Plans unveiled for $2.4 million Penney building project

The Downtown Dothan Redevelopment Authority wants to invest $25,000 in a project to redevelop the Penney Building.

The city funds would make the DDRA the public partners in the city’s first public/private downtown redevelopment project, with Redevelopment Advocates Initiative (RAI), LLC, a for-profit company created expressly to redevelop the old J.C. Penney department store building at the corner of North Foster and Troy streets.

Under the deal, which received the unanimous support of the DDRA last week, the Authority will maintain 20 percent ownership with project developer Nick Nitkowski and the owners of the building, Chip George and Dr. Greg Grantham, the three principles in the private venture.

The Penney Building has had a dozen tenants over the last few years, as numerous businesses have gone in and out. The site has housed a formal wear dress shop, several lounges and restaurants, a food court, and a dance club. It currently sits vacant although an upscale restaurant is going into the back of the property which is the former site of Stray Cats and Serafino.

DDRA member Walter Hill said developers and the DDRA want to move forward “contingent upon financing, including support from the city,” he said.

An estimated income and expense sheet for the $2.4 million project shows the 31,000-square-foot building space used as follows:

—12,800-square-foot top floor to be converted into residential housing

—9,000-square-foot special events area

—6,000-square-foot fine dining restaurant

—1,800 square feet of center office/retail space

—1,000 square feet of office space on Foster Street

The proposal calls for the Penney Building to be purchased by RAI and renovated in accordance with the Secretary of the Interior’s Standards for Rehabilitation so Historic Tax Credits can be earned and sold to generate equity for the project.

Private investors are expected to contribute $100,000 toward the project with federal tax credits expected to general $175,000. This leaves $2.1 million to be financed. The DDRA project committee has figured total annual income at $273,320, and annual expenses at $173,980.

Authority members will receive monthly progress and quarterly financial reports.

DDRA member Pat Dalby said most cities use tax credits as as means to fund projects of this type.

George said that while he has not approached any banks about the project, a local lender would most likely provide the tax equity.

The building will have a lobby and elevator to make it Americans with Disabilities Act compliant.