A pair of major downtown projects received the financing help they need to get off the ground Wednesday from the Buffalo Enterprise Development Corp.'s loan committee.
The Root Building, located at 86 W. Chippewa, and the Arcade apartment complex, at 625-637 Main St., will be remodeled as a result of a $378,000 four-year loan at 4 percent annual interest approved for a firm called 86 W. Chippewa, L.P.
All but $28,000 of the funds will be used for the two buildings as part of the developers' $600,000 equity injection into the $5.84 million combined project.
Renovation of the Root Building, renamed Metropole (Greek for city center) and the Main Street construction are being funded together because the city convinced the U.S. Department of Housing and Urban Development they should be considered a single project in order to secure a $1 million Urban Development Action Grant that has been floating around since 1988.
"The UDAG originally had been designated for the L.L. Berger building," said Richard Velez, BEDC's chief loan officer.
HUD requires in this particular deal $600,000 in equity from the developer-owners. Partners in 86 W. Chippewa only can come up with $250,000, making the new loan necessary. The other $28,000 will be placed in a separate account to repay loan interest.
"To make the UDAG work, we had to agree to develop all of the Root Building," said Joseph Petrella, a partner in the project. "The money from BEDC is bridging the need to prepare the entire building and to begin actual construction at the site."
BEDC already has loaned the partnership $500,000 to help acquire the Root Building, bring the taxes up to date and to secure a $97,576 grant from the state.
The loan will be secured by a $378,000 letter of credit supplied by M&T Bank, along with junior mortgages on the land and buildings and improvements at both sites.
As envisioned by its developers -- the same group that renovated the former Nemmer Building into Buffalo City Centre -- the six-story, 72,000-square-foot Metropole's first two floors will house the Emerson High School culinary and hospitality program.
The top four floors will be dedicated to market-rate housing, renting from the mid $400 to upper $500 per month range, plus utilities. Of the 27 units, 24 will feature two bedrooms and three will offer one bedroom, Petrella said. Each will have more than 1,000 square feet of space.
The so-called Market Arcade facades project will include 10 loft-style market-rate apartments on the second and third floors totaling 13,600 square feet of space. The 7,500 square feet of street-level space will house the Irish Classical Theater and small retail shops.
The BEDC loan committee also approved a $49,500 seven-year loan for Antoinette Ayers, who will do business as A&L Ice Creamery/Luncheonette.
The business start-up, located in the Towne Garden Plaza, will sell prepared foods and drinks for on-site and takeout consumption.
Ms. Ayers will put $5,500 into the $55,000 project, with proceeds being used to purchase new equipment, furniture, fixtures and for working capital.
Any retail start-up carries an element of risk, and Velez told the loan committee this project is no expectation.
"But we feel the risk is mitigated by Ms. Ayers character, the rebirth of the Towne Plaza area, with a number of other retailers coming into the area along with substantial new housing, and the continuing commitment by the city to make improvements in the area," Velez said.
"Still, when you get right down to it, this is a character loan that we feel is worthwhile."