On March 23, Springfield City Council members listened to Heer’s building owner Kevin McGowan lay out his history with the downtown property. Even after detailing the series of delays the renovation project has encountered, McGowan ventured another guess at when the city would start seeing signs of progress.
“I keep giving dates, not because I’m inventing dates, but because I really think those are the dates,” he said.
His next date is April 23, by which he expects to accomplish two things: submit his application for a $11.8 million loan from the U.S. Department of Housing and Urban Development and fill in a $3 million financing gap of the $29.2 million redevelopment project.
Heer’s hinges on the HUD loan, McGowan said.
“Development financing is a miracle nowadays, and the only miracle out there right now is HUD,” he said.
McGowan stressed that HUD already expressed interest in the project when it invited him to apply for the loan. But he missed a Feb. 5 application deadline, because McGowan said he was changing the building’s ownership structure.
Once HUD receives his application, the federal agency would have 60 days to give “a thumbs-up,” McGowan said.
Because HUD loans aren’t available for condominium developments – McGowan’s original intent – he’s planning 63 market-rate apartments and amenities including a weight room, pool, library and atrium with open-air patio. The apartments have been appraised to rent at $1 per square foot, though McGowan said he might charge more.
His ultimate goal is to refinance when the commercial market loosens up and buy out the HUD loan in order to sell condo units.
Here’s the Heer’s funding structure: Along with the $11.8 million from HUD, Chevron Corp. has promised $5.3 million in exchange for the project’s federal tax credits; Commerce Bank would kick in $4.9 million for state tax credits; $500,000 would come from a five-person ownership group; and $3.7 million would be covered through deferred development fees, McGowan said. Those sources equal $26.2 million.
McGowan is crunching numbers to determine the best way to realize the $3 million needed to move forward with the project.
He declined to discuss two of the possibilities under consideration, but expressed some interest in using the city’s Recovery Zone Economic Development Bond allocation. The recovery bonds, which were allotted to the city as part of the American Reinvestment and Recovery Act, include $10 million for public projects and $15 million in facility bonds, which are for private projects, said Springfield Economic Development Director Mary Lilly Smith.
If the bonds aren’t issued by July 1, they’ll go back to the federal government, Smith said. Since the city isn’t going to use the facility bonds, it can reallocate them. McGowan isn’t the only one interested in the bonds.
“I’ve talked to a few developers and at least one other one is interested and thinks he may be able to put a deal together,” Smith said.
It will be the developer’s responsibility to find a bank to purchase the bonds. And not every project will be eligible, Smith said, noting residential rental developments, gaming establishments and golf courses are among the exclusions. That means only the first floor of the Heer’s building – which is planned for a Mike Shannon Steaks & Seafood restaurant and a bowling alley and restaurant – would be able to take advantage of the bonds, Smith said.
Recovery bonds for schools City council members have recent experience with the recovery bonds: At the Mar. 22 meeting, they considered a bill that would assign the $10 million public portion of the city’s allocation to Springfield Public Schools.
SPS plans to use the bonds as part of the $51 million in school bonds approved by voters in November and would allocate the money toward improvements planned for a $7.4 million renovation of Hillcrest High School and $9.4 million expansion of Westport Elementary School.
Before the school district can take advantage of the bonds, the city must designate the areas around Hillcrest and Westport as recovery areas. The number of foreclosures in an area is one way to determine a recovery area, and Smith said both school zones had a sufficient number of foreclosures to make the designation.
Westport’s school zone, she said, had 36 foreclosures in 2009, up from 16 in 2006. In the area around Hillcrest, there were 118 foreclosures in 2009 and 76 in 2006.
Council will vote April 5 on the recovery bonds bill, which approves the assignment of the bonds and designates the recovery areas.
Tax vote in June On June 8, voters will vote on a three-year extension of the quarter-cent capital improvements sales tax. The tax would create a projected $26 million in revenue for projects including roadwork, sidewalks and signage. During the Mar. 22 meeting, council members unanimously approved an ordinance calling for the election.
A soft date for WOW During councilman John Rush’s update of the Wonders of Wildlife renovations, he said December is the target for the museum’s soft reopening. WOW board chairman Rob Keck told Rush a grand opening would be scheduled a few months later.[[In-content Ad]]
Dame Chiropractic LLC emerged as the new name of Harshman Chiropractic Clinic LLC with the purchase of the business; Leo Kim added a second venture, Keikeu LLC, to 14 Mill Market; and Mercy Springfield Communities opened its second primary care clinic in Ozark.
