By Steve Kemme
The Cincinnati Enquirer

HAMILTON - George Schmidt envisions downtown Hamilton's three historic Mercantile buildings being completely renovated and fully occupied with offices and retail stores by the end of 2004.

It's an ambitious plan for three deteriorating 19th-century structures that have been vacant for more than three years. But he believes strongly enough in this vision that he recently agreed to buy the three buildings from Hamilton for $1 and to assume the financial risk for the $3.5 million to $4 million project.

"These buildings have always intrigued me," said Schmidt, who owns a McDonald's restaurant downtown and in two other Hamilton locations. "I believe that when we're finished with this, the city is going to be very proud of these buildings."

The renovation of the Mercantile buildings, which sit side-by-side on High Street, is an important part of the effort to revive the struggling downtown of this Butler County seat, Greater Cincinnati's second-largest city.

Schmidt is lining up tenants for the three-story buildings. He plans offices for the top two floors and retail - perhaps clothing stores or a book/music store - on the first floors.

The city bought the buildings for $575,000 four years ago to save them from being demolished and replaced with a parking lot. Under the agreement with Schmidt, Hamilton will be repaid over 28 years through tax-increment financing, a development tool that uses property tax revenue to help pay for a project.

"I was against the city buying this property," Councilman Richard Holzberger said. "But I'm glad to see something good is finally coming out of it."

The deal between Hamilton and Schmidt will be finalized before the end of this month. Schmidt, who is president of a group of downtown business and property owners called the Special Improvement District, is trying to fashion a financial package of grants, loans and tax credits. He has hired the Miller-Valentine Group of Dayton and Sandvick Architects of Cleveland to work on the project.

The actual renovation work of the buildings, which have ornate stone facades, will start next spring. In the meantime, the buildings will undergo structural repairs to prevent further deterioration over the winter.

"Those buildings are really part of the downtown fabric," said Neil Barrille, assistant city manager. "Having George come to the table with a development proposal is very important to the community."

Schmidt admits he's taking a big risk with this project.

"A lot of projects that are high risk are also very high reward," he said. "I hope this sparks more risk-takers to come on board downtown."

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E-mail skemme@enquirer.com