9/28/2021
In 1999, RIHA purchased the Voss Brothers Warehouse and the new demolished Post office Annex on the Third Avenue edge of the downtown Rock Island District. The original warehouse included a four-story east building with approximately 6,500 square feet per floor and a three- story west building with 10,500 square feet per floor. A portion of the first floor has housed the RIHA administrative offices since July 2003. The RIHA offices are considered Phase I of the Warehouse Development and the first step in the implementation of the RIHA Asset Management Plan. In March of 2003, RIHA issues an RFP for Phase II of the Warehouse Development which was to include 37 mixed-income loft apartments.
After reviewing multiple RFP responses, RIHA chose Rock Island Economic Growth Corporation (GROWTH) as the developer for the project. Together, RIHA and GROWTH envisioned a joint venture based on complimentary skills to finance, build, and manage the project.
The Voss Brothers Lofts represents a unique partnership between a local housing authority and a community-based non-profit developer. In accordance with the Memorandum of Understanding, GROWTH was to serve as the Managing General Partner for the conversion and renovation of the upper floors of the Voss Brothers Building.
GROWTH will pursue funding and design the building in an energy efficient manner
GROWTH and RIHA will endeavor to develop innovative designs and assure quality
construction
GROWTH will sell tax credits to a syndicator and seek a proposal from the National
Equity Fund
Ownership of the property will revert back to RIHA or its assign following a 15-year
compliance period
RIHA will become the lessee of a 30-year lease for all commercial space
End of 15-Year Compliance Period
The project is nearing the completion of the 15-year compliance period and GROWTH has contacted us to transition the property to Community Home Partners. IHDA will need to approve the transfer.
A physical needs assessment of the building was conducted by our architect. It stated generally, the building appears to be in overall good condition with certain components in fair physical condition. The exterior appears to be in good condition from the modernization about fifteen years ago.
Some areas need tuckpointing and spalling off of the original foundation is recommended for coating and replacement.
The roof is at the end of its useful life. Windows appear to be in good condition.
The flooring is in fair condition and it is recommended to replace unit carpet with LVT flooring soon.
ADA/504 repairments are not up to code and improvements will need to be completed. Lighting throughout the site and building is not LED and is recommended to be replaced.
The furnace and the condensers are original and nearing the end of the estimated useful life and is recommended for replacement.
The parking lots, site concrete, and trash enclosures need replacement.
Reserve funds held by the Illinois Housing Development Authority will transfer with the project to CHP. This will be the source of funding for many of the improvements needed.
| Estimate of Costs | |
| Immediate | $194,000 |
| 1 - 5 Years | $626,900 |
| 6 - 10 Years | $656,800 |
| 11 - 15 Years | $611,100 |
| 16 - 20 Years | $32,200 |
| Total | $2,121,900 |
Outstanding Debt: IHDA $1,827,492
Summary Statements: Based on the review of the previous years audit, it would appear the property is not covering costs at the present time. We feel by bringing rents up to current Fair Market Rents and receiving property tax relief, the property could show significant income for the owner moving forward.
Results: Current as is investment value: $2,600,000
Home Base Property Management currently provides property management services for the building. Upon transfer, CHP will take over the property management function.
At closing, GROWTH will convey, transfer, and deliver to CHP all partnerships interest in the Voss Brothers Lofts LLC.
The purchase price is $325,000 to be made by wire transfer at closing.
Rent Roll – Rents have not been increased and there is opportunity to increase income by $100,000/year
Real Estate taxes – elimination of the tax burden would reduce expenses by approximately $34,000/year
Please see attached
Adding Voss Lofts to the CHP portfolio has been a long-term goal for our organization. This is an excellent opportunity to gain ownership of the building at minimal cost. While the building isn’t currently generating excess cash, our analysis indicates with some operational changes it will be financially successful. We recommend that the board approve the Voss Lofts transfer and purchase.