Pulaski, VA
Pulaski’s jobs were scarce, and its economy was faltering. Enter two men who saw potential: David Hagan and Steve Critchfield. David bought the Pulaski Yankees in 2014, refurbished Calfee Park, and turned an old warehouse into the popular Jackson Park Inn. Steve saw a beautiful town with dilapidated homes and blighted commercial spaces, yet very unique architecture. He mentored a group of millennials and together they formed West Main Development. They renovated the town’s buildings using initial construction loans, special financing from Virginia Housing, private and community investment, and historic tax credits.
Stage of Investment: Development (Phase Two of Downtown Historic Revitalization)
Population: 8,799 (2019)
Date Started: 2014
Estimated Completion: Ongoing
Key Players
People: Steve Critchfield
Framer: West Main Development and Aggregate Capital
Project Manager: Aggregate Capital
Community Engager: Town of Pulaski
Technical Assistance: VHDA, DHCD, Hill Studio (historic tax credit consultant)
Investors: Town of Pulaski, County EDA, VHDA, DHCD, First Bank & Trust, Virginia Community Capital, National Bank of Blacksburg
The Spark
A shortcut to avoid traffic in 2014 led Steve, a Blacksburg private developer, to see potential in Pulaski’s dilapidated buildings. “I fell in love with the architecture of the downtown area because it reminded me of an area I used to live… in DC. So, I stopped, and we walked around, and I decided I was going to get something done downtown,” said Steve.
The Challenge
Steve considered historic tax credits to support revitalization. The traditional method did not make sense as it would only bring 20% of the capital. Historic tax credits are often sold through syndication. Syndication is a process in which the building owner brings in an investor into the building’s ownership structure so that the investor can claim the credits in exchange for providing equity. Steve decided to sell the Historic Tax Credits to local banks directly.
“The work is never finished in a community. There is always another building, another business, another idea to continue moving forward. We are so close to crossing the threshold for more developers to see Pulaski as the next great investment.”
The Investment
A variety of investments contributed to Pulaski’s transformation. Early on in the transformation, David Hagan invested in The Pulaski Yankees and Calfee Park. He renovated the park, made it into the team’s home field, and gave them a new name: The River Turtles. The Town of Pulaski has been proactively creating opportunities to encourage private investments with a variety of publicly supported funding tools, including a five year meals tax rebate for any restaurants and a five to seven years property tax rebate for developers that rehabilitate existing structures in the downtown area. The EPA Brownfields Grant helped assess existing buildings and form potential revitalization efforts, while the VA Housing Development Authority (VHDA), along with VA Community Capital (VCC) and DHCD, provided additional funds for pre-development assistance. The DHCD grant kicked off a planning process, which ultimately resulted in the 2016 Downtown Pulaski Revitalization Plan, led by the Town of Pulaski.
The first project for West Main Development (WMD) were two buildings located in the heart of Pulaski’s Commercial Historic District, three commercial/retail spaces, and four apartments. Students from Virginia Tech’s Pamplin School of Business completed market feasibility studies to help WMD find and help the future commercial tenants. As plans for these properties developed, Steve simultaneously purchased and renovated another building to house MOVA Technologies. MOVA is a green energy company that is developing a patented emissions filtration system. He then turned to finding ways to finance 87-89 and 94 W. Main by stacking capital from various sources. The Return on Investment:
The mixed use of buildings in the Grassroots District is essential to a positive financial ROI. Over 30 new businesses have come to Mercer St. since 2013, some of which have moved into renovated buildings.
The local foundation’s primary goal is to give back to the community. The founder of the foundation’s descendants recall him once saying, “Whether $1.00 or $1 million, give to what people are passionate about.” The focus on Mercer Street comes from a desire to bring back what once was: the hustle and bustle, the connections, and the care among community members. The Foundation believes creating spaces for these interactions is key to success. And for the younger generations, it’s about creating a future for families, and building on what they’ve learned and seen through their experiences.
Because the two buildings are in a historic district, they qualify for Historic Tax Credits (HTCs). WMD helped facilitate the purchase of the Historic Tax Credits by First Bank & Trust which counted as part of their Community Reinvestment Act obligations, ultimately allowing the project to move forward without involving a syndicator. VCC provided financing for construction costs with a bridge loan until the development could collect proceeds from historic tax credits.
These two buildings were also part of the 15 facade renovations to be completed on Main Street with support from a $696,846 Community Development Block Grant from DHCD. Collectively, all of the donating organizations represent over $2.5 M, while approximately $250K was contributed by individual investments in the two buildings.
The Return on Investment
The buildings have a combined fair market value of over $1M - fairly impressive given the acquisition cost of $70K. “Multiple businesses have opened and multiple developers have come to town since we started and many more will migrate to Pulaski as we complete our next few projects,” according to Luke Allison, WMD’s millennial leader and co-founder of Aggregate Capital. “Agencies are excited because they realize the regional and generational impact when they fund projects in rural communities compared to areas like Northern VA. People and businesses are starting to focus on Pulaski, not because the buildings are cheap, but because they are valuable.”
“One of the biggest ROIs is helping people feel better about where they live and how they live,” said Steve Critchfield. Current and future projects focus on creating a vibrant downtown offering quality housing, with local shops/restaurants that will attract workers seeking unique social and outdoor experiences. Currently, everything is rented, with other developers moving in and buying buildings to start renovating.
What’s Next?
A project at 37 W. Main St. is in process, with 7 others in the pipeline. Aggregate Capital hopes to give the 13,000 square foot building new life as 9 apartments and a local taphouse/restaurant space, using the same financing methods.
Key Takeaways
Invest in “third spaces.” Ideas and action come when people have a place to gather and converse. Multiple third spaces create a diverse group of community members.
The city can play a leadership role. While there are multiple perspectives in Princeton, the City Council staff and the EDA board are committed to development from within the community.
Support local investment and local ownership. Two examples stand out: 1) the EDA is exploring the transfer of ownership and use of the city-owned buildings to community members through loans and business assistance; and 2) an “intermediary investor” is engaged in supporting a community Owners Group to build wealth (see profile).
A foundation can take on risk and leverage investment. Foundations do not typically provide grants to purchase buildings.
Key Investments in the Capital Stack
Equity: $2.5M
Senior Debt: $600K
Loans for theater and Lonnie Gunter Center
Subordinated debt: None
Grant or Subsidy: $2M
Technical assistance grants from The Hub, Downtown Appalachia and Brownfields,
Flex-E Grants from the State Development Office,
EFA funding for transformational arts programming,
ARC funding for downtown growth,
Capacity building grants from FHLBank,
Mini-grants from The Hub,
Grants for festivals and Lonnie Gunter Center
Corporate sponsors