That’s what I’m hearing from someone who has been attending some of these sessions and is looking at what’s going out at tomorrow’s meetings (11:30 A.M. AND 6 P.M. AT CITY HALL).
Since I’ve been busy covering SandRidge, historic tax credits, Devon and a million other items, a familiar and respected guest blogger will update us on this matter by tomorrow morning.
By now hopefully many of you have read my story about the potential impact of the planned two-year moratorium on the use of historic tax credits and my column on how it might kill redevelopment of the old Bond Bakery.
So, how could this hurt projects already underway?
Critics of this move say the two-year moratorium will be most punishing to those developers most active in redeveloping older buildings. Here’s why:
A developer buys an empty 10-story building in 2007 for $1.5 million. They spend three years working with the state’s Historic Preservation Office to get approval for designs that meet the requirements to obtain a 20-percent state historic tax credit and a matching 20-percent federal historic tax credit.
Renovation of the 100,000-square-foot building comes out to $140 per square foot – or $14 million. The tax credits are deemed critical to covering a funding gap that can not be financed through traditional means, and in this scenario developers interviewed by The Oklahoman say adaption to basic lofts could easily lead to a gap of up to $7 million.
This fictional project would likely qualify for state and federal historic tax credits each adding up to $2.6 million.
Assuming all additional financing is obtained through other means, XYZ Bank buys the federal and state tax credits knowing the credits can not be realized until the renovation is completed and a certificate of occupancy is issued by the city. The developer guarantees to over the tax credits if they don’t materialize. If the tax credits are approved in advance of the project and the renovation is done as planned and promised, there is rarely ever any risk to making such a guarantee – the developer is moving forward with the full faith and credit of the state.
If the moratorium goes into effect, even if the project has been approved for tax credits, developers who are midway through construction could find themselves in default of such agreements if, as in this case, the developer couldn’t personally cover the state tax credit of $2.6 million because the tax credits are frozen.
If this is all too complex to understand, let’s put in simpler terms we can all understand.
Imagine that you took advantage of the appliance tax rebate program last week. You could only afford to pay $300 for a new washing machine – but you bought a $500 washing machine by taking advantage of the $200 rebate promised by the federal government. Now imagine, after using the washing machine for a few months that the big box store called you up saying you owe that additional $200 because the feds failed to deliver on that promised $200 rebate. You did everything right. It’s the government that is backing out on the promised deal they made with you.
That’s what developers are facing across the state – only instead of owing $200, the amount will be in the million.
Legislators seem to think that developers stung by this will agree to using the historic tax credits when they are resumed in two years. Don’t be so sure of that. State historian Bob Blackburn suspects many of those developers won’t survive the above scenario and those that do will likely abandon historic renovation projects for years to come instead of believing in the full faith and word of the State of Oklahoma.
So how does this impact downtown Oklahoma City? Ask yourselves about how all of this might affect the future of the Bond Bakery, the old Sunshine Cleaners, the Fred Jones factory, the Rock Island Plow Building and the First National Tower.
And to those of you spending all of your time worrying about the fate of the buildings being targeted for demolition by SandRidge Energy – you’ve got a lot more to worry about.
I’m meeting with a developer tonight who has a track record of doing huge downtown redevelopment projects involving old warehouses, office buildings and hotels and turning them into housing. We’re talking projects in the tens of millions of dollars and properties dating back to the 1860s. His portfolio tops $100 million in development.
This developer is ready to buy one of the largest vacant buildings downtown Oklahoma City that has yet to be targeted for redevelopment (no, it’s not one of SandRidge’s buildings). He also wants to buy some surrounding buildings as well.
The signature of the governor’s pen may ensure this deal dies a quick death.
Read my Main Street column tomorrow….
UPDATE: And the answer is… Bond Bakery.
