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Yes $9.5M is a ton of money, but Northern Breweries building worth the investment, developer says

Greg Oldenburg his condo development would turn an eyesore into a tourist attraction

He knows its a large request, but Greg Oldenburg says the $9.5 million he's seeking in tax relief, rebates and interest free-loan represent the city's best opportunity to make progress on some of its highest priorities.

Oldenburg has been working the last few years to turn the derelict Northern Breweries building into the Brewer Lofts, a 50-unit condominium development. His proposal is headed to the city's planning committee Monday.

The applications are mainly through two programs: the downtown community improvement plan and the brownfield strategy. The latter offers incentives to businesses looking to redevelop former industrial sites. 

"They're the difference for either myself or potentially anybody else to make this thing feasible,” Oldenburg said Thursday. “I would not have bought the building if not for these programs."

The $23-million project, which he aims to complete by 2019, has 85 per cent of the financing in place from outside firms. But that financing is contingent on him receiving an interest-free loan of $4.5 million under the brownfield strategy. Since the entire budget for the strategy is $250,000, it would require special approval during budget talks.

While it's a lot of money, Oldenburg said he wouldn't have access to the funds until he has enough condos pre-sold. 

"There's no risk to the city because the only way we get to access that money is once we begin construction," he said.

The lenders he's dealing with want to ensure that he has access to enough capital in case there are cost overruns during construction.

"This could be used as more of a covenant,” he said. “If the project is $20 and it goes to $21, and we only have coverage for $20, where does that $1 come from?”

The money would be repaid within months of the completion of the development, Oldenburg said. Unlike an apartment building, condo buyers pay the full amount upon completion of the project, allowing lenders to be repaid quickly.

"Instead of waiting five years for that money, the money comes in, basically, within months of the registration of the condominium," he said. "The $4.5 million that's here would be used for, maybe, 12 months at the most, if it's used at all."

He's also seeking $1 million from a program in the Downtown Master Plan that encourages builders to provide more residential housing downtown, with a goal of adding another 3,000-5,000 downtown residents. That program is capped at $200,000, but Oldenburg said Brewer Lofts represent an opportunity to make some real progress on that goal.

"The $200,000 really represents 10 doors, and if there's any real interest in the city to fulfil this mandate, we're doing 50 doors that we would close all at once,” he said. “We're achieving a five-year goal for that particular program. So I'm saying, we're doing 50 doors, all at once. These are not high end. They're going to be very nice, but high-end is a completely different level of money."

While he has heard naysayers who are skeptical of his plans – online bloggers in particular – Oldenburg said he's passionate about preserving and re-purposing one of the oldest and most unique buildings in the city.

He said it could line up with Science North and the Big Nickel as a tourist attraction in the city. 

"It isn't just about the bottom line,” he said. “I think there's a greater purpose for this particular project, to create another viewpoint for the city, and a certain progression for the city. To take a building that, when it was built, was the third largest employer in the City of Sudbury to bring it to something where architectural tourists will come to see.

"And the building will be very much a public building, given the nature of the amenity spaces that are in there."

Getting access to the funds is essential to the viability of Brewer Lofts, he said. Without the programs, there's little chance he, his partners and the banks will make money.

"The brownfield program and the downtown CIP are key to providing, not only myself and the partnership, but the banks comfort that there's the potential for enough profit to reduce the risk of the investment,” he said. “This is not a non-profit."

And while he has heard critics who say they should just tear the building down, Oldenburg says that would be a colossal waste of an opportunity.

"Taking it down doesn't help anything,” he said. “A lot of people say, just take the building down. But when I take anyone through the building they're amazed, first at how big it is, and second how well built it is.

"These are interesting (structures) in this city I think should be celebrated. That's the intention of a lot of this."

In terms of long-term value, he said the building currently has a tax bill of about $14,000, a figure that would increase exponentially when it becomes Brewer Lofts. 

"For the city, if this project — or any other brownfield project — doesn't get realized, there will be no additional tax value," he said. "The risk for the city is that if the brownfield and downtown (CIP) aren't approved for myself or for the other applicants, these types of projects will never happen."

While he has sunk hundreds of thousands into the project already, Oldenburg said he'll survive if he gets a 'no' from the city.

"Certainly, that would affect me. If there's a 'no' to the downtown CIP and the brownfield, that's a real problem because it affects the City of Sudbury more than it affects me. I'll take my lumps, but it would really call into question the integrity of the very policies that have been put into place."

See Oldenburg's full proposal here

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