221 McKibbin Street Industrial Center IPED – Using Historic Tax Credits in New York June 24, 2009

Greenpoint Manufacturing & Design Center GMDC is the premier nonprofit developer of industrial space in New York City. Since 1992, GMDC has redeveloped over 700,000 square feet of space for small and mid-sized manufacturers, artisans and artists. GMDC currently houses more than 100 businesses employing more than 500 people in blue collar and creative industries. 221 McKibbin St GMDC

Greenpoint Manufacturing & Design Center GMDC is a pioneer in photovoltaics, having installed 115 kW of solar power on its buildings since We remain the largest commercial provider of solar power in New York City. 221 McKibbin St GMDC

Industrial Redevelopment Context Flow of artists into North Brooklyn in the 1980s and 1990s facilitated gentrification of Williamsburg and Greenpoint. Cost of industrial buildings in Brooklyn appreciated between 200% and 400% between 2000 and waterfront rezoning and conversions of industrial property to residential uses accelerated speculation and squeezed industrial and artisanal businesses. 221 McKibbin St GMDC

221 McKibbin Street Acquisition In 2005 GMDC found 221 McKibbin Street, a 72,000 square foot dilapidated furniture factory. The seller, who once employed 100 people, had largely closed down his manufacturing operation and become an importer of Asian furniture. The property, built between 1850 and 1930, was in very poor condition and therefore presented a more affordable option than most industrial properties then on the market. Project was possible because of a new “Industrial Acquisition Fund” created by the NYC Council as one of the community benefits negotiated at the end of the rezoning process, allowed GMDC to write down the purchase price by $4 million. GMDC negotiated a “bargain sale” with the owner, purchasing the building at $5.5 million, $1.2 million below the appraised value, which the owner then received as a tax write off. 221 McKibbin St GMDC

First Closing After securing a commitment for the $4 million in acquisition funds from New York City Council, GMDC closed on acquisition and construction financing in June Sovereign Bank provided first position financing. The New York City Investment Fund provided bridge financing for the City Subsidy, which required an extensive series of approvals through NYC EDC. Construction commenced in August McKibbin St GMDC

Revealing Conditions Demolition uncovered previously hidden site conditions, including: Extensive structural fire damage to roof joists Deflecting roof perlins Masonry damage Compromised elevator hoist beam Unanticipated roof work Underground storage tanks not identified in the Phase I Report Extensive concrete slab damage Discovered abandoned boiler room 221 McKibbin St GMDC

The Search for Tax Credits GMDC planned to look for New Markets and Historic Preservation Tax Credits even before first closing. Spoke to many prospective CDE’s, but faced problems with pre-leasing requirements and lack of credit tenants, both of which are largely unavailable in world of small and mid-sized manufacturers. Developed relationship with Portland Family of Funds (United Fund Advisors). PFF brought in Citibank as second CDE and investor; Citi brought in Seedco. New Markets and Historics were combined. All funds were leveraged through the New Markets structure. Deal negotiated during first stages of the credit crisis and in the middle of construction. 221 McKibbin St GMDC

Historic Preservation Original building constructed between 1850 and 1870 by H. Lawrence and Sons as the spinning house of a ropewalk. The property is the last remaining structure of its kind in Brooklyn, which was once a center of the maritime ropemaking industry. Approval of historic preservation work took place during construction, meaning adjustments had to be made to plans throughout the process depending on the feedback from SHPO and NPS. Building will now be placed on the National Register of Historic Places. Historic restoration work included: reopening windows and skylights restoring the 1930s era steel multi-light windows removal of the exterior stucco layer on the ground floor repair and repointing of the historic brick façade and interior replacing the original, dilapidated tin ceiling in the Columbia Products section of the building. 221 McKibbin St GMDC

Construction Scope Façade West View Before Façade West View After Renovation included: Complete façade and window restoration Extensive structural work Roof replacement Environmental remediation Installation of all new systems (heating, electrical, and elevator). Subdivision of the building into 1200 – 7000 square foot units. Stairway AfterStairway During 221 McKibbin St GMDC

Acquisition$5,500,000 Hard Costs$6,750,000 Development Cost Summary Soft Costs$2,250,000 Financing and Tax Credit Costs$3,300,000 Unit 6 During Unit 6 After 221 McKibbin St GMDC

Project Benefits 100 full-time jobs during construction 100 permanent jobs when it is fully leased up. $17.8 million of direct investment $181 million total economic impact (based on IMPLAN analysis) High percentage of local employees, often from the immediate surrounding community. Employers provide living wage jobs, often with benefits. 221 McKibbin St GMDC

Created new workspace for businesses that face displacement from rezonings, real estate conversions and speculation. Renovated and repurposed a historic structure in a blighted area. Provided space for 15 small local businesses employing more than 100 low-income and immigrant New Yorkers in living-wage jobs. Offer long-term, below-market leases to small, locally-owned businesses. 16 kW photovoltaic system to be installed on front peak roof. Project Goals and Accomplishments 221 McKibbin St GMDC

Display fabricator Woodworkers Architectural millworker Printer Metal finisher Commercial Artists Current Tenancies Include 221 McKibbin St GMDC

Partners Greenpoint Manufacturing & Design Center Local Development Corp. United Fund Advisors Citibank Community Capital Seedco Financial New York City Investment Fund Sovereign Bank New York City Economic Development Corporation New York City Industrial Development Agency Architects Oaklander, Coogan & Vitto Architects Construction Manager Westerman Construction 221 McKibbin St GMDC

Thank You