West 25Th Street Lofts

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West 25Th Street Lofts West 25 th Street Lofts: Neighborhood Catalyst Developers Rick Foran of the Foran Group and Chris Smythe of Smythe Property Advisors oversaw the adaptive reuse of 4 historic buildings into the West 25 th Street Lofts project. This historic 83 unit loft apartment property with 9,600 SF of commercial space is located in Hingetown, a once blighted section of Ohio City which is a neighborhood of downtown Cleveland. Planning began in 2007 and was formally completed in 2016, thanks in large part to state and federal historic tax credit (HTC) equity and a HUD 221(d)(4) FHA loan guarantee. Those financial tools helped overcome the Great Recession, a landmark historic tax credit ruling, and other issues faced by the developers during an epic 8 year roller coaster ride. The neighborhood at the time was at the wrong end of West 25 th Street. The southern end of West 25 th about ¾ of a mile away had seen considerable investment in apartments, new restaurants and craft brew pubs. The Hingetown area however was characterized by abandoned vacant industrial buildings, some single family bungalows, and scattered public housing. It was in a federally designated economically distressed area. The West 25 th Street Lofts has had an enormous catalytic impact on the neighborhood. Shortly after the West 25 th Lofts project was announced a few other like-minded developers discovered the Hingetown area. While Smythe and Foran were putting together their debt and HTC equity, a new museum was started in conjunction with the Cleveland Museum of Art, a Firehouse was renovated into a hip coffee house and a strip of storefronts became re-tenanted with very trendy start-up entrepreneurs. A new 65 unit apartment project shortly followed. Today the neighborhood is one of Cleveland’s hottest and hippest locations. A 195 unit apartment complex is under construction one block away and a 75 unit development and a brewery are nearing completion nearby. Plans are in the works for a 165 unit 11 story apartment tower across the street. From the beginning the West 25 th Street Lofts project has had considerable media attention: TV news stories, articles on Cleveland.com, Crains, Novogradac Tax Journal article, even a cover story in Properties Magazine. The West 25 th Street Lofts has been a model for public-private partnerships. The developers worked very closely with the Ohio City Inc. Community Development Corp. (OCI) They helped shepherd the project thru City Hall as the developers sought various approvals. The developers helped organize with OCI an expansion of the local SID District providing sidewalk trash pick- up, snow removal, and mobile street ambassadors. The developers also used a City of Cleveland UDAG funded Vacant Property Initiative loan to acquire the Exhibit Builders building. The City was very proactive to make sure the project was a success as they realized the catalytic nature of the investment. OCI also was instrumental in working with the Metroparks and CMHA to demolish the buildings across from the Lofts on West 25 th Street to create a new green park connecting it to the very popular Canal Corridor Bike Trail. An improvement that will greatly enhance the livability and desirability of the area. Lastly the developers on their own worked closely with the State Historic Preservation Office and National Park Service to successfully create a new federal historic tax district as the current one stopped 1 block shy of Hingetown. It was a lengthy 12 month process but it has significantly improved the neighborhood’s access to HTC capital. A change that should pay dividends for decades. The Episcopal Diocese owns St. John’s Church the oldest church in Cleveland (1842) across the street. It hasn’t been occupied since 1985. They offered their parish hall as the project’s field office knowing the West 25 th Lofts Project would dramatically improve the neighborhood. Now the Church is planning its own renovation. It has become a neighborhood community center successfully hosting many Cleveland Public theater events and a popular yoga studio in the basement. To qualify for HUD 221 (d) (4) financing the property must be in a designated distressed economic area which the Hingetown neighborhood clearly was. The U.S Department of HUD is seeking to make transformative changes in neighborhoods with the use of their FHA loan guarantee and they have been very pleased with its progress and its impact. While it was an extremely arduous process to marry HUD financing with HTC’s its timing wasn’t helped by various external factors: A government shut-down, Boardwalk, closing of the Cleveland HUD office, and the GOP convention in summer of 2016. A failure of a charter school tenant 3 weeks before closing precipitated a lengthy and costly redesign. In the end the developer’s persevered. Construction on the $27 million West 25 th Street Lofts began in July 2015. Residents started taking occupancy in late 2016 and the project has leased up very quickly. The apartments are now 98% leased. There are 150 new residents of the neighborhood where there where none a few months ago. The 83 apartments include one-, two- and three-bedroom lofts, as well as 12 townhouse style units and a couple of studio apartments. Each loft is different, ranging from 618 square feet for a studio to more than 2,000 square feet for a two-story townhouse loft. The units have bamboo hardware floors, energy-efficient stainless steel appliances including washers and dryers in each unit, granite countertops, high ceilings and oversized windows. Common space includes a fitness center, and a community deck, to which six apartments have direct access. The property is noteworthy for is preservation and utilization of the historic building materials. There are 65 unique suite layouts and all have some element of historic brick, industrial crane steel or wood beams combined with contemporary designed interiors. West 25 th St. Lofts Financing • $15.3 million HUD 221(d)(4) loan from Love Funding Corporation • $3.6 million federal HTC equity from East West Bancorp Inc. via NTCIC • $3.2 million state HTC equity from Nationwide Insurance and Nationwide Agribusiness • $2.9 million owner equity and contribution • $2.3 million deferred developer fee • $100,000 storefront grant from City of Cleveland .
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