Renovation of Former Candy Factory into Apartments Witnessed by Member of Founding Family
Renovating a historic building can be rewarding. Doing so while a member of the eponymous family watches is even better.
James Flanigan, owner of J.D. Lewis Construction Management in Richmond, Va., is experiencing that as his company renovates the former Weatherly Candy Factory and an adjacent office building in Elizabeth City, N.C., into apartments with the help of historic tax credit (HTC) equity.
“It was a candy factory since 1923,” Flanigan said of the Weatherly Candy building. “There were four generations of Weatherly Candy manufacturers and the last one is still alive. He lives in view of the property and is excited to see it. It’s kind of cool to have a tangible human who knows the history of the property.”
Work started early last fall, capping a long journey from conception to ground breaking–with J.D. Lewis Construction Management serving as the developer and J.D. Lewis Construction NC LLC as the construction company.
Image: Courtesy of J.D. Lewis Construction Management
The Weatherly Candy Factory in Elizabeth City, N.C., is being renovated into apartments with the help of historic tax credit equity. The property was built in 1923.
“I drove through Elizabeth City about six years ago to look at another property and this was the most prominent building when you come to Elizabeth City from the Outer Banks,” said Flanigan. “We looked at the building, thought it was great, but it was overpriced. We couldn’t make a deal and it just sat there for a few years. A year-and-a-half ago, we got it under contract and started the tax credit process.”
In 18 months, the property went from being under contract to starting construction–in early December 2018. Once finished, it will include 44 upscale rental units at a cost of $5.7 million–about one-third coming in HTC equity.
“It’s located on the Pasquotank River and has great river views. It’s in the old historic downtown,” Flanigan said. “Elizabeth City is a commuter city for Chesapeake, Norfolk and Virginia Beach. Housing is more affordable and there’s a big effort to make downtown more viable.”
The Weatherly Candy Factory apartments should help with that.
“This property is yet another example of how important the HTC is,” said Thomas Boccia, a partner in the Cleveland office of Novogradac & Company LLP, who provided projections on the development. “Because of the credit, James and his team are able to keep a great historic building in use and meeting the needs of the community at the same time.”
New Apartments, Great Location
The renovation will transform the former candy factory and an adjacent building into one- and two-bedroom apartments, from 550 to 1,000 square feet each. Rent will be from $1,100 to $1,200 monthly. There will also be 35 parking spots.
“You’re always trying to maximize your unit count while producing well-designed units,” Flanigan said.
The apartments will have exposed brick walls, metal columns, wood beams and the original heart-of-pine floors. While the new homes will be nice, the location is the key.
“The biggest amenity is the downtown,” Flanigan said. “The Pasquotank River feeds into the Albemarle Sound, so there’s an abundance of water-related activities. The intercoastal waterway is there. There’s a nice waterfront park where you can tie your boats up overnight. Elizabeth City is an up-and-coming city, so it’s fun to be in on that part of its rejuvenation.”
The Weatherly Candy Factory building was erected in 1921 as a modern facility for the Weatherly Candy Company, which was founded in 1890. At its peak, the firm employed about 50 workers and produced as much as 2 million pounds of candy per year. The company remained open until the 1970s.
The building was one of the first structures built on Elizabeth City’s waterfront after the Civil War and was noted for its safety features and equipment that allowed candy to be manufactured without being touched by people.
As a historic building, there are a few hurdles during construction, including the presence of asbestos-containing material, which needed to be identified and abated; as well as needing zoning approval to allow multifamily use. Structurally, there was roof damage, a required relocation of power lines, the need for a deeper elevator pit and required National Park Service (NPS) approval to remove non-historic vinyl cladding and subframing.
Flanigan said working with the NPS and the state historic preservation office went smoothly.
“We had done some similar projects in Richmond and know the NPS guidelines well,” Flanigan said. “We’ve drafted a number of Part 1 and Part 2 applications. This is an old warehouse. Also it was a car dealership and factory, so we knew how to take the plans to the NPS.”
Tax Credits Crucial
Flanigan received approval for federal HTCs for the factory building, then for the adjacent building. He said the tax credits were indispensable.
“It was always a tax credit job,” Flanigan said. “Others looked at it as a teardown, but in our mind and with our history of tax credits, it made sense as apartments.”
Linden Capital was the syndicator for both federal and state HTCs.
“At its simplest, we look at two inputs–do we like the project and do we like the development team,” said Jim Bonbright, president of Linden Capital, which syndicated both the federal and state tax credits via one of its national tax credit investment funds. “For Weatherly Candy Factory, the answer on both fronts was a resounding yes. It’s a cool building in a part of town with a lot going on. Equally important, James and [co-owner] Kevin O’Leary have an excellent reputation with a track record of developing great projects.”
Flanigan said there was education involved for his company.
“This is the first one where we’ve federal syndicated credits,” Flanigan said. “That was a learning curve.”
Bonbright said this development, like most HTC properties, had an element of mystery.
“Historic renovations are always fascinating, but they all have unique opportunities,” he said. “Sometimes you open up a wall that’s 80 years old, not knowing what exactly will be inside of it.”
The financing was critical.
“[Tax credits are] the only reason this happened,” Flanigan said. “Without tax credits, this building would rot.”
Instead, a former candy factory will soon be apartments. With a member of the Weatherly family watching it happen.
There are no reviews yet.