Transcript Using Tax Credits in Retool for the Next Economy Panel

221 McKibbin Street
Industrial Center
IPED – Using Historic Tax
Credits in New York
June 24, 2009
GMDC
221 McKibbin St
Greenpoint Manufacturing & Design Center
•
GMDC is the premier nonprofit developer of
industrial space in New York City.
•
Since 1992, GMDC has redeveloped over 700,000
square feet of space for small and mid-sized
manufacturers, artisans and artists.
•
GMDC currently houses more than 100 businesses
employing more than 500 people in blue collar and
creative industries.
GMDC
221 McKibbin St
Greenpoint Manufacturing & Design Center
• GMDC is a pioneer in photovoltaics, having installed 115 kW of solar power on its
buildings since 2002.
• We remain the largest commercial provider of solar power in New York City.
GMDC
221 McKibbin St
Industrial Redevelopment Context
• Flow of artists into North Brooklyn in the
1980s and 1990s facilitated gentrification
of Williamsburg and Greenpoint.
• Cost of industrial buildings in Brooklyn
appreciated between 200% and 400%
between 2000 and 2007.
• 2005 waterfront rezoning and conversions
of industrial property to residential uses
accelerated speculation and squeezed
industrial and artisanal businesses.
GMDC
221 McKibbin St
221 McKibbin Street Acquisition
•
In 2005 GMDC found 221 McKibbin Street,
a 72,000 square foot dilapidated furniture
factory.
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The seller, who once employed 100 people,
had largely closed down his manufacturing
operation and become an importer of Asian
furniture.
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The property, built between 1850 and
1930, was in very poor condition and
therefore presented a more affordable
option than most industrial properties then
on the market.
•
Project was possible because of a new
“Industrial Acquisition Fund” created by the
NYC Council as one of the community
benefits negotiated at the end of the
rezoning process, allowed GMDC to write
down the purchase price by $4 million.
•
GMDC negotiated a “bargain sale” with the
owner, purchasing the building at $5.5
million, $1.2 million below the appraised
value, which the owner then received as a
tax write off.
GMDC
221 McKibbin St
First Closing
•
After securing a commitment for the $4 million in
acquisition funds from New York City Council,
GMDC closed on acquisition and construction
financing in June 2007.
•
Sovereign Bank provided first position financing.
•
The New York City Investment Fund provided
bridge financing for the City Subsidy, which
required an extensive series of approvals through
NYC EDC.
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Construction commenced in August 2007.
GMDC
221 McKibbin St
Revealing Conditions
Demolition uncovered previously hidden site conditions, including:
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Extensive structural fire damage to roof joists
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Unanticipated roof work
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Deflecting roof perlins
•
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Masonry damage
Underground storage tanks not identified in the Phase I
Report
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Extensive concrete slab damage
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Compromised elevator hoist beam
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Discovered abandoned boiler room
GMDC
221 McKibbin St
The Search for Tax Credits
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GMDC planned to look for New
Markets and Historic Preservation Tax
Credits even before first closing.
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Spoke to many prospective CDE’s,
but faced problems with pre-leasing
requirements and lack of credit
tenants, both of which are largely
unavailable in world of small and
mid-sized manufacturers.
•
Developed relationship with Portland
Family of Funds (United Fund
Advisors).
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PFF brought in Citibank as second
CDE and investor; Citi brought in
Seedco.
•
New Markets and Historics were
combined.
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All funds were leveraged through the
New Markets structure.
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Deal negotiated during first stages of
the credit crisis and in the middle of
construction.
GMDC
221 McKibbin St
Historic Preservation
•
Original building constructed between 1850 and 1870 by H. Lawrence and Sons as the spinning house of a
ropewalk.
•
The property is the last remaining structure of its kind in Brooklyn, which was once a center of the maritime
ropemaking industry.
•
Approval of historic preservation work took place during construction, meaning adjustments had to be made
to plans throughout the process depending on the feedback from
SHPO and NPS.
•
Building will now be placed on the National Register of Historic Places.
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Historic restoration work included:
• reopening windows and skylights
• restoring the 1930s era steel multi-light windows
• removal of the exterior stucco layer on the ground floor
• repair and repointing of the historic brick façade and interior
• replacing the original, dilapidated tin ceiling in the Columbia
Products section of the building.
GMDC
221 McKibbin St
Construction Scope
Renovation included:
Façade West View Before
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Complete façade and window restoration
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Extensive structural work
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Roof replacement
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Environmental remediation
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Installation of all new systems (heating, electrical,
and elevator).
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Subdivision of the building into 1200 – 7000 square
foot units.
Façade West View After
Stairway During
Stairway After
GMDC
221 McKibbin St
Development Cost Summary
Acquisition
Hard Costs
$5,500,000
$6,750,000
Unit 6 During
Soft Costs
Financing and Tax Credit Costs
$2,250,000
$3,300,000
Unit 6 After
GMDC
221 McKibbin St
Project Benefits
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100 full-time jobs during construction
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100 permanent jobs when it is fully leased up.
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$17.8 million of direct investment
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$181 million total economic impact (based on IMPLAN
analysis)
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High percentage of local employees, often from the
immediate surrounding community.
•
Employers provide living wage jobs, often with benefits.
GMDC
221 McKibbin St
Project Goals and Accomplishments
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Created new workspace for businesses that face displacement from rezonings, real estate conversions
and speculation.
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Renovated and repurposed a historic structure in a blighted area.
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Provided space for 15 small local businesses employing more than 100 low-income and immigrant New
Yorkers in living-wage jobs.
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Offer long-term, below-market leases to small, locally-owned businesses.
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16 kW photovoltaic system to be installed on front peak roof.
GMDC
221 McKibbin St
Current Tenancies Include
• Display fabricator
• Woodworkers
• Architectural millworker
• Printer
• Metal finisher
• Commercial Artists
GMDC
221 McKibbin St
Partners
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Greenpoint Manufacturing & Design Center Local Development
Corp.
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United Fund Advisors
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Citibank Community Capital
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Seedco Financial
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New York City Investment Fund
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Sovereign Bank
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New York City Economic Development Corporation
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New York City Industrial Development Agency
Architects
• Oaklander, Coogan & Vitto Architects
Construction Manager
• Westerman Construction
Thank You
www.gmdconline.org