SandRidge Energy attorney Frank Hill told the board the India Temple, YMCA and Kermac buildings were all empty for three decades. But then we hear this:
My name is Brian Young. Back in March 2006, I was hired by Kerr McGee as a legal contractor to work on environmental litigation. Initially, 5 of us were assigned to go through various reports and files. Due to the quantity of files for this particular project, there was no room in the regular Kerr McGee tower for us to go through everything. So KM put all of us over in the India Temple building. At some point, our employment shifted from Kerr McGee to Tronox (in fact, I think it shifted within the first week or so)
I worked there from March 2006 until January of 2007, when the project was completed. The number of people working in that building varied over the course of the year, but it ranged from 5 people up to about 10 or 12. We worked on the 4th floor of India Temple. All the lighting, electrical outlets, and plumbing still functioned. Kerr McGee/Tronox sent over some IT guys that summer to hook up computers and high speed internet access. They ran standard ethernet cables through the walls and ceiling as well.
The only safety hazards we ever encountered were a warning that the middle of floor could not hold the hundreds of file boxes we were searching through (we had up to 200 on the floor at one time with no issues), and difficulty in going down the old emergency stairs when a transformer exploded and left half of downtown without power (there were no emergency lights installed in the stairway and they had to send over someone with a flashlight).
Now, no one may have had their permanent office in that building, but it was continuously in use. While I only worked on that one project, my understanding is that the India Temple building was where KM sent various overflow projects that were too large to handle in their tower.
We’ve also heard over and over again from those supporting demolition of the buildings that if they were good candidates for redevelopment that a person would have done so long ago. But then Doug Loudenback reminds of this 2005 comment by former Kerr-McGee Chief Executive Luke Corbett:
Corbett said his company has fielded numerous offers for the properties over the past decade, but he said the ideas or timing was never quite right.
“What’s captured our attention is what has happened to the downtown area after MAPS,” Corbett said. “If you look at the momentum we have in this city and the growth that’s occurring downtown, it’s breathtaking.”
It’s been awhile since we’ve hit up the most simple form of journalism there is: a situation captured so well by a single photo that sending the photo with the question “Why?” pretty much gets to the heart of the matter. And so we have our latest “why?” which I’ll be sending to Jim Cowan, director of the Bricktown Association (for one more week) and planning director Russell Claus.
Marsha Wooden, vice president of administration, declined comment at the end of today’s meeting.
Here are the questions I wanted to ask:
1. SandRidge Energy and Preservation Oklahoma are providing very different accounts of Oklahoma Historical Society director Bob Blackburn’s thoughts on the historic merit and viability of the older buildings on the SandRidge campus. Would it help clear up any confusion if he appeared at the next Board of Adjustment meeting?
2. Why won’t you accept the National Trust for Historic Preservation’s offer to pay for a historic analysis of the buildings in question?
3. What is the consequence of further delays in the project?
4. What should have been the basis for the Downtown Design Review Committee’s decision on whether the buildings in question should get their approval for demolition?
5. Why won’t SandRidge Energy entertain proposals to turn the Kermac building into housing?
Street of Dreams
Run down, then wrecked, Automobile Alley is an example of how an area can be reborn.
By Steve Lackmeyer
Sunday, April 17, 2005
Edition: City, Section: BUSINESS, Page 1C
Dreams have always been a part of Automobile Alley — some came true, some were broken.
The stretch of Broadway was a vibrant business district 75 years ago. Gradually, it became a slum populated by transients before being devastated by a terrorist act.
In the last decade, that stretch has returned to vibrance. The urban neighborhood is a mix of high tech offices and residential lofts, anchored by eclectic boutiques including a coffee shop, art gallery and music store.
Chris and Meg Salyer, who have renovated at least a half-dozen historic properties, said the foundation for the rebirth is community. And they said that community was formed in the wake of the senseless devastation that occurred at the federal building.
“We realized we were a greater force and power together,” Meg Salyer said, looking back. “And if we worked together in the rebuilding, we could make this a wonderful place.”
From their windows in the Magnolia Petroleum Building at NW 7 and Broadway, the Salyers see life. They see neighbors they didn’t even know until after April 19, 1995.
Chris Salyer was sorting through paperwork in his fifth-story office at the Magnolia building when terrorists bombed the nearby Alfred P. Murrah Federal Building.
“I looked in the direction of the noise and saw this white vertical plume of smoke,” he said. “The sound was deafening. … The white plume immediately went black. And that was followed by more explosions as the fuel tanks of the cars in the parking lot next to the Athenian went off.”
