The company also does not yet own the Arcade, though it is under contract to buy the complex for $639,000.
If the project moves forward, the developer will have to address a $529,400 delinquent tax bill that is attached to the property.
“There’s a lot of moving pieces here,” said Josh Parker, principal with Cross Street Partners. “We are 100 percent committed to moving forward with the artist housing components of the project … and we’re continuing on the planning with the rest of it.”
Miller-Valentine Group, Cross Street Partners and the city of Dayton are working to redevelop the long-vacant Dayton Arcade. Miller-Valentine is a local firm. Cross Street Partners is based in Maryland.
The development team earlier this month was awarded $20 million in low-income housing tax credits to help create more than 125 apartments aimed at artists and creative types, as well as other amenities.
The city of Dayton also has committed $1 million from its federal HOME allocation to help fund the project. The distribution requires city commission approval.
Developers also plan to request about $1.9 million in state historic tax credits for the initial $15 million housing rehabilitation project, according to documents filed with the state. The developers also intend to obtain federal historic tax credits, which are noncompetitive.
The deadline to apply for state credits is Sept. 30, and awards will be announced by the end of the year.
Development officials have said they want to secure state historic tax credits for multiple phases of the Arcade renovation.
CONTRIBUTED
“We feel very good about the chances for state historic tax credits given the iconic nature of this building,” said Parker, with Cross Street Partners.
Cross Street Partners created SHPS Investors LLC, which is under contract to buy the Arcade from Gunther Berg.
In March 2009, Gunther Berg and Wendell Strutz of Plymouth, Wis., were the only people to bid on the Arcade complex at a sheriff’s tax lien sale. They paid about $1,000 for the property. They also were required to pay a $614,000 tax lien.
They formed the Dayton Arcade LLC, which paid off the delinquent property taxes and took ownership of the property. Funds were raised from some local and out-of-state investors.
Berg has a 50 percent ownership interest in the complex, as well as an irrevocable option to purchase the remaining 50 percent from the other investors.
SHPS Investors has tentatively agreed to pay Berg $639,000 for the property, which he has vowed to use to repay five parties who invested in the previous effort to revive the complex.
SHPS has provided Berg with a down payment. The company has until April 15, 2017, to close on the sale. SHPS has the right to cancel the deal at any point.
“Our goal is to make these folks whole as soon as we can and get this project off the ground,” said Parker.
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If developers obtain state tax credits and move forward with the project, they will still have to contend with a delinquent tax bill. Berg has only made one payment on the complex’s delinquent taxes since 2009, paying $21,600 in 2013, said Kate Evans, Montgomery County assistant treasurer for delinquency.
The back taxes have grown to more than $529,000 including this year’s bill, and they will stay attached to the property after a sale, she said.
“Half a million dollars is a lot of money, and it’s meaningful tax money that would go to the schools,” she said.
Parker said his company believes strongly in the future of Dayton and the potential the Arcade has to help re-energize downtown. More hurdles stand in the way of the project’s success, but Parker and other officials are optimistic the economics will work out.
“The proof is in the pudding: We’ve got to get to work and execute on this project and demonstrate that downtown can again be a really exciting place for businesses and residents, who have already started to buy into that,” he said.
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