- 4 min read
- Posted on 05.02.10
Financing for major projects isn't dead, but it is scarce and complicated. That's why announcements last week about the financing for two major downtown projects, the former St. Louis Centre Mall site at 7th and Washington and the former Union Pacific Building at 13th Olive, should have caught your attention. Taken together, the two projects represent $150 million in new development. These developments will not only continue and reinforce downtown's transformation but will also generate sales tax, earnings tax, building permit and other revenue that will help us during these difficult economic times.
These major achievements in this troubled economy would not have been possible without some important partners, including my colleagues on the Board of Estimate and Apportionment; the St. Louis Board of Aldermen; and our Missouri and federal governments. I am grateful for their efforts.
Let me explain the two projects.
The State of Missouri, the Missouri Development Finance Board ("MDFB") and the Missouri Department of Economic Development are the key players in the $31 million Seventh Street Garage and Retail transaction. MDFB now owns the facility under construction and will own the completed facility, has provided the majority of the financing for conversion of the upper three floors of the structure to parking for the US Bank Building and One City Center and exterior and "grey box" improvements to the first floor retail space, and will operate the parking located on its upper three floors. A Clayco/Environmental Operations partnership will act as the turn-key developer for the conversion. US Bank Community Development Corporation secured significant allocations of New Markets Tax Credits and made the New Markets investment in the development, and Pulaski Bank provided a first mortgage loan. The City's St. Louis Development Corporation also provided a New Markets allocation and the City's Land Clearance for Redevelopment Authority negotiated the contract and leases and provided other assistance necessary to close the deal. The completed facility will include 750 parking spaces and approximately 70,000 sq. ft. of first floor retail space. It is also expected to include a movie theater on a portion of the second and third floors. MDFB will lease the retail space to a non-profit intermediary governed by representatives of the Downtown Partnership, St. Louis Development Corporation, US Bank Community Development Corporation and adjacent property owners; the non-profit will, in turn, lease the space to a retail developer and oversee tenant selection and leaseup to ensure that uses in the retail area complement the significant investment made in downtown to date. Prep work has been going on for a month; construction begins in earnest next week.
Key players in the $109 million Park Pacific development are the U. S. Department of Housing and Urban Development, and Steve Smith of the Lawrence Group. Originally conceived with a heavy residential condominium component, the development's program was forced to change radically when the single-family mortgage market and associated construction financing market crashed. Fortunately, for this great old building, Downtown's mixed use environment made it possible to retool and move forward with this development as upscale residential rental that can be converted to condominiums when the market recovers -- even while large numbers of single-family subdivision lots remain untouched in the burbs. In addition to the residential rental units, the development will include office and retail commercial space. HUD provided the more than $63 million in mortgage insurance (the largest in local office history) that made it possible for bonds to be issued and sold to the AFL-CIO Investment Trust. James Heard, director of the HUD Local Office, presented Steve with a ceremonial check at a ceremony last week. Steve and his company had worked for two years to reconstruct financing for the project. Federal and Missouri historic tax credits and federal New Markets Tax Credits from SLDC and others were all instrumental in making the development feasible, as was the City's tax increment financing. Great Southern Bank is providing bridge loan financing, Gershman Investment served as financial consultant, and Paric will complete the renovation.
Both projects involved the talents of some of the region's smartest and hardest working attorneys, and the full attention of my talented development team, helmed by Barb Geisman.
Next up? Financings for Central Library and Kiel Opera House are moving forward.