Davis and Sargent Mill Building

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1 Davis and Sargent Mill Building Lowell, MA Nobis Engineering, Inc Adaptive Reuse Project Presented by Fred Phillips, Overlook Associates, LLC Miriam Sheehan, Nolan Sheehan Patten, LLP

2 Why this Project Happened Nobis needed space for expansion Overlook identified available building City of Lowell provided enthusiastic support Use of New Markets and Historic Rehabilitation Tax Credits made project feasible

3 Nobis Objectives Keep cost < alternative leased $20/sq. ft. Needed minimum of 10,000 sq. ft. Didn t want to share a building Needed on site parking Needed to provide a first class working environment Wanted local amenities restaurants, recreation Wanted to do a Green building on a Brownfields site Wanted access to public transportation

4 Development Team Nobis Engineering, Lowell, MA Environmental, Civil, Landscape Overlook Associates, Salem, MA Historic and Finance Durkee Brown Viveiros Werehfels, Providence, RI Architecture The Jordan Institute, Concord, NH LEED Consultants Mass. Housing Investment Corp., Boston, MA New Markets Tax Credits Aberthaw Construction, Lowell, MA General Contractor Mass Development, Boston, MA Lender Nolan Sheehan Patten, Boston, MA Tax Structure and Legal City of Lowell, Lowell, MA

5 Financial Structure Sources of Funds Federal Historic $697 Mass. Historic (Net) 730,000 $577 New Markets $697 Debt $2,070 Energy Rebates $65 Owner s Equity $1,094 Total $5,020

6 Operating Expense Annual Expense Expense/Sq. Ft. Debt Service $139,008 $6.69 Taxes $35,000 $1.68 Other Operating $85,000 $4.09 Return to T.C. Investors $25,000 $1.20 Total $284,008 $13.66 Square Feet 20,793

7 INVESTORS HTC Equity = $ 695,068 NMTC Equity = 1,188,000 $1,883,068 LENDER Loan = 5.37% MHIC Investment Fund QEI = $3,635, % 3 Principals SHTC Investor CDE 99% 1% 94% of QEI A Loan = $1,791,392 B Loan = 1,444,276 $3,235, % Loan = $278,607 QALICB Debt = $ 278,607 QLICIs = 3,235,669 SHT = 578,004 Equity = 1,031,750 $5,124, yr. Lease Loan MT 8 yr. sublease Engineering Corp.

8 Tax Structure Historic Credit Master Lease Pass Through Structure At Risk Rules Apply Since Individuals Own the Property Exception for Qualified Commercial Financing. QCF is financing that does not exceed 80% of the Credit Base is from an unrelated party is for property acquired from an unrelated party is from a governmental entity or person actively and regularly engaged in lending Here could not rely on QCF Exception CDE s status as qualified lender was unclear

9 Tax Structure At Risk Rule Applies if Debt is Nonqualified Nonrecourse Financing Debt is nonrecourse if Nonrecourse or Borrowed from an owner (or related party) Here Individual owners guaranteed the QLICIs QLICIs structured as debt not an ownership interest Thus at risk rule inapplicable

10 Other Benefits Renewal Community Benefits Hiring - $1,500 per person tax credit Depreciation 10 yr. vs. 39 yr. No capital gain tax on sale MA Economic Development Incentive Program Tax abatement (TIF) - $63K over 10 years 10% MA ITC 5% Abandoned Buildings Deduction City of Lowell Billboard relocation, sidewalks, trees, $10K CDBG loan National Grid Advanced Buildings Program - $23K Energy rebates Mass Tech Collabarative Solar panels - $42K rebate

11 Preservation vs. Green Design Few conflicts encountered Muntin width on gas filled windows Reproduction doors Closed cell foam insulation for building envelope Visibility of roof plantings Visibility of solar panels and rooftop units New lobby addition

12 Green Features Site Selection: Public transportation, Brownfield Site, reuse of existing building, urban setting Stormwater Management pervious asphalt, plantings, bio-swale Heat Island Effect reduced paving, plantings, white EPDM roofing Water conservation waterless urinal, dual flush toilets, low-flow fixtures, 43% water use reduction

13 Green Features Energy Performance Building envelope - insulation, glazing Lighting controls sensors, daylight harvesting High efficiency rooftop units Motion sensor on workstation power strips Energy Star appliances 10KW solar array on rooftop

14 Green Features Materials Recycling stations in building Rehab of existing building 90% construction waste recycled 10% recycled content Regional purchasing

15 Green Features Environmental Quality CO2 Sensors Low emitting materials agrifiber, adhesives, no formaldehyde, paints, carpets Thermal comfort heating, cooling zones Daylighting outdoor views Smoke free

16 Innovation and Design Sustainability Education Green cleaning Low mercury lamps Exemplary water use reduction

17 Maritime Building New Orleans, LA NH&RA New Markets Symposium Key Largo, FL March 11, 2009

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19 Background Individually-listed National Register building in Central Business District Constructed in stories, 120,000+ sf Original use: Office, ground floor retail

20 Background (Cont.) Conversion to 105 market-rate apartments New pool and amenities on roof 24,777 sf of continuing retail and commercial space on first and second floors

21 Background (Cont.) Estimated rehab cost: $24,786,000 Eligible for federal and state historic credits, NMTCs

22 Interior Issues Original corridors, stairwells, elevators in place Limited original fabric Residential lays out well in doubleloaded configuration

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25 Penthouse Addition Issues Set back from street facades Limited height Compatible materials

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27 Bill MacRostie MacRostie Historic Advisors LLC Washington, DC / Chicago / Boston