $17,838,859 in direct labor income and $13,884,804 in indirect and induced labor income each year.

Midtown Faust in Rockford was rehabilitated by Brad and Sue Roos in 2024 using the RE-HTC. The Faust Building is now home to a pottery studio, office space for a local nonprofit and Roos’ woodshop.

Illinois State Bank Building of Quincy, Quincy

IL-HTC Project

INTRODUCTION

Nationwide, historic tax credits are the country’s most effective tool to promote private investment in historic buildings.

A TAX CREDIT

IS A DOLLAR-

FOR-DOLLAR

OFFSET OF

INCOME TAXES

THAT WOULD

OTHERWISE

HAVE TO BE

PAID, MAKING

IT A POWERFUL

INCENTIVE

FOR HISTORIC

REHABILITATION.

Illinois is a state that understands the positive economic impact of rehabilitating historic buildings and the importance of quantitatively measuring that impact. This understanding is reflected not only by the high rate of participation in the Federal Historic Preservation Tax Credit program (F-HTC) but also in the enactment of two state historic tax-credit programs, the River Edge Historic Tax Credit (RE- HTC) and the Illinois Historic Preservation Tax Credit (IL-HTC), and the legislatively mandated requirement to thoroughly analyze their impact and effectiveness. Some 37 other states also have historic tax credit programs, but most of them are simply a state version of the federal historic tax credit. The Illinois Legislature created two programs to reflect Illinois’ specific needs and challenges by focusing on former industrial hubs, low-income communities, and formerly government-owned buildings, such as schools, hospitals, and post offices. Moreover, the enabling legislation of both state incentives mandates biennial quantitative analysis of the use and impact of the state historic tax credit programs. In May 2023, the inaugural report on the impact of the historic tax credits in Illinois was produced , which analyzed data through 2022. This 2025 report represents the first of the biennially mandated comprehensive updates.

Illinois’ two state-level historic, tax-credit programs have had positive economic, cultural, and environmental impacts across the state. From Chicago to East St. Louis, historic tax-credit projects have created jobs and revitalized buildings that now house new, local businesses. Private investment in historic buildings through historic tax credits brings vacant and underutilized buildings back online, increases property-tax revenues and generates returns to the State through increased retail-sales taxes. These projects create sustained sources of income for Illinoisans through construction jobs; because historic-rehabilitation projects are more labor intensive than new-construction projects, a larger share of a project’s costs go directly to labor income rather than to the purchase of materials. Not only have these rehabilitation projects re-densified commercial cores and revived local landmarks that contribute to community pride and social cohesion, they have also kept thousands of tons of construction and demolition debris out of landfills.

INTRODUCTION 1

Enacted in 2011, the River Edge Historic Tax Credit (RE-HTC) is a by-right 25% state income-tax credit on Qualified Rehabilitation Expenditures (QREs) for projects located in River Edge Redevelopment Zones in five cities across the state.1 If a building owner invests $100,000 in a certified rehabilitation of their historic building and uses the RE-HTC, they will receive a $25,000 credit towards their state income-tax liability.

The Illinois Historic Preservation Tax Credit (IL-HTC) was enacted in 2018 and provides a state income-tax credit equal to 25% of a project’s QREs, up to $3 million of credit, to owners of historic structures who undertake certified rehabilitations. In 2023, the IL-HTC annual program cap was authorized to increase from $15 million to $25 million, beginning on January 1, 2024. Two allocation rounds are held each year, and allocations are assigned by ranking projects according to a list of statutory priorities. Since the first application round for an IL-HTC allocation took place in 2019, SHPO architecture staff has made improvements to the competitive allocation process, which are outlined in the IL-HTC chapter.

For a project to qualify for either of the state historic tax credits, buildings must be designated as “historic,” meaning individually listed on the National Register of Historic Places (NRHP) or listed a contributing building in either a NRHP historic district or a locally designated historic district that has been certified by the National Park Service (NPS). The project must also obtain F-HTC certification from the NPS.

Therefore, the two state-level, historic tax-credit programs offered in Illinois have been designed to dovetail with the F-HTC. There is no additional design review for the state tax-credit programs beyond that of the F-HTC. For the remainder of this report, to eliminate the possibility of duplicating data across programs, projects were separated into 3 categories: projects that took the F-HTC only, projects that paired the F-HTC with the IL-HTC, and projects that paired the F-HTC with the RE-

HTC.

1 Illinois Public Act 103-0009 and Illinois Public Act 103-0595, respectively signed by Governor Pritzker on June 7, 2023, and June 26, 2024, authorized the ability to establish additional River Edge Redevelopment Zones in East Moline, Joliet, Kankakee, LaSalle, Moline, Ottawa, Peru, Quincy, and Rock Island, where the RE-HTC will be available upon certification of the zones by the Department of Commerce and Economic Opportunity.

