The community group Middletown Moving Forward recently obtained nonprofit status and is now raising money from donors to create a loan fund for investing in key city revitalization projects.
The efforts will make the organization a bigger player in local development, its leaders say. Gap financing from Middletown Moving Forward, coupled with a downpayment and private bank loan can help developers raise the capital they need to make job-creating investments such as renovating empty buildings.
The goal is to raise a total pot of $5 million worth of commitments from financial institutions, community foundations or other sources, said the group’s Interim Director Calista Smith. City government has not pledged any taxpayer dollars at this time for the investment fund, Smith said.
“Anything we can do to bring activity to Middletown that’s positive is going to make it a better place to live and a better place to locate… businesses,” said Ken Cohen, board president of Middletown Moving Forward and president of local scrap metal recycling company Cohen.
Typically, gap financing provides lower-interest capital with lengthier payback terms than traditional business loans to applicants that qualify. It’s not meant to be the sole source of financing. Funds will help cover the cost of redevelopment in commercial areas, including downtown, around Middletown Municipal Airport/Hook Field and along the Cincinnati-Dayton Road thoroughfare, Smith said.
“We’re making the rounds as our team of board members are introducing the concept to various financial institutions,” she said.
Smith said the program has been modelled after other funding programs such as Cincinnati’s 3CDC, Hamilton’s CORE Fund, and the Catalytic Fund in Northern Kentucky.
“One thing we have is that we already have a number of projects already in the pipeline,” she said. “We believe our fund will be able to give out more loans to projects underway such as the Goetz Tower and Manchester Inn renovation projects.”
Smith said she hopes that a year from now, the organization will be able to start accepting loan applications for these projects and others that are in progress.
Denise Hamet, Middletown’s economic development director, said a funding mechanism to partner with and help bridge the gap between the amount of capital funds from the developer and the amount a bank is willing to loan will help to bring projects to fruition as well as create jobs.
“I think it builds collaboration in the community and sends the message that redevelopment in the community is a priority,” she said.
Hamet said many projects, such as rehabbing or renovating a building, tend to cost more money and take patience as they require more time to complete.
One example is the Goetz Tower, located at the southeast corner of Central Avenue and South Main Street. Hamet said it took three years to assist the group redeveloping the seven-story downtown building to acquire about $1.2 million in state and federal historic preservation tax credits to leverage with their lender’s financing for the venture. The redevelopment project will convert the second through the seventh floors into 24 market-rate apartments, as well as create retail, restaurant and other commercial space on the first floor. Construction is to begin in March and will take 18 months to complete.
Hamet also said the airport is another area where the city is stepping up its efforts. She said there is a need to build more hangars and other structures to possibly attract aerospace-based companies to locate there.
“New projects are emerging every day,” Hamet said. “Our message is that it takes a village to get a project off the ground.”
The Goetz Tower project will be key in continuing to revitalize downtown in conjunction with other projects such as the Manchester Inn renovation as well as the Snider Ford/Sonshine Building project to convert it into a microbrewery and brewpub, Hamet said.
“It’s all interconnected,” she said. “One (project) is going to help another.”
Middletown Moving Forward formed in 2005 as a community improvement corporation to advance, promote, and encourage industrial and commercial economic development activities. Its board members consist of private and public sector leaders.
Its board has met several times with Mike Dingeldein, executive director of the CORE Fund in Hamilton, he said.
Launched in December 2012, Hamilton’s Consortium for Ongoing Reinvestment Efforts (CORE) Fund is a private nonprofit that has raised more than $6 million to acquire blighted properties and make non-traditional loans to developers for projects in the area of High and Main streets.
Unlike CORE Fund, Middletown Moving Forward’s activities would not be restricted to downtown investment. Nor does the Middletown group have plans at this point to buy vacant buildings, Cohen said.
CORE Fund also has money available to make nontraditional loans, but has yet to issue its first one.
“I think what we’ve learned since we started is that we aren’t what we thought we would be just because we didn’t know how it would go,” Dingeldein said.
By taking the risk of acquiring buildings directly, the CORE Fund has been able to ready the properties for development — cleaning-up, doing some restoration work, settling liens and completing environmental studies — faster.
“For us clearly it’s been putting property and buildings and projects in a place where they can get legs under them. It’s real easy to imagine great projects, but it’s hard to get them up off the ground,” Dingeldein said.