7/17/2009 11:06:00 AM Heer's developer invited to apply for $12M HUD loan
The Heer's building sits on the northwest corner of Park Central Square.
Kevin McGowan, president and CEO of Heer's developer Blue Urban LLC, visited Springfield's square Friday to announce that a HUD-backed loan for the project has been pre-approved.
The U.S. Department of Housing and Urban Development has given Heer's building developer Blue Urban LLC the formal go-ahead to apply for an $11.8 million loan for the renovation project.
Blue Urban filed a pre-application package with HUD in May, and HUD officials followed up with a review of the proposed project. The approval for a loan guarantee means Blue Urban will file paperwork around Oct. 1, when final architectural plans and construction costs are completed, according to a city news release.
The loan is through HUD's Section 220 program, which insures lenders against losses on mortgage defaults for multifamily housing projects in urban areas targeted for revitalization.
The next big hurdle for Blue Urban President and CEO Kevin McGowan: City Council approval of his requested incentives package. The balance of the $27 million project will be funded by historic preservation tax credits and local incentives, he said.
Missouri law allows a tax credit equal to 25 percent of qualified expenditures associated with a historic redevelopment project, and the federal program offers a 20 percent tax credit.
McGowan said he'll also seek New Market tax credits, which are available for redevelopment projects in low-income census tracts, and he's previously expressed interest in establishing a tax-increment financing district for Heer's.
In the coming weeks, McGowan and Economic Development Director Mary Lilly Smith will review the available incentives in hopes of submitting formal requests to council by Labor Day. Smith said the council, which has almost entirely turned over since approving the original Heer's redevelopment agreement with McGowan in August 2007, would have to consider each requested incentive separately.
Plans call for 61 one-, two- and three-bedroom units with rents ranging from about $800 per month to $1,300 per month. A Mike Shannon's Steaks and Seafood restaurant and other commercial tenants will be on the main floor.
If everything stays on target, renovation of the Heer's could begin by January 2010. McGowan estimates construction will take about a year.
"We will be ready to go as soon as we get these final details resolved," McGowan said in the release. "I can't wait to show Springfield that we'll get this done despite all of the obstacles we've faced in this unprecedented development market."
McGowan initially planned to renovate the building into 40 for-sale condos, but a declining market for downtown condominiums and the country's tightened credit climate left him unable to obtain traditional financing for that project. He's left intact a rooftop pool on top of the Heer's annex, a fitness facility, two libraries, study rooms and a theater room.
McGowan said he's already talked at length with newly elected Mayor Jim O'Neal about the Heer's project. Without the city's commitment and the HUD-backed loan, McGowan said the project would likely have been in jeopardy.
"It's just a lousy time to do development," he said.
Last summer, McGowan switched to apartments when redeveloping Window Lofts and Piper Lofts in downtown Kansas City. The $90 million historic renovation projects, along with a city parking garage, according to the Kansas City Star, recently wrapped up. McGowan is leasing the units for between $1.05 to $1.35 per square foot, the Star reported.
