City Considers Bridge Loans for Wells, Wick Rehabs
YOUNGSTOWN, Ohio -- City Council tonight will consider interim financing for a pair of West Federal Street building rehabilitation projects intended to capitalize on demand for short- and long-term residential space downtown.
Legislation before council members would provide bridge loans of 70% of the value of state historic preservation tax credits that have been secured for the Wick Building and Wells Building renovation projects. Both loans would carry an 18-month term and 3% interest rate, and would give the city first position on the tax credits refunded to the developers, said David Bozanich, city finance director.
Wells Associated Renaissance Partners, a partnership formed by Strollo Architects, a downtown architectural firm, plans to renovate the Wells Building. Strollo would occupy the first floor and part of the lower level and develop the upper levels of the building as apartments targeted to employees of downtown technology companies.
Wick Properties LLC is redeveloping the Wick Building for apartments and extended-stay rooms. Wick Properties is an entity formed by NYO Property Group, which redeveloped the Erie Terminal Building downtown, for the project.
“Our short-term dilemma is to secure final bank financing,” said Gregg Strollo, president and principal of Strollo Architects. The bridge financing the city is voting on tonight “allows our project to realize the benefit of the state tax credit before it is physically in our hands,” he said.
“Our borrowing needs are greater than we had expected because of the lousy appraisal as a result of the 2007-2008 real estate debacle and the fact that properties don’t appraise well even after you put money into them,” Strollo elaborated.
Bozanich said he and Mayor John McNally have “extensively discussed" the loans with the developers and with attorneys from Squire Sanders in Cleveland who are “experts in this field” and have concluded “that but for the city participating in these projects, they would not move forward without us filling a small gap but a necessary gap in the financing.”
The loan to the Wells project would be $700,000 to $800,000 and the loan to Wick Properties would be $1.6 million to $1.7 million, Bozanich said. He put the total value of the combined projects at $20 million.
Once the state’s historic preservation office determines guidelines to qualify for the tax credit have been met, it would then issue the credit, which Strollo said would be paid back to the city. “So it should be a very short-term loan. It’s not something that gets stretched out over years and years,” he said.
Both projects are expected to be completed by year end, Bozanich said.“It’s a pretty aggressive construction timeline,” he remarked. “The good thing about it, it keeps the momentum going.”
Downtown has seen recent success in attracting people to live downtown with the rehabilitated Federal Building and Marchionda’s Erie Terminal Place “so we think that similar successes could be had at both of those building sites,” Bozanich said..
Strollo said he expects the Wells project to be completed sometime in the September to November timeframe.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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