CINCINNATI – The Port of Greater Cincinnati Development Authority is lending a hand to another potential apartment project Downtown, this time a 15-story, 130-unit complex slated for the corner of Sycamore and Eighth streets.
The port authority, an economic development agency, will acquire the project site and lease it back to NAP Sycamore LLC, an affiliate of North American Properties, the developer, as part of an incentive deal. That will allow NAP to save on construction materials, among other gains, since the port authority is exempt from paying sales tax.
It's at least the second such structured lease approved by the port in recent months – and port authority officials say it's a deal that could become more common. In July, the port's board of directors approved a purchase-leaseback for the former School for Creative and Performing Arts building at 1310 Sycamore St. in Pendleton, which is being converted into a 142-unit apartment building by CSCPA, an affiliate of Core Redevelopment, the Indianapolis-based developer that purchased the property back in 2012.
The latest project at Eighth and Sycamore, the old American Red Cross site, includes the construction of a 15-story building with roughly 130 market-rate apartments. The housing units are just one component of the mixed-use development; the port's ownership interest lies solely on the residential side, officials said.
The rest of the project, being built by Cincinnati Center City Development Corp. or 3CDC, will include parking and commercial use. The parking garage on Seventh Street between Sycamore and Broadway has been demolished, and a 500-space garage – nearly double what previously existed – is being built in its place along with approximately 10,000 square feet of first floor, street-level commercial space.
Susan Thomas, vice president of public finance for the port authority, said their deal with NAP Sycamore would close rather quickly – sometime this month. Construction on the apartment units, however, won't start until spring.
Short-term, the port will earn an upfront fee of approximately $85,000, Thomas said, as well as "a small amount rent payment."
"This is another situation where the city (of Cincinnati) has asked us to do this, and the developer has been very interested," she said. "Because the port authority is a public agency….because we are viewed as the economic development engines…we do not pay sales tax on construction materials. So it's a decrease in the cost to construct, but what's interesting, often times what we're really decreasing is the amount of direct subsidies that have to be made by the municipality."
The city of Cincinnati did approve a $3.5 million grant in June to North American Properties for the design and construction of the apartments.
Total project consideration is $40 million. The port authority will have a long-term lease with NAP Sycamore; NAP has the option to terminate the agreement on any date four years after completion, per the terms.
Further, Thomas said city of Cincinnati officials are increasingly offering such structured lease agreements with the port authority as part of their incentive packages. Laura Brunner, port president and CEO, said other projects "are in the pipeline," meaning such votes by the port authority's board of directors could become more frequent.
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