From: RE Journals
By: Dan Rafter
June 5, 2013
Ensuring a new future for the Buzza building in Minneapolis
The Buzza building in the Uptown neighborhood of Minneapolis has had an interesting history, serving as the former home of such tenants as the U.S. Military, Minneapolis Public Schools and greeting card company Craftacres. Now, thanks to apartment developer Dominium, this historic building is poised for an interesting future, too.
Relying on both federal and state historic tax credits, Dominium transformed the building into the Buzza Lofts, a 136-unit affordable multi-family development. And the transformation has been a success. The lofts were 100-percent leased within 30 days of their Nov. 1, 2012, opening.
The Buzza Lofts are also an example of how tax credits can make a project a reality.
Chris Barnes, vice president and project partner for Dominium, said that without the combination of federal historic tax credits, Minnesota state historic tax credits and federal low-income housing tax credits, the Buzza Lofts would never have opened.
“The tax credits were critical,” Barnes said. “That is so often what makes or breaks a project. Those tax credits made the difference in getting the deal done.”
The Buzza Lofts project received $5 million each from the federal historic tax credit and the state historic tax credit. It received an additional $10 million from the low-income housing tax credit.
The tax credits have allowed Dominium to charge monthly rents at the property at an average of $1 a square foot. That makes the Buzza Lofts an affordable option in a part of Minneapolis in which monthly apartment rents average $2 a square foot.
“We are an affordable housing development in an area that is an expensive place in which to live,” Barnes said. “When you offer quality space at the rents we were charging, you’d expect to be full with a waiting list. That is what happened.”
Buzza Lofts offers a community room, fitness center and business hub to its residents.
Turning the building into a modern loft-living space was no easy task. The Buzza building, after all, was built in 1907. The challenge for Dominium lied in keeping the charm of the historic building while providing residents with the modern amenities they required.
Dominium had to negotiate with state and federal agencies before making any changes to the building. And the company was working on a tight schedule; the sooner the Buzza Lofts opened, the sooner its revenue stream would start flowing. Because of this, Dominium challenged its contractors to finish construction in 11 months.
That happened. Actually, as Barnes says, construction wrapped up ahead of schedule, in about 10-and-a-half months.
“Historic projects tend to be challenging,” Barnes said. “You are always trying to honor the original use of a building while making it functional for current users. There are always negotiations at the federal and state level. But it is only a challenge, not a fight. It’s about finding that balance. It requires a lot of dialogue back and forth.”