Fox Valley Apartments, formerly Lincoln School

Aurora, RE-HTC Project

The two state-level, historic tax-credit programs offered in Illinois have been designed to dovetail with the F-HTC, with many of the requirements being the same. The table below outlines how the F-HTC, the IL-HTC, and the RE-HTC work:

2 “NRHP” means the National Register of Historic Places, and ”HD” means a Historic District.

3 “RERZ” means River Edge Redevelopment Zone.

Federal Historic Tax Credit (F-HTC)

River Edge Historic Tax Credit (RE-HTC)

Illinois Historic Preservation Tax Credit (IL-HTC)

Enacted 1976 2012 2018

Building Eligibility

Listed individually on the NRHP or within

NRHD or certified local historic district2

Same as Federal AND located within a River Edge Redevelopment

Zone

Same as F-HTC

Post-Rehab Use Income-producing Same as F-HTC Same as F-HTC

Amount of Credit 20% of Qualified

Rehabilitation Expenditures (QREs)

25% of Qualified Rehabilitation

Expenditures (QREs)

25% of Qualified Rehabilitation

Expenditures (QREs)

Per Project Cap None Same as F-HTC $3 million Yearly Program Cap None Same as F-HTC $25 million Earn Credit Upon Certification of Completed Phases

Yes Same as F-HTC No

Transferability of credit

Cannot be bought and sold but can be syndicated Same as F-HTC Same as F-HTC

Recapture Yes (5 years) None Same as F-HTC

Rehabilitation Standards

Must meet Secretary of the Interior's Standards for Rehabilitation Same as F-HTC Same as F-HTC

Review of Work National Park Service and State Historic Preservation Office

Same as F-HTC Same as F-HTC

Minimum Investment

$5,000 or the building's adjusted basis, whichever is greater.

Same as F-HTC Same as F-HTC

Qualified Rehabilitation Expenditures (QREs)

Rehabilitation but not acquisition, site improvements, or additions

Same as F-HTC Same as F-HTC

Carried Back/ Forward

Carry back 1 year; carry forward up to 20 years

Carry back 3 years, forward up to 5 years

Carry back 3 years, forward up to 10 years

Legislation Reauthorization None Every 5 years Every 5 years

Overall, 49 out of Illinois’ 102 counties and 62 of its cities have benefited from a F-HTC, RE-HTC, or IL-HTC project. This study examined the impact of projects that have utilized the IL-HTC, the RE-HTC, and the F-HTC since 2000.

GEOGRAPHIC SPREAD

OF PROJECTS

Riverdale

Riverside

Oak Park

Hines

Chicago

Chicago (Pullman)

Chicago (Norwood Park)

Skokie

Highwood

Naval Station Great Lakes

Lake Bluff

Libertyville Waukegan

Evanston Alton

Litchfield

Winchester

Jacksonville Barry

Quincy

Springfield Decatur

Champaign

Paris

BloomingtonNauvoo LaHarpe Peoria

Rockford

Belvedere

Galena

Warren Orangeville

Woodstock See Popout

Sycamore

Oregon Geneva

Plainfield Naperville

Lockport Tinley Park

Joliet

Aurora Montgomery

West Dundee Elgin

Washington

Galesburg

Aledo Kewanee

Moline

Marseilles

Kankakee

Momence

Danville Lincoln

Petersburg

Granite City Collinsville

East Saint Louis Belleville

Maeystown

Cairo

Map of All Historic Tax Credit Projects (2000-2024)

INTRODUCTION

RE-HTC Completed RE-HTC Underway

IL-HTC Completed IL-HTC Underway

F-HTC Completed since 2000 F-HTC Completed 1999 or before

Chicago Area

Mt. Carrol

Rock Island LaSalle

Tinley Park

Danville

FEDERAL HISTORIC

PRESERVATION TAX

CREDIT (F-HTC)

The Federal Historic Tax Credit represents the largest federal investment in historic preservation.

SINCE 2000,

NEARLY 300

F-HTC PROJECTS

HAVE BEEN

CERTIFIED,

REPRESENTING

OVER $8

BILLION IN

TOTAL PRIVATE

INVESTMENT IN

ILLINOIS.

Enacted in 1976, the Federal Historic Preservation Tax Credit (F-HTC) is administered by the National Park Service (NPS) in partnership with State Historic Preservation Offices (SHPOs). The F-HTC, which provides a 20% federal income tax credit on Qualified Rehabilitation Expenditures (QREs), is the nation’s most effective program for encouraging private investment in historic buildings and promoting community revitalization. Since 1976, over 48,000 buildings across the country have been rehabilitated using this credit.

The F-HTC uses a three-part application process. Part 1 confirms the historic status of the building. Part 2 describes its condition and the planned work, which is evaluated by the NPS and the SHPOs for conformance with the Secretary of the Interior’s Standards for Rehabilitation (Standards). Part 3 documents that the work was completed as approved.

Once its Part 3 is approved by the NPS, the project is a “certified rehabilitation.” While NPS grants final certification and approval, SHPOs provide guidance to applicants throughout the process and often serve as the boots-on-the-ground administrators of the program.

