6/24/10, Planning and Historic Preservation
Today’s schedule calls for three (3) meetings, one with the city’s planning and historic preservation departments, one with an adjacent property owner, and one with a lender. The latter was a nice surprise to me, thanks Scott for setting that one up.
At a little before 9am we headed over to City Hall. There we officially met Randy Hutcheson, Planning Manager. After pitching our idea to him and why we wanted to meet with him, see demolition delay, he brought in Mr. Jamie Zwolak, a planner who is very knowledgeable in Historic Tax Credits and Preservation. One thing we found out was that Historical Preservation, from Fort Worth’s standpoint, only deals with the exterior of the building and more specifically whether it is visible from the public right-of-way, street. Also, since the current storefront windows and doors are most likely not original, we would be allowed to change them out without any loss to our potential Historic Credits. Of course we can’t modify the opening size, by making it larger, but can if desired make it smaller.
With this information, our design to add overhead doors and one multi-folding door to the front openings would be ok from the city’s perspective. Also, we can add the overhead doors to the rear by punching openings through the brick, without any loss of Historic Credits. Even though the rear is visible from Allen Avenue, it technically wouldn’t be seen if there were a building on the lot instead of a parking lot and therefore falls within the rule. A second story could be added if we so desire as long as the new addition’s roof line is not visible from across the street. I doubt we will be making the building a two story. I have been thinking about that option more though, if we can get 10 parking spaces, we might be able to make the numbers work with 10 total units of 800 sf each……NAH!
As far as the tax credits are concerned, if we meet the first three (3) tiers of Historic Preservation, we can get a ten year city tax (only) exemption from any assessed property value increases. Spending 30% of the assessed value on renovation, rehabilitation, or construction is one of those first three requirements. If we meet the first 10 tiers, we can be exempt up to 15 years.
Scott and I had some time to kill before our lunch with Mr. Fran McCarthy, which we utilized at school doing a little more research.
Cat City Grill & Fran McCarthy
We met Fran McCarthy at Cat City Grill at 1208 Magnolia, just below his office. Mr. McCarthy redeveloped 1208 Magnolia, which was once referred to as Butt Ugly #3. Now it houses Cat City, other retail shops, and offices upstairs. Lunch in and of itself was pretty good, though mine was very messy for a grilled chicken sandwich. Over lunch we discussed what we wanted to do with the property and the issues we were running into. We hadn’t even gotten to asking to lease parking from him, when Mr. McCarthy spurted out that he would be willing to allow us an access easement through his property and to utilize his dumpster if we would be willing to pitch-in on maintenance and trash pickup fees.
Fran was extremely personable and enlightened us with a few of his learning experiences from his time in real estate, and specifically the Neat Southside. We also inquired about the light rail transit system that was being studied for the Near Southside, since he is the Chair of the Central City Redevelopment Committee. He informed us that at the moment it was stalled, because certain politicians are trying to use money allocated for the light rail on another project (Tower 55).
After lunch (thanks Scott), he invited us stairs to show us another option, an idea he had, for our parking dilemma. He suggested that we convince the city, since we are willing to give up four (4) spaces in front of our building for the Park Place’s master plan, we should be able to use the alley for parking. With that idea, he photocopied a site plan of his property (butting up to ours) and pointed to four (4) places that could be utilized for off street parking. That would make 7 total spots, where we would maybe need only 1 space more. But the project could easily work with those 7 and even less.
Mr. McCarthy was willing to lease spaces to us, but was not sure if he would have any to give up once the yoga center opens its doors in the coming weeks. They will have classes during and after normal business hours, and could possibly need all the available parking spaces. He also mentioned that Finn McCools Pub will be opening a sandwich shop in the adjacent vacant shop space. This leaves his strip of retail with only one, 1,115 sf of vacant space.
I really appreciate Mr. McCarthy taking time out of his day to meet with us. He will be a valuable ally for this and any other project we work on going forward, especially in the Near Southside. He stated that helping us out, in the long term helps him, his properties, and the Near Southside as a whole. He even gave us numbers for a few local lenders he has used on past projects. I’d say he is trying to help us, and not just because we bought his meal.
Southside Bank
Our 1:30 was with Mr. David Geeslin of Southside Bank, on the corner of Hemphill and Magnolia, another redeveloped property or at least a well rehabbed property. It is a small world, because as it turns out Scott’s mother and Mr. Geeslin know each other. He is quite the story teller, one anecdote after another.
In between the stories, he introduced us to the SBA 504 loan specifically for owner occupied real estate. Mr. Geeslin introduced us to the SBA 504 because the bank wants the building as collateral for the loan and therefore a tenant improvement loan would not be considered.
Just a quick note: We were very forth coming with Mr. Geeslin about this project being an academic exercise with an outside chance of the project becoming reality. With this in mind, his sales pitch was more informational than for putting a deal together.
Some of the current numbers he gave us were a 1.4 debt service coverage ratio, but could be less and a loan-to-value ratio between 65-80%. He did say that if we were to have an 80% LTV, he would insist on the 1.4 DSCR.
He also printed out a checklist for preliminary approval and a list for contractor qualifications. Some of the requirements are: corporate and personal tax returns, financial statements, resume, company history and business plan, inventory of current building projects, rent rolls, and a personal guarantee. Part of the personal guarantee is the ability to cover debt service if the project never “makes a dime,” basically you gotta have a job (income) to pay the bills.
I really appreciate all of those who gave a part of their day to meet with us. It was quite an enlightening and very productive day.
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