Nothing is more encouraging than seeing one development renew a larger urban area. The $14.5 million renovation and expansion (25,000 to 40,000 square feet) of the Holyoke Public Library last fall is a watershed example. With a unique combination of financing and New Markets Tax Credits, the library is now a community resource and has contributed to the neighborhood’s transformation, as evidenced by the adjacent proposed Library Commons project, which will be introduced to the city on April 9 by HAPHousing.
“These projects have multiple impacts. There were boarded-up buildings, and the library was in bad condition,” observed Deborah Favreau, senior investment officer, Massachusetts Housing Investment Corp. “The revitalization helps the lowest socioeconomic levels. Previously, 200 to 250 people visited the library per day; now we have 1,000 people per day, and usage will double to 200,000 visitors annually. There is impact, vibrancy, safety. The architecture is inviting – drawing you inside – with gorgeous historicity.
“The town has one of the highest levels in the state of children living in poverty. This is real reversal, not just for the building, but for the entire city,” Favreau added.
According to Marcos A. Marrero, director of planning and economic development for the city of Holyoke, “buildings can be inspirational.”
“This was one of the worst blocks in the city,” he said. “Adjacent to the library were three vacant single-family homes, properties, the old Providence Hospital and another apartment building. The whole block is identified for renewal, and we look forward to making that happen.”
Holyoke’s team employed a unique strategy to tap traditional funding streams (municipal bonding, grants and private fund-raising) and innovative ones (New Markets Tax Credits), according to Matt Blumenfeld, principal, Financial Development Agency.
“Massachusetts offers an effective, highly competitive state construction-grant program under the Massachusetts Board of Library Commissioners (MBLC) that incentivizes municipalities to revitalize public libraries,” he said. “This has helped build or renovate more than 175 library buildings since its establishment in 1987. The library initiated a comprehensive needs assessment and planning process. In 2005, it began seeking funds. Through the Public Library Construction Program, libraries are also eligible for a Green Library Incentive, created by the MBLC to encourage sustainable energy-efficient public library construction.”
Urban Renewal
Constructed in 1903, age, water damage and wear and tear deconstructed the 25,000-square-foot building. By 2009, only 10,000 square feet was used. Portions of the limestone façade were falling off, encircled in safety fencing.
The city faces harsh social, educational and economic circumstances. Median household income is $33,915, according to the latest U.S. Census, half the state average; 31 percent survive below the poverty level. Dropout rates, unemployment and teen-pregnancy rates remain among the highest in New England. Education is a cornerstone of revitalization, and the ability to read is critical. Officials worried that the library no longer contributed significantly to the literacy and education of its populace.
“They applied to MBLC for a construction grant in 2005, but were waitlisted until 2010, at which time the library received a $4.4 million grant contingent upon obtaining full project funding within a year,” explained Blumenfeld. “After its feasibility study, the library’s board projected costs could be covered by the $4.4 million state grant, a $2.5 million capital campaign, $7.1 million in municipal bonding, and $0.5 million contribution from the HPL endowment.” The board was hesitant to tap its endowment, but had to in order to leverage city bonding. Concurrently, advisors began to develop a contingency plan to access NMTC to fill a potential funding gap. NMTC had never been used on a stand-alone library project in New England, but seemed an ideal source. The contingency plan grew in importance when the cash-strapped city could only commit $5.5 million in bonding support. A further city requirement demanded that the library guarantee any endowment shortfall.
“Employing a New Markets structure was no easy task,” added Blumenfeld. “The team worked tirelessly to clear regulatory hurdles. Throughout 2011, while final design was being completed by Finegold Alexander and the bid package was underway, the library team worked to secure a full project allocation of New Markets from Massachusetts Housing Investment Corporation (MHIC), and structure a complex transaction encompassing city and state procurement regulations, pledging the majority of the total endowment to back the deal, and drawing on private funding sources.”
Ultimately, the city acted as the leverage lender. The library used proceeds from its bond sale, short-term borrowing backed by the endowment, the MBLC grant and capital campaign proceeds to provide the loan that attracted U.S. Bancorp Community Development Corp. to become the equity investor in the tax credits themselves.
“With full project funding achieved upon the closing of the NMTC deal, renovation and construction proceeded,” said Laura Vowell, vice president, NMTC Investments, U.S. Bancorp. The library was completed in the fall of last year.
“The city succeeded in creating one of the most beautiful and functional libraries in the state,” she said.
The project has inspired owners of adjacent parcels. A multi-story residential building across the street has been taken off of the condemned list and is slowly being restored; several empty lots are being prepared for new construction; and the nearby Masonic Lodge anticipates a façade facelift.
Developers at HAPHousing are poised to propose a plan for a 55-unit housing complex that would be across the street from the Holyoke Public Library as it laid out its plan on April 9 at the library. The Springfield-based developer has options to acquire vacant properties and lots on Chestnut, Essex and Elm streets and plans to build a complex of residences to be called Library Commons.
James Alexander is principal at Finegold Alexander + Assoc. Inc. in Boston.
