The state has approved $7 million in tax credits for the revitalization of downtown Lancaster’s Keppel Building, it was announced Friday.
The New Markets Tax Credits come via Commonwealth Cornerstone Group, a nonprofit created by the Pennsylvania Housing Finance Agency.
“Any time we can save one of our historic buildings in a downtown area and re-purpose it to meet the needs of today's businesses, it's a big win for that community and for Pennsylvania,” said Gov. Tom Wolf in a prepared statement.
As was previously reported, Pittsburgh-based Zamagias Properties is converting the empty, former candy factory into 38 apartments plus retail and office space.
David Martens, president of Zamagias, called the New Markets Tax Credits a “key” piece of the project’s financing, along with historic tax credits and a bank loan.
The total project cost is approximately $9 million, he said.
The 323 N. Queen St. building, constructed in 1913, once was the home of the Keppel Candy Co.
Most recently, it housed the Candy Factory workspace-sharing initiative, which now operates across the street.
The building has been vacant for more than a year and was condemned by city officials.
LNP reported Zamagias’ interest in the building in September.
Martens said renovations to the building began this week. Completion is expected by year-end.
The project consists of two connected four-story buildings totaling 70,000 square feet.
First-floor space will be upgraded and expanded to include a coffee shop, venue space and office and retail space, according to the state.
Zamagias already has received interest from five office or retail tenants, said Martens.
The upper three floors will be converted into 38 apartments, with eight designated affordable housing, said Martens.
Rents have yet to be determined, he said.
A portion of the second floor might be converted into office space for local businesses and non-profits.
Renovation of the Keppel Building is expected to support 25 full-time construction jobs.
Once work on the building is completed, Zamagias anticipates the retail and office tenants will create 40 full-time positions.
It's expected that at least 60 percent of the jobs will be made available to people on low incomes.
Zamagias is known in Lancaster as the developer of Steeple View Lofts, also downtown.
The former Radel & Stauffer building at 118 N. Water St. was converted into 36 apartments for people age 55 and older.
The units opened in May 2013. It was a $9.5 million project.
New Markets Tax Credits were established by Congress in 2000 to spur investment in low-income communities.
Investors get a federal income-tax credits for making equity investments in community development entities such as Commonwealth Cornerstone Group. In turn, the entities use the money to fund the projects.
The program is administered by the U.S. Department of the Treasury.