Erie City Council signs off on $1 million in loans for Avalon Hotel transformation

The city of Erie is providing a $1 million financial boost to a developer’s plan to transform the former Avalon Hotel at 16 W. 10th St. into an apartment complex.

Erie City Council, at its regular meeting on Wednesday morning, approved two $500,000, low-interest loans for New York-based GoodHomes Communities LLC , which now owns the eight-story property.

One loan is from the city’s Enterprise Zone Revolving Loan Fund; the other is from Erie’s Urban Core Economic Recovery Revolving Loan Fund. Both carry 10-year repayment terms and interest rates of 2.99%, according to Chris Groner, who manages the city's revolving loan funds.

Project details

An Erie County Redevelopment Authority affiliate, the Erie County Industrial Development Authority closed on a $30.6 million bond in April for the project. GoodHomes’ purchase of the property was also finalized in April.

GoodHomes officials have said the building, built as a Hilton Hotel in 1976, will be transformed into a 197-unit affordable housing workforce apartment complex that will include leased commercial space on the ground floor as well as a clubhouse, mail room and a laundry room for tenants.

The city loan, Groner said, will be used to create the new ground-floor commercial space.

Tina Mengine, the county Redevelopment Authority’s CEO, has said the apartments will not be government subsidized, but will rent for what Mengine called affordable prices in the range of $800 to $900 a month. GoodHomes is also expected to lease space on the first floor to UPMC Hamot for medical offices.

The project could be completed as soon as spring 2025, Mengine has said.

GoodHomes, formed in 2022, has been involved in residential development and redevelopment projects involving more than 5,000 apartment units. The company purchased the property from Ramesh Diora, whose ownership group bought the Avalon for $1.8 million in 2010.

Other Business

City Council on Wednesday also approved:

• A first-reading ordinance that seeks to extend the city's Local Economic Revitalization Tax Assistance program through July 31, 2029. LERTA provides 10-year tax abatements for new construction or improvements at residential/commercial properties citywide. The extension is necessary because the city's LERTA ordinance includes what’s known as a sunset provision, which means citywide LERTA tax breaks will expire on July 31 unless the three taxing bodies that signed off on them — the city of Erie, Erie County government and the Erie School District — agree to extend the program. City Council is expected to take a final vote on LERTA's extension on July 17. Mayor Joe Schember has called LERTA a success that has spurred nearly $320 million in commercial/residential development within city limits, including the waterfront. That includes more than $50 million in residential property investments.

• Final appropriation of $2.9 million in Community Development Block Grant funds, $764,318 in Home Investment Partnership funds and $267,205 in Emergency Shelter Grant funding from the U.S. Department of Housing and Urban Development. The annual funding is used citywide for various housing and community development programs.
• A first-reading ordinance that appropriates an additional $375,571 from the Erie County Metropolitan Planning Organization for the $2.4 million Kahkwa Bridge project in west Erie. That funding, as well as the final construction contract for the bridge, is expected to receive final approval at City Council's July 17 meeting.
• A $275,000 loan from the city's Small Business Diversity Revolving Loan Fund for East Side Renaissance , an initiative that focuses on improving Parade Street between East Sixth and East 12th streets and surrounding neighborhoods. Those areas have been heavily affected in recent years by poverty, blight, crime and other issues. The loan carries a 15-year repayment term and a fixed interest rate of 1%. The money will be used for mixed-use building rehabilitation.

Contact Kevin Flowers at kflowers@timesnews.com . Follow him on X at @ETNflowers .

This article originally appeared on Erie Times-News: Erie City Council signs off on $1 million in loans for Avalon Hotel transformation