A pair of downtown Cleveland redevelopment projects won $10 million in state tax credits for historic preservation Friday, locking in key financing for more than 420 apartments and 13 condominiums in the city.
CLEVELAND, Ohio -- A pair of downtown Cleveland redevelopment projects won $10 million in state tax credits for historic preservation Friday, locking in key financing for more than 420 apartments and 13 condominiums in the city.
The massive May Co. building on Public Square and an empty former George Worthington Co. warehouse -- the last major hole in the Warehouse District -- were among the largest winners in a $33 million round of tax credits allocated this week. On Friday morning, the Ohio Development Services Agency announced awards for 31 historic buildings in 10 communities, including Akron, North Canton and Youngstown.
"We've have a real strong track record in securing credits," said Joe Marinucci, chief executive officer of the Downtown Cleveland Alliance, which represents property owners. "Our goal in each cycle is to secure two credits for downtown. And we were able to do that in this particular cycle. If we can keep that momentum up, it allows us to keep doing buildings and to maximize housing over the next couple of years."
A local investor group is plowing ahead with plans to buy and redevelop the May Co. building, but that deal is far from done. The upper floors of the former department store, which closed in 1992, would house more than 350 apartments and indoor parking in a $128 million undertaking.
"This was a key thing, to get the state tax credit allocation," said apartment developer John Carney, who is working with fellow developer Bob Rains and Beachwood investor David Goldberg on the May Co. project. "Without this, we haven't been able to go forward. ... We're working on our financing. We're working on the plan, if you will. We've got four to six months of work to do before we acquire the building and start construction."
The May Co. team has been working with Rep. Kirk Schuring, a Canton Republican, on ways to lift the cap on tax-credit awards for individual buildings. The state program, launched in 2007, offers property owners a credit equal to 25 percent of qualified historic rehab expenses -- up to $5 million. That credit can apply to a range of liabilities, such as corporate franchise tax or income taxes, or can come in the form of a refund.
But the $5 million limit per building wasn't applied until the second round of awards. So first-round winners, including the former Ameritrust complex at East Ninth Street and Euclid Avenue, were able to qualify for much larger awards based on their size.
Schuring has drafted legislation that would give huge redevelopment projects a shot at more money without changing the state's annual limit of $60 million in awards. Under his proposal, property owners could win $5 million in credits per year, over five years, to achieve a cumulative award of $25 million.
That structure would heighten competition for the awards, and fewer small buildings might benefit if a larger share of the credits goes to huge projects. But access to deeper pools of tax credits could make landmark redevelopment deals, in downtown Cleveland and other cities, much more viable.
Schuring's legislation, introduced in October, hasn't seen any action. Still, Carney and his partners are hopeful their push will gain traction in 2014.
"We're going to continue working on that," he said.
The May Co. and the Worthington Building each won $5 million in credits.
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View full sizeA former George Worthington Co. building in Cleveland's Wharehouse District will be converted to apartments, with condominiums on top, in a project that won $5 million in Ohio historic preservation tax credits on Friday. At 629-728 Johnson Court , the brick building is one of several once occupied by a major hardware wholesaler and distributor. Tucked into an alley, at 629-728 Johnson Court, the five-story Worthington Building would become more than 70 apartments and 13 condominiums under developer Neil Viny's plan. Viny, a principal at the Dalad Group in Independence, has controlled the building since the 1980s and is pushing ahead with a project amid record-high downtown apartment occupancy rates and rising rents.
According to the state, the project would cost $30 million and would include indoor parking, retail space and a rooftop penthouse -- tucked out of sight, to maintain the property's historic appearance from the street. Plans include a complete overhaul of two courtyards next to the T-shaped building.
And the new investment might spur a makeover of Johnson Court, a little-trafficked passage between West Sixth and West Ninth streets. The developer and Warehouse District leaders hope to reposition the alley as a pedestrian corridor lined with funky stores.
"We always viewed it as our last great opportunity, a game-changer," Tom Yablonsky, executive director of the nonprofit Historic Warehouse District Development Corp., said of the Worthington Building. "The Warehouse District is in schematic design and planning with the developer to figure out what we can do with Johnson Court."
Viny did not respond to a request for comment.
Three other Northeast Ohio projects also grabbed awards this week.
• Greystone Hall, a former Masonic hall on South High Street in Akron, won nearly $5 million in credits for a $48 million redevelopment. A local investor group plans to remake the 1917 building as banquet space, meeting rooms and food-service facilities, to serve a new hotel planned on neighboring property. Akron officials and Amerimar Realty Co., a Philadelphia developer, announced plans for the 160-room hotel in July.
• North Canton will see its first state tax-credit deal, at the sprawling former Hoover Co. vacuum-cleaner plant downtown. Industrial Realty Group is transforming the 19-building complex into offices, stores and residential space, including 132 apartments. A $51.6 million project won $5 million in credits.
• In Youngstown, a former mansion will become five apartments. The Heedy Mansion, in the city's Wick Park neighborhood, has been empty since 2007. The project attracted $93,200 in credits.
The state received applications for more than $90 million of tax credits in the most recent round. The winning projects represent almost $400 million in private investment. In Northeast Ohio, the state estimates that the five redevelopment deals will support more than 1,300 long-term jobs, plus more than 1,000 construction jobs.
Applications for the next wave of tax credits are due in March.