Hanning & Bean would develop six row townhouses and about 80 apartments and 14 condominiums in a 12-story tower built above a five-story parking garage funded by the city. The project will also include commercial space and a new headquarters for Ash Brokerage.
Under terms of the May 5 development agreement, Bean was to have secured "commercially reasonable evidence of a written commitment for financing" within 90 days. When that deadline went unmet earlier this month, city officials at first granted a two-week extension, which has been extended again. Bean also was to have provided a $4 million letter of credit that city officials have said would protect the public if Bean's potion of the project fails to materialize.
Although the agreement states that the city is entitled to terminate its agreement with Bean if the deadline for financial commitment was not met, spokesman John Perlich said "We continue to have dialogue with Bill and his team about his component of the project. Work at the constructions site is not impacted by the agreed-to extension."
Bean, however, said there have already been delays affecting his portion of the project — delays he said have already increased his costs while affecting his search for financing.
Under terms of the agreement, the city was to have the parking structure in "build-ready condition" by March 1, 2015, so work could begin on the residential tower. But Bean said it now appears there's "no way" that can happen until sometime during the summer — meaning the pouring of concrete and other work would have to continue during cold-weather months, adding "hundreds of thousands of dollars" to his costs.
Bean said he is seeking to amend the terms of his deal with the city to reflect that. "I don't want to point fingers, but we've made very few changes (in our part of the project," he said.
The city cannot say the same — which may account for at least some of the delay.
Although work was originally scheduled to begin in April, demolition of most of the buildings on the block bounded by Wayne, Berry, Harrison and Webster streets began July 10. That followed news in May that the cost of the entire project had increased from the original estimate of $71 million to nearly $100 million, in large part because of the city's garage.
Although part of the added cost was to increase the number of spaces from 750 to 1,200, Mayor Tom Henry said at the time other factors, such as poor soil and the need to relocate utilities, also contributed. Officials also acknowledged it proved unexpectedly difficult to design a parking garage able to support a massive residential tower.
In addition to Bean's $30 million, the city is also expected to provide about $39 million and Ash about $29 million. The project is schedule for completion in 2016. Perlich said the city on Thursday closed on the sale of bonds necessary to finance the garage and also closed the development deal with Ash Brokerage.
“Positive progress continues to be made on the downtown development and is evident by the visible work at the construction site. The parking garage and Ash Brokerage components of the project are moving forward as planned," Perlich said. "This is a three-step construction process with the garage starting first, followed by the Ash building, and the housing is third. We're committed to keeping the public informed."
Bean said he remains convinced there is demand for the kind of upscale housing he still hopes to build, and that the "numbers make sense" — at least as originally agreed upon. But delays and added costs "move the bar (of economic sustainability) further. I can't afford to put $1 million or $2 million more in (without a resolution)."
This is not the first time a major downtown development has faced construction and financing challenges, however.
Today, a residential, commercial and office building called "The Harrison" stands just north of Parkview Field. But the $18 million project didn't open until last year — four years later than expected. Financing was secured just before a city-imposed deadline after new investors were added to the list of backers.