Council Committee to Talk Fire Suppression

Vol. III, No. 224 - A new financing tool may help downtown residential redevelopment

Photo by Kevin Butz on Unsplash

Tonight, a Troy City Council will take its first public step toward tackling one of the most stubborn problems in downtown redevelopment: how to make old buildings safe enough to live in without making the numbers fall apart for property owners and developers. The Community Partnerships Committee is expected to consider a proposal to create a new revolving loan fund aimed at helping downtown building owners install or upgrade fire sprinkler systems, using a $200,000 commitment from the Troy Reinvestment Fund.​ The meeting will take place in City Hall and will begin at 6:00 p.m.

On paper, a loan fund for sprinklers does not sound especially exciting. Yet this kind of tool sits right at the line between what Troy says it wants downtown and what actually gets built. The Troy Downtown Riverfront Strategic Development Study, better known as the MKSK Study, laid out a clear goal nearly a decade ago: downtown Troy should be adding roughly 40 to 65 new housing units every year to meet changing demand. The plan argued that Troy’s future depends, in part, on attracting more one- and two-person households, younger workers, and older residents who want to downsize into walkable neighborhoods with smaller homes or apartments.​

Reality has not matched that ambition. While there have been some successes with new or rehabbed units downtown, Troy has not come close to delivering dozens of new housing units in the city core year after year. One major reason is that retrofitting older buildings for modern residential use is expensive and complicated. Developers can design a subdivision of single-family homes on the edge of town and rely on familiar layouts, modern codes, and predictable costs. But when a property owner tries to turn the upper floors of a century-old Main Street building into apartments, the price tag can climb quickly once fire suppression systems, elevators, and structural changes enter the conversation.​

Fire sprinklers are one of those quiet deal-breakers. Modern codes often require them in mixed-use and residential projects, especially when sleeping units are located above commercial spaces. For a small property owner with limited access to capital, tying into a new sprinkler line, upgrading an outdated system, or installing an entirely new one can be the point where a promising housing idea gets shelved. The MKSK study flagged this basic tension years ago: Troy wants more people living downtown, but the economics of urban infill and reuse “can be trickier than conventional greenfield development” and often require special financing tools to fill the gap.​

The proposal in front of council tries to respond to that gap with a targeted tool. The plan would use $200,000 from the Troy Reinvestment Fund to seed a dedicated downtown revolving loan program, administered by the City’s Development Department and reviewed by the City’s Loan Review Committee.

Loans would range from $10,000 to $50,000 and would be limited to projects inside a defined area around the Public Square, stretching along Market and Main Streets. Importantly, the guidelines make clear that these loans do not have to meet traditional job creation standards, because the primary purpose is to unlock building upgrades rather than add direct payroll.​

The details matter. Loan terms are expected to run about five years, with interest set at half of the prime rate at the time a complete application is filed. There is a $100 non-refundable application fee and a 1.5 percent closing fee, along with requirements for full collateral, personal guarantees, financial statements, and proof of insurance. Borrowers will be expected to complete their projects and spend loan funds within six months, and the city will have the ability to accelerate the loan if work stalls or key conditions are not met. For some owners, those safeguards may feel burdensome. For others, they may be a reasonable trade-off for access to below-market capital that might not be available from a bank alone.​

Will a $200,000 sprinkler loan program suddenly produce 40 new downtown units every year, as the MKSK plan once imagined? Probably not. Even if every loan went to a different project at the maximum $50,000 amount, that would support only four projects in the first round, and not every project will be fully devoted to housing. But it would be a mistake to judge this effort only by the raw number of apartments it may help create in its first year or two. A well-designed revolving fund can recycle repayments into new loans, stretch public and philanthropic dollars further, and build a local track record that makes future infill projects easier to finance.​

There is also a broader question for Troy to consider. The MKSK study did more than list housing targets; it called for a toolbox of financing mechanisms, zoning changes, and public investments that, together, could thicken downtown’s mix of uses and residents over time. The new sprinkler loan proposal fits into that toolbox alongside ideas like gap financing programs, downtown redevelopment districts, and efforts to activate underused public spaces. If council approves this program, the next challenge will be making sure it is not a one-off gesture, but part of a larger, visible strategy to move from plans on a shelf to actual people living in upper floors and walking to work, shops, and the riverfront.​

For now, the choice in front of the committee is fairly simple. Troy can continue to talk about the need for more diverse housing options downtown, or it can start to chip away at one of the unglamorous barriers that keep those homes from being built. A revolving loan fund for fire sprinklers will not, by itself, transform the city’s housing market. It can, however, send a clear signal that the community is willing to back up its words with a practical tool that helps turn empty or underused upper floors into safe, lived-in homes.​

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