What do you do with one million square feet of underutilized and vacant department store in your city center, with a building constructed in 1905? That’s the question community leaders in Rochester, New York needed solved with the Sibley Building, once the largest department store in America between New York City and Chicago. In May, Boston-based WinnDevelopment closed on financing of two separate QALICBs for the overall $68.95 million redevelopment component of the site, utilizing $42.51 million in New Markets Tax Credit (NMTC) financing from four Community Development Entities (CDEs) and a mix of public financing sources. The project also utilized more than $13.7 million in state and federal Historic Tax Credits and $1.8 million in loans from the City of Rochester and its Community Development Authority.
The project is proving to be a powerful example of successful partnerships between government entities, educational institutions and the private-sector development community and Sibley is demonstrating how NMTCs are addressing the needs of challenged communities. It is located within the Central Business District of Rochester and a census tract where the unemployment rate is 20.8% (2.63 times the national average) and has a poverty rate of 58.3%.
Sibley integrates meaningful retail, professional offices and health care services, apartments and business incubation space for high-tech research and development into Rochester’s city center and directly anchors the city’s Downtown Innovation Zone and addresses specific issues around engagement, heritage, transportation and neighborhoods outlined specifically in the City of Rochester’s 2014 Master Plan.
The plan includes 70,000 square feet of first-floor retail and hundreds of thousands of square feet of office space on the upper floors.
“This project will help create jobs and grow the local economy – all anchored in an important Rochester landmark,” said Governor Andrew Cuomo. “Repurposing and developing the Sibley Building is an important step for Rochester, and this transformation is a great example of what can be achieved through the Regional Economic Development Council process.”
The overall project funding package included NMTCs in the amount of $20 million of allocation from RBC Community Development, $12.4 million from Urban Research Park CDE, and $8.35 million from Community Impact Capital. PNC Bank, N.A. was the tax credit investor and also provided $1.76 million in NMTC allocation from its affiliated CDE. Furthermore, the project received funding from local and state resources to bring the project to fruition including an Empire State Development loan, funding from the Upstate Revitalization Initiative and Regional Economic Development Council, NYSERDA’s “Cleaner, Greener Communities” grant program and Brownfield Remediation funds. The adaptive reuse of this historic building will be constructed to LEED Silver standards.
The Sibley project won the support of New York Senator Charles Schumer who has been a leading proponent of the NMTC program in the United States Senate. At a December 2015 news conference discussing the need and impact of the New Markets Tax Credits program, Sen. Schumer, D-N.Y. said the tax credits are a critical piece of financing for the project. “Private sector alone led to a vacant downtown,” said Schumer, “[incentives] bring initial development here, and then the rent levels go up and desirability, and you don’t need any more credits. It grows on its own.”
Overall, the Sibley project is estimated to create 1,566 temporary construction jobs, 1,042 permanent FTE jobs, 75 market-rate apartments and 21 affordable apartment units and will spur an immediate direct catalytic investment of $148.4 million within the community. The project is expected to take between 14 months and 24 months to complete, with apartments available for lease beginning in the spring of 2018.
New York State has provided more than $10 million to HTR over the last four years through New York Governor Cuomo’s Regional Economic Development Council initiative, including $5 million towards the construction of their facility located within the Sibley building. The accelerator’s new hub at the Sibley Building provides support for start-up companies across the nine-county Finger Lakes region. The Center for Governmental Research projects that the accelerator’s efforts will create 1,000 direct jobs over the next five years.