SINCE THE CREATION OF THE

IL-HTC AND RE-HTC PROGRAMS,

THE AVERAGE ANNUAL INVESTMENT

THROUGH THE F-HTC HAS MORE

THAN DOUBLED.

FEDERAL HISTORIC TAX CREDIT PROGRAM 5

Since 2000, the NPS has certified 292 F-HTC projects in the State of Illinois.4 While the F-HTC is administered by the NPS, review of these applications requires significant resources and time from both SHPO and NPS staff. The totals in the table below do not include projects that simply inquire about potential tax credits, nor amendments to application components, meaning the number of actual reviews conducted by NPS and SHPO staff is significantly larger than the number of certified projects.

Prior to 2011, Illinois had no state-level historic tax credit to complement the F-HTC.5 While the RE-HTC was authorized in 2011, the first project to utilize the RE-HTC was not certified until 2015. Therefore, the years prior to 2015 represent F-HTC activity without the influence of a complimentary RE-HTC or IL-HTC. From 2015 through 2024, 105 projects received a F-HTC certification alone, representing a total private investment of over $5.8 billion.

4 The projects analyzed in this section utilized the F-HTC but did not use either the IL-HTC or RE-HTC.

5 The Historic Preservation Tax Credit Pilot Program (35 ILCS 30/1) was Illinois’ first state historic tax-credit program, enacted on June 21, 2010. It was statutorily limited to the Hotel Pere Marquette in Peoria. This report does not include the Pere Marquette rehabilitation in its analyses of the state tax-credit programs.

Calendar Year

Number of Certified

Part 3s

Qualified Rehabilitation Expenditures

Other Expenditures Total Investment F-HTC Credit

Achieved

2000 9 $38,443,381 $4,734,612 $ 43,177,993 $ 7,688,676 2001 16 $53,221,435 $3,771,829 $ 56,993,264 $10,644,287 2002 15 $38,965,055 $209,301 $ 39,174,356 $7,793,011 2003 14 $44,502,112 $740,500 $ 45,242,612 $8,900,422 2004 9 $156,754,492 $4,212,535 $160,967,027 $31,350,898 2005 17 $152,988,903 $811,493 $153,800,396 $30,597,781 2006 9 $57,549,011 $18,004,915 $75,553,926 $11,509,802 2007 15 $145,185,053 $8,387,269 $153,572,323 $29,037,011 2008 8 $155,144,571 $2,484,142 $157,628,713 $31,028,914 2009 15 $135,450,728 $6,438,971 $141,889,699 $27,090,146 2010 8 $97,573,390 $36,495,746 $134,069,136 $19,514,678 2011 9 $321,598,356 $7,985,340 $329,583,696 $64,319,671 2012 8 $33,493,896 $2,876,553 $36,370,449 $6,698,779 2013 13 $446,871,349 $93,762,693 $540,634,042 $89,374,270 2014 21 $539,082,022 $124,001,703 $663,083,725 $107,816,404 2015 12 $184,727,395 $102,848,252 $287,575,646 $36,945,479 2016 16 $267,300,689 $203,406,966 $470,707,655 $53,460,138 2017 19 $404,078,029 $208,891,680 $612,969,709 $80,815,606 2018 15 $193,759,500 $47,928,162 $241,687,662 $38,751,900 2019 20 $188,717,005 $116,201,245 $304,918,250 $37,743,401 2020 16 $1,119,821,912 $398,561,699 $1,518,383,611 $223,964,382 2021 18 $286,541,096 $107,750,229 $394,291,325 $57,308,219 2022 7 $135,331,124 $ 42,673,589 $178,004,713 $27,066,225

2023 9 $998,292,819 $1,513,921,606 $2,512,214,425 $199,658,564

2024 10 $165,974,809 $46,676,915 $212,651,724 $33,194,962

Grand Total 292 $5,737,620,268 $2,961,927,403 $8,699,547,672 $1,147,524,054

FEDERAL HISTORIC TAX CREDIT PROGRAM 6

The F-HTC can be easily paired with either of Illinois’ two state-level, historic tax credits. In order to qualify for the RE-HTC or IL-HTC, a project must also receive a F-HTC Part 3 certification from the NPS. Since 2015 (the year that the first State HTC project was certified), 105 projects have used F-HTC alone, while another 111 have or will be pairing the F-HTC with either the IL-HTC or RE-HTC. Meaning, over half of all F-HTCs since 2015 have been paired with either the IL-HTC or the RE-HTC. Over time, the percentage of projects pairing state and federal historic tax credits has grown.

PAIRING STATE AND FEDERAL HISTORIC TAX CREDITS

SHARE OF F-HTC PROJECTS PURSUING

IL-HTC OR RE-HTC (2015-2024)

F-HTC & RE-HTC Completed F-HTC & RE-HTC Ongoing/ Underway F-HTC & IL-HTC Completed F-HTC & IL-HTC Allocated

F-HTC Only Completed

It’s important to note that in cities with River Edge Redevelopment Zones, the availability of the RE-HTC credit has made the use of the F-HTC more common.

