Putting on the Ritz
Downtown apartments would be pricey
Ghosts of pratfalls past haunted Springfield council chambers this week as the city approved public funding for a rogue developer with an unproven business plan who vows to take downtown where it never has gone before.
With projected rents for yet-to-be-built units topping out at $2,500, the troubled rehab project at the intersection of South Sixth and Monroe streets would have some of the most expensive apartments in downtown, if not the entire city.
“This does push it up,” Greg Curl, a regional president with First Bankers Trust and Co., which is providing private money. “This is going to be a little more unique and different, and a test of a market that hasn’t been tested.”
The city council on Tuesday voted 5-5 to commit $1.8 million more in public tax increment financing money to the project than had already been approved, with Mayor Jim Langfelder breaking the tie to approve the deal. The city previously had approved nearly $2 million, but money was cut off in 2016 after developer Rick Lawrence changed plans and started spending money on things that hadn’t been contemplated, most notably an elevator that would access adjoining buildings where apartments are planned. Lawrence, who told the council he’s out of cash, owes more than $1 million to vendors and in unpaid benefits for workers.
“I lost focus,” Lawrence told the council on Tuesday. “I knew where I was going, but I wasn’t sharing it (with bankers or the city). That’s where I got out of step with the construction loan.”
Lawrence says the project is 50-percent complete. Like the city, Bankers Trust cut off funding in 2016 when it learned that Lawrence was building something that was different, and more expensive, than what originally had been pitched.
“This project went off the rails,” Curl said. “The scope changed to the point where there was no reversing course. What we’ve been focused on ever since that point in time is, how can we restore the project?”
Federal tax credits have been added to the financing package, but everything was contingent on tax increment financing from the city, which had to double its investment in the project, with $800,000 of the $3.9 million subsidy coming in the form of a loan. The decision marks the second time in recent months that the city has boosted TIF funding for an already-approved downtown project. In September, the council with little debate added nearly $700,000 in TIF funding to help convert the former First United Methodist Church at Fifth and Monroe streets into apartments and offices. The infusion brought the city’s share of the $8.6 million project to nearly $1.7 million.
Aldermen opposed to the Lawrence project said they didn’t want to set a precedent that might encourage future developers to break loan agreements, then be forgiven. Citing a 2016 inspector general’s investigation of the Enos Park Neighborhood Improvement Association, Ward 1 Ald. Chuck Redpath said that the city needs to be vigilant. The inspector general’s probe of the neighborhood association found no evidence of malfeasance.
“The Enos Park association, there was monkey business going on,” Redpath claimed during Tuesday’s meeting. “We’re tightening down. We have to be stewards of the people’s money.”
Ward 3 Ald. Doris Turner criticized Lawrence for not paying benefits to workers after the city and bank cut off money. “I’ve received more inquiries about this ordinance than I have any other ordinance since I’ve been sitting in this chair, and that’s been six years,” Turner said. “I am deeply concerned about the way this project has been treated, and the missteps that have been taken.”
The mayor pointed out that benefits owed would be paid if the city approved the measure. Otherwise, he warned, any available monies from Lawrence would be taken by the bank.
Karen Conn, whose family owns Obed and Isaac’s Microbrewery, urged the council to approve the money. Nearly a decade ago, Conn and her husband, Court, were caught in controversy when the city paid to move a historic home to the intersection of Seventh and Jackson streets, then left it in a right-of-way pending council approval to pay for a foundation so that the building could be moved off Seventh Street. The money came through, and the building is now home to Wm. Van’s Coffeehouse.
“I’ve meandered down the same path that Mr. Lawrence is traveling today,” Conn told the council. “With the city’s support of this TIF request, he’ll manage through this.”
Conn reminded the council of a 2008 proposal to convert the YWCA building into luxury condominiums. The developers asked the city council for $1 million, but the measure failed by one vote, with aldermen questioning whether rents would be enough to cover costs. The city has subsequently spent millions of dollars to acquire the property, plus adjacent land, and demolish the Y building. Langfelder has backed a plan to turn the property into a park.
“That (council) vote sealed the fate of that property, and now that iconic landmark is gone,” Conn told the council. “But that property still poses to be a thorn in the city’s side.”
Langfelder also cited the YWCA saga as reason to approve Lawrence’s project.
“It was one vote shy, and Springfield’s downtown would be a lot different place than what it is today,” the mayor said. “Now, I’m getting blasted because we’re doing an interactive park or plaza, whatever the future might hold.”
Contact Bruce Rushton at firstname.lastname@example.org.