Mar 9 2015
Pizitz, LLC has secured $23 million in New Markets Tax Credit (NMTC) allocation from National New Markets Fund, LLC to help finance the mixed-use redevelopment of the Pizitz Building – a designated historic landmark in downtown Birmingham, Alabama that has been vacant for nearly 30 years.
The building was constructed in 1923 and served as the flagship for the regional Pizitz department store chain until it was shuttered in 1988, following sale of the family-owned retailer to McRae’s. The beloved architectural icon is located in the heart of Birmingham’s City Center, which like many downtown business districts is undergoing a revival. The area is classified as a severely distressed census tract and a “food desert” (area without ready access to fresh, healthy and affordable food) by the USDA.
The $23 million in NMTC financing is part of an ambitious $66 million redevelopment of the building, which has earned Historic Preservation Certification status from the U.S. National Park Service. When the project is complete in Fall 2016, the Pizitz Building will be transformed into a catalyst for the continued revitalization of downtown Birmingham.
The ground floor will serve as home to the new Birmingham Public Urban Market - a year‐round, open-air market with stalls leased individually to locally owned and operated food-related businesses. Vendors will sell fresh produce and prepared foods with locally-sourced ingredients. The market will also include an event space for community gatherings and teaching demonstrations.
The mezzanine level will be home to beta, a contemporary shared workspace that combines traditional office necessities with a flexible environment that accommodates individuals, entrepreneurs and small businesses - from non-profits to tech start-ups. beta launched its first such workspace in 2011 in New Orleans, and operates an additional location in Roswell, New Mexico.
The remaining floors of the 251,210 square-foot, seven-story building will provide 143 residential units, with 20 percent set aside for affordable housing. Environmental sustainability is a priority, with a focus on achieving LEED (Leadership in Energy and Environmental Design) Certification.
The project has strong support from Birmingham Mayor William Bell, who has identified the Pizitz Building as a strategic catalyst for continued downtown growth. Other recent large-scale projects in the downtown area include the McWane Science Center expansion, Railroad Park, Regions Field Minor League Baseball Stadium, Uptown Entertainment District and the Lyric Theater.
Also supporting the project are REV Birmingham (the local economic development organization) and the Community Foundation of Greater Birmingham. They are among the local organizations that back the project for its capacity to bring sustainable businesses to Downtown Birmingham and create an environment where people want to live, work, shop and play.
In addition to the $23 Million in New Markets Tax Credits, the project also secured $27 million from the HUD 220 Senior Debt program and Federal and State Historic tax credits, as well as local funding through the HUD 108 program, a City Streetscape Grant and a Construction Sales Tax Abatement. U.S. Bank served as the tax credit investor.
“NMTCs are the funding lynchpin required to revitalize Birmingham’s landmark Pizitz building,” said National New Markets Fund Co-Founder and President Deborah La Franchi. “This long-awaited project marks a significant milestone in the effort to revitalize downtown into an economically and culturally vibrant resource for all the citizens of Birmingham.”
La Franchi went on explain that inclusion of the beta workspace was a key element of the project for National New Markets Fund. “beta has the potential to make redevelopment of the building even more impactful through its ongoing focus on stimulating local job creation and helping local startups ascend to the next level.”
Redevelopment of the Pizitz Building is the first National New Markets Fund project in Alabama. The Fund has helped finance 17 major projects in the Southern U.S., and 30 projects overall representing $372 million in New Markets Tax Credit allocation.
“New Markets Tax Credits were critical in making this project a reality,” said David Silverstein, principal with Bayer Properties. “We are excited to begin construction on the Pizitz Building, which is truly a transformative project for Birmingham.”
U.S. Bank subsidiary U.S. Bancorp Community Development Corporation is investing equity in the New Markets Tax Credits portion of the project as well as the historic tax credits helping to fund the renovation.
“We seek out these highly innovative models that have far-reaching positive impacts,” said Laura Vowell, vice president, U.S. Bancorp Community Development Corporation. “Pizitz has the potential to fundamentally turn around downtown Birmingham.”
New Markets Tax Credits (NMTCs) were established by Congress in 2000 to stimulate investment and economic growth in designated low-income communities. They raise investor capital and leverage public and private funding to provide borrowers, such as Pizitz, LLC, with financing in the form of favorable rates and flexible below-market terms.