Wednesday, April 14, 2010

Diverse development team announces $37M Vernon Manor project to begin soon

Built in 1924 and once a favorite haunt of the elite and famous, the Vernon Manor Hotel closed its doors for good in March 2009.

"This is a bittersweet day for me," Cincinnati Mayor Mark Mallory said during a press conference yesterday morning. "This hotel has always had a special place in my heart, and in the hearts of members of my family. We sort of hung out here and have been coming here for years, coming to Sunday brunch and having my meetings. So it's sad for me to see the hotel go away, but this is a great opportunity as it relates to economic development."

City officials, representatives from the state, developers and investors gathered on the rooftop terrace of the seven-story building for an update on milestones and timelines for the $37 million Offices at Vernon Manor, a project that will convert the hotel into 171,000 square feet of office space for Cincinnati Children's Hospital Medical Center.

With project financing due to close on Thursday, developer Al. Neyer, Inc. plans to begin renovations later this month. Construction on a 440-space public parking garage, to be built adjacent to the hotel on the 5.6-acre site, is scheduled to begin in July.

The project is being financed through a $7.1 million loan from the Ohio Department of Development, more than $14 million in federal new market tax credits, and $1.3 million in federal historic tax credits, among other sources. The loan debt will be serviced by revenues from the Corryville tax increment financing (TIF) district.

Al. Neyer, Inc. will pay for construction of the parking garage, which it will lease to the City for 25 years while continuing to operate and maintain it.

Unlocking the potential

Children's has signed a 17-year lease in the building and plans to move 600 back office employees from its main campus to the new space upon completion next summer. The move will allow Children's to create additional research and clinical jobs at its main campus.

These types of jobs are a key component to the GO Cincinnati economic development plan, which calls for the creation of more positions in the fast-growing life science and health care industries.

And as the signature historic and architectural piece of the neighborhood, it's also seen as a key anchor to Avondale as a whole.

"We believe preserving and using the Vernon Manor advances our neighborhood vision plan, and ensures that the Vernon Manor will continue to be an anchor for our Uptown community," said Avondale Community Council president Patricia Milton.

The bottom line, Cincinnati City Manager Milton Dohoney said, is that 600 new jobs could generate up to $829,000 in new earnings tax revenue. The retained jobs provide more than $600,000.

"It unlocks the potential that we believe is here in the Avondale neighborhood," he said. "And we want to encourage others to look at this neighborhood as a destination for growth and development."

"Avondale is a community with many gifts, and a community which welcomes positive change," Milton said. "Our vision for Avondale is to promote a vibrant, safe, healthy, attractive, educated and caring community, with opportunities to build strong families and strong businesses."

Commitment to the neighborhood

Cincinnati Children's Hospital Medical Center opened in a house in Walnut Hills over 125 years ago, spent 39 years in Mount Auburn, and has called Avondale home since 1926.

"We are very committed to this neighborhood," said Michael Fisher, president and CEO of Children's. "This city has been our home throughout our entire history. We've always been within a few miles from where we are here today. As we've continued to grow and need more space for our now nearly 12,000 employees, we want to preserve our connection with this community and with the City of Cincinnati."

Fisher said it also has to do with location, location, location.

"It keeps our employees not directly involved with the clinical work at the hospital very close to our main campus," he said. "And we want to thank you [City of Cincinnati] for continuing to create the kind of environment in this city where, increasingly, our thousands of employees will also want to stay around and play – and maybe even live. This is just one more piece in that puzzle."

Corryville Community Council Interim President Michael Ealy hopes that some of those employee dollars will spill over into his neighborhood.

"This will serve as an economic conduit for the community of Corryville," he said. "It will increase the Corryville TIF base, which will kick off more development in our community."

Economic freedom

Upon completion, the property will be owned by Vernon Manor Offices, LLC, a partnership that includes 51 percent ownership by African-American investor group REEAAL, LLC and 49 percent ownership by Neyer Vernon Manor, LLC.

Al. Neyer, Inc. courted the investor group, understanding the role of commercial real estate ownership in wealth creation. And, for its part, the City needed to prove that it could be inclusive when it comes to economic development.

"I will tell you that the most fulfilling accomplishment in my professional career has been pulling together the African-American investment team that is represented here today," said Al. Neyer, Inc. Executive Vice President Laura Brunner.

REEAAL, LLC President Ed Rigaud, currently president and CEO of Enova Premier, LLC and co-director of Taft Business Consulting, LLC, helped spearhead the effort to bring the National Underground Railroad Freedom Center to Cincinnati and served as its first president and CEO.

"I learned two things at the Freedom Center," Rigaud said. "One is that freedom is a hierarchy. There are various levels of freedom. And, while we make progress, in order to get to the top – where there's empowerment and actualization – you have to have economic freedom. This is an important step in achieving economic freedom for every one of our citizens."

'The perfect storm'

City Manager Milton Dohoney said it was a complex project to put together because of the sheer number of parties involved.

"Complementary interests all needed to intersect," Dohoney said. "This was 'the perfect storm'. All things came together appropriately."

"This is a great opportunity for that [public-private] partnership to continue," Mallory said.

Neyer agreed.

"This project symbolizes what can happen when a diverse and committed group of professionals decide to make a difference to improve their community," he said.

To Rigaud, the project is beneficial, not only to REEAALL, LLC and Al. Neyer, Inc., but to Avondale and the City as a whole.

"Our little investment group loves this community," Rigaud said. "And we're taking risks, but we're taking those risks for something that's extremely important."

A history and photographs of Vernon Manor by Sherman Cahal can be seen on Abandoned.

Previous reading on BC:
Vernon Manor parking agreements authorized (12/21/09)
Two ordinance could lead to 440-space Vernon Manor garage (12/16/09)