Although it is about 100 years old and a little rusty,
the three-story steel fire escape located behind the Greenleaf Annex building
still works.
Developer Mike Langton wanted to keep the fire escape as a part of his plans
to turn the building at 113 W. Adams St. into 12 loft apartments. But the city's
building code requires the fire escape to be inside the building.
"It works, but not for today's standards," said Langton, co-developer of LB
Development Inc. of Jacksonville.
So, the old escape will have to be taken down. Which means the cost of the
project, originally budgeted at about $1.6 million, will go up by about
$100,000.
Throughout the process of redeveloping the building, Langton -- like others
who attempt to come up with new uses for old buildings -- has stumbled into some
surprises when he unlocked the door.
Redeveloping old buildings, like the Greenleaf Annex building -- which was
lastas an office building in 1985 -- and other downtown buildings, come
with inherent challenges. Most of the obstacles are annoying, yet they can be
conquered. They can be costly and time-consuming.
It would be easier for developers to tear down the buildings and start from
scratch. But in many cases the buildings are protected from being torn down
because they bear historical designations. Also, by retaining most of the
structure, developers qualify for tax credits to offset development costs.
"With new construction you can estimate your cost, but with adaptive reuse
projects you are not sure what you are going to uncover," said Ann Frej,
director of office and industrial development at the Urban Land Institute in
Washington, D.C. "Some developers like the challenge and others don't."
Despite a hand from city officials by way of financial incentives, developers
struggle to get their projects off the ground.
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Mike Langton
is redeveloping the three-story Greenleaf Annex building. The bottom floor will
be for retail space with the upper floors to be converted into 12 residential
lofts. --------------------------------------------------
Currently, there are a handful of downtown redevelopment projects in various
stages of development. Developers must overcome a special set of problems before
the buildings are restored.
"These are not your standard redevelopment projects," said Al Battle, chief
of project development at the Downtown Development Authority. "Each one is
unique in how we participate in them. There is always something that we have to
overcome to make the project. While the problems are consistent, we are very
flexible to help solve those problems."
The problems developers like Langton and Vestcor Companies Chairman John Rood
-- whose company plans to redevelop the Lynch and Roosevelt Hotel buildings --
face is clearing a path for other developers, says John Hildrieth, director of
the southern office of the National Trust for Historic Preservation in
Charleston, S.C.
"Those are the pioneers' problems." he said. "Everybody [future developers]
down the road will be thankful the pioneers went through it because they won't
have to go through it."
Construction is expected to start on Langton's project when a bank approves
his conventional loan.
"We are literally ready to start the next day we close," said Langton, who
added the project is expected to be complete by Dec. 31.
Langton said challenges were securing financing, dealing with the unknowns
inside the building and complying with city fire and life safety issues.
"Other than that there has been no problem," said Langton, who laughed at his
sarcastic comment.
Financing 'nightmare'
For Langton, securing financing has been difficult, even though he received
financial assistance from the city in the form of two low-interest loans
totalling $600,000.
One of the loans, which was from the Duval County Housing Finance Authority,
was extended with the understanding Langton would lease one of the 12 apartments
he develops at an affordable rate.
--------------------------------------------------
Tripp
Gulliford (left), John Falconetti (center) and Steve Diebenow of White Oak
Capital look over one area inside the seven-floor Jones Brothers Furniture
building on North Hogan Street.
--------------------------------------------------
The apartments will range in price from $700 to $1,000, depending on size,
with the $700 apartment being the affordable unit.
But it is getting the private financing that poses the most recent problem.
With the keys to the building and some of the initial gutting work on the
first and second floor done, Langton still has not received final approval for a
25-year conventional loan.
What's the hold-up?
Langton says banks have been reluctant to extend a loan for such a project
that has never been done in Jacksonville.
"We are creating a market that does not exist," Langton said.
He said as a result of an non-existent market for loft apartments he was
turned down by eight Jacksonville banks. He expects a Philadelphia bank to
approve a loan.
Because the project includes retail and residential banks, the approval
process has to be reviewed by bank departments in two cities, thus delaying the
project by about a month, he said.
"It's been a nightmare to get all that together."
Parking problem
Public assistance, by way of cash, tax rebates and grants, can sometimes make
redeveloping easier.
In the case of White Oak Capital Inc. of Jacksonville, an investment group,
city assistance came in the form of an agreement by the city to allow White Oak
to buy a parking lot adjacent to a vacant Jones Brothers Furniture store
building.
Owning the parking lot makes the project possible. It will consist of the
redevelopment of the building, which has been vacant since 1986 when the
furniture store closed, into 24 loft apartments or 35,000 square feet of office
space. White Oak is still pondering the mix of apartments and office space for
the project.
Two weeks ago, the Jacksonville Economic Development Commission approved a
measure to allow White Oak to buy the parking lot adjacent to the building when
it is ready to redevelop.
The measure has to be finalized with an approval by the City Council. That
could set the estimated $1.7 million project in motion.
"If the City Council approves it, we will be closing on the property shorty
thereafter," said William "Tripp" Gulliford, a White Oak partner.
White Oak had been under contract for eight months with the owner of the
building until a parking solution was found, according to Gulliford.
Establishing parking spaces for downtown projects is a problem each developer
is faced with.
With Langton's project, his parking will be located about two blocks away
from his building.
"Parking is an issue that city officials and developers will be faced with
for years to come," said Steve Diebenow, a White Oak partner.
Another challenge will be to clean up the building. White Oak Partner John
Falconetti, says it will take "tens of thousands of dollars."
Still on hold
Rood, chairman of Vestcor, needs a more accurate calculation of how much it
will cost to redevelop the Lynch and Roosevelt Hotel buildings into 226
loft-style apartments.
One thing is for certain, the cost will be higher than the $31 million
previously planned.
"We think we will be higher or over budget and it will be necessary to go
back to JEDC to adjust the financial structure of the deal they offered," said
Rood. In December, the City Council approved a $7.1 million incentives plan for
Vestcor to redevelop the buildings.
The Lynch building was last occupied in 1989 by the American Heritage Life
Investment Corp., and the Roosevelt Hotel building closed in 1987 after it had
been used as a retirement home community, the Jacksonville Regency House.
Rood underestimated the cost to remove asbestos, lead-based paint and
obsolete equipment in the buildings, thus causing a delay in the project.
Atop the Lynch building there is a large air conditioning unit that has to be
removed for the project to fly.
"When we build a garden apartment on a dirt site, the work is pretty
predictable," Rood said. "Costs change a little bit, but not that much. But when
you go into an existing building, you never know what you are going to find, and
there are no two buildings alike."
For the past two months, Rood has been seeking bids from companies to remove
the asbestos and paint and other construction services.
The discovery delayed and even jeopardized the entire project; Rood had to
opt out of a sales contract.
Sean McElvaney of Ireland, the owner of the building, was not willing to
allow Rood to stay under contract while Rood bid out the work to get an an exact
redevelopment cost. So, Rood will have to enter into another contract once he
can finalize his costs.
Hildrieth, of the National Trust for Historic Preservation, said redeveloping
old buildings is not a challenge that many developers can handle.
"Not every developer is cut out to do that kind of work, and that's fine. But
the end product is differentiated in the market," he said. "It is generally high
quality and of a character that cannot be built in other projects. It rewards
those who stick it out and pioneer these kind of projects."
