But the city of Dayton has agreed to loan $10 million to a development partnership that says it now has secured nearly all of the financing it needs for a $95 million rehab of the southern portions of the arcade.
Seven buildings will be turned into housing, an arts hub, a tech and innovation hub and retail, restaurants and other uses.
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“This is a great day for Dayton,” said Bill Struever, CEO of Cross Street Partners, the lead development partner. “Our partners and members of the Cross Street team applaud the city commissioners for believing in this project and visualizing possibilities that will breathe new life and energy into the downtown business district.”
The city of Dayton on Wednesday agreed to loan $10 million to a project to revitalize the Dayton Arcade as part of a development agreement.
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The agreement requires the developer to begin construction on the commercial components of southern portion of the arcade by the end of this year and finish up by March 31, 2020.
However, the developer says the goal is to finish those parts of the project by November of next year.
The agreement also requires work on the residential parts of the arcade to begin by the end of this year and be completed no later than June 30, 2020.
“We are looking to close (on financing) late this summer, and deliver occupancy by November of 2019,” Struever said.
The project will create a 90,000-square-foot innovation center that is a joint collaboration by The Entrepreneurs Center (TEC) and the University of Dayton.
It also will create an arts hub and 116 affordable and market-rate housing units for artists and creative entrepreneurs.
WATCH: You have NEVER seen the Dayton Arcade like this, and it will amaze you
As part of the development agreement, the city is making up to $2 million available via an early release to help pay for preliminary demolition and pre-construction work inside the arcade complex. That work is expected to help get more exact construction bids.
The agreement says the city’s loan may be forgiven at the end of seven years if certain conditions are met, including benchmarks for job creation and if there are no developer defaults.
The south arcade project will create a UD-anchored innovation and entrepreneurial center and community serving retail, as well as housing.
The second phase will focus on the Third Street arcade and will create a culinary and kitchen incubator program, retail and restaurant space, creative co-working space and market-rate “micro-loft” apartments.
The arcade will bring together major arts organizations under one roof and will be home to a cluster of restaurants and retail, including a custom craft brewery, a fresh market and deli and a local coffee shop, city documents show.
Potential tenants include Warped Wing Brewery, Feelohs market and deli (an idea of the owner of Carmen's Deli & Bistro), Boston Stoker coffee shop, Salon J Ladner and the Dayton Visual Arts Center (DVAC). The owners of The Eagle restaurant, with locations in Cincinnati, Columbus and two other cities, are exploring opening a location in the arcade.
The iconic Rotunda would be restored and turned into a public event space and destination, available for festivals, performances, pop-up retail, talks, product launches and other activities, city documents state. A new theater and a “shark tank” for business pitches would open on the lower level of the rotunda.
MORE: Through the years: Downtown Dayton Arcade
Struever said essentially the development team has all of the funding sources lined up with term sheets.
He said there are more than 10 funding sources for the arcade project.
Struever said they are still pursuing a $500,000 grant from the Dayton Business Committee and some funding from JobsOhio. But they’ve obtained tens of millions of dollars in tax credits and other incentives.
There’s still a lot of work to do to get to the closing, but the finish line is not far away, Struever said.
“We’ll be busy beavers … but we’re going to get everything wrapped up,” he said.
If the arcade was demolished, as some people wanted, it would have cost between $10 million to $12 million and an important part of Dayton’s history and a beautiful group of buildings would be lost, supporters said.
The project has come too far to fail, officials said, because that would mean the loss of tens of millions of dollars in state, federal and local support for what will transform a big part of downtown and will be tech hub and activity center for entrepreneurship.
“It would cost the city upwards of $12 million to tear down the Arcade, but the commissioners’ decision to preserve undoubtedly one of Dayton’s most significant and emotional historic structures creates an opportunity to develop a catalyst for change,” added David Williams, senior director of development for Cross Street Partners.
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