Blanche Hotel: 6 Months & Counting – $14,000,000 Letter of Intent May Be Next Month
Posted March 11, 2015 07:55 am
LAKE CITY, FL – Last night in City Hall, the Community Redevelopment Advisory Committee met to accept the 2014 CRA financial report and listen to City Manager Wendell Johnson discuss the three major issues confronting the CRA: the land give-away from the Lake Shore Hospital Authority; the $1.2 mil CRA loan; and the Blanche Hotel. Most of the substantive discussion was about the $14,000,000 Blanche Hotel Project.
Shortly after the meeting got underway, City Councilwoman Melinda Moses suggested that the City get on a County 5 agenda to discuss the improvements happening downtown in the Community Redevelopment Authority (CRA) downtown area.
The County's Economic Development Director, Glenn Hunter, told the committee, "You could give them real live time."
City Manager Johnson wanted to know if the County would be interested in presentation from the City.
Ms. Moses said, "I think it would be a positive step forward for us to go to them, because we are in this together."
Mr. Hunter added, "I think the service clubs are the place to do that. You’ll get the most information out there the fastest."
The City is going to make inquiries.
About six months ago, Integrity Development Partners (IDP) submitted a Letter of Intent (LOI) to the City. City Manager Johnson advised the City Council that the LOI needed a do-over.
Last night, City Manager Johnson told the committee, "I've continued addressing with Integrity Development Partners the objective of finalizing their letter of intent. I think we're almost there. I've got it down to what I call, "fine tuned." (also: IDP Housing)
He said the former letter "was obviously not in a form of content that would be acceptable to the City or the County. Glenn Hunter and I have been working on that."
City Manager Johnson continued, telling the committee that he, Mr. Hunter, and IDP have been traveling back and forth between Valdosta and Lake City to "hammer out the agreement."
"We are nearly to a point of having that letter in a condition that I feel comfortable with taking to the City Council and presenting it for consideration to the County Commission," he said. "It is going to set the tone and the parameters for what will really have to be agreed upon in formal agreements."
Feeling Good: Construction Budget Remains at $14,000,000
Mr. Johnson said, "I'm feeling pretty good about it. The estimated project construction budget remains $14 million."
The developer equity has gone from $200,000 in the original LOI to $500,000. Mr. Johnson said the developer equity was generated through deferred development fees. There was no further explanation.
The financial plan still calls for a $2,000,000 contribution from the City and the County, or some combination of the two.
Mr. Johnson explained, "The only way to amass that is through a creative relationship where a project like this is going to generate new taxes that could be returned back to pay a loan off that either the City or the County gives. That's kind of the objective of how we're gonna do that."
He continued, "I don't see how the City or County can lose on trying to make this work. It's easy gettin' the $2 million back over time. The good thing about it is the impact it is going to have on the stability downtown."
There was no explanation of what percentage of the Blanche would have to be occupied to make the loan payments, or from where the tenants would be coming.
Residential Space: second thoughts
Mr. Johnson explained that IDP had some second thoughts and they are looking at expanding the residential area. "They started at about 7000 ft.²; they're up to about 12,000 ft.²."
Mr. Johnson did not spell out the reason for the residential space increase, although it appears that IDP may be looking for HUD money for the project.
IDP will own the property.
The Blanche: in arrears
Mr. Johnson said, "The Blanche is in arrears. There have been no taxes paid since 2012. There is no principal or interest being paid. It was put into receivership the year before last. I think at this point the property would be there for the grabs."
Mr. Johnson mentioned that according to the Fishkind Study the post-construction value of the project would be $9 million.
Mr. Johnson concluded his discussion of the $14,000,000 project, "The community is going to have to buy into it; the community is going to have to take some risk. Without that, the Blanche will never be redeveloped."