Loft project needs financing

1. Web-posted Sunday, November 15, 2009
Building blocks for lofty goals
Big plans tempered by tight financing
By Karen Smith Welch
karen.welch@amarillo.com
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Michael Schumacher / Amarillo Globe-News
Vineyard Manor apartments, 1205 S. Polk, ownedby Scott Flow are under construction remodeling the 23 unit
complex Tuesday November 10, 2009. Flow said he is trying to make affordable apartments in the downtown
area.
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Downtown Amarillo continues to be largely uncharted territory for developers attempting residential projects.
"I think it's a challenge for all downtowns when you're first starting (revitalization), because you don't have a
lot of comparables" Downtown Amarillo Inc. Executive Director Melissa Dailey said, referring to similar
successful projects to show investors.
The current lending crisis only adds to the difficulty, Dailey said.
"The No. 1 problem is financing and the availability of financing - and that's for any project anywhere," she
said. "Projects that used to need 20 percent equity (to secure financing) now need 50 percent equity."
Plans for a second floor of condominiums at one downtown high-rise gather dust, while two lease-property
developers attack their projects unit by unit because of a scarcity of outside construction financing.
Even a pledge of future property tax rebates from the Center City Tax Increment Reinvestment Zone hasn't
helped one of those developers, Darin Hudson, secure a construction loan for the 20-unit Double R Lofts
complex at 705 S. Grant St.

2. Hudson, who has completed similar projects in Albuquerque, N.M., and Leadville, Colo., hopes to attract
lenders by finding tenants to prelease luxury lofts yet to be constructed in the former produce warehouse.
So he built a model and showed it Thursday.
"It's all I can afford to do from my back pocket," Hudson said.
Three years have passed since the original six condos at Eagle Centre Lofts at 705 S. Tyler St. were
completed and sold, but plans for a second floor are on hold.
"Is it in our sights? Yes," developer Jeff Tidmore said. "Is it anywhere close to being started? No. We've just
been pretty static, waiting on the economy to look up.
"I believe in downtown. I wish we would have built 30 of them instead of six back then. It (waiting) just has to
do with the pure economics of getting buyers into the units."
Downtown developers have to be pioneers, in a sense, said Scott Flow, an Amarillo attorney who is
renovating Vineyard Manor Apartments at 1201 S. Polk St. unit by unit.
"Every venture where you're stepping out on a limb is always a little bit scary," he said. "Frankly, lenders,
especially in this economy, are not necessarily looking to finance these kinds of projects.
"Getting them to buy into the concept of raising the profile of downtown has been a challenge."
Downtown Amarillo Inc. intends to commission a housing study to assess the demand for downtown living
spaces. The study would spell out the demand for rental and for-sale units, the sizes of units desired and
amounts people are willing to spend, Dailey said.
The information gained could be a tool developers and financial institutions can use to gauge the viability of
projects, she said.
"That's going to help," Tidmore said. "We need the city of Amarillo, we need Downtown Inc., we need all of
these groups to come on board and provide this sort of documentation that supports developers in their
efforts."
Downtown Amarillo Inc. also continues to shape the idea of a loan consortium of local banks that wouldn't
provide primary financing for a project but would take a small stake to show potential investors a local
commitment, Dailey said.
The idea is similar to what Tidmore has seen work in other downtown revitalization attempts.
"To get these things kicked off, you have to have local participation from the banks, and no one bank should
have to take all the risk."
Flow also applauds assistance programs, such as the facade grant distribution from Center City of Amarillo,
which provided $10,000 in matching money to pay for window replacements at Vineyard Manor. The city of
Amarillo allocates money to Center City to be used in the grant program.
Meanwhile, the clock ticks on the TIRZ tax rebate promise for Double R Lofts.

3. Hudson's agreement with the TIRZ board requires that construction be under way by Jan. 1, with the project
certified for occupancy by Dec. 31, 2010.
Lenders have expressed reluctance for a variety of reasons, said Hudson, who sees potential for more
projects in Amarillo's downtown warehouse district.
"I think it would be great for five or six of these type developments," he said. "That's what I'd like to do."