The funding would help make additional improvements at the historic arcade complex, plus renovate a large nearby office tower called the Centre City building and a parking garage.
“This is our third attempt to win a (Transformational Mixed-Use Development Program) tax credit allocation and critical to the continued redevelopment of the south-end of downtown Dayton,” said David Williams, vice president of development of the Dayton office for Cross Street Partners.
A developer behind the Water Street District wants $4.3 million in tax incentives to help fund its $98 million renovation of the Delco, a very large commercial property across from Day Air Ballpark that is supposed to transition to a variety of new uses.
Transformative
The Arcade District and Water Street District developers have sought Transformational Mixed-Use Development Program credits in one or both of the state’s two previous funding rounds, but they were not successful. The deadline to apply for a third round of funding was in September.
State lawmakers created the Transformational Mixed-Use Development Program a few years ago to offer new financial assistance to projects that will have a “major economic impact” on development sites and surrounding areas.
Eligible projects must have a combination of retail, office, residential, recreation, structured parking and other kinds of similar uses.
The state awarded $100 million in tax incentives in each of the previous two funding rounds. Twenty-five projects already have won awards, but none were in the Dayton area.
The Ohio Department of Development received 33 applications for round 3 funding, but the total amount requested — $285 million — far exceeds the $100 million the state has to dole out.
Dayton Arcade
Dayton Arcade Partners LLC has applied for the credits in all three funding rounds.
The funding would help build out several tenant spaces in the southern part of the arcade, plus help complete construction on the northern part of the complex at a time of skyrocketing building costs, said Williams, with Cross Street Partners.
Credit: JIM NOELKER
Credit: JIM NOELKER
Tax credits also would help renovate the nearby Air City Garage, located along East Fourth Street.
The bulk of the incentives — about $8 million — would be put toward rehabbing the empty Centre City building, located at 40 S. Main Street, just across from the arcade, Williams said.
Cross Street Partners is one of the partners on the Dayton Arcade project, along with the Model Group and McCormack Baron Salazar.
The 21-story Centre City building already has won about $8.6 million in state historic preservation tax credits for a proposed rehab project that is expected to cost $88 million or more.
Cincinnati-based Model Group plans to convert the property into about 200 housing units and 53,000 square feet of commercial space.
The high-rise, also called the United Brethren Publishing House, has been vacant since 2012, and multiple redevelopment proposals for the property over the years never made much progress.
Williams said the overall planned investment in the Dayton Arcade project is about $160 million.
The investment in the Centre City building and the Arcade District garage is expected to be about $104 million, he said.
Work on the Dayton Arcade keeps chugging along, and new businesses recently have opened inside and construction continues on a 94-room Hilton Garden Inn hotel and a retail marketplace.
The 6888 kitchen incubator is expected to be completed by the end of this year, and a grand opening for the hotel and marketplace could happen in late fall of 2024.
Several office and first-floor tenant construction projects are underway on the southern sections of the complex.
Water Street District
Delco Residential LLC has applied for tax credits for Water Street District Phase II, according to state records.
Developers Crawford Hoying and Woodard Development in roughly the last eight years have thoroughly transformed the northeast section of downtown Dayton near and around the Dayton Dragons baseball stadium with major investments.
Credit: JIM NOELKER
Credit: JIM NOELKER
Since 2015, they have created more than 700 new apartments, two new hotels (the Fairfield Inn & Suites and the AC Hotel), new office and commercial spaces and they helped bring new bars, breweries, restaurants and other amenities to the area.
The development team is working to rehab the massive former Mendelsons liquidation outlet at 340 E. First St., which sits on about 7 acres of land.
The duo plan to turn the 515,000-square-foot building into about 160 market-rate apartments, 77,000 square feet of commercial office space, 20,000 square feet of first-floor space and 482 parking spaces.
An application seeking credits submitted by Crawford Hoying leaders in the previous funding round says labor and construction costs have outpaced “value growth,” which has created economic feasibility issues.
Renovating a building with the history and age of the Mendelson’s property comes with additional costs, which in theory can be offset by higher rental rates, but those might not be realistic in this market, the application states.
Crawford Hoying said the total anticipated cost of renovating The Delco exceeds $98 million.
But the company said the eligible remaining anticipated costs are about $43 million.
A spokesperson for Crawford Hoying said the Water Street District and the surrounding area in downtown Dayton have lacked investment and development through much of the last half of the 20th century.
Few people called this area of Dayton home until recently, the spokesperson said, and residents outside of the downtown area largely avoided it for a variety of reasons including lack of housing options, safety and no real sense of community.
“The development of Water Street District has been slowly turning the narrative around,” the spokesperson said. “This project will be a catalyst for real urban renewal on a much larger scale.”
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