Blanche Renovation Should Begin by Christmas, IRS Blamed for Construction Delays
Posted September 14, 2016 08:40 am
LAKE CITY, FL – Last night in City Hall, Rhett Holmes, president of IDP Housing , the real-estate/construction group responsible for the financing, design, and future construction of what has become known as just the "Blanche," Lake City's downtown turn-of-the-century Blanche Hotel renovation, told the Community Redevelopment Advisory Board (CRAC), "I know of no reason why this deal will not proceed." Mr. Holmes blamed "IRS guidance issues" for the delays in completing the agreement between the City and IDP, which will allow the construction to begin.
City Manager Wendell Johnson, gave a short introduction to the Blanche renovation, "The Blanche Center has been going on -- seems like years, but it's been well over a year now."
Mr. Johnson turned to IDP's Holmes explaining that Mr. Holmes came down (from Georgia) "to give the community and the committee an update."
IDP's Holmes got right to it, "We have bought the property. The biggest holdup that we've had -- I will blame it on the IRS. The IRS came out with some guidance that has impacted the entire industry on how they can expense and amortize certain costs associated with projects... When the IRS issues guidance they are never really clear on the guidance that they issue... We are dealing with the repercussions... Our revised target to close is November... Everything is going well."
Mr. Holmes explained that the IRS changes impact investors and not the project. "It's just the IRS doing what they do best -- cause confusion."
Rhett Holmes talks about the IRS while City Attorney Bonnie Green looks on.
Councilwoman Melinda Moses asked, "If it closes in November, when should we be able to see construction begin?"
Mr. Holmes answered, "No longer than 30 days. My goal is to get this thing closed and going before Thanksgiving. You'll see a lot of dumpsters to start off with. "
City Manager Johnson added, "The development agreement between the City and the Blanche has been delayed for over a year. The exhibits to the agreement need to be furnished by the bank. That's the reason for the delay."
Mr. Holmes followed up, "Once we get these revised documents in hand we are about 45 to 60 days from closing."
Economic Development Director Glenn
"Who's Doing the Work?"
County Economic Development Director Glenn Hunter asked, "Brett, who is the contractor and where are they from?"
Mr. Holmes answered, "It is True North Construction out of Valdosta and Atlanta. They've done a lot of government work -- schools... They have historic structure experience... we now have the green light to use historic tax credits on the property."
Mr. Hunter asked if they will they be working with the local contractors.
Mr. Holmes responded, "We get this question on every project: the smaller the town, the bigger the issue. We work with local subs (subcontractors) as much as possible. In many cases we run into subs that are either not qualified or not licensed... a lot of the demo work is where we pick up a lot of local subs, local workers, and day laborers. We'll be using folks like that to do as much work as we can... if you have anybody who is interested, please send them our way."
Any Chance of a Kibosh?
Your reporter asked, "Is there a chance that by the time this gets straightened out with the IRS -- the kibosh could be put on this and this may not happen?"
Mr. Holmes answered, "No. It's all about how they price equities. We have a back up with them. It will delay us further, but we are trying not to delay any further. We have a backup solution to that, but we are trying to keep everything going."
Your reporter followed up, "Once all the stuff gets done and you guys start rolling, how long do you think it is going to take to complete the project?"
Mr. Holmes said, "It will take about 15 to 18 months to do everything."
City Manager Asks for a Little More "Reassurance"
Mr. Johnson: "If you could say one thing to the group, following up on what Stew Lilker just asked, could you just give us a reassuring statement that this is going to happen?"
Mr. Holmes: "There is nothing at this point that I know of that will keep this deal from moving forward. I know of no reason why this deal will not proceed."
Before he left for the drive back to Valdosta, Mr. Holmes told the Committee, "If you want to give us help with leasing apartments, retail, and sub (contractor) suggestions, we're wide open."
Once the IRS and Sun Trust, the underwriter of the tax credits, wrap up their business, and the lawyers finish their feeding frenzy and make some big pay-days, the City will be able to execute the agreement which had its inception a year ago and the City and County taxpayers will find out what this is going to cost.
Keep your eye out for the dumpsters.