The Ohio Development Services Agency announced $27.5 million in tax credits Tuesday morning during a news conference in Toledo.
CLEVELAND, Ohio - Four Northeast Ohio real estate projects won $7.75 million in historic-preservation tax credits this week, boosting the odds of more apartments in Cleveland and a boutique hotel on Akron's South Main Street.
The Ohio Development Services Agency announced $27.5 million in tax credits Tuesday morning during a news conference in Toledo. The awards marked the 14th round of a popular program that helps developers and investors remake historic buildings, most of which are empty or near-vacant. The program, launched in 2007, recently reached a milestone - its 100th finished project.
The newest crop of winners includes Cleveland's Leader Building, a downtown office property set for a mixed-use conversion; the small Gund Brewing or Scott Drug building on West 25th Street, just south of Lorain Avenue; the Stuyvesant Motor Co. Building on Prospect Avenue near Cleveland State University; and Akron's United Building, set to become a 65-room hotel.
Thirteen Northeast Ohio applicants collectively sought nearly $24.4 million in tax credits this time around. Most of them will have to reapply. Ohio's tax-credit program is capped at $60 million in annual awards, split across two batches in the summer and winter. Most individual projects qualify for up to $5 million.
"We're seeing significant interest across the state, from new communities and communities where we've done a lot of work in the past," said Nathaniel Kaelin, tax-credit program manager for the state development agency. "A number of really quality projects may have to come back for another round."
The credits offset state financial institutions' taxes, insurance premiums or individual state income-tax liabilities. Some property owners can use the credits themselves, but many developers find investors who are willing to put money into a project in exchange for tax credits. Projects don't actually receive the credits until construction is complete.
This time around, the state sifted through applications spanning 97 buildings, from developers who asked for a combined $74 million.
"These investments preserve historic buildings while creating new economic opportunity for neighborhoods," David Goodman, director of the state development agency, said in a written statement.
Here are more details on Tuesday's local winners:
The Leader Building: The K&D Group, Inc., a prolific downtown residential developer, bought this office building last year and plans to convert the upper floors to more than 200 apartments. K&D will keep the building's street-level storefronts and will retain office space on the lower floors. The Leader Building, at 526 Superior Ave., was constructed for the Cleveland Leader newspaper in 1913. The building won the maximum tax-credit award of $5 million.
The United Building: Developer Tony Troppe plans to remake this Akron office building as a small hotel with dining facilities and conference spaces. The eight-story building, at 1 South Main St., was constructed for the United Cigar Stores Co. in the early 1920s. As of March, the office space was 70 percent vacant, according to the Ohio Development Services Agency. The hotel project, which won a $1.6 million tax credit, could be finished in 2016.
The Stuyvesant Motor Co. Building: Perhaps best known to Clevelanders as the old City Blue building, this empty Prospect Avenue property is set to become apartments and indoor parking. Woda Group, Inc., a Columbus-area real estate company, bought the building at the end of last year and expects to renovate it to appeal to Cleveland State University faculty or suburban homeowners looking for spacious apartments in the city. Woda asked for just under $2 million in tax credits, but the state awarded only $877,438 to the project. The development agency said the property could receive the remaining $1.12 million in credits if other tax-credit projects fall through or come in under budget.
The Gund Brewing/Scott Drug building: This small Ohio City building is tucked next to the renovated United Bank Building, just south of the West Side Market. Real estate investor Tom Gillespie plans to convert the three-story, 1860s-vintage property into five upper-level apartments and a roof deck above retail. The building was constructed for the Gund Brewing Co. family and was later home to a pharmacy. Gillespie won nearly $250,000 in credits.
The local losers include the Forest City Bank Building and the adjacent Seymour Block, which also recently missed out on federal low-income housing tax credits awarded by the state. The buildings, at West 25th Street and Detroit Avenue in Ohio City, are set to become affordable apartments as part of a larger project being planned by the Snavely Group.
The Alta House, a Little Italy institution being spruced up for Cleveland Montessori, also failed to make the cut. So did Euclid Avenue's empty Stager-Beckwith Mansion, the future home of the Children's Museum of Cleveland; the Heyse Building, set to house apartments on Fulton Road in Ohio City; the old Variety Theater on the city's West Side; downtown's 75 Public Square, another office building being considered for a mixed-use conversion project; the former Foundry Equipment Co. building in the Flats, which is part of a planned rowing complex; and the graffiti-tagged Joseph & Feiss Co. building, a onetime West Side garment factory recently purchased by a charter school called Menlo Park Academy.
The next round of tax credits will be announced in December.
Starting with this week's awards, the pool of available credits is slightly smaller - $27.5 million instead of $30 million - due to a recent change in state law that permits occasional large awards to the biggest projects with the broadest impact. Last year, the state chose Cincinnati's Music Hall as the first such "catalytic" project earmarked to receive $25 million in tax-credit allocation over five years. That means $2.5 million in credits will be set aside from each bi-annual round of awards for the Music Hall through 2019.
The state will accept and evaluate another group of catalytic project applications during the second half of this year.