St. Louis developer Kevin McGowan and his loan company Berkadia Commercial Mortgage have missed a third deadline to receive U.S. Department of Housing and Urban Development insurance on an $11.8 million loan to help fund redevelopment of the Heer’s building, said Dale Gray, HUD spokeswoman.
The loan insurance application was due today.
Previous missed deadlines were the original Oct. 6 deadline and then Berkadia's self-set Oct. 15 deadline a week later.
Gray said a representative from Berkadia asked HUD officials on McGowan’s behalf this morning whether another extension would be considered. That request was denied, Dale said.
McGowan, who develops under Blue Urban LLC, released a statement this afternoon regarding the Heer’s project.
“After several years of efforts by Blue Urban and by many city and state government and other professionals, it is with regret that Blue Urban announces its decision to not move forward at this time with the submittal of an application to HUD in connection with the Heer's building in downtown Springfield,” McGowan, president of Blue Urban, said in the statement.
The loan was the largest piece of the Heer’s project funding puzzle.
McGowan now will be required to go back to the preapplication process, Gray said.
McGowan said he blames the sour economy for the failed project.
“With the changing economy, this deal is left with too much risk and too little reward for Blue Urban to proceed," McGowan said in the statement.
The Heer’s building will be secured until the economy improves, McGowan’s statement said. McGowan told Springfield Business Journal last week that roof improvements would be made and windows boarded up before winter.
In August, Springfield City Council approved
a term sheet and resolution that included a $2 million loan from the city to Heer’s Building LLC and McGowan. See the Dec. 6 Springfield Business Journal print edition for further coverage.