For instance, in Rockford, only eight F-HTC projects occurred citywide prior to the availability of a state tax credit. However, after the establishment of the RE-HTC, Rockford has had 17 certified RE-HTC projects, with another 13 underway, and an additional two F-HTC-only projects.

A Tax Credit is a dollar for dollar offset of income taxes that would otherwise have to be paid. While tax credits can leverage private investment, they are only claimed by the owner/applicant after the rehab project has been completed (Part 3 certified by the NPS). Additionally, tax credits are only for a percentage of the Qualified Rehabilitation Expenditures (QREs) and are not based on the project’s entire cost. Examples of expenditures that are not qualified include acquisition costs, constructing a new addition to a historic structure, and site improvements, such as sidewalks, landscaping, and parking.

FEDERAL HISTORIC TAX CREDIT PROGRAM 7

As a by-right and uncapped program, the River Edge Historic Tax Credit (RE-HTC) is one of the most effective programs of its kind in the United States. The RE-HTC provides a state income-tax credit equal to 25% of a certified rehabilitation’s Qualified Rehabilitation Expenditures (QREs) to owners of certified historic structures who undertake certified rehabilitations located within River Edge Redevelopment Zones. When the program was enacted in 2012, the program was available in Aurora, East St. Louis, Elgin, Peoria, and Rockford. In 2023 and 2024, nine additional cities were authorized to create River Edge Redevelopment Zones: East Moline, Joliet, Kankakee, LaSalle, Moline, Ottawa, Peru, Quincy, and Rock Island, all of which are in the process of establishing their Zones. The RE- HTC credit is by-right if a project 1) substantially rehabilitates a certified historic property in a River Edge Redevelopment Zone (RERZ), 2) results in an income-producing use, 3) is an NPS-certified rehabilitation, and 4) has QREs that exceed the greater of $5,000 or the adjusted basis of the property.6 The RE-HTC statute allows for state tax credits to be issued for completed phases of an overall rehabilitation project, as long as those phases have each been approved by the NPS.7 The RE-HTC legislation is set to expire on 12/31/2026.

6 The original RE-HTC legislation defined the minimum expenditure as 50% of the purchase price of the property when it was last sold. Effective 1/1/2019, this was changed to align with the F-HTC definition.

7 According to the IL SHPO, “Underway” means the project has an approved F-HTC Part 2 and is under construction, but no state tax credits have been issued and won’t be until the project is completed, the Part 3 is certified by the NPS, and final RE-HTC paperwork is approved. “Ongoing” means that RE-HTC certificates have been issued for completed phases, but additional/final RE-HTC certificates are anticipated to be issued once the project is completed, the Part 3 is certified by the NPS, and final RE- HTC paperwork is approved.

RIVER EDGE

HISTORIC TAX

CREDIT (RE-HTC)

The River Edge Historic Tax Credit is one of the most effective programs of its kind in the United States.

OVER $643

MILLION

OF PRIVATE

CAPITAL HAS

BEEN INVESTED

IN RIVER EDGE

COMMUNITIES

THROUGH THE

RE-HTC SINCE

2015.

THE RE-HTC LEGISLATION

IS SET TO EXPIRE IN 2026. IF

NOT EXTENDED, RECENTLY

ADDED COMMUNITIES WILL

NOT GET THE CHANCE TO

BENEFIT FROM THE RE-HTC.

HOW THE RE-HTC WORKS

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 8

The expansion of the River Edge Redevelopment Zone (RERZ) program in 2023 and 2024 was due, in large part, to grassroots advocacy from cities across the state.

The City of Quincy acknowledged the cost of inaction. Kyle Moore, former Mayor of Quincy, President of the Great River Economic Development Foundation, and now Illinois State Representative for the 99th Congressional District, said that Quincy lost some important buildings due to a lack of resources available in similar cities.

The loss of the historic Newcomb Hotel spurred Quincy’s effort to explore additional incentives for historic buildings. Recognizing the success of the River Edge Historic Tax Credit in Rockford and Peoria, Great River Economic Development Foundation partnered with the Chamber of Commerce in 2023 to hire a lobbyist to help add Quincy to the RERZ legislation.

Similarly, in Rock Island, a downtown building was lost because not enough incentives were available for rehabilitation. State Senator Mike Halpin and State Representative Gregg Johnson, both of whom represent congressional districts that include Rock Island, believed that Rock Island was the poster child for inclusion in the RERZ program. City staff made it clear that, due to their proximity and shared labor and development markets, Rock Island and Moline were a package deal – meaning that if Rock Island were included in the RERZ expansion, Moline had to be, too.