Still looking outside his window, Salyer saw the plate glass windows on buildings along Broadway start to shatter in a delayed response.
“It was exactly like dominoes falling to the ground,” he said.
In the midst of the chaos, Meg Salyer rushed to her husband’s office, where they defied orders to evacuate.
From their window, they saw a procession of doctors and nurses walk down Broadway, marching toward a triage where, sadly, few lives were to be saved.
“It was just so poignant,” Meg Salyer said.
Acting on impulse, the Salyers spent the day securing their buildings with plywood.
The Salyers had invested their life savings buying up and renovating a half dozen of these old car-dealership buildings. Most of them were not even insured. At that point, they could not even think about the future.
The Salyers’ future neighbor, Nick Preftakes, was known as a focused thinker. Instead of waiting for a for-sale sign on a desired location, the developer would contact a property’s owner, letting them know he was a ready buyer.
At the urging of an old friend, Mark Ruffin, Preftakes had joined him in buying an old car dealership at NW 13 and Broadway. In early 1995, the pair started converting it into the “Garage Lofts,” downtown’s first residential lofts.
The bet seemed like a good one, Ruffin had argued, because similar projects succeeded in other cities.
April 19, the developer was in his office at NW 63 and Broadway Extension, talking on the phone with his sister in Philadelphia.
When the blast went off, Preftakes didn’t worry about his only downtown property. When the window shades swung in and the ceiling tiles lifted up in his office, Preftakes thought the explosion involved weapons kept by one of his tenants — the Oklahoma State Bureau of Investigation.
“I thought the explosion was in my own building,” Preftakes said. “So what do you do? You go run outside. Everybody was leaving the building, trying to figure out what had happened.”
Preftakes spent the remainder of the morning watching the events transpire on television like millions of others around the world. When he traveled downtown, he found extensive damage to the lofts that were already under construction.
Like Salyer, all Preftakes could do that first day was cover everything with plywood. And they, along with everybody else in north downtown, would have the next couple of weeks to ponder what would follow.
They had no choice. The street was closed for weeks as the investigation commenced into what was, at that point, the most deadly terrorist attack on American soil.
Broadway was already in pretty bad shape even before the bombing. When the Salyers started buying up properties in the late 1980s, what few tenants remained consisted of loan shops, pawn shops and offices where the down-and-out could sell their plasma.
The sidewalks were crumbling. The only landscaping consisted of weeds the size of preschoolers.
The Salyers worried that what few decent tenants remained in north downtown might flee to the suburbs.
April 20, they arranged for ADT Alarm Systems to move into their Magnolia Petroleum Building, which had escaped much of the damage that surrounding properties sustained.
Meg Salyer proceeded with plans before the bombing to open an office staffing company.
Mayor Ron Norick secured quick funding to replace shattered windows. The Urban Land Institute came in and provided a quick analysis of the area’s damage and needs.
Norick, working with the state’s congressional delegation, had secured millions in federal grants and loans to help property owners rebuild.
Downtown was divided up into six separate zones, with workshops for Automobile Alley property owners coordinated by Ron Frantz, a former Main Street organizer who worked with the Oklahoma Commerce Department.
Meg Salyer noticed Frantz was doing more than just planning out a recovery strategy. He was sparking a frank discussion between property owners.
They let out their emotions. They spoke out about the pain they had endured. They talked about what they thought was holding the area back. They shared fears that the bombing might scare people away from downtown for good.
In these tense moments, the street became a community.
“We had people who had been in this neighborhood for 25 years who had never become acquainted with each other,” Meg Salyer said.
Trials and tribulations
Such bonding didn’t provide easy answers for Meg Salyer when, one Saturday morning in July after the bombing, her phone rang and she was told that one of her buildings was on fire.
The old St. Nicholas Hotel had only one tenant: Sweeney’s Deli. The operator, David Hoke, had just reopened after spending weeks repairing the damages from the bombing.
“I thought, little fire, whatever,” Meg Salyer said. “I called the guy who worked for us, and he said, ‘Get downtown, take a look.’”
The blaze was nothing less than a four-alarm fire. The building appeared to be a loss.
“It would have been the easiest to tear it down,” Chris Salyer said. “I can’t count how many times we thought about that.”
