Could Richford Arms upgrade plan get a $1.7 million city loan? Erie City Council will decide

The city of Erie has already signed off on a $750,000 loan for an extensive renovation of downtown’s Richford Arms apartment complex expected to cost more than $27 million.

Now, Mayor Joe Schember’s administration wants Erie City Council to approve an even larger financial assist for the project.

Three resolutions on Erie City Council’s Wednesday meeting agenda, if approved, would allocate an additional $1.7 million for the improvements in the form of a 30-year, zero-interest loan.

Upgrades proposed: New entrance, 2-story addition part of $25 million renovation plan at Erie's Richford Arms

The loan is for Beacon Communities, the Boston-based owner of the 100-unit complex at 515 State St.

The company plans extensive renovations at the property including a new entrance for residents; a raised outdoor terrace with seating, planters and lighting; and various other upgrades.

Preliminary work has begun at the apartment complex, according to Beacon Communities officials.

Richford Arms tenants range from people in their mid-20s to seniors in their early 90s. Tenants receive Section 8 rental subsidies or other assistance through the federal Department of Housing and Urban Development.

The bulk of the Richford Arms work is funded by an unspecified amount of tax-credit financing from the Pennsylvania Housing Finance Agency.

Renee Lamis, Schember’s chief of staff, said the city agreed to provide the additional loan to the project because “there was some gap” regarding Beacon’s tax credit financing for the project.

The Erie Times-News previously reported that Beacon Communities was seeking at least $12 million in housing tax credits from PHFA.

Such tax credit programs allow businesses to invest in housing-related projects and, in exchange, those businesses get a percentage of their financial investment back via tax credits.

Lamis said the project complements other recent, multimillion-dollar downtown investments by groups such as Erie Insurance, the Erie Downtown Partnership and the Erie Downtown Development Corp.

Perry Square improvements: Bathrooms, drinking fountain, new tables among ongoing, upcoming upgrades

Office complex: Take a look inside Erie Insurance's new $147 million Thomas B. Hagen Building

EDDC update: Downtown Erie's Flagship City Food Hall lineup changes as opening draws near

“We are committed to helping Beacon Communities to make this renovation happen,” Lamis said. “It's a great project for downtown that will improve the quality of life for the residents of Richford Arms.”

Josh Cohen, Beacon's director of development, said in a statement that tax credit financing provides roughly $1.2 million annually for 10 years, for a total of about $12 million.

Cohen said a "bridge loan & permanent financing" will also fund the project, expected to cost $27.3 million.

“We are thrilled and honored by the city of Erie’s commitment to the renovation and preservation of this critical affordable housing community," Cohen said.

"A variety of factors, including turbulence in the construction materials and labor markets related to the COVID-19 pandemic, created a last-minute funding gap," Cohen said. "We are grateful for the city’s fast and definitive actions to keep this important renovation project on track.”

Federal dollars

The city loan to Beacon Communities is being made available at 0% interest and would have to be repaid within 30 years, said Debra Smith, the city’s director of economic and community development.

Smith said the $1.7 million comes from three federal sources: Home Investment Partnerships funds, money from the Community Development Block Grant program and dollars allocated to the city via the Coronavirus Aid, Relief, and Economic Security Act.

The money used to provide the loan to Beacon Communities from those three sources, Smith said, was allocated to the city between 2017 and 2021 but was not spent on other projects.

HOME funds are used by the city on projects that emphasize homeownership opportunities, promote the stabilization of neighborhoods and help develop rental properties for low- and moderate-income residents.

Erie uses CDBG funds each year for community projects such as street paving, sidewalk improvement, housing programs and homeless shelters, as well as to partially fund a number of local nonprofit social service agencies and Erie’s community centers.

The city typically gets more than $3 million in CDBG and HOME funds, combined, each year.

CARES Act dollars are emergency funds the city received in 2020 because of the COVID-19 pandemic.

Erie received roughly $3 million in CARES Act funding in 2020.

Beacon Communities previously secured a $750,000 loan of HOME dollars from the city to help with the renovations.

Smith said, however, that Beacon Communities “came back to the city because of different factors” regarding financing. “So we moved some money around to help them.”

Federal guidelines allow the city to loan the money to Beacon Communities at zero interest, Smith said, because the funds are being used to create or improve affordable housing.

Project details

City Councilwoman Kathy Schaaf said she supports the new $1.7 million loan.

“It would be a shame not to see (the project) completed in the way it was designed,” Schaaf said. “Think of all the people who live there now.”

Cohen has said the construction work at Richford Arms would take about 18 months to complete and that no Richford Arms residents will be permanently displaced by the renovations.

"We have mobilized on site and began preliminary site work," Cohen said. "Upon full financial closing, the full construction scope will begin in the residential building.

"Residents will be temporarily relocated to vacant host units within the building while units are renovated on a floor-by-floor basis," Cohen said.

The planned improvements also include a new two-story addition to the north of the building, at the site of Richford Arms' existing parking lot, that would include kitchen space, a television room, new laundry room, a wellness/fitness center, support offices and storage, as well as six new apartments.

Also included are improvements to the building’s ground floor retail storefronts, new common areas for wellness programs; and renovations to various apartments and corridors.

The building was formerly the 400-room luxury Ford Hotel, which opened in May 1928 touted as “Erie’s first fireproof hotel." It later became known as the Richford Hotel.

City Council meets Wednesday at 7:30 p.m. in the Bagnoni Council Chambers at City Hall, 626 State St. The meeting can be viewed on the city's YouTube page.

Contact Kevin Flowers at kflowers@timesnews.com. Follow him on Twitter at @ETNflowers.

This article originally appeared on Erie Times-News: Proposed upgrades at Erie's Richford Arms could snag $1.7M city loan