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What’s the future of the Jefferson Center and UpTown after Bitwise’s collapse?

Posted By: Toledo Blade on June 11, 2023.  For more information, please click here to read the source article.

Almost two weeks after Bitwise laid off its entire work force, including about 15 employees in Toledo, it remains unclear what will become of its historic UpTown building, which recently underwent a $38 million overhaul.

ProMedica, which had partnered with the Fresno, Calif.-based tech firm on the project, isn’t providing details — including about its investment, the building’s ownership structure, or whether it expects to have a presence at the 1300 Jefferson Ave. building going forward. Spokesman Tausha Moore said late this week that ProMedica was still “re-evaluating the project.”

Publicly available lease and deed documents associated with the property show it’s owned by Toledo Innovation Center Landlord LLC, which lists Bitwise’s California headquarters as its address. The documents are signed by Bitwise’s former co-CEO Jake Soberal, who was fired by Bitwise’s board along with the company’s other leader Irma Olguin, Jr., last week.

Several local officials say the silver lining is that the project got finished before Bitwise’s financial implosion. They said they still hope the facility could serve as a tech-focused business incubator, just without Bitwise as the primary tenant. Bitwise had planned to eventually employ almost 400 people at the 100,000-square-foot building.

“I’m satisfied that we have a rehabbed building that’s beautiful,” Lucas County Commissioner Pete Gerken said this week, adding that county officials have offered their assistance to ProMedica in the hunt for possible tenants. The county spent $1 million of its federal American Rescue Plan Act funds on the project.

Mr. Gerken said he does not believe Bitwise will be making any more payments on the building, so it’s crucial that tenants can be found to start paying back the loans taken out for the project — including a combined $17.5 million in financing provided by the Toledo-Lucas County Port Authority and the Development Finance Authority of Summit County.

John Szuch, chairman of the finance and development committee of the Toledo port authority’s board of directors, said the good news is there are still some funds leftover from construction that could be used for the building’s upkeep expenses and a few loan payments in the short term.

“It’s a very complicated capital stack,” Brandon Sehlhorst, the city of Toledo’s economic development director, said of the project’s financing. “There’s a lot of creditors involved in that project, and it’s going to take some time to unravel it.”

Officials acknowledged it won’t be easy to fill the building. Following the pandemic, Toledo has had an increasing amount of empty office space. The area’s office vacancy rate was 18 percent at the end of last year, according to the most recent Reichle Klein Group analysis.

Sam Zyndorf, managing partner of the commercial real estate firm Signature Associates in Toledo, said given the beauty of the remodeled building, a tenant can be enticed to move in eventually.

But he noted several big hurdles: The size of the empty space dwarfs what most local companies would need. Given the pricey remodel, a fairly high rent price will need to be charged. And recruiting an out-of-area tech firm to replace Bitwise will be difficult, considering the tech sector as a whole is slumping.

Lorraine Hotel, new apartments

Local leaders had pitched Bitwise and the remodeled Jefferson Center as the anchor of what they said could be an innovation and technology-focused UpTown revitalization. The district extends northwest from downtown, and its major thoroughfares include Adams and Monroe streets.

Toledo City Councilman Vanice Williams said the neighborhood “still has momentum” even without Bitwise coming, with its other existing vibrant areas that include the shops, bars, and restaurants along Adams.

“We can’t miss anything we didn’t have,” she said of the company.

She’s toured the remodeled building, and said she is convinced someone will want to rent it.

LeSean Shaw, the vice president of Bitwise Toledo before he was laid off, said in an email to Ms. Williams and other local leaders this week that he still hoped the building could be used for a similar purpose that Bitwise had in mind: training people from underserved communities technology skills that would help them get good-paying jobs.

“This is a moment in history, where we can be victims of the implosion of Bitwise Industries, or we can take advantage of the momentum that the company has created,” he wrote.

The Jefferson Center isn’t the only highly touted UpTown project that has stalled out in recent years. The nearby Lorraine Hotel, at 1117 Jefferson, has long been a candidate for a makeover, but it hasn’t yet materialized. Most recently a Cleveland-based group wanted to turn the vacant building back into a working hotel, complete with a café and rooftop lounge, but the firm later backed out.

There might be fresh hope for the old hotel, however. Rami Sebai, an associate adviser for SVN-Ascension Commercial Realty, said this week the building recently went under contract, and the out-of-town buyer appears to be interested in turning it into apartments. He declined to say who the developer is or what the price was, only that it was above $500,000.

In another part of the neighborhood, ProMedica and a Columbus developer, Windsor Cos., in 2020 had proposed a large apartment project on four acres across the street from Uptown Green Park. But there has been no publicly announced movement on the plan for about two years.

Ms. Moore said this week the project is still active, but “there is no definitive timeline for that project, as the developer is still in the process of finalizing the design.”

Marty Lahey, co-owner of Manhattan’s Pub ‘n Cheer on Adams, said that street has steadily added new businesses and developments in recent years, but other parts of the neighborhood have been slower to see signs of a rebirth.

A key for the neighborhood, he said, will be to figure out how to attract more housing developments, including on the many empty plots of land in the neighborhood, which would then be followed by additional retail.

“We still have a ways to go,” Mr. Lahey said.

‘Massive’ infrastructure overhaul

One game-changer for UpTown could come in the form of a massive grant from the U.S. Department of Transportation.

The city unsuccessfully applied last year, and is trying again this year, for a $25 million grant which would help fund a more than $50 million overhaul of 38 city blocks over the course of six years.

The overhaul would include water and sewer upgrades, road work, new sidewalks, streetscape improvements, more trees, and a new TARTA mobility hub, according to the city’s application for the funds.

Mr. Sehlhorst said a central goal of the project would be to better connect UpTown with the Junction neighborhood, on the other side of I-75, including with a multi-use path. Much of the money would also go toward improving streets in Junction.

“In many ways, Junction and Uptown are poised for transformation,” the city’s application for the federal money stated. “However, fully capitalizing on this momentum — and, crucially, ensuring that all neighborhood residents have safety and equitable access to its benefits — will require a fundamental transformation of the area’s infrastructure.”

Mr. Sehlhorst said, if approved, it would be a “massive project” that would involve “essentially tearing up all of UpTown” over a six-year period starting in 2026. He said the city expects to hear back on whether it has secured the grant by June 28.