City council will consider legislation today to provide funding to rehabilitate two downtown buildings that need the money for the projects to move forward.
Council is being asked by the administration to approve loans equalling 70 percent of state tax credits, at 3 percent interest, to two downtown projects. They are the Wick Building project to convert the vacant structure into a 52-unit rental and extended-stay facility, and a rehabilitation project to turn the empty Wells Building into the new headquarters of Strollo Architects with 12 apartments. Both buildings are on West Federal Street.
Financial problems and national lawsuits related to an Atlantic City boardwalk redevelopment makes it difficult for companies with government tax credits — which are paid at the conclusion of projects — to receive loans from lending institutions, said city Finance Director David Bozanich; Gregg Strollo, the architectural firm’s president and principal; and Dominic Marchionda, managing member of the NYO Property Group, which owns the Wick Building and is converting it to housing.
If city council agrees to the loans, which are to be repaid about 18 months after the money is borrowed, it will be easier to leverage those funds to get bank loans, they say.
“Without the city loan, we can’t even start construction,” Strollo said. After council approval, “we can now get final bank financing.”
Strollo’s project will cost about $4.4 million, with $1 million coming from state tax credits and 20 percent of the total amount coming from federal tax credits.
The city would loan $700,000 to Strollo for the project. Wells has been empty for about 30 years.
NYO’s project cost is $15.3 million with the state giving $3.7 million in tax credits and 20 percent of the cost coming from federal tax credits.
The city would loan $2.59 million to NYO.
“The project would have not happened or been delayed without the city’s help,” Marchionda said. “It helps keep the progress growing. Lenders are being difficult with money, so the city’s help is the very last piece of the puzzle for us.”
NYO, which owns several downtown buildings, has done interior demolition and asbestos abatement to Wick, vacant for about seven years, Marchionda said.
The city loan would be secured by a first-lien position on the state tax credits, Bozanich said.
Both projects are expected to be finished by the end of the year, but repayment would be 18 months after the companies get the city money to give them time to file tax returns and get the state tax credits, Bozanich said.
The loans would come from the city’s investment account that is used for various economic-development projects, he said.
“Do we not let these people go forward with about $20 million in investments in downtown for some minimal risk on state tax credits or do we provide a relatively small amount of money to allow for the projects to be funded?” Bozanich said. “We have a high degree of confidence the projects will be done.”
Mayor John A. McNally added, “Although we’re taking some small risk, quite frankly, the substantial investment they’ll bring to downtown are worth it. The city is stepping in to fill this little void.”
Also today, council will vote to accept a citizen-initiated charter-amendment proposal to ban fracking in the city and forward it to the Mahoning County Board of Elections to determine if it has the needed signatures to get on the May 6 primary ballot.
The Youngstown Community Bill of Rights Committee submitted petitions on two separate occasions to the clerk of council with 2,108 signatures. The committee needs 1,164 valid signatures to get on the ballot.
The anti-fracking amendment was rejected twice by city voters in 2013. Supporters of the amendment say they will continue to put the issue on the ballot until it passes.
Opponents say the proposal is unenforceable under state law.