Progress on the long-awaited Federal/North project appears to have passed a new hurdle.
Last week the Northside Community Development Fund received a $4 million tax credit from the Treasury Department that it hopes to use for the first third of financing for the five-building redevelopment in the Garden Theatre block on West North Avenue.
The Fund, the Northside’s only Community Development Financial Institution, was one of 99 CDFIs, and only three in Pennsylvania, to receive funding under the Treasury Department’s New Markets Tax Credit Program.
CDFIs sell the new markets tax credits to private lenders or developers for low-interest loans of the same amount. Lenders then receive tax credits totaling 39 percent of the cost of the investment. So if a company buys the Fund’s $4 million investment, they will get to keep a little more than $1.5 million in expected federal income taxes.
Mark Masterson, the Fund’s executive director, said that as long as details regarding the joint venture between the Northside Leadership Conference and the Central Northside Neighborhood Council get worked out, the $4 million will go toward low-cost financing in that project. One of these details is whether a master developer will be chosen for the project or if separate buildings will be handled by separate entities.
“It’s targeted for that, it doesn’t mean it’s going to go there,” Masterson said. “If the Federal/North project is not ready, we’ll make loans and investments in other businesses and projects on the Northside.”
After the Fund finds a company to buy the tax credit, usually a bank, it must deploy 85 percent of the money within 12 months. Masterson said that if the principal players, including the Urban Redevelopment Authority, did not decide on the necessary leadership structure and other details of the Federal/North project by the end of those 12 months, he and the Fund’s board would consider funding other developments.
Preliminary estimates project a total cost of $12 million for the redevelopment of the five blighted buildings in the Garden Theatre block.
The Bradberry Building and the Masonic Hall will be renovated to make a total of 21 apartments and space for three retail businesses. Renovations will turn the former Garden Theatre porn venue into a family-friendly movie theater and restaurant with two additional retail spaces.
Additionally, 8 West North and 6 West North will be turned into retail and office space for six businesses.
The Northside Leadership Conference estimates that the project will increase the neighborhood’s population by 42, increase local tax revenue by $315,000 annually and bring 56 permanent new jobs to the Northside, not to mention 230 construction jobs during development.
The final $8 million for the project will come in the form of government and foundation grants and private loans from banks.
“Complex projects like this will wind up with a dozen sources of funds, and we haven’t raised it all yet,” said Mark Fatla, the Northside Leadership Conference’s Executive Director.
Fatla said funding will run the gamut from URA financing and developer equity to federal grants and historic tax credits.
He said requests for proposals will be sent to prospective developers in the first four months of 2010.
Fatla said with large-scale projects like Federal/North, it would be hard to predict if construction will be underway by the end of next year. It depends largely, he said, on how quickly the Conference can cobble together enough funding from private and public institutions who already have tight budgets due to the recession.
The Northside Chronicle is a subsidiary of the Northside Community Development Fund. The Northside Chronicle will not benefit from the tax credit.