WHEELING - City officials seem eager to assist a Cleveland-based developer that plans to invest about $8 million in downtown Wheeling's Windsor Manor - a project that could eventually lead to commercial activity on the residential high-rise's lower floors, City Manager Robert Herron said.
That developer, Arbors of Windsor Manor LLC, has sought Wheeling's help by asking City Council to issue up to $5 million in revenue bonds to help them purchase and renovate the 1143 Market St. building. City Council unanimously passed legislation Tuesday expressing conditional support for the plan, though council members would have to approve an actual bond sale by ordinance following a public hearing.
Although the bonds are municipal bonds, that debt is by law the sole responsibility of the developer, and the city has no obligation to pick up the tab should the developer default. Such a situation wouldn't even negatively impact the city's credit rating, Herron said.
Photo by Ian Hicks
A Cleveland developer is seeking Wheeling’s help to obtain low-interest financing to buy and renovate the Windsor Manor high-rise downtown.
Peter Holloway, a financial adviser with Wheeling-based Hazlett, Burt & Watson, said there are a number of advantages for developers to seek municipal revenue bonds for a project - despite the fact they are backed by the city in name only.
Municipal bonds, by definition, are tax-free. That alone makes them attractive to potential investors, Holloway said, regardless of the additional risk assumed in purchasing bonds backed by a private company rather than a governmental agency.
"Because these are tax-free, the yield on the bond is going to be lower than a corporate bond," Holloway added. "It makes it cheaper for the developer."
Arbors of Windsor Manor's planned investment includes purchasing the building from its current owner, Joseph Skilken & Co. of Columbus, Ohio; completing renovations throughout the structure, including upgrades to apartments; and establishing commercial space on the building's lower two floors.
"That's a significant investment in a downtown structure," Herron said. "This is a good project, and we're looking forward to a complete renovation of Windsor Manor."
Herron said the commercial component of the company's plan should not eliminate any of Windsor Manor's existing rental units. Windsor Manor currently rents to the elderly and disabled.
The state Legislature enacted a law many years ago allowing local governments to issue such bonds - known as industrial development bonds even though they can be issued for a variety of commercial ventures, not just manufacturing - to combat high unemployment by establishing a mechanism for private developers to obtain low-interest financing.
To Herron's knowledge, Wheeling has only issued these bonds once before - about 10 years ago, to assist Oglebay Park with its expansion of Wilson Lodge. This would be the first time the city has done so on behalf of a private developer, as the Wheeling Park Commission is a public agency.
Herron said Arbors of Windsor Manor is seeking a low-interest loan for the project through the West Virginia Housing Development Fund. The state Economic Development Authority requires governing bodies - which can be either municipal councils or county commissions - to endorse a project by issuing that document before it will reserve a portion of its annual "private activity bond" allocation to be issued in that municipality's or county's name.
West Virginia's cap this year is slightly less than $292 million. Under state law, the Housing Development Fund can issue up to 40 percent of that total - about $117 million - in the form of mortgage bonds, mortgage certificates and loans for qualified residential rental projects, such as the proposed purchase and renovation of Windsor Manor.
West Virginia Secretary of State Natalie Tennant's office lists Joseph Bobeck, president and chief executive officer of Great Lakes Financial Group in Cleveland, as Arbors of Windsor Manor's principal officer. Attempts to reach Bobeck regarding further details of the proposed project have been unsuccessful.