James DeRosa purchased the old Marshall McCarron's bar at Randall and John Avenue in Ohio City with dreams of reviving it as a hip restaurant.

Then, in 2008, the economy did a spectacular nosedive. Unable to get a loan to make even basic repairs on the dilapidated property, DeRosa and his partners put their dreams on hold. A mounting list of code violations soon landed them in housing court.

"We were faced with the option of tearing the property down or fixing it up," says DeRosa. "The neighbors thought it was important that this corner building be saved, and we didn't want to create another vacant lot in the city of Cleveland."

Eventually DeRosa and his partners Beth Kalapos and Thomas Stickney were able to obtain rehabilitation financing through Cleveland Action to Support Housing (CASH), a nonprofit whose mission is to revitalize Cleveland neighborhoods through repair and rehabilitation lending. Speculative retail was out of the question given the tight credit markets, so instead the developers turned the tavern into two new apartments.

"This project wouldn't have happened without the CASH program," says DeRosa. "They helped us get a reduced interest rate on our rehab loan so the project had positive cash flow." 

CASH uses Community Development Block Grant funds from the City of Cleveland to subsidize rates through a linked deposit program. The interest rate that CASH offers is 3% below the typical bank rate -- right now, the rate is 2.6%. The nonprofit also helps owners to hire a contractor, develop a list of repairs, and complete inspections.

Today, the old Marshall McCarron's has been renovated into two new market-rate apartments -- a two-story, townhouse-style unit on the street and a three-story apartment in the back. The developers turned the bar's patio into an amenity for the new residents.

The tavern, which was built in the late 1800's, has an illustrious history. The original property had likely been two separate houses, DeRosa says. They were pulled together -- most likely by horses --  to create the tavern.

"When we renovated the property, we found the seam between the two original houses, and we put the dividing wall back in to create two apartments," he says.

In the end, the historic tavern was not only saved, but handsomely restored. "We made mistakes, but we learned a lot and are proud of the project," says DeRosa.

Source: Jamie DeRosa
Writer: Lee Chilcote