Cities increasingly involved in real estate, Fairview Heights economic director says

By DENNIS GRUBAUGH
    Communities have a lot of tools in their box when it comes to real estate development, and one of the most effective ones is thinking outside the box itself.
    So says Paul Ellis, the economic development director of the city of Fairview Heights.
    More than what is generally perceived, much of what economic developers do is real estate. Traditionally, you’d think of developers and brokers driving the process, but both are ultimately dependent on local governments and local agencies to complete projects today,” he said.
    A community’s proper handling of things such as permits, planning and service districts allows for smoother sailing for the entrepreneur wanting to settle in or expand.
    “In Fairview, from my own experience, we’ve tried to be much more user friendly, and I think we are. Things get more complicated every year, and our city, like a lot of cities has developed new tools,” Ellis said.
    Code enforcement makes sure visual priorities are maintained, which protects values, and proper permitting and zoning helps allocate the scare resource of land, he said.
    Fairview Heights does not have an abundance of vacant land but has the potential.
    “There are areas we have not annexed, especially to the south and a little bit to the north,” he said. “We’re largely a redevelopment community. And we have the tools that are consistent with that like tax increment financing and the enterprise zone.”
    One new incentive he’s working on is called PACE, or Property Assessed Clean Energy financing. PACE was recently authorized by the state legislature and allows a business to finance energy improvements, like solar power or HVAC systems.
    Fairview Heights typically has a low vacancy rate but of late has witnessed major closings of the Sears store at St. Clair Square and the nearby Toys “R” Us and Babies “R” Us buildings, all of which have potential new tenants with whom the city is working.
    Ellis believes the impending death of box stores is greatly exaggerated and retailers are learning to deal with the advance of e-commerce.
    “Brick and mortar sales have lost about the same percentage to online sales that they did in the 1960s and ’70s to catalogue sales,” he said. “That is not where you’re seeing the difficulty. The difficulty is in the financing and debt instruments that retailers have used, and when retailers have not been competitive.”
    A lot of brick and mortar business that had been foundering are now developing an on-line strategy, he said, citing Target as one successful example.
    “And some of the ‘digital natives,’ which previously had only existed on line, are starting to see open storefronts,” he added.
    Fairview Heights still has need for retail space, but leases are taking longer and longer to be finalized, he said.
    “There is demand for space in our retail centers when a store closes. The bad news in how long it takes to negotiate leases. It’s taking six, eight, 10 months to get a replacement open even if you have a replacement lined up on the day a store says it’s closing.”