Texarkana City
TX

Resolution
1664

Resolution No. 2017-068 authorizing the City Manager to enter into loan agreements with Grimm Lofts, LLC.

Information

Department:Planning and Community DevelopmentSponsors:
Category:Agreement

Body

 

Updates/History of Briefing:

 

Resolution 2015-080

Resolution 2017-024

Resolution 2017-025

 

Executive Summary and Background Information:

 

The project includes restoration and redevelopment of the historic Hotel Grim built in 1925 originally as an eight-story hotel. The building contains 103,200 square feet and when built, was the second tallest structure in Texarkana. The iconic building is strategically located on State Line Avenue on the Texas and Arkansas border. The proposed project will preserve the historic elements of the building while completely updating the property.

 

The goal is to redevelop the hotel with commercial space on the first level and residential apartment units throughout the remaining floors. The financing plan is to use 108 funds from HUD along with federal and state historic credits, an EPA cleanup loan, conventional debt, and any other eligible sources.  

 

Recent developments over the past several years included a Phase 1 of an EPA Brownfield assessment completed in the Summer of 2014. The property was added to the National Historic Registry in May of 2015, making it eligible for historic tax credits, and Phase II of the Brownfields assessment was completed in June of the same year, making the project eligible for EPA Revolving Loan funds.

In June 2015, Texarkana was selected as one of four cities nationwide for a site visit from the Council of Development Finance Agencies (CDFA). A Project Response Team comprised of CDFA staff and technical assistance partners provided expert advice and recommended a redevelopment strategy detailed in the report titled Grim Hotel: Roadmap to Redevelopment. The visit was made possible through CDFA’s Brownfields Technical Assistance Program, funded by the U.S. Environmental Protection Agency.

In July 2016, the Grim Lofts, LLC was officially formed by developer Jim Sari and an EPA Brownfields Revolving Loan Fund Application was submitted for cleanup funds.

In November 2016, the Hotel Grim Lofts project team presented at the Council of Development Finance Agencies National Development Finance Summit in New Orleans, Louisiana November 2-4th. The session was titled “Hotel Revitalization in the Heartland” and featured the Texarkana project along with another historic hotel project in Green Bay, Wisconsin.

On January 30th, 2017, the City of Texarkana, Texas recently received approval from the U.S. Department of Housing and Urban Development for Section 108 loan guarantee assistance in the amount of $1,429,000 for the Hotel Grim Lofts Project.

On March 13th, 2017, after a 30 day public comment period, Texarkana, Texas City Council approved acceptance of HUD 108 Loan in the amount of $1,429,000 for the Hotel Grim Lofts Project and approved substantial amendment to the City’s Consolidated Plan for the project.

On May 24th, 2017, the development team for the Hotel Grim Lofts announced plans to purchase additional properties for redevelopment in downtown Texarkana. The new properties will add additional market rate apartment units and office space. The plan includes purchasing property at 301 Pine St that will include approximately 20 market rate residential apartments and purchasing property at 317 North State Line Avenue for conversion to renovated office space. 

Based on a recently completed market study and additional environmental costs, the Hotel Grim will convert to primarily affordable family units with commercial space on the ground floor. The plan will include approximately 98 residential apartments with efficiency, one bedroom and two bedroom units available. 

The overall project cost is estimated at $20 million with $12 to $13 million in construction costs.  The overall project will add 118 residential units in downtown Texarkana and will include over 12,000 square feet in new retail and office space. The development team is currently completing the architectural design along with the environmental plans and anticipates closing the deal in Fall 2017.  

 

To ensure prudent expenditures of public funds, the City will take the following actions and require the following assurances from the developer:

 

1.)    Require an annual audit to verify compliance. 

