Heer's developer misses HUD deadline

Heer’s Tower developer Kevin McGowan missed a Feb. 5 deadline to apply for funding from the U.S. Department of Housing and Urban Development, but neither McGowan nor the city of Springfield appears concerned.

“That’s really between him and HUD, and as I understand it from talking with him, he’s coordinated everything with HUD and they are waiting for his application,” said Mary Lilly Smith, economic development director for the city.

McGowan said his St. Louis-based development company, Blue Urban LLC was working with HUD representatives. A request for a deadline extension was denied, he said, but he’s decided to take a different approach, one he calls a “direct-to-firm” route.

“The bottom line is, the project will be delayed 15 days,” he said.

McGowan said his application for the $11.8 million HUD loan for the estimated $30 million Heer’s renovation was delayed while he put together a specific ownership structure for the project. Some of the details that needed to be worked out included the amount of personal loans owners would need to personally guarantee and the different percentages for each owner.

Shared ownership of the building was always part of the plan, McGowan said, noting changes to the structure weren’t made to satisfy HUD. That structure is taking shape, he said, adding that there should be five individuals with ownership of the building, including himself and his father-in-law Mike Shannon, owner of Mike Shannon Steaks & Seafood, which already has committed to putting a restaurant on Heer’s main floor.

The group of owners is looking at increasing construction costs. The renovations were originally estimated to run between $25 million and $27 million. After replacing estimated bid numbers with hard numbers and adding $800,000 in roof repairs that weren’t in the original plans, McGowan said construction costs are now expected to come in around $30 million.