Former Phantasy complex in Lakewood lands $5 million state historic tax credit

A $5 million state historic tax credit will help developers remake the former Phantasy Entertainment Complex in Lakewood into a polestar for the region’s lesbian, gay, bisexual, transgender and queer communities.

The rambling property, once known as the Homestead Theater Block, won the largest possible award this week in a fierce contest for state preservation aid. The building is slated to house new venues and small businesses as part of a broader project called Studio West 117.

Gov. Mike DeWine and the Ohio Department of Development announced almost $40 million in tax credits on Wednesday, June 22, for 38 projects scattered across the state. That list included 10 Northeast Ohio winners, from a former Cleveland public school to a downtown Elyria building earmarked for an esports hub.

And there was one surprising local loss: The long-suffering Warner & Swasey complex in Cleveland’s Midtown district out on credits, yet again, despite a tweak to the program’s scoring rubric that seemed to tip the odds in that property’s favor. The deteriorating buildings, at East 55th Street and Carnegie Avenue, are the subject of a mixed-income housing plan.

Richard Barga, managing director of the nonprofit group MidTown Cleveland Inc., expressed disappointment that the development department’s recent decision to provide extra points for affordable-housing deals was not enough to help Warner & Swasey best its competition.

“Not winning this seems completely contradictory to what the intent of the applications this round were,” he wrote in a text message. But, he went on, “This project continues forward despite this setback. We were just awarded $1.5 (million) in state brownfield funds and look to continue the progress.”

MidTown and Pennrose, a Philadelphia-based developer, will have to decide whether to reapply. So will the applicants who unsuccessfully sought credits to overhaul the Samsel Supply Co. complex in the Flats; redevelop a mothballed hotel in Midtown; and continue the march of preservation projects along Superior Avenue, east of downtown Cleveland.

The General Assembly recently agreed to temporarily double the size of the popular tax-credit program. That expansion will impact the next round of awards, in December.

The tax credits are a critical piece of the financing for the reimagined Phantasy, which will act as the centerpiece for an LGBTQ-focused campus near the Cleveland-Lakewood border. The full project, with an estimated price tag of roughly $87 million, spans historic preservation and new construction at Detroit and Hird avenues.

“This is one giant step closer to us being able to fully close on our financing for the Phantasy,” said Daniel Budish, who is leading the charge on the project with fellow tax-credit consultant Betsy Figgie. The pair bought the 54,000-square-foot Phantasy complex in 2020.

After renovations, the space will hold a handful of entertainment venues, hosting drag shows and other performances; small businesses; shared office space; and a podcasting studio. Construction is likely to wrap up in 2024, Budish said.

Behind the Phantasy, he and Figgie are preparing to open another building, called the Fieldhouse at Studio West 117, in the fall. The facility, a mix of renovated space and ground-up construction, includes a gym area for dodgeball, volleyball, basketball and pickleball; a rooftop bar and restaurant; ground-floor dining; and a courtyard with a bouldering wall.

And on the other side of Detroit, the pair aims to build 200-plus apartments on the site of a shuttered NTB tire and service center facility. That building, with a blend of low-cost senior housing and modestly priced workforce housing, is likely to open in 2025.

The developers also hope to incorporate a health clinic into that phase of the project.

The state development department announced the tax credits at an event in downtown Elyria on Wednesday morning. The Lorain County community landed its first award, a $2 million tax credit that will support developer Kevin Flanigan’s vision for reviving a stretch of downtown.

The Italianate Dixon Building, constructed in 1873, will become part of a project that will bring an esports arena, gaming stations, offices, classrooms and a restaurant to Broad Street. A new apartment building, with a wine bar on the first floor, is set to rise on a nearby parking lot.

The tax credits, coupled with a historic $3.4 million award from Ohio’s Transformational Mixed-Use Development Program and a state brownfield clean-up grant, will help drive a tough project forward, consultant Stephanie Mercado wrote in an email.

