LORAIN — To get another piece of funding for renovations on The Broadway Building, Council approved the creation of an energy special improvement district — allowing developer Ariel on Broadway to access a $1.6 million loan to rehab the building, while making it energy efficient.
PACE, or a property assessed clean energy program, provides financing for energy improvement projects in the building via special assessments. Council approved the four-part legislation allowing for the creation of an energy special improvement district, or ESID, at its regular meeting Monday night. The district allows the developer to receive a state energy direct loan, while the city retains zero liability if the building fails or developer defaults on the loan. They will receive a principal amount of $1.6 million, eventually paying back $2.7 million to the state between the principal amount and interest over the 15-year agreement, according to Mayor Chase Ritenauer.
“This is before you, its part of the financing package for the hotel project,” Ritenauer said. “This is part of state law in terms of how this has to go in terms of these special improvement districts.”
Council entered into a Committee of the Whole to allow Attorney Caleb Bell, from Bricker and Eckler Attorneys at Law, and Port Authority Director Tom Brown, to explain the agreement.
Brown explained, “As the mayor stated, this is a crucial piece of financing for the Broadway Building but more importantly this will set up an ESID in the city of Lorain … First time in three years anyone in the state of Ohio has gotten a state energy loan, Radhika (Reddy) and her team put together an audit and showed what kind of energy improvements they would do on that Broadway Building. … In order to accept that grant, or loan, we have to create an ESID and pay it through a PACE process, that’s the state’s requirements.”
Through the lease agreement in place, developer Radhika Reddy will pay the loan directly back to the state, though the Port Authority is still owns the building. The ESID will be similar to a Tax Increment Financing agreement, requiring a financial advisor, yearly meetings — with the addition of a committee set up. Under the agreement, the city will not be held liable for any of the loans for the building renovations, even if Reddy defaults. If she does not pay the loan back, assessments against the building will kick in. If assessments are not paid, either other lenders would have to pick up the tab, or the building would go into tax foreclosure and sale.
““The overall project costs are going to be approximately $8 million, with about $1 million coming from the property owner themselves as their own equity, this ($1.6 million) coming from the state loan, and then some additional lending from First Mortgage Lender and a tax credit lender — so all those pieces of funding come together to create the sufficient amount of money to carry out the project,” Bell said. “This is just one piece of that overall stack of funds, but you can see without this ($1.6 million) the project will not have full financing.”
After several rounds of discussion and questions from council members, Council suspended the three-reading rules and passed the two resolutions and two ordinances comprising the agreement and district creation unanimously – allowing Reddy to move ahead with renovations before winter sets in.
Council also voted to allow Safety/Service Director Dan Given to enter into a contract for the Broadway Streetscape Project. The project, spanning from West Erie Avenue to 10th Street, will include the installation of concrete sidewalks, drainage, landscaping, signage, curbs and handicap ramps.
Funding for the project is split between the Ohio Department of Transportation and the city — with ODOT picking up $1.5 million. Lowest bid estimated the project at $3,742,545.08, according to city documents.
Given expects to contract with KE McCartney and Associates, out of Elyria. The city is aiming to have work completed next year, furthering goals of the area becoming a destination in the county.
Opening the Eagles Building for renovation and for-profit use, Council voted to terminate the guarantee agreement made between the city and state as part of the Cultural Project Cooperative Use Agreement. In an effort to use the building, located next to the Palace Theater, as another cultural hub, the city entered into the agreement in 2009, stipulating the property had to be used by a nonprofit.
Law Director Patrick Riley explained the market did not exist for another nonprofit in the space, with the building sitting vacant for the past nine years because of the stipulations in the agreement.
Ritenauer said, as of Monday, the state’s bonds on the building are paid off, allowing it to be sold for a for-profit company, which could bring new businesses, such as a brewery or restaurant, to the space.