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ALLENTOWN, PA. - . Pennrose Properties specializes in restoring landmark buildings, and its expertise was just what this city needed to transform two early 20th Century downtown buildings into 63 one-bedroom apartment units for independent seniors aged 62 and older.

Allentown Center Square Senior Housing was created by restoring the former Allentown National Bank and the former Trojan Powder Building, which stand side by side on the same block.

Built in 1905 and 1912, respectively, the buildings “were in a state of terrible disrepair,” according to Pennrose. The restoration included removal of a drop ceiling that had been inserted into the bank lobby, revealing a dome that was restored and is now part of the common area.

Turning commercial buildings into apartments was challenging and costly, the firm said. The floors of the two buildings did not align, so dual-stop elevators were installed. Remediating lead paint and asbestos and restoring the historic dome also added significant expenses. The total development cost was $12.2 million, or $193,000 per unit. Construction costs were $8.5 million, per the original contract, plus $841,000 in change orders.

The firm says it raised $9.3 million in equity from low-income and historic tax credits for the project. The city helped with an $800,000 loan from HOME funds for a term of 30 years with interest accruing at the applicable federal rate.

Other financing included a $1.2 million loan from the Pennsylvania Housing Finance Agency’s PennHOMES program. It has a 30-year term at zero percent interest, with deferred principal payments for the full term.

The project had a $1 million tax credit allocation, or about $16,000 per unit.

For the environmental remediation, the sponsors obtained a loan for $428,000 from the Department of Community and Economic Development’s Industrial Sites Reuse Program. It has a 30-year term, with no interest and deferred principal payments.

The 62 one-bedroom units are sized at 548 square feet and rent for up to $469. There is one efficiency unit, which is 395 square feet and rents for $375. About half the units are targeted to people earning up to 60 percent of the median income. The balance is targeted to people with incomes maxing out at 40 percent and 50 percent of AMI.

A part-time on-site service coordinator will link residents to aging, health, transportation, and other community services. Low-cost on-site meals are among the services offered to residents.

The development also has a gym, a computer lab, a community room, and an examining room for visiting doctors and nurses. Lease-up began April 2006, just a month before completion. Full occupancy was achieved in eight months.

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. Before Allentown Center Square Housing Partnership, L.P. (the partnership for which Pennrose, GP, LLC, serves as its general partner) took ownership of the Allentown National Bank and Trojan Powder buildings in 2005, the structures seemed destined for demolition. Years of neglect and abandonment had left these two prominent landmarks at Allentown’s Center Square in such poor shape that even city redevelopment and economic development leaders were hard-pressed to offer any hope of saving them. One year later, the partnership led by Pennrose President Mark H. Dambly proudly hosted a grand opening for the development..

Allentown Center Square Senior Housing involved the rehabilitation of two historic buildings—the former Allentown National Bank (c. 1905) and the Trojan Powder building (c. 1912) into an independent-living, senior apartment facility consisting of 63 units for households over the age of 62.

The rehabilitative scope of work included the complete remediation of all environmentally hazardous elements and the removal on non-historical elements throughout the building; the complete stabilization of the structure of the buildings, including the stabilization of the ornamental cornices and façade elements; the restoration of the Allentown National Bank interior elements, including the removal of the floor inserted into the bank lobby and the restoration of the interior building elements; complete rehabilitation of the 11 floors of the Trojan Powder building and eight floors of the Allentown National Bank building into 63 apartments and related community spaces.

By combining these two historic structures and eliminating an eyesore that had become a white elephant in the heart of the city’s business district, Pennrose Properties and the City of Allentown were able to preserve the buildings and create quality affordable housing for senior citizens in the heart of the redeveloping Center City commerce district. The new apartment complex also includes a community room, computer lab, exercise and health rooms, resident laundry facilities, and onsite parking in a mix that provides modern amenities while acting as a catalyst for continued development throughout the downtown business district.

Allentown Center Square both provides for the adaptive reuse of historic structures for affordable housing for low-income senior citizens, and serves as an integral component in the overall community revitalization of downtown Allentown. The project has previously been recognized with the 2005 Lehigh County Urban Redevelopment Pioneer Award, and the 2006 Allentown Preservation League Award.

Q. How does this project represent an innovative solution to a specific development challenge?

A. The Allentown National Bank and Trojan Powder buildings, though historically significant, succumbed to years of neglect and decay which had placed the two buildings in a state of terrible disrepair.

In a determined and concerted effort to put the buildings back into productive use and eliminate the eyesore that had slowly developed, the City of Allentown solicited proposals for the buildings’ rehabilitation. Unfortunately, the city’s search for proposals left them virtually empty-handed; developers were just not interested in tackling the job at hand. The anticipated costs were essentially prohibitive, and the market was not well established. Although the city wholeheartedly supported the buildings’ rehabilitation, and was successful in having the property designated a Keystone Opportunity Zone by the Commonwealth of Pennsylvania, developers had a difficult time determining a viable end-use for the buildings.

Fortunately, Pennrose had the vision and determination to make a deal work, which enabled them to prepare a development proposal that was economically feasible and that would allow the city to retain these magnificent, historic structures at what is unquestionably the most prominent intersection in the City of Allentown. Now, several years later, Allentown Center Square is an extraordinary success, not only for Pennrose, but also for the City of Allentown and its residents. The eyesore has been eliminated, the buildings have been historically preserved, and a new, glorious, affordable, service-enriched home has been created for 63 deserving households.

The work of Pennrose and the City of Allentown serves as a shining example of what can be done with aging urban properties. Together, Pennrose and the city rallied the financial and community support required to preserve and restore two buildings—once the pride of Center City Allentown—that had become no more than white elephants destined for demolition.