Both projects put up a building with no tenant in it — 334,800 square feet in Rockford, a proposed 100,000 in Paducah. Square footage is what the announcements lead with. Who carries the building while it sits empty, and what the ownership structure does to lease negotiation once a prospect surfaces, is what determines public exposure.
Rockford, Illinois (pop. 147,384) broke ground June 24 on a 334,800-SF shell inside a roughly $25 million project developed by Hillwood. Public contribution: a $2.428 million DCEO site-readiness grant for horizontal infrastructure, up to $2.5 million in city reimbursement (partially DCEO-matched), and pay-as-you-go TIF increment through the 2030 levy year. Hillwood advances every dollar and submits documentation for reimbursement. The city holds back 20% until the shell is complete. No piece of the reimbursement is contingent on occupancy. Hillwood owns the building.
Paducah, Kentucky (pop. 26,730 — under this section's usual floor, but the structure is instructive at any size) introduced two ordinances July 28 for a proposed 100,000-SF, $8 million spec building. One authorizes up to $6 million in taxable general-obligation notes. The other names the Paducah-McCracken County Industrial Development Authority as project manager, developer, and owner. A $2 million Kentucky Product Development Initiative grant covers the balance. As of August 14 both ordinances remain at introduction; no final adoption appears in the city's public record. Everything below on the Paducah side is proposed terms.
| Rockford / Hillwood | Paducah / IDA (proposed) | |
|---|---|---|
| Building size | 334,800 SF | 100,000 SF |
| Total project cost | ~$25M | $8M |
| Financing mechanism | Private developer advances all costs; public reimburses horizontal | $6M GO notes + $2M state grant |
| Vacancy risk holder | Hillwood (private) | City of Paducah (public) |
| Building owner | Hillwood | IDA |
| Below-cost consent | None — developer's internal calculus | City commission approval required |
| State grant program | DCEO Capital Ready (horizontal only) | KPDI (vertical construction eligible) |
Vacancy Risk
Hillwood carries the construction financing, pays the property tax, and absorbs the cost of every vacant month. Rockford's exposure has a ceiling: capped reimbursement against documented horizontal costs, plus increment that exists only if the property generates tax revenue above the base. Empty building, no public debt service on the shell.
Paducah's proposal pledges the city's full faith and credit. The draft ordinance leaves rate, maturity, and redemption terms to a future Award Certificate — a document that does not yet exist, which means the annual carrying cost is not on the public record. At current taxable municipal rates and the city's AA- rating, $6 million runs somewhere between $270,000 and $360,000 a year in interest, before principal and before maintenance, insurance, and marketing. That range is my estimate, not the city's figure. The obligation runs whether or not there is a tenant.
The IDA owns the building and holds broad disposition authority under Kentucky statute — it can lease or sell without a commission vote on each transaction. The draft interlocal carves out one exception. If a contemplated sale would not repay 100% of the city's actual financing costs, the IDA must obtain city approval before closing. The draft states expressly that no one is representing that sale proceeds will make the city whole.
How the Financing Model Shapes the Prospect Set
Both buildings are pitched at broad industrial categories. Rockford's 334,800-SF shell suits logistics, distribution, light manufacturing, or assembly. Paducah's proposed 100,000 SF is aimed at general industrial or commercial users. Neither project has published floor loading, clear height, or power density. Without those numbers, neither shell is qualified to a specific manufacturing process — both are general-purpose product until a tenant specifies. That reading is mine; the published documents simply don't address it.
The financing structure shapes deal flexibility independent of the building specs. Hillwood can discount rent, write a TI allowance, or take below-market terms to fill the shell, and that math happens inside one company. The IDA has the same speed on any transaction that recovers the city's costs. On a transaction that doesn't, the below-cost consent clause inserts a decision-maker at the point in a search where finalists are being compared on response time — which, in a process where the prospect wants terms inside a week, is a real constraint.
The IDA structure also produces inventory the private structure won't. Where no national developer will underwrite a shell without a tenant — where the site's locational logic doesn't support the risk — public ownership is the only path to the building existing at all. The consent clause can then be used deliberately: a commission accepting partial cost recovery to land a first anchor is pricing a concession rather than discovering a loss. Cities without a developer relationship are usually recruiting a first anchor, not fielding a multi-finalist logistics search.
Matching the Model to Your Market
The private model requires a developer willing to carry spec risk in a tier-3 market. Hillwood is a national industrial developer with enough portfolio to spread vacancy across dozens of projects. That appetite is the scarce input, not the grant. Attracting it means having a site whose locational logic — interstate access, labor shed depth, utility capacity — pencils in a developer's underwriting without a committed tenant.
Check your state program against what you actually need funded. Illinois DCEO's Capital Ready program pays for grading, utilities, road, and rail access, and expressly excludes buildings. The FY2026 round closed April 30; no successor NOFO had posted as of mid-August. Awards ran up to $5 million with a 20% local match for government applicants.
The IDA model is available to cities with no developer on the other end of the phone. It requires a commission willing to vote GO debt on a building with no tenant, which is a harder vote than bonding against a named user. Kentucky's KPDI program authorizes grants for vertical construction, capped at $2 million to $2.5 million depending on county classification, with local match scaled from 10% to 20% by county economic ranking. The 2026 Round 1 letter-of-intent deadline passed July 31.
If you have a developer partner, the threshold question is whether your site underwrites without a committed tenant. If you don't, the question is whether your commission will vote GO debt on an empty building — and the consent language you write into the interlocal will govern your response speed on every deal that building attracts.
Either path needs a state grant component to close the capital stack. Find out whether your program funds vertical construction, as KPDI does, or horizontal only, as Capital Ready does. The application cycle sets your timeline.
- Paducah's final vote: The two spec-building ordinances were introduced July 28 but not yet adopted, and the executed interlocal agreement, bond documents, and building specifications will define the actual risk profile if the commission acts.
- KPDI Round 1 awards: Kentucky's Product Development Initiative set site-visit notifications for the week of September 25, which will reveal whether Paducah's $2 million grant clears the competitive round and confirm the program's current appetite for spec-building projects.
- Illinois Capital Ready successor: DCEO's FY2026 round closed April 30 and the program listing shows no new NOFO, so any Illinois peer city pursuing the Rockford horizontal-infrastructure model needs to watch for a FY2027 announcement to set its own timeline.
- Rockford shell specifications: The development agreement defines a Class A shell but does not publish clear height, floor loading, or available power, and those specs will determine whether the building's prospect set extends beyond logistics into manufacturing processes with heavier infrastructure requirements.