The ability to tap into historic tax credits and the potential for future growth in downtown Wilson led developers to start the first residential project in the heart of the city.
A significant amount in historic tax credits paved the way for the project, which would have been difficult to achieve without the federal and state credits, said Patrick Reilly, managing partner of Rehab Development. “Without these credits, these projects would not be viable,” Reilly said.
Nash Street Lofts, planned at 215 E. Nash St. in the former Western Auto building includes the construction of 13 apartments inside the three-story 1884 brick building. In addition to historic tax credits, the project will receive $550,000 in federal grant funds that U.S. Rep . G.K. Butterfield secured in 2009 for the development of the historic building, said Kimberly Van Dyk, downtown manager for the city of Wilson.
Reilly said the historic tax credits were the key selling point for the project because lending institutions view the credits as equity.
“Historic tax credits are one of the primary drivers that can facilitate a redevelopment effort like what we’re doing at Nash Street Lofts,” he said. “Without those credits, it would be much more difficult for lending institutions to make these projects happen. It’s an equity source.
“A historic tax credit is not a tax subsidy. It is a cash-positive driver definitely for the Internal Revenue Service. It’s definitely a permanent job creator.”
The project is estimated to cost between $1.3 and $1.5 million and most, about $1.3 million, is expected to be viewed as a qualified rehabilitation expense that should lead to 20 percent in state and 20 percent in federal historic tax credits, Reilly said.
“I have no doubt that we will be approved,” he said.
The infusion of historic tax credits is important not only as a financial driver for the project but also because the property, when finished, will not be assessed a value that’s equal to the renovation cost, Reilly said.
CommunitySmith and Rehab Developers have formed Nash Street Lofts, a limited liability company, and are partnering on the project to renovate the three-story building. Nash Street Lofts purchased the building on Feb. 1 for $50,000 from Wilson Downtown Properties, the real estate arm of the Wilson Downtown Development Corp., Reilly said. Nash Street Lofts will also pay another $50,000 for the property after the apartment complex starts generating revenue.
Nash Street Lofts is committed to finishing the project by the end of the year, even though there is a deadline of February 2014 as part of its agreement with the city of Wilson. The company is also required to spend more than $1 million on the project, above the property’s assessed value of about $56,000. The city of Wilson previously owned the property but conveyed it to WDP, with requirements for development.
The project will be the first of its kind in downtown Wilson and a long-standing goal of WDDC and the city of Wilson. Pulling the pieces together took a coordinated effort.
“If it were not for the cooperation from the city and the people in (the WDDC) office, we would not be where we are today,” Reilly said. “They are as forward-thinking and cooperative as any city, municipality, I’ve worked with.”
One of the drawing cards that helped secure the developer’s interest is downtown revitalization plans that are connected to the future Vollis Simpson Whirligig Park. Other efforts to create an artisan district and increase retail, restaurant and other development were all part of the draw, Van Dyk said.
“They became particularly interested in Wilson because they heard about the whirligig project and the artisan district we want to develop,” Van Dyk said.
Rehab Development has been involved in other downtown revitalization projects and Wilson is its third main street revitalization project since 2009. The company completed two projects in downtown Henderson that led to upper loft residential units and lower-level retail space, similar to what’s planned in Wilson. The company received federal Main Street Hope VI grants for the project.
The apartments in downtown Henderson are almost always full, Reilly said. He anticipates the same in Wilson.
“Based on our own experience and the overall socioeconomic feel, we believe there’s going to be a market for these apartments in the future,” Reilly said of the Nash Street Lofts. “General feedback from the public is that there’s an interest.”
Nash Street Lofts will include the construction of 13 apartment units available for rent. The first floor will have two live-work units that include retail space to the front of the building, facing Nash Street, with a studio apartment at the rear. The first floor will also have two more one-bedroom units, at close to 500 square feet of space each. The live-work units will each have between 800 and 900 square feet of space total.
The second floor will have one two-bedroom loft, at close to 1,000 square feet of space, and four one-bedroom lofts ranging between 600 and 800 square feet each. The third floor is planned to have two one-bedroom units, ranging from 600 to 700 square feet, and two, two-bedroom units with close to 1,000 square feet.
After the project is complete, the developers will hire a manager to oversee the property and to handle marketing efforts. Rental costs will be based on market rates.
If the project goes well, Rehab Development and CommunitySmith may invest in another similar project in downtown Wilson.
“It’s an exciting project and we’re excited about being in Wilson,” Reilly said. “The difference it can have on downtown and the main street area is incredible.”