With public agency's help, developer poised to buy Erie's Avalon Hotel, make it apartments
A multimillion-dollar makeover is getting closer for the Avalon Hotel, the declining eight-story landmark that takes up about half of a city block in downtown Erie.
A New York City developer is working with a subsidiary of the Erie County Redevelopment Authority to secure $45 million in bond financing to fund the renovation of the 193-room, 150,000-square foot Avalon into 219 market-rate apartments targeted to younger workers.
The Industrial Development Authority, an affiliate of the Redevelopment Authority, is scheduled to vote on Tuesday on issuing $45 million in bonds for the project, including the purchase of the Avalon, at 16 W. 10th St., between State and Peach streets. The vote is to occur immediately after the Industrial Development Authority holds a public hearing on the proposal, according to a legal advertisement published this week in the Erie Times-News and GoErie.
The meeting is at the offices of the law firm of MacDonald, Illig, Jones & Britton, 100 State St. in Erie. The public hearing starts at 10 a.m.
The Erie County Industrial Development Authority is to loan the $45 million in bond revenue to the Community Finance Corp., an Arizona-based nonprofit that is affiliated with the developer of the Avalon project, GoodHomesCo LLC.
The Industrial Development Authority is acting only as a conduit for the bond issue and is not underwriting the bonds or agreeing to accept any responsibility for their repayment, said Chris Groner, vice president of capital financing and lending at the Erie County Redevelopment Authority. He said the developer will be responsible for the repayment.
As a tax-exempt organization, the Industrial Development Authority can get better rates on bonds than more traditional agencies. Groner said the Avalon project will not be tax exempt. The authority has helped secure bond financing for a number of public and private projects in Erie County over the years.
Developer has contract for Avalon property in downtown Erie
The financing represents the last step before GoodHomesCo buys the Avalon, said Michael Agresti, the local lawyer for GoodHomes on the project. He and Groner said GoodHomes has a contract for the property, and Groner said the sale must be executed for the closing to occur on the bond deal. The proposed sale price has not been disclosed.
Groner said the Redevelopment Authority is glad to have a role in the project, which is meant to revitalize a building that was a showcase and a magnet for tourists when it opened as a Hilton in 1976. The property, which includes an underground parking garage, a ballroom and conference rooms, has had various owners and updates since it was sold at a sheriff's sale in 1990. The hotel remains in operation.
"We all want to see that building have investment put into it," Groner said.
GoodHomesCo plans to buy the property from Ramesh Diora, whose ownership group, Errie LLC, bought the hotel for $1.8 million in 2010. The property is assessed at $1.8 million and has an annual real estate tax bill of about $68,500, according to Erie County assessment records.
The sale has been contingent on the approval of a zoning variance and the arrangement of financing, Agresti said.
The Erie Zoning Hearing Board in December granted a variance that will allow the development to have 219 apartments — the number of units Agresti has said are needed to make the project financially viable.
The Avalon is in a C-3 central commercial zoning district. The zoning allows multifamily housing but requires 1,000 square feet per unit. The hotel, which is 150,000 square feet, would accommodate no more than 150 units under the standard C-3 zoning. The variance expanded the cap to 219 units.
Apartments to rent for $750 to $1,000 a month
GoodHomesCo plans to reconfigure the hotel to accommodate mostly studio apartments measuring 390 square feet. Some one-bedroom apartments, measuring 780 square feet, are also planned, primarily on the second floor where the hotel's convention and meeting rooms are now located, according to information Agresti presented at the zoning hearing in December. The apartments are expected to rent for $750 to $1,000 monthly.
The new apartments will meet a need for young professional housing in Erie, and its residents will benefit downtown restaurants and other businesses, Agresti said.
"It is going to be a game-changer for that area," he said in an interview this week.
The plans for the Avalon call for a storage area where tenants can store kayaks, bicycles and other items, most likely in what now is the ballroom.
The hotel restaurant will become a tenant lounge and game room. Meeting and event rooms, co-working space, a fitness center, sun decks, laundry facilities and a courtyard grill area with picnic tables are also planned, Agresti said. He said GoodHomesCo also plans to restore the Avalon's pool.
