Amanda Morrison/Watertown Daily Times

Gary C. Beasley, Neighbors of Watertown director, sits in the indoor sidewalk area of the Franklin Building on Wednesday.

Franklin Building: Cost of restoring historic building climbed near $10m

When public officials cut the ribbon Friday to celebrate the successful renovation of downtown Watertown's Franklin Building, there will be plenty of smiles, handshakes and pats on the back.

What they won't discuss is the missteps some of them made along the way that delayed the building's restoration and eventually drove up the final price tag of the project to nearly $10 million.

Gary C. Beasley, executive director of Neighbors of Watertown Inc., fought some of those officials along the way and today hears the criticism about the building's hefty restoration cost. He counters that historic preservation is expensive because higher construction standards are required for projects involving affordable housing and public money.

"It's not like you go out and build a house in a field," he said.

About $1.2 million of the project's price tag was in construction wages the City Council had hoped to sidestep. Council members had tried skirting federal law, which required that any project using federal money pay construction workers prevailing wages. Council members had hoped to pay lower wages to save money.

In the end, Mr. Beasley is pleased to say that a building that was headed for the wrecking ball is now filling up with upstairs tenants and downstairs businesses.

THE MONEY MIXTURE

Using a mixture of local, state and federal funding, it took $9,993,022 to restore the three-story landmark on the south side of Public Square, Mr. Beasley said.

But he said that no direct local taxpayer dollars were used to preserve the former YWCA building at 50 Public Square that was in such poor condition that the city condemned portions of it in 1997.

As a result of the restoration, the building houses 16 occupied apartments on the upper floors and eight to 10 commercial spaces on the ground floor. So far, the North Country Arts Council is the lone tenant, with five other groups or businesses expressing interest in the other storefronts, Mr. Beasley said.

Working with federal, state and local officials, Neighbors was the lead agency on the project. The building is owned by a for-profit partnership, Public Square Developers LP, with the National Development Council, a national investment house. Neighbors maintains the property.

The brunt of the money came from $2,198,985 in federal stimulus funding and a $1,550,000 Restore New York grant that was used for its exterior, hallways and stairways. The federal Housing Trust Fund contributed $500,000 and the city landed a $375,000 grant from the federal Community Development Block Grant program.

The project was financed partially through tax credits. The National Development Council, which has completed similar deals all over the country, bought about $2 million in historic tax credits — or 20 percent of the cost of the project — to help bankroll it, Mr. Beasley said. The investment firm will be paid back over the next 15 years.

By using tax credits, NDC saved dollar-for-dollar the amount it would have paid in taxes to the Internal Revenue Service, he said. The investment firm was able to purchase the tax credits for 85 cents on a dollar, so it made money on the deal, he said.

"It's a very valuable commodity," Mr. Beasley said, noting that the tool is used all over the country for preservation projects.

To comply with government auditing requirements, the cost for the apartments and commercial space was divided out, with the residential side totaling $5,485,957 and the commercial space costing $4,449,065, he said.

Construction costs for 16 apartments and other areas attributed to the residential space, such as common areas, stairwells, an elevator and the upper floors of the facade, ended up at $275,887 per unit, Mr. Beasley said.

Without $680,068 from the Watertown Local Development Corp. — also known as Watertown Trust — the project wouldn't have gotten off the ground. That money was used to stabilize the building and put a new roof on it before renovation work began in late 2009. It was purchased in 2002 for $55,000.

The only money still owed on the building is on the stimulus portion — $14,000 annually on the "interest-only loan" for 30 years, he said.

OPPORTUNITY FOR A PROFIT

The money from tenants paying rent generates annual income of $148,000. The Watertown Local Development Corp., which was involved early on in the efforts to save the building, is responsible for finding tenants and making sure that rent is paid.

If all of the space is leased, Donald W. Rutherford, chief executive officer of the Watertown Trust, projects between a $10,000 and $15,000 profit this year.

Mr. Beasley asks that critics look at what the community is receiving in return for saving a building that faced certain demolition because its condition had deteriorated so much from neglect over the years. As a result of the restoration, the building is now on the tax rolls, with a 2011 tentative assessment of $422,842, he said.

"We've taken away a negative and turned it into a positive," he said, adding it also has pumped money into the local economy with 140 people working on the construction project at its peak.

RIBBON CUTTING

A ribbon-cutting ceremony for the rejuvenated Franklin Building has been scheduled for noon Friday, with tours to take place until 3 p.m. Mayor Jeffrey E. Graham, Rep. William L. Owens, Assemblywoman Addie J. Russell, D-Theresa, and state officials are scheduled to attend the reopening.