Illinois Public Acts 103-0009 and 103-0595, signed into law by Governor Pritzker on June 7, 2023, and June 26, 2024, respectively, authorized the establishment of River Edge Redevelopment Zones in East Moline, Joliet, Kankakee, LaSalle, Moline, Ottawa, Peru, Quincy, and Rock Island. While they have been added to the RERZ legislation, that does not mean that their historic buildings are automatically eligible for the River Edge Historic Tax Credit (RE-HTC). Each city must first establish its River Edge Redevelopment Zone and certify it with the Department of Commerce and Economic Opportunity, which takes time, deliberation, and review. After certification, only then are owners of historic buildings within the RERZ eligible to begin incurring rehabilitation expenditures that qualify for the RE-HTC. The RE- HTC legislation is set to expire in 2026. If it is not extended, these recently added communities will not get the chance to benefit from the RE-HTC.

As of the end of 2024, Moline, Ottawa, Rock Island, and Quincy have all begun to establish their Zones, but none have yet been certified by DCEO. Three IL-HTC projects in newly eligible RE communities may be able to return their IL-HTC credit allocations and apply for the RE-HTC if they are located in certified RERZs. All three of these allocation projects have budgets large enough to receive a higher credit from the RE-HTC than if they were to remain with the IL-HTC. Two additional projects within Moline and Rock Island have already been completed (Certified) before their communities’ River Edge Zones have been established, therefore, those projects are not eligible for the RE-HTC.

UPDATE SINCE 2022 STUDY:

EXPANSION OF THE RIVER EDGE REDEVELOPMENT COMMUNITIES

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 9

Since the beginning of the RE-HTC in 2012 and through January 2025, 41 projects have been certified, and another 32 are currently ongoing or underway.8

8 The 2025 numbers only include projects certified through January.

9 The grand reopening of the New Broadview was held on March 28, 2025.

Rockford Elgin

Peoria

East St. Louis

Aurora

17 certified 3 ongoing 10 underway

1 certified 0 ongoing 2 underway

14 certified 1 ongoing 5 underway

0 certified 0 ongoing 1 underway

9 certified 2 ongoing 8 underway

RE-HTC

Certification Year Count

2015 1 2016 4 2017 7 2018 7 2019 5 2020 3 2021 6 2022 0 2023 4 2024 2 2025 2 Ongoing 6 Underway 26

TOTAL 73

NUMBER OF RE-HTC PROJECTS

Of the 41 certified RE-HTC projects, 42% are in Rockford and 34% are in Peoria. The first RE-HTC project in East St. Louis is underway with certification expected in 2025.9 Of the 32 ongoing or underway RE-HTC projects, 41% are in Rockford and 31% are in Aurora. Each of the other three River Edge cities has at least one RE- HTC project currently under construction.

SHARE OF CERTIFIED

RE-HTC PROJECTS

BY CITY

SHARE OF ONGOING

OR UNDERWAY RE-HTC

PROJECTS BY CITY

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 10

Before the authorization of the RE-HTC, Aurora had seen only 5 federal historic tax-credit projects. Since 2015, Aurora has 19 RE- HTC projects completed or underway.

International Harvester Building now Company 251, Aurora

RE-HTC Project

SIZE OF RE-HTC PROJECTS

The RE-HTC has helped rehabilitate almost 1.1 million square feet of space.

Additionally, another 1.8 million square feet are being rehabilitated in projects that are underway. The RE-HTC has been used to rehabilitate large and small-scale projects alike. The average size of buildings rehabilitated through the RE-HTC is 53,000 square feet. Of the 41 RE-HTC projects that have been certified, nearly 73% were projects whose buildings had fewer than 50,000 square feet of space.

SHARE OF PROJECTS BY SQUARE FOOTAGE

(CERTIFIED RE-HTC)

QUALIFIED REHABILITATION EXPENDITURES

Historic tax credits are not calculated on a project’s entire project cost but on its Qualified Rehabilitation Expenditures (QREs). As defined by the Internal Revenue Service, QREs are expenditures that are directly connected with the rehabilitation of a historic structure. Examples of expenditures that are not qualified include acquisition costs, constructing a new addition to a historic structure, and site improvements, such as sidewalks, landscaping, and parking. The 41 RE-HTC projects certified through January 2025 represent a total QRE investment of over $577 million, with an estimated $307 million in QREs from projects that are ongoing or underway. Overall, 49% of all certified RE-HTC projects had QREs of less than $5 million.

SHARE OF PROJECTS BY QRES

(CERTIFIED RE-HTC)

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 12

PRE- VS POST- REHAB TYPOLOGICAL USE

RE-HTC projects have transformed underutilized buildings into commercial space, mixed use facilities, and housing.

RE-HTC PRE-REHAB USE RE-HTC POST-REHAB USE

PRE-REHAB VACANCY

Vacant buildings have a negative economic impact on their surrounding areas.

Increased rates of vacancies are associated with higher crime rates, declining property values, and risks to community health and welfare. Additionally, vacant buildings represent a huge cost to local governments in terms of policing, underutilized or unused connections to existing utilities, the required maintenance of streets, alleys, and sidewalks that front vacant buildings, etc. When a commercial building sits vacant, at least one fewer business is operating than could, there are no paychecks being issued to employees, and no sales tax being collected.