“It is an honor to receive the award, especially given that this is the first historic tax credit award for a project in the city of Elyria,” she wrote. “The state historic tax credit award is one of … the critical last pieces of funding to be secured for the project.”

Cleveland, often a big winner in the twice-yearly race for credits, notched only two wins — both beyond downtown.

In the Jefferson neighborhood, on the West Side, Sustainable Community Associates will use $2 million in credits to help transform a former public school into housing. The building, the Nathaniel Hawthorne Elementary School on West 130th Street, is one of a dozen vacant schools that the Cleveland Metropolitan School District and the city offered up to developers last year.

A designated city landmark, the building will become 36 mid-priced apartments. With state and federal preservation tax credits and a state brownfield grant in hand, the developers hope to break ground in December or January and finish construction 12 months later.

Their plans also call for building a 57-unit apartment project on part of the vast parking lot next to the school. The new construction will be a second phase.

“This is a middle-income, middle-neighborhood project,” said Josh Rosen, a co-founder of Sustainable Community Associates, a Cleveland-based team that is interested in proving the market in parts of the city where other developers aren’t flocking.

“I feel like when we talk about new types of community development and economic development in wards that haven’t seen investment, this could be a really great case study for how the city, the county, the state and private developers can work together, he added.

CHN Housing Partners was the other victorious Cleveland applicant, for a $13.9 million revival of the Victorian Gothic St. Michael School building at 3146 Scranton Road. At the edges of the Tremont and Clark-Fulton neighborhoods, the vacant school will become apartments for low-income seniors. CHN plans to renovate a also convent as housing.

“It’s huge. It’s huge,” Heather Rudge, a preservation consultant working on the project, said of securing a $1.36 million tax-credit award after several unsuccessful applications.

“Thank God the building’s going to be reused,” she said. “There’s nothing unbelievable about it inside, but the exterior is just so great. I cannot wait to get the right windows in that building.”

The other outsize winner in the region was the hulking Hoover Co. complex in North Canton, which grabbed $5 million in credits. The award will flow to the most difficult, western portion of the old manufacturing campus, which is being repositioned as a mixed-use project called the Hoover District.

Joint-venture partners Industrial Realty Group LLC and Industrial Commercial Properties LLC plan to turn the historic spaces into 226 apartments.

That project previously won — then lost — a $5 million state tax-credit award. The state does not pay out the credits until a project is complete. The Hoover redevelopment deal stalled a few years ago, prompting the development department to rescind the award in late 2019.

Progress on the project completely stopped when the pandemic hit in 2020, according to a copy of the recent tax-credit application filed with the state. Now, though, the owner is fully committed to “the remaining rehabilitation project subject to the re-establishment of the historic tax credits,” the application reads.

The other local winners were:

• North Hall in Berea. Baldwin Wallace University plans to modernize this midcentury dormitory, which is vacant, as a 65-unit residence hall that can accommodate roughly 135 students. The $18.4 million project, which includes asbestos remediation and an elevator addition, won $1.8 million in credits.

• The First National Bank Building in Canton. This downtown Canton office tower secured $1.12 million in credits for a partial rehabilitation project, which spans a historic banking hall and upper-level office spaces. After $5.7 million in renovations, the building will be ready for new office tenants and a ground-floor restaurant.

• The A. Schrader’s Son of Ohio Warehouse in Akron. This century-old warehouse is being converted into a self-storage facility. The second phase of work won a $250,000 credit.

• Riddle Block in Ravenna. A $250,000 credit award will support a makeover of this four-story building on Ravenna’s Main Street downtown. The project will include 20 apartments — completed two of them short-term rentals — and ground-floor retail spaces.

• The Lakewood Board of Education building in Lakewood. Part of this historic educational complex, on Warren Road, will be refurbished as three apartments and office space. The local school district vacated the building in 2019. The state awarded $225,000 in credits to the deal.

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