The Dayton Arcade, one of downtown’s most iconic properties, received a significant boost today when the state awarded the project an additional $4 million in historic tax credits.
The arcade closed 26 years ago, but a development group has been working to pull together financing for a more than $90 million overhaul of the historic complex, which sits in the heart of downtown along West Third Street.
INSIDE THE ARCADE: See amazing interior views
Developers have said that the additional $4 million in state tax incentives is one of the final puzzle pieces of its “capital stack,” and they wanted to announce by year’s end whether the arcade project is going to happen.
Transforming the massive complex into a mix of uses, including housing and an innovation hub, would reinvigorate a sleepy section of downtown and would be a catalyst for new investment in the center city, officials and developers say.
Skeptics say there have been many proposals for reviving the property — and all fell flat.
But no proposal has ever come this close to reaching the finish line, officials say.
“This is big,” said John Gower, urban design director of CityWide.
Today, the Ohio Development Services Agency announced it has awarded the Dayton Arcade $4 million in state historic preservation tax credits for a nearly $41 million project.
Developers propose to rehab the arcade in phases, beginning with new housing for artists and creative types and professionals, event spaces and a hub for entrepreneurs, students, faculty, businesses and other groups.
In June, the first phases of the project were awarded $5 million in state historic tax credits.
The $56 million early stages of renovation will focus on the southern buildings, including the rotunda and the Commercial and Fourth Street Apartment buildings. The Dayton Arcade consists of about eight interconnected buildings.
The tax incentives announced today will support the restoration of the Third Street Arcade and Gibbons Annex buildings.
“It’s really important,” Gower said. “Nine million dollars in state historic tax credits is a scale of an award that the Dayton area has never seen before.”
Miller-Valentine Group and Cross Street Partners, the development partners, want to make the Third Street Arcade into first-floor retail spaces and offices and small apartments on the upper levels.
The Third Street Arcade has a two-story, sky-lit retail arcade. The retail spaces will be filled by a collection of pop-up restaurants.
The McCrory building will house University of Dayton art programs in the basement and first floor, and its upper floors will have spaces related to the innovation center.
The proposed rehab of the arcade is expensive because of the complex’s deteriorated condition and the specialized construction needs to bring it back to life, according to the developer’s application for credits.
“Market conditions in Dayton will not support the cost without some outside incentive,” the application states.