Not much demand for city revolving-loan program

A city program that is supposed to provide funding to developers in order to help turn around distressed and forgotten-about areas has itself become neglected.

It might seem odd considering that it’s not easy today for developers to get project financing, but city officials say there’s little demand for the Business Corridor Revitalization Program, which was created about five years ago.

Brad Richardson, the city’s economic development director, said the lack of interest in the program, which has $16.3 million in available funding, is the economy’s fault.

Developers can’t get their hands on private funds, which means redevelopment projects aren’t happening – even with the city offering a financial boost.

“The whole thing has kind of slowed down,” Richardson said of the construction market. “There are not a whole lot of projects flowing through the pipeline right now.”

J.P. Craig, an estimator in the Charlotte office of LeChase Construction Services, a general contractor based in Rochester, N.Y., said he is aware of the city’s program. But as far as he knows, his firm has never worked on a project funded by it. LeChase’s Charlotte office has been around for 11 years, he said.

The BCRP “would definitely be a help” to the construction industry, he said, adding that it’s more likely that a developer, not a contractor, would apply for the program’s funds.

Commercial lending is still hard to come by, he said.

“It seems to be turning a corner,” he said, “but the availability of lending really hit a bad low last year. You can see by all the half-vacant strip malls.”

In Huntersville Business Park, where LeChase’s Charlotte office is, there are a lot of half-empty buildings, he said.

Born in 2006

The BCRP was created in June 2006 when the Charlotte City Council appropriated $8.9 million for the program. Each year, $2 million has been allocated to the fund.

Nearly five years later, the fund has grown to $16.3 million. But since 2008, less than $1 million has been distributed.

Jamie Banks, spokeswoman for the city’s Neighborhood and Business Services division, said the program gives priority to the following corridors: Eastland, North Tryon, Beatties Ford Road, Rozzelles Ferry Road and Wilkinson Boulevard/Morehead Street/Freedom Drive. Those areas were picked because they are challenged but still have potential for commercial development, she said.

The BCRP is a revolving-loan program: As developers repay the loans, they can be awarded to other developers.

Since fiscal 2008, the city has awarded 25 grants totaling $691,000 for façade improvements to businesses in those targeted corridors, Richardson said. Those grants have resulted in $6.25 million in additional, private investments, he said. Another 25 grants totaling $130,260 have been awarded to decrease crime through projects such street lighting, resulting in $275,615 in further investments.

Although it was not funded by the BCRP, the $7 million Wilkinson Park Business Center on Wilkinson Boulevard between Old Steele Creek Road and Morris Field Drive created interest and momentum for the BCRP, Richardson said. Charlotte Mecklenburg Development Corp., a public-private partnership, began the project in May 2001 with the aid of $2.45 million in city funds.

Richardson said that after the City Council saw the success of the business center, it voted in 2006 to create a business corridor revitalization program.

Program? What program?

Some in the construction industry say they didn’t even know the program existed.

Such is the case for Roger Hendrick, owner of Charlotte-based Hendrick Construction.

“We have not used it, and I’m not really aware of it,” he said, adding that as a contractor he’s more involved in the construction of projects instead of the financing, which is more of a developer’s concern.

It’s a challenge for projects to get financing as banks are demanding larger payments, among other things, he said.

But with manufacturing and the stock market up, expansion projects should be around the corner, he said, adding that the city’s program could come in handy then.

Winds of change

While the program’s funding sits largely used, Richardson is calling for changes to the city’s deadline to achieve the program’s latest goals, which haven’t been established. But he said those goals will likely be similar to previous goals to remove blight, reduce crime and clean contaminated sites.

Instead of three years, he wants the city to have two years to achieve the goals, he said, adding that he wants to work more closely with community groups to do smaller, neighborhood projects that could be funded by the program.

The Mecklenburg County Park and Recreation Department and Charlotte-Mecklenburg Schools are two agencies that Richardson hopes to see the city working more closely with in the upcoming year to complete projects using the program’s funds.

Aside from the BCRP, there are other initiatives that Richardson is hoping will lead to more investment in struggling areas.

For one, the city’s economic development office merged in 2009 with the code enforcement office, which enforces the city’s nuisance code. A year ago, the city decided to apply the nuisance code — which bans vacant, unsafe buildings — to not only residential properties but also commercial ones.

“Now we have the ability to require improvements or demolitions,” he said. “Maybe a property owner really wants to improve a structure but doesn’t have money.”

In such a case, the city can help the owner cover the demolition of the building or improve it, he said. Or, if there’s an adjacent property that could be developed, the city might be able to coordinate a large land purchase with a developer, he said.

“We don’t want to do this from the top down,” he said. “We want to make some small wins that lead to better momentum in a community. Redeveloping a whole section of land for $3 to $4 million may not be the right thing to do, particularly now when development is just not happening quickly.”

Tara Ramsey can be reached at [email protected]. Deon Roberts, [email protected], contributed to this story.