Toledo City Council Tuesday night approved the final piece of financing developers need to start the long-awaited renovation of a blighted former warehouse visible from Fifth Third Field’s main gate.
A unanimous council voted to give Berdan LLC $2 million of federal money toward the developer’s $30 million plan to renovate the Berdan Building into 115 apartments. The 1 S. Erie St. building occupies the south side of Washington Street on the block immediately west of the ballpark.
“This was the last piece of the puzzle needed to move this project forward,” said Councilman Adam Martinez, who has struggled along with the Bell administration for most of the past four years to shepherd to completion a development plan for the building.
“It will be a keystone downtown,” Mr. Martinez said.
The Lansing developers who renovated the nearby Standart Lofts, a 75-unit apartment building, bought the Berdan Building earlier this year for $700,000 and announced plans to renovate it into living and retail space. The sale was facilitated by the Lucas County commissioners’ decision in March to release county liens on the property owed by a previous developer.
Developers Richard Karp and Kevin Prater said the project could not proceed without the federal money.
“The next step we have is to go in for building permits, zoning approval,” Mr. Prater said Tuesday. “That will take six to eight months. ... This would not have been possible without the $2 million.”
Because the Berdan is in considerably worse shape than the Standart building was before its renovation, it requires more money to redevelop, the developers said.
The Berdan has large holes in its roof, buckling floorboards, and evidence of fires set inside. Many windows have been broken or are missing altogether, and brickwork requires major restoration.
The $2 million comes from the U.S. Housing and Urban Development Neighborhood Stabilization Program 2.
If the project ultimately is successful, it would close more than a decade of attempts to renovate the Berdan Building.
The $2 million originally was earmarked for the project under the previous developer. Because that renovation project failed, the $2 million was loaned to the North Toledo community group, United North, for its $7 million Cranes Landing housing project. When Cranes Landing’s investors repaid the $2 million, it became available again for the Berdan Building, Deputy Mayor Steve Herwat said.
“While the $2 million of NSP2 funds represents less than 7 percent of the $30 million total development cost, it is a necessary piece of the redevelopment financing in conjunction with $5 million of state of Ohio historic-preservation tax credits, federal historic tax credits, conventional debt, and developer equity,” the developers’ statement said. “Construction is expected to commence in 2014, with completion in 2015.”
The project funding includes $5.64 million from federal historic tax credit syndication proceeds, $5 million from state historic tax credit proceeds, $2 million from HUD, $11.3 million owner equity, and $6 million in conventional senior debt.
By accepting the federal money, the owners are required to maintain eight apartments at HUD-designated income-restricted rent levels for 15 years.
Kathleen Kovacs, commissioner of Toledo’s neighborhoods department, said the city could be liable to repay the $2 million if the developers do not complete the project or do not maintain the eight income-restricted apartments.
As protection, she said the city will have a mortgage on the building until it is completed and the eight income-restricted apartments are rented. There will be a restrictive covenant on the property requiring the owners to maintain those eight apartments.
The Berdan is a Toledo landmark and an example of early 20th century commercial style, according to the 1974 application for its listing in the National Register of Historic Places. The building was completed in 1902.