Authority signs off on bigger loan to redevelop Schoen building
Updated On: May 02 2013 05:32:21 AM CDT
The authority overseeing projects in Allentown's Neighborhood Improvement Zone signed off on a developer's revised loan application asking for an extra $3.25 million to revitalize the former Schoen's Furniture Store.
The Allentown Neighborhood Improvement Zone Development Authority voted unanimously on Wednesday afternoon to back Charles Street Capital's loan application to National Penn Bank for up to $8.6 million.
In February, the authority was told Charles Street would need to borrow $5.35 million to do redevelop the six-story building at 612 Hamilton St.
Charles Street Capital's Doug Brown, who described himself as "the senior and passive partner" in his son Jeffrey's company, explained why more money was needed. "It's a 1920s building," he said. "It's not [a] green-field construction [project], it's a renovation."
Brown also said the project is not a financial slam dunk for Charles Street. "I have a lot of sleepless nights," he told the authority. "But we feel good about [the project]. We're prepared to go."
The authority will have no responsibility for the bank loan Charles Capital will get for the project. But by getting the authority's approval, Charles Capital will not have to pay earned income taxes on up to $302,000. That money will be used to help pay the Schoen project's debt service.
Should the earned income taxes exceed $302,000 by 25 percent or more, the money would go into an account controlled by the authority and be used for projects to upgrade neighborhoods in the arena district.
"If the NIZ revenues come in like we're told they will, in the long term we will do just fine," Brown said.
Brown said he and his family have put down roots in the Allentown area, and are committed to helping rebuild the downtown. "If this was in Cleveland, you would not see me standing here," he said.
Brown updated the authority about the tenants who will occupy the building. Douglas Pelletier and his software company, Trifecta Technologies, of Lower Macungie Twp., Lehigh Co., will lease the top three floors of the building, and the project's general contractor, Shane Patrick Associates Inc., of Allentown, will be moving its offices to the second floor.
Negotiations are still underway for the tenant who will operate a restaurant-pub on the ground floor, Brown said.
The third floor "is not spoken for yet," he pointed out. "We're holding off, because we don't want to be selling from an empty cart."
Authority chairman Seymour Traub and authority member J. Robert Lovett each had words of encouragement for Brown.
Traub called Charles Capital's plan "a great re-use of a building" and said the project "is a great example of how the NIZ works."
Lovett said, "This kind of project is appropriate for the NIZ because it's something nobody would do otherwise. You're pretty brave."
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