ITHACA, NY -- City Centre has been sold for $75 million dollars after opening its doors in 2019. The multi-use residential building in the heart of downtown Ithaca was owned by Marc Newman and his business partners, and sold the 218,000 square-foot building to Adam Ross and Jonas Seider of CREM Capital.
The building has 192 multifamily residential units, 10,600 square feet of ground floor commercial space and 8,700 square feet of amenity space. New York City–based CREM Capital owns buildings around the country, and in a letter to the Tompkins County Industrial Development Agency (TCIDA), Ross said the firm “manages a private equity investment fund dedicated exclusively to housing of this nature.” On CREM’s website it shows a particular focus on student housing. City Centre isn’t specifically designated as student housing, but given the large population of Cornell University and Ithaca College students in Ithaca, it is a popular building for students downtown.
According to Heather McDaniel, administrative director of TCIDA, when City Centre applied for a tax abatement with the organization, the cost of building was about $50 million, meaning the now-former ownership group made a profit of $25 million in the sale.
“We never thought a building would sell for $75 million in the city of Ithaca,” McDaniel said. “How amazing is that? It’s a testament to how strong our market is.”
When a building is approved for a tax abatement, it’s generally non-transferable. However, McDaniel said in circumstances where there’s a change of ownership but the building will still be used for the purposes the project was originally approved for, the TCIDA can make exceptions. The TCIDA voted in February to approve the transfer of the payment in lieu of taxes (PILOT) agreement to the new ownership team.
A PILOT agreement is written so that the owners of the property will always pay the property taxes calculated by the land value upon purchase. According to McDaniel, the land was valued at $1.8 million when Newman’s team bought it.
“We estimated that the base taxes on that land would be about $837,000 over 10 years,” McDaniel said. “That will always be paid.”
Where the PILOT comes in is in the graduation of new taxes associated with the value of the new building. At the beginning, the TCIDA estimated the value of the new building to be $24 million when finished, so the taxes over 10 years would be $3.1 million. However, with the sale the value of the building could go up, McDaniel said, so the taxes paid will reflect that, even with the PILOT agreement.
“The taxes are based on whatever the value and tax rate is, so if the value goes up, they’re paying more over the years,” she said.
The sale will trigger a new assessment of the property, so if the value of the property is deemed higher, the taxes will be too.
As for what people can expect with the new ownership, Newman will stay involved at the management level and the management team that has been running the building since it opened will stay on as well, so residents likely won’t notice many, if any, changes.