Appeared in Novogradac Journal of Tax Credits in March 2015.
HTCs, LIHTCs Preserve Historic Building, Create Housing and Commercial Space in Watertown, N.Y.
BY MARK O'MEARA, Staff Writer
Frank Winfield Woolworth, who founded the F.W. Woolworth Company and was made famous for his chain of “five-and-dime” stores, purchased the American Building in downtown Watertown, N.Y., in 1916 with the plan of demolishing it and building a larger structure in its place. The building had previously housed the store in which Woolworth began his career and the six-story F.W. Woolworth Building opened its doors in 1921. It housed the Five & Dime Store until 1971, when the store was moved to a more modern facility.
Now, 94 years after Woolworth purchased it, the building has been rehabilitated and put to new use. The Woolworth Apartments is a mixed-use development that features 50 apartments reserved for residents earning up to 60 percent of the area median income (AMI) and 11,000 square feet of retail space on the ground floor of the building. The rehabilitation of the historic structure was a joint venture between co-developers White Birch Enterprise LLC and Georgica Green Ventures LLC. “The building lent itself to apartments. Not all historic buildings do that,” said David Gallo, president and principal of Georgica Green.
The 50 apartments include 35 one-bedroom units and 15 two-bedroom units, with rents ranging from $434 to $690 per month. All 50 units are from the second to the sixth floors, with 10 units per floor. The commercial space is still vacant, although Gallo anticipates it will be split into about three parcels. “The initial focus has been on the construction of the apartments,” said Gallo. “We will shift that focus in the next month.” Construction of the Woolworth Apartments started in November 2013 and was completed in January 2015. At the end of January, 28 residents had moved in to the building. Erich Seber, owner and president of White Birch Enterprise, expected the development to be fully leased by the end of February.
The development features a number of modern amenities, including a manager’s office, community center, kitchen, laundry facility, library, computer area with Internet access, exercise room and a flex room for private parties. In addition, Woolworth Apartments has community parking, which Gallo said, “is pretty unique for downtown Watertown.” The city donated the land across the street of the development to be used as resident parking, with 28 parking spots. Finally, the development dedicated some of the space to the legacy of F.W. Woolworth. There are artifacts displayed in honor of F.W. Woolworth, including pictures of the building as it looked in the 1920s. Seber said that people will also be able to take a virtual tour of the building.
“One city official said ‘If we couldn’t save this building, it would be as if the city had a missing tooth for the rest of its life,’” Gallo said. Gallo, himself, then added, “This is the most prominent building in Watertown, we couldn’t lose it.’”
LIHTCs, HTCs Fund Rehabilitation
The development of the Woolworth Apartments was financed using a number of funding sources, including federal low-income housing tax credits (LIHTCs), federal historic tax credits (HTCs) and state HTCs. Raymond James was brought in as the syndicator, with TD Bank investing in all three credits. The $9.5 million in federal LIHTC equity, $2.7 million in federal HTC equity and 1.8 million in state HTC equity was provided by the Raymond James Tax Credit Fund. Darryl Seavey, managing director of the Northeast United States at Raymond James, said this investment was attractive for a number of reasons. “The development team was rock solid. We understood the market and knew there was a strong demand for affordable housing in the area. This provided an opportunity to revitalize an important historic component of downtown Watertown and bring renewed energy to this critical piece of the downtown landscape,” said Seavey.
“TD Bank tries to deploy capital in regions where there is not as much activity [such as in Watertown],” said Mark McBride, tax credit investment officer at TD Bank. “In some of the other outlying markets, some deals have a tougher time attracting capital.” TD Bank also provided a $7.5 million construction loan. McBride liked that this was a “very equity driven transaction” with very little debt on the property.
“This building is the centerpiece of downtown Watertown and has been sitting vacant for years. To adapt the vacant building into affordable housing and new retail space changes the whole face of the downtown area,” Matthew Schatz, vice president and relationship manager in the Commercial Real Estate Group at TD Bank. “[This development] is important to the revitalization of the downtown area and it provided needed services for an existing customer of TD Bank.”
New York State Homes and Community Renewal (HCR) provided the $1.1 million annual LIHTC allocation. The tax credits are part of $91 million in awards that Gov. Andrew Cuomo announced in May 2013 to build and preserve more than 2,000 affordable housing units across the state. Darryl C. Towns, commissioner/chief executive officer (CEO) of HCR, said, “The Woolworth Apartments is a shining example of how historic preservation and mixed-use development provides affordable homes, increases access to retail services and revitalizes communities. Under Gov. Andrew Cuomo’s leadership, HCR is working with partners and creating and preserving affordable housing which in turn helps to strengthen communities across the state. The low-income housing tax credit is a critical tool in this effort and we are pleased to see the positive impact it is having on the city of Watertown.”
Finally, the investment included a $2.5 million grant from Empire State Development’s Restore New York program, which encourages community development and neighborhood growth through the elimination and redevelopment of blighted structures. Empire State Development’s incoming president, CEO and commissioner Howard Zemsky said, “The Woolworth project is making a significant impact on Public Square, restoring the deteriorated, unused historic building to include affordable housing and commercial space that will attract additional residents and businesses. This project is a great example of all that can be accomplished when state and local partners work together to move the regional economy forward.”
The development also received support from the New York State Energy Research and Development Authority (NYSERDA) for building weatherization. “This project reflects a public private partnership that provides affordable housing and commercial space where energy use is reduced and energy costs are more affordable, in line with Gov. Cuomo’s housing and energy goals, ” said John B. Rhodes, president and CEO of NYSERDA. “This -year-old mixed use building received NYSERDA support as part of our commitment to ensure that low- to moderate-income residents have the opportunity to benefit from energy efficiency measures.”
HTCs Preserve Historic Structure
In order to receive both federal and state HTCs, a number of the historic features of the Woolworth Apartments had to be preserved. Three of the entrances to the building had to be relocated to match the original footprint of the building. At that time, Seber said that curved glass was installed above the entrance doorways. Seber said that he worked closely with the National Park Service to preserve the building’s austral windows. In addition, the first-floor elevator door was preserved along with the skylights in what is now the community center. In addition, Seber said that there was extensive plaster repair that had to be done to the interior of the building, including recasting some of the plaster molds to preserve the ornate detail on top of the interior columns. “The building had a lot of asbestos and mold under the plaster,” said Seber. “It was very difficult to get rid of that while preserving the plaster work.”
The exterior of the building needed to be rehabilitated as well. Seber said, “We did a lot of preliminary exploration,” in order to examine all of the ornate details of the building. That preliminary work allowed Seber to accurately restore the granite exterior of the first floor of the building, the terracotta work made to look like granite on the secondhand sixth-floor cornice exterior and the brick work on the third floor. Seber said he was very excited to rehabilitate a building that is listed on the National Register of Historic Places.