Frantz was the first to console Salyer, giving him a Main Street program “certificate” in response to the blaze.
“This is the award for the first post-Main Street fire,” Frantz told the Salyers. “It happens in every Main Street program.”
Those whom Salyer had relied on for advice on how to bring Broadway back were vocal in urging him not to tear down the St. Nicholas Hotel. Architect Rand Elliott had worked on some of Salyer’s building renovations and had also tackled his own project: the restoration of the Heierding Building at 35 N Harrison.
For years, the flatiron-shaped building was a burned out, gutted eyesore at the entryway to downtown. Elliott related to Salyer’s dilemma with the St. Nicholas Hotel.
“Nothing scared me,” Elliott said. “I believed in buildings being resurrected.”
Devery Youngblood, hired to oversee the newly formed Automobile Alley Main Street program, joined with Elliott in arguing to Salyer that demolition of the building would hurt the area’s redevelopment.
“It was important to the character of the district,” Youngblood said. “But it’s not the developer’s place to lose money. It was a very real decision that had to be made.”
The economics of the project weren’t great, but the Salyers took the advice and rebuilt the St. Nicholas Hotel. The property is now home to CD Warehouse and VOX, an alternative weekly newspaper.
“I’m a preservationist through and through, so it didn’t take too much talking to get me to keep it,” Salyer said.
While Salyer got busy renovating the St. Nicholas Hotel into a modern office building, Preftakes was tackling three buildings across the street.
The C.R. Anthony’s headquarters at NW 7 and Broadway had been repaired after the bombing but was destined to be left empty when Texas-based Stage Stores bought the clothing store chain.
Preftakes wanted the office building but not the adjoining annex on NW 7. Kenny Walker, owner of neighboring Walker Stamp and Seal, wanted the annex but not the office building.
In this emerging community, the pair bought the complex and then split it for their own needs. Preftakes offered the renamed “701 Building” as a traditional office property and alternative to office lofts he had opened in two nearby warehouses.
The progress that the Salyers and Preftakes made sparked a feeling along Broadway that the area was on the rebound. Some renovations once considered not doable were pushed along by the city’s bombing recovery program and the office’s grants and loans.
Properties boarded up for years before the bombing suddenly came into play. The former home of a Packard dealership was renovated and turned into the IAO Gallery. Yet another was turned into an office supply store.
Both were owned by Bob McDonald, whose father started a Chevrolet dealership along the “alley” in 1932.
A three-story former auto dealership at NW 5 and Broadway owned by the Boyington family for a half-century had remained empty since 1982. With assistance from bombing recovery funds, owner Don Boyington renovated the building into the Fifth Avenue Lofts.
The renovations were complimented by a “streetscape” that replaced the crumbling sidewalks and added vintage-style street lamps and brick-paver crosswalks.
In later years, the property owners would assess themselves as part of a business improvement district and use the fees to add street furniture and historic markers along sidewalks.
Chris Salyer said neither he nor Preftakes deserve sole credit for the revival of Automobile Alley. The community’s effort was born in response to the violence of April 19, 1995, Salyer said.
“There were people from every walk of life,” Salyer said. “It’s unfair for us to be singled out. … This is a joint effort.”
Salyer and Preftakes disagree as to whether the revival would have happened if not for the bombing.
Preftakes calls the idea that Automobile Alley is the “silver lining” in the tragic aftermath of the bombing is nothing more than an “urban legend.” He saw the properties as a great business opportunity before the bombing. And he argues the tragedy didn’t alter his ultimate plans.
Salyer thinks other cities can learn from what happened in Oklahoma City, but wishes that lesson didn’t have to come at the expense of 168 lives.
“The lives that have been changed, much to the better here, is the result of all the pain and suffering that we all went through,” Salyer said. “I’m thinking the good that can come from vile efforts like this is the template that can be used in circumstances of any similar disaster.”
But definitely no decision today. Deferred until later this month.
May have just complicated effort by Board of Adjustment to seek structural reports by noting structural integrity not a factor for consideration, but historic integrity is.
SandRidge attorney Frank Hill now agreeing with Miller after previously agreeing to hiring of engineer.