“We are hoping we are successful next time, but we are also figuring out some Plan Bs,” said Dave Williams, vice president of urban development with Miller-Valentine Group, which is one of the development partners on the arcade project.
The state gave the arcade rehab project a validated score of 85 out of 100 points, which was higher than all but three other projects across Ohio. More than 40 developers applied for historic tax credits in the most recent funding round.
But another local adaptive-reuse project earned 2 points more than the arcade, making it the top-scoring project in Dayton, which came with the reward of additional points.
Twice a year, the Ohio Development Services Agency allocates historic preservation tax incentives to projects that will rehab historic buildings. The program is highly competitive.
In the fall round, about 44 applicants requested more than $74 million in historic tax incentives. Last month, the agency awarded $22.8 million in credits to 18 of those applicants.
The new owners of the Centre City building, located on South Main Street in downtown Dayton, asked for and received $5 million in credits for an adaptive-reuse housing project. The owners plan to create 164 market-rate apartments and first-floor commercial space in the empty office tower.
But the Dayton Arcade’s request for $5 million in credits was unsuccessful, which surprised and disappointed some developers, city officials and elected leaders.
The arcade is one of the projects at the center of a redevelopment plan for a nine-block section of downtown.
The state’s scorecard reveals that the Centre City project just barely edged out the arcade in two categories: the amount of investment leveraged and the job commitments.
By earning the top score in Dayton (87 points), Centre City was awarded seven additional points, lifting its final score to 94 points.
The state gives additional points to the top-scoring project from every unique city or township.
The arcade earned a higher validated score than winning projects in Cleveland (a score of 81 led to $5 million in credits) and Columbus (a score of 83 resulted in nearly $2 million in credits). But the arcade lost to tough local competition.
According to the state’s scoring system, the Centre City project had a higher return on investment than the arcade’s because it costs more. Centre City was $46.4 million, compared to the arcade’s $41.5 million price tag.
But the arcade sought $5 million in credits for just the first phase of the complex’s redevelopment. Rehabbing the entire complex was broken into smaller stages for financing reasons and so it would be eligible for multiple rounds of state historic tax credits. The initial phases could top $70 million.
“There was nothing we could do about it, because a project is only as big as it is,” Williams said. “We had to break this thing up into allowable, bite-sized pieces.”
City officials and developers are optimistic that the arcade is a strong candidate for credits in a future funding round. They said they are are encouraged by the fact that the project just narrowly missed the cut in the last go-around.
After a tour of the complex, State Sen. Peggy Lehner, R-Kettering, and Rep. Niraj Antani, R-Miamisburg, said they would both send letters in support of redeveloping the arcade when developers seek tax credits once more.
Projects that unsuccessfully sought historic tax incentives in earlier funding rounds won them in later rounds, said Penny Martin, a spokeswoman with the Ohio Development Service Agency.
The state offers tax credit awards of different amounts in three category groups to help diversify the types of projects that win support, she said.
“If an applicant doesn’t receive funding in a round, and they want to talk to us about their application and score and learn more about how they can try to improve their chances, we’re happy to talk to them about that,” Martin said.
She added, “If a project doesn’t score high enough to be funded, we’re here to talk to people about their application and what might help their application if they apply again.”
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