2.)    Land use restriction for 10 year affordability period recorded in property records (attached)

3.)    Default provisions and enforcement are referenced in all loan documents (attached)

4.)    Guaranty for the payment and completion (attached)

5.)    Collateral assignment of Note and Mortgage (attached)

6.)    Promissory Note (attached)

7.)    Execute a Custodial Agreement with the bank

8.)    Initial prepayment of the HUD 108 Loan for $512,265.05 and annual principal payments over the next 5 years of $183,347 from the City’s existing HUD line of credit.

9.)    Restart the downtown TIRZ for potential public improvements related to the project. 

 

 

Potential Options:

·         Approve

·         Deny

 

Fiscal Implications:

$1,429,000 HUD 108 Loan Guarantee

$    650,000 EPA Revolving Cleanup Loan

$    260,000 City Housing Fund

$2,339,000 Total Development Package

 

Staff Recommendation:

Staff recommends for approval.

 

Advisory Board/Committee Review:

Staff Economic Development Loan Committee

EPA Revolving Loan Fund Committee

 

Board/Committee Recommendation: 

Staff Economic Development Loan Committee recommended for approval.

EPA Revolving Loan Fund Committee recommended for approval.

 

Advisory Board/Committee Meeting Date and Minutes: 

Staff Economic Development Loan Committee recommended for approval of the HUD 108 Loan for $1,429,000 for a 20-year term with the first 5 years as interest only, utilizing the 10-year Treasury Rate, currently at 1.7% adjustable every 5 years, as a non-assumable loan.

 

The RLF Loan Review Committee met on September 27, 2016 to review this application.  The Committee approved an EPA RLF Loan for up to $650,000.00 for a 20-year term with the first 5 years as interest only, utilizing the 10-year Treasury Rate, currently 1.7%, adjustable every 5 years, as a non-assumable loan.

 

 

Meeting History

Jun 12, 2017 6:00 PM Video City Council Regular Meeting

David Orr briefed this item. Jim Sari, Project Developer, updated council on project plans. George Johnson provided additional comments concerning anticipated rent rates dictated by the current Texarkana median housing income level.

RESULT:MOVED FORWARDNext: 6/26/2017 6:00 PM
Jun 26, 2017 6:00 PM Video City Council Regular Meeting

Jeff Sandefur, Josh Morriss, Richard Reynolds, Mary Hart, and William Scurlock each addressed council stating reasons why they support the adoption of this resolution.

Sheila Osborne Wagnon addressed council stating reasons why she opposes the adoption of this resolution. Ms. Wagnon also expressed commendation to David Orr for his long time efforts and challenging work done in behalf of the Grim project and seeing it through to possible development.

Jennifer Strayhorn, Texarkana Library Director, addressed council stating the reasons why she supports the adoption of this resolution. Ms Strayhorn also added that the library is open until 9:00 p.m. four nights a week and that she would not allow staff to leave work in the downtown area, at that time of night, if she didn't feel it was safe enough to do so.

Council Member Matlock made comments contrasting low income and Section 8 housing to affordable housing based on median income levels for individuals and families.

RESULT:MOVED FORWARDNext: 7/10/2017 6:00 PM
Jul 10, 2017 6:00 PM Video City Council Regular Meeting

David Orr said the repayment schedule for the Grim Hotel rehabilitation project was addressed at the last council meeting during the Community Development Block Grant program discussion. Mr. Orr presented himself for any final questions from council before voting on this resolution.

Council Member Williams read a brief statement expressing support of this resolution.

Mayor Bruggeman thanked all of the citizens who provided input into the discussion of revitalizing the Grim Hotel. The Mayor said the unanimous vote in favor of restoring the Grim Hotel for redevelopment is truly a historic moment for Texarkana. This first step will help Texarkana move towards greater progress in the city's downtown area.

(7:55 p.m.)

RESULT:ADOPTED [UNANIMOUS]
MOVER:Brian Matthews, Ward 4
SECONDER:Betty Williams, Ward 3
AYES:Jean H. Matlock, Betty Williams, Brian Matthews, Christy P. Paddock, Josh Davis
ABSENT:Willie Ray
EXCUSED:Bob Bruggeman