Taxpayers play key role in $90M arcade plan
Ohio capital budget includes a $1 million allocation to project.
If current plans to revitalize the Dayton Arcade succeed, and the complex finally reopens after nearly three decades of neglect, taxpayers will have played a key role in making it happen.
The proposed state of Ohio capital budget includes a $1 million allocation to the project.
The city of Dayton has contributed more than $1.4 million to
the redevelopment efforts, and it also agreed to provide $2.5 million in federal funds to help construct the housing components.
The city also may apply for funding for the arcade from the Montgomery County ED/GE (Economic Development/Government Equity) program in the upcoming round, and the county also has contributed money to the project.
And developers also have secured tens of millions of dollars in low-income housing, new market and state historic preservation tax incentives.
“This is a great undertaking, and a labor of love, but we are making good progress,” said Bill Struever, principal with Maryland-based developer Cross Street Partners.
The proposed renovation of the Dayton Arcade has been called one of the most complicated and difficult projects in the region, and developers say a significant amount of subsidies are needed to create the best possible space at the lowest possible occupancy cost.
The redevelopment is projected to cost about $90 million and would have two stages.
The first phase focuses on the southern portion of the complex that includes the Fourth Street, Ludlow, Commercial, Kuhns, McCrory and the Lindsey buildings and the rotunda. The arcade consists of nine interconnected buildings.
Cross Street Partners, one of the development partners, says phase 1 will create an innovation center, offering 100,000 square feet for shared offices, classrooms and co-working, incubation and other spaces. The hub would be anchored by the University of Dayton and the Entrepreneurs Center.
Phase 1 also will create about 126 apartments and an art center, galleries, studios and maker spaces. There will be restaurants, retail and other shops. The rotunda will be a public event space — with a theater — that is expected to host festivals, talks, performances and pop-up shops.
Because the arcade is a large and expensive project, developers say they still need to nail down more funding sources to make the finances work.
The proposed state capital budget includes $1 million for the Dayton Arcade innovation hub.
Identical bills were introduced in the Ohio House and Senate this week, and hearings have started in committees in both chambers. Passage could occur sometime in mid- to late-March.
“We are thrilled the capital budget bill includes support for the Dayton Arcade, and are grateful to our regional statehouse delegation for their support of this project,” said Michael Gessel, vice president of federal government programs with Dayton Development Coalition.
A strong urban core is vital for having a vibrant region, and the redevelopment of the arcade represents a major milestone in rebirth of downtown, he said.
Last spring, the city of Dayton agreed to chip in $1 million to help pay for architectural, engineering, design and demolition services for the arcade complex.
Prior to that, in September 2015, the city approved spending $700,000 — including $450,000 in city funds — on emergency repairs for the arcade and other work to prevent further deterioration to support its redevelopment.
In July, the city also approved allocating the arcade project $2.5 million of its federal HOME funds to help pay to create the 126 new apartments, 11 of which must be rented to households below 80 percent of the area median income.
HOME funding was structured as a 30-year loan at 1 percent interest, with repayment through available cash flow beginning two years after completion, according to a spokeswoman with the U.S. Department of Housing and Urban Development.
Also, the city of Dayton last fall submitted a request for $1 million in ED/GE funding. But the city withdrew its submission from consideration after officials said they did not finish construction cost projections and other preparatory work.
City officials this week said they are evaluating whether to apply for ED/GE funds in the next funding round but remain undecided. The ED/ GE program is funded by county sales tax revenue. The deadline is April 2.
Developers say they continue to pursue other funding sources, including additional new market tax credits.
The arcade has been awarded $9 million in state historic tax credits — the most for a Dayton project — and $22.5 million in low-income housing tax credits to help fund the new apartments.
The Ohio Housing Finance Agency has approved $3 million in housing development loans and has tentatively committed another $3 million housing development loan.
“The facility will bring together unique academic and entrepreneurial partners to create a dynamic, vibrant destination,” said Scott Koorndyk, president of the Entrepreneurs Center, in a letter in support of the arcade.