Moreover, property taxes collected on a vacant building are much lower than if it were rehabilitated and occupied. The RE-HTC has been a valuable tool to re-activate vacant buildings in the five River Edge communities. Overall, 41% of certified RE- HTC projects took place in buildings that had been completely vacant before the start of their rehabilitations. The uncapped nature of the RE-HTC has made the rehabilitation of larger, long-vacant buildings possible, increasing its transformative impact on the local level.

buildings were vacant before their RE-HTC rehabilitation

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 13

124 SW Adams, Peoria (Super A &P)

The rehabilitation of historic structures is an effective job-creation tool. RE-HTC projects that were completed between 2015 and January of 2025 have generated an average of 290.1 direct jobs and an additional 233.8 indirect and induced jobs, representing a direct-labor income of more than $19.8 million and an indirect/ induced-labor income just short of $15.7 million.12

12 A “direct job” is created by the project. In historic rehabilitation, that would include a carpenter, plumber, electrician, etc. “Indirect jobs” are not created by the project but are supported by it, such as a salesperson at the lumberyard or the truck driver who delivered materials to the job site. An “induced” job is one that is supported by direct and indirect employees’ personal spending on goods and services using wages earned through direct and indirect jobs.

RE-HTC JOBS AND LABOR INCOME

On average, certified IL-HTC projects have generated and an additional and an additional

290.1 direct jobs in direct labor income

$19,825,644

$15,692,442 in indirect and induced labor income each year.

indirect and induced jobs each year.

233.8

The resulting paychecks from those jobs represented, on average, RIVER EDGE HISTORIC TAX CREDIT PROGRAM

Before

The Best Building looms over Rock Island’s downtown not only as one of the city’s tallest buildings, but also as a reminder of a failed redevelopment attempt that started almost 10 years ago. In 2016, the City of Rock Island entered into an agreement with a local developer to rehabilitate the building. After the expenditure of about $8 million, work began to slow, and the half-finished project ultimately came to a standstill. The redevelopment is now getting a new lease on life thanks to Iowa developer Chris Ales, who is working closely with city officials to complete the rehabilitation of the former department store into 40 affordable-housing units. There will be 2-, 3- and 4-bedroom units along with office space, a community room, kitchen, common areas, and a game room.

While Rock Island has made effective use of its available incentives, especially for creating upper-floor housing in downtown, large projects like the Best Building have been at a disadvantage. A few downtown buildings had already been lost because of a lack of rehabilitation incentives. However, developer Ales remained optimistic, and in 2024 the Best project was awarded a partial IL-HTC allocation of $2.5 million.10

State Senator Mike Halpin, who represents the 36th District that includes Rock Island, saw the success of the River Edge program in other cities and believed that Rock Island was the poster child for the need to expand the program.11 In 2024, the River Edge Redevelopment Zone Act was amended to add Rock Island and its sister city, Moline. Rock Island is currently establishing boundaries for its River Edge Redevelopment Zone and hopes that the DCEO certification can happen soon. Once the RERZ is certified, projects like the Best Building will be eligible for the RE-HTC and will help catalyze additional development in the downtown.

Chris Ales says transitioning from the IL- HTC to the RE-HTC is crucial for the success of the Best Building’s rehabilitation, as it will increase the state tax credit from $2.5 million to almost $3.8 million. Additionally, once the Zone is certified, the project can return its IL-HTC allocation to be reallocated to other qualifying projects.

Ales noted that the Quad Cities share the same labor pool and real estate market, but the rehabilitation incentives have been better in Iowa. “I’ve completed four projects across the river in Davenport in the amount of time it’s taken this project to get off the ground because of the different incentives available across state lines. The River Edge Tax Credit will make Rock Island more competitive.” And being more competitive should help attract investors and developers into downtown Rock Island.

10 If Ales chooses to reapply, this project is still eligible for a $500,000 allocation.

11 Senator Halpin is also a supporter of the IL-HTC program, having introduced bills in successive legislative sessions to increase the annual program cap from $25 million to $75 million.

BEST BUILDING, ROCK ISLAND

IL-HTC (ANTICIPATED RE-HTC)

THE RE-HTC LEVERAGES

MAJOR PRIVATE

INVESTMENT IN RIVER EDGE

COMMUNITIES.

Every $100 the state provides in tax credits spurs $842.93 in additional economic activity.

SINCE 2012, THE RE-

HTC HAS AWARDED

$79 MILLION IN

TAX CREDITS FOR

34 PROJECTS.

THESE PROJECTS

LEVERAGED OVER

IN TOTAL PRIVATE

INVESTMENT.

$643

MILLION

RIVER EDGE HISTORIC TAX CREDIT PROGRAM

The RE-HTC has been a crucial tool for leveraging private investment in River Edge communities, because, like all HTCs, not all of the expenditures necessary to complete a typical rehabilitation project are eligible for the tax credit.