The redevelopment of the Avalon is scheduled to occur at the same time the Erie Downtown Development Corp. has been transforming the area around Perry Square. Market-rate apartments are at the core of the EDDC's projects, which are meant to lure younger people to downtown Erie.
That is also the goal of the Avalon project, Agresti said.
"It is not specifically for young people, but the amenities are geared for young people," he said.
Hilton project was also designed to boost downtown
The construction and opening of the Hilton was also heralded as a pivotal moment for downtown Erie, which at the time was fighting flight to the suburbs, including the opening of the Millcreek Mall in 1974. The city-based Erie Redevelopment Authority helped develop the $6 million Hilton project on the site of the former Lawrence Hotel. The groundbreaking for the Hilton occurred in 1973, and construction issues delayed the opening for six years.
At the groundbreaking, on June 28, 1973, then-Erie Mayor Louis Tullio praised the Hilton as a project that would revitalize downtown. He said the hotel would complement the Transitway Mall, which extended from 10th Street about four blocks north to South Park Row and Perry Square. It was meant to boost retail businesses.
The Transitway Mall made the stretch of State Street accessible only to pedestrians and public and emergency vehicles. The mall included widened sidewalks, benches and other pedestrian-friendly features.
"This hotel, coupled with the Transitway Mall, will put us on par with the growth of the suburbs," Tullio said at the groundbreaking ceremony for the Hilton, according to an account in the Erie Daily Times. "We're all very proud of the progress that has been made on this occasion."
Two months later, on Aug. 20, 1973, Tullio took the controls of a bulldozer and scooped up the first load of asphalt to build the Transitway Mall. The unpopular mall was removed and State Street was reopened to traffic in 1993.
An apartment complex that 'will be new for Erie'
An outside firm, Metropolitan Hotels Inc., of Baltimore, built the Hilton. It made the hotel part of its chain of hotels.
The Avalon project is also part of a larger effort. It is similar to GoodHomeCo's developments in other, larger cities in which the renovated building includes a number of amenities for tenants.
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GoodHomesCo and its owner, David Mitchell, have launched or explored similar ventures in 10 cities in the United States, including Detroit and Columbus, Ohio, and Warwick, Rhode Island. The company also focuses on redeveloping senior living facilities into apartments
"It will be new for Erie, for sure," Agresti said of the concept for the Avalon.
History of the Avalon Hotel
1976: Erie Hilton Hotel opens on the site of the former Lawrence Hotel at 16 West 10th St., between State and Peach streets.
1990: Prudential Insurance Companies of America, which held the mortgage on the hotel, acquires the hotel at a tax sale and changes its name to the Erie Plaza Hotel.
1992: Avalon Hotel Partners acquires the hotel for about $500,000 and changes the hotel’s name to the Avalon Hotel.
1993: The Avalon receives a $2 million Section 108 loan through the city of Erie to renovate the facility. It repays the loan six years later.
2005: Avalon Hotel Partners, whose general partner is local businessman Robert J. O’Malley, lists the hotel for sale.
2006: The Avalon is sold to Mantiff Erie Hospitality LLC, of Wayne, New Jersey, for $4.73 million. Mantiff takes out a $4 million mortgage on the property.
2010: Errie Operating LLC, of Millburn, New Jersey, an ownership group that includes current Avalon owner Ramesh Diora, purchases the Avalon for $1.8 million. The hotel remains in operation.
December: GoodHomesCo LLC, of New York City, gets a zoning variance to build 219 market-rate apartments in the Avalon complex. The company has since reached an agreement to buy the property once it secures $45 million in financing for the purchase and renovations. An affiliate of the Erie County Redevelopment Authority is helping with the financing and is to vote on the deal on Tuesday.
Contact Ed Palattella at epalattella@timesnews.com. Follow him on X @ETNpalattella.
This article originally appeared on Erie Times-News: Developer to get help from public agency to buy Avalon Hotel in Erie
