Posted Jun 16, 2009, 6:47 AM
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Loving SA 365 days a year
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Join Date: Feb 2007
Location: San Antonio
Posts: 3,891
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Stalled Broadway Development Eyes October Restart
1221 Broadway may someday be offices, retail and
apartments. There has been virtually no construction on it since
October 2004 because of lawsuits, other disputes and financing problems.
Quote:
Development eyes October restart
If all goes according to plan, construction on a long-stalled project on Broadway at U.S. 281 finally could resume as early as October.
The project, which was started in February 2003, has sat virtually untouched since October 2004.
But a string of lawsuits have finally been settled, clearing the way for local developer Ed Cross, through his partnership called Colina del Rio LP, to turn the eyesore into an urban mixed-use project with office, retail and apartment development called 1221 Broadway.
“We see it as the gateway to downtown,” Cross said. “It's highly visible both as you come in on Broadway and on 281. It's critical that it's an exemplary building of architecture and design, and can be the kind of project that San Antonio will be proud of.”
The project currently is made up of several concrete-and-steel building shells. When complete, the project will have 292 loft-style apartments, 76,673 square feet of office and retail space, and 533 parking spaces. Another story will be added to the four-story concrete structures, and the one steel structure toward the center of the site will serve as a parking garage.
Delays have plagued the project from the beginning.
Its original developer, George Geis, through his Villaje del Rio Ltd. partnership, stopped construction over disputes with his contractor, traded lawsuits with the contractor and then defaulted on a $26.7 million loan he received from Deutsche Bank.
The U.S. Housing and Urban Development Department was assigned the loan in June 2005, incurring the debt. Six months later, HUD sold that debt to Cross, who later foreclosed on the property and bought it for nearly $4.8 million in 2006.
Geis sued HUD in December 2005 to prevent it from selling the note to Cross, and he filed for Chapter 11 bankruptcy protection.
He also sued Cross in 2006 to prevent the foreclosure. Although a court ruled in Cross' favor, Geis appealed it all the way to the U.S. Supreme Court, which denied the petition this past December.
In 2007, Cross sued Geis for allegedly practicing architecture without a license, and Cross won $1.2 million in a settlement. Geis still could appeal this ruling.
“We basically spent three years in court,” Cross said. And now, the current lending climate is proving difficult to get the project under way again.
“Capital markets for virtually all commercial real estate are very dysfunctional,” said Chad Carey, whose Regent Living company is looking to finance an apartment project farther north on Broadway. “It's borderline impossible to find capital for new projects. Both of our projects serve a unique market, and it's frustrating for both of us.”
But Cross and his partners might have found an option.
They met with HUD officials Monday to discuss financing the project. If HUD approves, the application process could be complete by September, and construction would start soon after.
Even with the lawsuits settling, there still will be some delay because of the process for applying for HUD financing. Rather than apply for financing and then finalizing his engineering, design and building plans, Cross had to have all the plans complete before meeting with HUD.
Though construction still is months away from resuming, proponents of downtown are hopeful that the project will help spur more investment in the River North area, especially with the newly opened River Walk expansion.
“It has been a bit of a black eye and needs to heal,” said Ben Brewer, president of the Downtown Alliance. “Moving that project forward and completing it would be huge. I think seeing a residential project completed would get people enthused about even more residential development in the area. There's a psychological aspect to seeing that project move forward.”
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