Only Qualified Rehabilitation Expenditures (QREs) are eligible for the credit and do not include, for example, newly constructed additions, the building’s purchase price, site and landscape improvements, furnishings and equipment, and tenant-funded buildouts. For every $100 in QREs (i.e., expenses eligible for tax credit), certified RE-HTC projects have generated an additional $11.54 of investment in non- QRE expenses. These non-QREs receive no state or federal credit but still generate new jobs, labor income, and tax revenues for the State and local governments. These non-qualified rehabilitation expenditures increase the leveraging power of the historic tax credits.

Every $100 that is provided in commercial historic tax credits results in an additional $467.60 in direct private investment and $375.33 in indirect and induced economic activity.13

13 These numbers were determined using IMPLAN, a regional economic analysis software and data application that is designed to estimate the impact or ripple ef-fect of a given economic activity or the contribution of some existing activity within a specific geographic area. These data represent the impact of ANY investment in historic rehabilitation. Therefore, $100 dollars invested in historic rehabilitation will produce roughly $468 in direct private investment, regardless of which historic tax credit program is applied. These numbers would be true in Illinois for the RE-HTC, the IL-HTC, and the F-HTC.

RETURNS TO ILLINOIS

AND ITS COMMUNITIES

Though a one-time investment by the state, local communities benefit from increased tax revenues each year.

The transformative development at the Broadview Hotel in East St. Louis broke ground in March of 2023 after the property sat vacant for nearly 20 years. As of May 2025, the project is nearing completion, and will be the first certified RE-HTC project in East St.

Louis. The Broadview’s redevelopment proposal leverages both affordable and historic tax credits to create 110 senior-housing units and over 20,000 feet of community commercial space, including 10 minority-business incubators, 10 table spaces for new businesses, a beauty salon, and a sandwich and coffee shop.

For owners to be able to access the state tax credit, their projects must be completed, the NPS must certify the completed work, and the IL SHPO must accept the final expenses. However, the owners are paying taxes on materials, labor, and construction profits while planning and construction are underway. As a result, by the time the State issues $100 of state tax credits for a certified project, the project’s owner will have already paid $22.38 in taxes to the Illinois Treasury and $16.65 in taxes to the local government. In other words, $39.03 of taxes have been paid before $100 of state tax credits are even issued.

Before

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 17

HOUSING PRODUCTION

The RE-HTC is a housing-production tool. Of the 73 RE-HTC projects that have been certified or are currently ongoing or underway, 47 have a housing component. Of those 47 projects, 7 include affordable housing.

Since 2013, certified RE-HTC projects have created 676 net new housing units, representing a 541% increase in the number of housing units overall.

Certified RE-HTC projects have created 135 net new affordable housing in buildings that previously had none.

The Old Copley Hospital in Aurora was rehabilitated into the Bloomhaven Innovative Living Community in 2023 using the F-HTC and RE-HTC.

Threatened with demolition in 2017, the site now boasts 152 housing units. At a rehabilition cost of over $140 million, this project ranks as one of the largest recipients of RE-HTC in the state.

MARKET RATE AND AFFORDABLE HOUSING IN

CERTIFIED RE-HTC CERTIFIED PROJECTS

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 18

TODD AND

LINCOLN SCHOOLS

AURORA, RE-HTC

In Aurora, two former elementary schools have been transformed into a 47-unit, workforce-housing development with additional resources for the community. At the beginning of the COVID-19 Pandemic, the City of Aurora partnered with West Aurora School District 129 to find a developer who could rehabilitate the decommissioned school buildings. The City and District felt that since the buildings had long served as community resources in their respective neighborhoods, their new use should continue to benefit the community. Eventually, JTE Real Estate Services, a local developer responsible for the nearby RE-HTC rehabilitation of Copley Hospital, came forward with a plan for their reuse.

The Mary A. Todd Elementary School, built in 1934 and decommissioned around 2019, now has eleven studio, 1-, and 2-bedroom apartments, all of which were leased upon opening. Before the rehabilitation began, the School District carefully removed murals and statues created in the 1930s under the Works Progress Administration’s Federal Art Project to keep these works of art in public ownership. To maintain the historic integrity of the school, photographic facsimiles of the murals were installed in their place. A community clinic in the 1950s addition, owned by the School District and leased/operated by VNA Healthcare, serves uninsured and underinsured families. The clinic’s vaccine program has already had a positive impact in the surrounding community. According to Alex Alexandrou, the Mayor’s Chief of Staff and Chief Management Officer, during its first year of operation, the program ensured that “for the first time, not a single child in the district missed the first day of school because they couldn’t get a vaccine.”

The Abraham Lincoln Elementary School, only a mile away, opened in 1891, was remodeled in the 1920s, and closed its doors in 2009. Because it is much larger and was vacant for much longer, it required a great deal more work than the Todd School. Lincoln School now boasts 14 apartments and an additional 22 units in adjacent new construction, all with 1, 2, or 3 bedrooms. The new construction made the discontiguous project financially viable. Lincoln School includes a computer lab, community room, and other amenities with programming to start soon.

