The Stories That Shaped 2008, No. 8: Credit crunch, square redesign hang-ups hamper Heer's project

The arrival of 2008 brought with it the promise of cosmopolitan condominiums overlooking a modernized Park Central Square, but the city's best-laid plans for downtown Springfield were again undermined by unforeseen financial and political forces.

And the coming year will be drenched in déjà vu as St. Louis developer Kevin McGowan takes another crack at redeveloping the Heer's building with a loan guaranteed by the U.S. Department of Housing and Urban Development. This time, McGowan plans to convert the former department store into 61 apartments, with monthly rental rates ranging from $600 to $1,200.

A little more than a year ago, McGowan - standing in the square with Heer's as his backdrop - proudly announced that his company, Blue Urban LLC, would renovate center city's most notorious eyesore as 41 upscale condos above a Mike Shannon's Steaks and Seafood Restaurant.

At about the same time, Springfield architecture firm Butler, Rosenbury & Partners Inc. was putting finishing touches on its proposed redesign of Park Central Square - a project partially funded with a $1 million Federal Highway Administration grant.

In February, BRP unveiled a hybrid park-plaza design that included four "media towers" with speakers and lights that would support a canopy for outdoor shows.

While the design generally received high marks, the price tag - nearly $3 million - was difficult for some to accept.

City Council approved the costly overhaul, but lone dissenter Councilman Dan Chiles pursued talks with renowned landscape architect Lawrence Halprin, the man who designed the square's current layout and unique fountain.

Chiles' conversations with historic preservationists eventually led to the intervention of the Missouri State Historic Preservation Office, which determined that the square's inner portion is eligible for listing on the National Register of Historic Places.

Chiles, who was heavily criticized for his actions, said he's pleased with the outcome.

"Look what we've got now," he said.

"We have preserved what is now recognized as an important and architecturally significant piece of work in the center of our city."

While the state's determination prohibits federal funds from being used to revamp the square, it does not bar a privately funded renovation project, state Preservation Office Director Mark Miles said.

With the square redesign effectively blocked, the council voted in June to move forward with streetscape improvements on the square's less controversial perimeter - originally envisioned as the project's second phase.

Through its agreement with McGowan, the city was required to break ground on square improvements by Aug. 1.

McGowan, in turn, pushed back his construction start date on the Heer's condo project to late summer and postponed a draft-style sales event designed to secure buyers for the one-, two- and three-bedroom units.

Mounting concerns that the Heer's project was in jeopardy were addressed in late July, when council members approved a revised redevelopment agreement with McGowan.

The new agreement eliminated a clause that authorized him to sell the dilapidated downtown building back to the city if square renovations didn't start by Aug. 1. In return, the city dropped a personal guaranty of up to $250,000 that McGowan consented to in the original agreement, which would have assessed daily fines of $1,400 if he had missed the Sept. 1 deadline to start work on Heer's.

Feb. 1, 2009, was the new deadline for construction to begin, but in October, McGowan told Springfield Business Journal that lenders paralyzed by the unfolding economic meltdown were no longer willing to finance a for-sale condo project without requiring 25 percent to 30 percent developer equity.

"That's actual hard cash," he said at the time. "And I would say there's no developer in the country that's willing to put up 30 percent cash equity. Why? We'll all wait."

McGowan has since negotiated a HUD-backed, market-rate loan to finance the $27 million Heer's apartment project, which he said won't include subsidized or Section 8 housing.

Shannon's is still committed to the project, although the city no longer plans to lease space in the building for its traffic management center and TV23 operations, he added.

McGowan said he's hopeful City Council will review a set of revised deadlines and requested incentives early next year.

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