Prost cedes Heer's to city, averts foreclosure

The city announced Dec. 18 that Prost had signed a deed to transfer ownership of the 156,000-square-foot former department store as part of an 11th-hour agreement reached by both parties. The transfer came at no additional cost to the city, which purchased Prost’s $3.1 million loan from Great Southern Bank in mid-October with a low-interest loan from the Missouri Development Finance Board.

The surprise announcement came just 24 hours before the city had planned to foreclose on Prost’s loan and auction the property in front of the Greene County courthouse.

In a news release, the city described the agreement as “amicable.” The pact “was in the best interest of all parties concerned,” Prost told Springfield Business Journal.

“You have to make various business decisions in life and some of those are tough decisions,” he said.

Mary Lilly Smith, the city’s economic development director, said Prost’s attorney contacted the city earlier this month about relinquishing ownership of the building.

“Once he made that offer, it really came together pretty quickly,” Smith said. “I think he was interested in having a friendly settlement and remaining a viable candidate for the redevelopment of the Heer’s building. Going through the foreclosure was not going to be pleasant for either of us.”

Prost bought the Heer’s building from Warren Davis Properties for $2.2 million in 2004 and later negotiated an agreement with the city for the exclusive right to redevelop the abandoned seven-story structure. Prost had planned to convert the building into a mixed-use development with class A office space and luxury condos on the upper floors and retail and restaurant space on the lower levels. But he was unable to lock in a $23 million construction loan.

After Prost missed a series of financing deadlines and lost his exclusive right to redevelop the building, the city shopped the project around to other interested developers. Magers Management Co. of Springfield and Restoration St. Louis and McGowan Walsh, both of St. Louis, have expressed interest in taking over where Prost left off, although the city says his Springfield Office Building LLC is still in the running.

Moving on

No timetable has been established for selecting a new developer, but city officials said they would move forward aggressively. An 11-member committee has been formed to oversee the selection process, and Smith said she’s hopeful the panel will have a recommendation for City Council in the first quarter of 2007.

“I think what we most want to see is a project that makes financial sense,” she added.

The city has rejected Prost’s amended redevelopment plan, which called for 18 additional condos in place of unleased office space on the building’s third and fourth floors.

“We had various opportunities to sign up some major office tenants,” Prost said. “But for whatever reasons, those office tenants did not sign up, so that required us to go to Plan B.”

But a $20 million financing commitment from Bank of America in St. Louis hasn’t been withdrawn, said Dave Puricelli, the bank’s senior vice president.

“We still have our internal approvals of the way the deal was going to look,” Puricelli said. “We’re just … sitting on the sidelines waiting to see what the city’s decision is and hoping it’s Vaughn.”

Assistant City Manager Evelyn Honea said the city plans to send letters to the developers in the next 30 to 45 days to gather additional information about their financing capabilities and parking plans as well as any requested incentives.

Kevin McGowan with McGowan Walsh said his firm’s interest in redeveloping the Heer’s building hasn’t waned in light of the city’s tug-of-war with Prost.

“It’s perhaps the most beautiful building in all of Springfield, and we want to contribute to turning around of a significant part of downtown: Park Central Square,” McGowan said.

Parking hang-up

McGowan told SBJ in August that the first floor of the Heer’s building should be renovated for retail/restaurant space and the second floor should be reserved for commercial tenants. The top five floors should be strictly residential, he said.

“We’re getting calls from people in Springfield who think we might get (the project),” McGowan said. “That tells me there’s a lot of interest from the residents of Springfield to purchase a loft downtown.”

McGowan said Prost’s redevelopment plan had too much office space and was too closely tied to a city-owned parking deck slated for construction on a vacant lot just west of Heer’s. McGowan Walsh has proposed a parking garage beneath the building.

“That project is doable. It was doable two years ago,” McGowan said. “That (city parking deck) is contributing to the difficulty of developing the Heer’s building. The Heer’s building can be self-sufficient in terms of parking.”

McGowan Walsh has renovated historic buildings as upscale lofts in Kansas City and St. Louis, where the firm most recently sold 61 of its 68 Ballpark Lofts ¬in a single day. The firm staged a draft-style event for prospective buyers who paid $2,500 upfront to participate. Lofts ranged in price from about $150,000 to nearly $400,000, McGowan said, noting that lofts in the Heer’s building would sell for about the same amount and under the same bidding structure.

Springfield’s Selection Committee for Heer’s Redevelopment

Mary Collette, City Council member

Conrad Griggs, City Council member

Bob Cumley, city manager

Evelyn Honea, assistant city manager

Tom Finnie, downtown development consultant

Mary Mannix-Decker, city director of Finance

Louise Whall, city director of public information

Phil Broyles, city assistant director of Public Works

Dan Wichmer, city attorney

David Queen, municipal finance attorney with Gilmore & Bell PC

Mary Lilly Smith, city director of economic development

These 11 members will help to choose the developer for the Heer’s project. In the running are:

• Magers Management Co.

• McGowan Walsh

• Springfield Office Building LLC

• Restoration St. Louis[[In-content Ad]]