All 47 apartments are available to households earning 30% to 60% of Area Median Income. The project utilized a myriad of funding sources, including $2.9 million of HOME funds, $600,000 of CDBG funds, Low Income Housing Tax Credits, and a combined $7 million of Federal Historic Tax Credits and state River Edge-Historic Tax Credits. The $16 million project rehabilitated two historic buildings, provided critical affordable housing and a community clinic, and used RE-HTCs to continue the positive legacy of long-standing community assets.

AURORA

AURORA CHANGE IN ASSESSED VALUE (2010-2021)

INCREASE IN ANNUAL PROPERTY TAXES FROM CERTIFIED

RE-HTC PROJECTS IN AURORA

Five of the 9 completed RE-HTC projects were in buildings that were vacant prior to their rehabilitations. Between 2010 and 2023, the aggregated assessed value of these 9 properties grew from $919,962 to $2,206,615, an increase of 139.9%.

Property values in historic districts in RERZs also saw an increase of 23.5%, while the change in assessed value in the rest of the RERZ was only 19.2%.

These RE-HTC properties generated $68,626 in local property tax revenue in 2023, as compared to $28,427 in 2010. In 2023, Aurora received $40,199 more in property taxes from RE-HTC properties than it did from those properties in 2010, before their respective rehabilitations.

RE-HTC PROPERTY VALUE ANALYSIS

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 20

ROCKFORD

ROCKFORD CHANGE IN ASSESSED VALUE (2010-2021)

INCREASE IN ANNUAL PROPERTY TAXES FROM CERTIFIED

RE-HTC PROJECTS IN ROCKFORD

Of the 17 completed RE-HTC projects, seven were vacant prior to their rehabilitations.

Between 2010 and 2023, the aggregated assessed value of these 17 properties grew from $1,872,119 to $13,466,620, an increase of 619.3%. Property values in historic districts in RERZs also saw an increase of 16.8%, while the change in assessed value in the rest of the RERZ decreased by 3.2%.

That same year, these 17 properties paid $304,346 in annual property taxes, as compared to just $54,584 in property taxes in 2010. In 2023, Rockford received $249,867 more in property-tax revenue from properties that received the RE-HTC than it did in 2010.

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 21

PEORIA

PEORIA CHANGE IN ASSESSED VALUE (2010-2021)

INCREASE IN ANNUAL PROPERTY TAXES FROM CERTIFIED

RE-HTC PROJECTS IN PEORIA

Five of the 14 completed RE-HTC properties were vacant prior to their rehabilitations.

Between 2010 and 2023, the aggregated assessed value of these 14 properties grew from $5,596,720 to $21,423,250, an increase of 282.8%. Property values in historic districts in RERZs also saw an increase of 11.0%, while the change in assessed value in the rest of the RERZ decreased by 6.2%.

Today these properties collectively pay a $595,566 in annual property taxes, compared to just $137,119 in 2010. In 2023, Peoria received $458,447 more in property-tax revenue from properties that received the RE-HTC than it did from the same properties in 2010.

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 22

Changes in assessed values and property taxes were analyzed for the River Edge cities of Peoria, Rockford, and Aurora.14 Based on an analysis of the data from these cities, every time $250,000 in tax credits are awarded, $28,046 in additional property taxes are generated every year.

Here is what these cities could do each year with the increase in property taxes from completed RE-HTC projects:

The equation is simple: the RE-HTC encourages private investment that substantially increases property values and, by extension, property-tax revenues, which enables cities to significantly enhance their public services.

14 Elgin was excluded this from analysis because only one RE-HTC project has been completed. At the time of analysis, assessment data was available only up to 2023.

RE-HTC PROPERTY VALUE ANALYSIS

Hire five new police officers, PLUS

Hire an additional five city maintenance workers, PLUS

Still have enough money to provide $250 per month rental subsidies for 64 families.

EVERY TIME

$250,000 IN

TAX CREDITS

ARE AWARDED,

$28,046 IN

ADDITIONAL

PROPERTY TAXES

ARE GENERATED

EVERY YEAR.

Hire five new teachers, PLUS...

If properties that were rehabilitated using the RE-HTC in Aurora had experienced property value change like the rest of the historic district within the RERZ zone, the local government would have seen $50,000 less in property tax revenue in 2021.

St. Charles Senior Living (St.

Charles Hospital), Aurora

RIVER EDGE HISTORIC TAX CREDIT PROGRAM 23

SALES TAX ANALYSIS

Measuring the economic impact of construction activity demonstrates the contributions these RE-HTC projects make to their local economies while they are underway, but additional effects can be measured once their rehabilitations are complete. One such measure is the impact RE-HTC projects have on retail and business activity after the buildings are placed into service. This measurement is typically difficult to quantify due to a lack of access to relevant data.

However, on 8/23/24, the Department of Natural Resources (DNR) and the Illinois Department of Revenue (DOR) entered into an Intergovernmental Agreement (IGA) that enables the sharing of information between the two agencies.