The city of Aurora is in the early stages of developing various new lending programs for economic development, sustainability and community projects.
In general, city officials have said the four programs would be low risk and replenish themselves through the repayment of the loans, with some being paid back through property taxes. There’s still some research that needs to be done before the new loan programs can be rolled out, Aurora Mayor John Laesch recently told The Beacon-News.
But concepts were presented to the Aurora City Council earlier this month during a discussion of the 2026 budget.
One of the potential programs would look to give out loans to encourage economic development and help small businesses. The city has been hearing from business owners, developers and others that they need access to affordable capital, Aurora Chief of Staff Shannon Cameron said at the Aurora City Council meeting on Dec. 9.
“We have businesses that have been in our area for a long time that want to make improvements, but cannot afford to for a variety of reasons,” she said.
So, this program would offer loans with below-market interest rates and flexible terms — but because the loans would still need to be paid back, the funds would replenish, according to Cameron. She said the program could benefit the community by helping businesses open and expand, support Aurora residents willing to invest in their city, strengthen commercial corridors, create jobs, stabilize neighborhoods and help bring businesses up to city code.
Another potential loan program the city is looking at creating is the special service areas capital improvement loans. The city would fund up-front neighborhood improvements like sound walls and streetscape updates through a loan that would be repaid using a special service area, which is an additional property tax on those in the area, Cameron’s presentation showed.
Having the city front-fund these projects will save taxpayers money because the city can offer lower interest rates on the loan, Cameron said. For the city, she said, these loans would have low risk because they are repaid using property taxes, which would then replenish the fund for future loans.
The other two potential loan programs would also be repaid through property taxes, but they would apply only to single buildings, not neighborhoods. These Property Assessed Clean Energy, or PACE, financing loans would help developers or property owners pay for projects like solar panels, HVAC improvements and other energy-efficiency upgrades, according to Cameron.
She presented concepts for both commercial PACE loans, which are often called C-PACE, as well as residential PACE loans, called R-PACE. Currently, Illinois state law only allows for commercial PACE loans.
Similar to a special service area, PACE loans are repaid through a voluntary bump in the building’s property taxes. So, the PACE loans have little risk to the city, Cameron said.
Property owners often save more money on their utility bills than they pay towards the loan, she said.
Money to be loaned out through the programs would come from the city’s Transformation Fund, which was created last year after data center company CyrusOne paid the city $16 million as part of a redevelopment agreement.
When the city received those funds, some were put aside to be used for lending programs like what the city is now working towards, and the Aurora City Council has already approved economic development loans through the Transformation Fund.
For example, earlier this year before Laesch won the mayoral election, the Aurora City Council unanimously approved $450,000 in loans for a diner planned for downtown. Laesch was an alderman at-large on the Aurora City Council at the time.
Although he had often voted against economic incentives for other developments, Laesch said at the time that this approach to economic development was better than what the city had done in the past.
Many development incentives over the past several years were supposed to be repaid using things like food and beverage taxes, but that hasn’t worked out, Cameron told the City Council earlier this month. Most of the loans, if they aren’t in default, are being underpaid, she said.
Aurora is looking to fund these loan programs with around $6.6 million from the Transformation Fund, according to Cameron. But that figure assumes the city will get back some of the $3 million the Aurora City Council voted to give the Aurora Regional Economic Alliance last year, a repayment that city officials have said is still being negotiated.
During the City Council meeting on Dec. 9, Laesch stressed that the new loan programs were not yet final, and that they would still need to come before the Aurora City Council for approval. Cameron said there’s a lot of banking regulatory systems the city needs to put in place to create programs like these, and that staff are currently working to meet with regulatory agencies to make sure it is done correctly.
A commercial PACE lending program would likely come before the Aurora City Council for approval first, but that would be funded through the state, according to Cameron. She said the city’s own commercial or residential PACE programs would come later.
Ald. Patty Smith, 8th Ward, asked if the lending programs were the best use of the Transformation Fund dollars since officials have said the city is in a budget crisis. Cameron said that operational costs really shouldn’t be tied to one-time payments since it may solve the issue for one year, but not long-term.
rsmith@chicagotribune.com
