Syracuse, NY -- A new company wants to bring college students to live downtown Syracuse by turning a vacant office building near Armory Square into a dormitory for 146 students.
The project proposed by Syracuse Creekwalk Commons Inc. is unusual because the newly formed company is not affiliated with any college but hopes to redevelop the building as a nonprofit corporation exempt from income and property taxes.
Construction contractor James Breuer, a director of the company and one of the building's owners, said most of its tenants likely would be Syracuse University students. However, he said full-time students from any of the area's colleges and universities could live there.
The company has proposed transforming the E.M. O'Donnell Building at 324 W. Water St. into 69 apartments, along with 8,000 square feet of retail space. The building is owned by EMO Properties LLC, of which Breuer is a partner, and has been vacant for three years.
Syracuse Creekwalk Commons has applied to the Internal Revenue Service for status as a nonprofit corporation that would support higher education by providing a residence hall for students.
Breuer said nonprofit status would allow the company to borrow money at the lower interest rates available through tax-exempt bonds.
He said Creekwalk Commons would be exempt from property taxes as a right because it would be owned by a nonprofit corporation and operated as student housing. However, he said the corporation plans to "keep the city whole" by voluntarily making payments to the city.
About $65,000 a year in property taxes are paid on the building. Breuer declined to say whether keeping the city "whole" means that Creekwalk Commons would be willing to pay that amount. He said the amount of the payment would be subject to discussions with city officials, he said.
Syracuse Assessment Commissioner David Clifford said the fact that a nonprofit corporation would own the building does not mean that the housing would be exempt from property taxes. He said he would have to be convinced that the project served charitable or educational purposes and that no profits would be paid to private individuals.
"It's unique, and we'll see how it works out," he said.
Creekwalk Commons would be the first college dormitory close to downtown's core. Upstate Medical University transformed a vacant apartment building on Harrison Street, on the eastern edge of downtown, into a 139-unit residence hall last year.
The developers think the building's location between Erie Boulevard West and West Water Street will appeal to students. The building is one block north of Armory Square, a former warehouse district popular with college students because of its mix of bars, restaurants and specialty shops.
It also sits along Onondaga Creekwalk, the new pedestrian and bicycle path that follows Onondaga Creek from Armory Square to Onondaga Lake. The creek flows under the O'Donnell Building. (The creekwalk goes around the building.)
The project also is unusual because Syracuse Creekwalk Commons, though not associated with any college, is seeking tax-exempt status so it can borrow money at a lower cost than it could as a for-profit venture.
The company plans to add a fourth floor to the three-story building. Its apartments would be fully furnished, and the building would have laundry facilities, a fitness center and an indoor bicycle storage facility. Each floor would have a student lounge.
Breuer said the company hopes to start construction in July and have the apartments ready for lease starting in July 2014 -- in time for fall semester.
Students would be able to lease one- or two-bedroom apartments for either 10 or 12 months, or for two summer months.
The building is 500 feet from a former Armory Square furniture warehouse that houses the Department of Design of Syracuse University's College of Visual and Performing Arts.
"Connective Corridor" buses, a joint project of Centro and Syracuse University, provide free daily transportation between Armory Square and the university.
Breuer said turning the building into student housing makes business sense because the downtown office market is weak while demand for student housing outpaces supply at many local colleges and universities. Efforts to lease the building to an office tenant over the past three years have failed, he said.
"It's not going to compete with other developments downtown," Breuer said. "It's bringing a whole new population downtown."
In recent years, developers have converted a number of vacant and underused office buildings in the heart of downtown into apartments, primarily for young professionals and empty-nesters.
Creekwalk Commons has applied to the Onondaga Civic Development Corp. for $17 million in tax-exempt bonds to finance the project.
The OCDC was created by the County Legislature to help nonprofit organizations obtain low-cost financing. It would receive a $170,000 fee for issuing bonds. In the event of default, buyers of the bonds could foreclose on the project but could not go after the OCDC or the county.
The O'Donnell building is directly across Erie Boulevard West from National Grid. The utility and its predecessor, Niagara Mohawk Power Corp., used it as office space and a customer service center for 25 years until its lease expired in 2010.
EMO Properties, which has owned the building since 1985, would sell it to Creekwalk Commons at a price to be determined by an appraisal, said Breuer. EMO has about 50 partners. Breuer declined to disclose who its other partners are, saying it is a private company not subject to public disclosure. Creekwalk Commons estimated the purchase price at $1.6 million in its application to the OCDC. The city assesses the building at $1.6 million and the land it sits on at $400,000. Breuer said the $1.6 million was only an estimate and is subject to change based on the appraisal.
Syracuse Creekwalk Commons filed a certificate of incorporation with the state in March, describing itself as a supporting organization to Downtown Syracuse Foundation Inc., an independent, nonprofit foundation formed last year to promote downtown development.
According to its incorporation papers, the purpose of Creekwalk Commons is to redevelop the O'Donnell building "to further the educational missions of the institutions of higher education by providing the enriching experience to students of being housed in the downtown Syracuse community."
Breuer said all earnings would be put back into the building.He said the organization's board of directors will serve as volunteers without compensation. In addition to Breuer, the organization lists its officers as Linda Hartsock, director of community engagement and economic development at Syracuse University; Robert Doucette, a partner in Paramount Realty Group; Merike Treier, executive director of the Downtown Committee of Syracuse; and Edward Green, of Edward S. Green & Associates. Hartsock is listed as the organization's president.
Breuer's company, Hueber-Breuer Construction Co., would serve as construction manager for the building's conversion, according to Creekwalk Commons' application for financing. Breuer said all contracts for the actual construction work would be put out to bid and would be awarded to the lowest, qualified bidders.
Most student housing in the city is owned, directly or indirectly, by colleges and are exempt from property taxes. EdR, a private real estate investment trust, built and operates two Syracuse University dormitories and makes payments in lieu of taxes on them.
Breuer's construction company has played a role in other student housing projects in the city.
Among them was Upstate Medical University's $28 million transformation of a vacant high-rise, Townsend Tower, into a 139-unit dormitory named Geneva Tower last year. Hueber-Breuer was construction manager on the project.
It also was construction manager for Centennial Hall, a 454-bed dormitory that State University College of Environmental Science and Forestry opened in Syracuse in 2011.
Robert Simpson, president of CenterState Corporation for Economic Opportunity, the area's primary economic development group, said the project would help advance the city's goal of breaking down the wall that once separated it from Syracuse University and other educational institutions on University Hill east of downtown.
"That's been a priority, integrating the city with the colleges," he said. "This would add another layer."
SYRACUSE — The Central New York Community Foundation (CNYCF) today announced its board of directors voted to renew its $1 million commitment to the Syracuse chapter of Say Yes to Education, called Say Yes Syracuse.
