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Developer of $37M downtown apartment project seeks new construction schedule

August 1, 2017

The city’s Metropolitan Development Commission on Wednesday will consider whether to extend deadlines tied to a downtown apartment project so the developer can still qualify for a property tax abatement.

Louisville-based Investment Property Advisors LLC completed the first phase of the 9 on Canal Apartments in 2014. The development included 304 apartment units, 7,877 square feet of retail space and a 278-space parking garage.

In November 2015, the MDC granted a 10-year real property-tax abatement for a $37.2 million second phase that would add 219 apartments, more than 20,000 square feet of retail space and 188 underground parking spaces along downtown’s Central Canal.

The developer’s agreement with the city required it to complete the six-story project by the end of 2017 and add 63 jobs at an average wage of $15 per hour by the end of 2018.

But, in May, a representative from Investment Property Advisors notified the Department of Metropolitan Development that it “was not likely” to complete its commitments by the deadlines, according to the resolution to extend the timeline.

The MDC will consider extending the deadline for completion to May 31, 2019, and the deadline for the creation of jobs to Dec. 31, 2020. Commissioners also want a construction schedule from the developer.

Work on the second phase should start by October, said Chase Sorrick, a co-owner of Investment Property Advisors, noting that the new construction schedule aligns better with the spring leasing season.

“We wanted our building to open in the early springtime, and so we didn’t want to put a lot of pressure on our construction schedule,” he told IBJ.

9 on Canal is about 95 percent occupied, Sorrick said.

Apartments in the second phase will range in size from 650 square feet for a one-bedroom unit to 1,322 square feet for a three-bedroom unit.

Investment Property Advisors would build the second phase at 350 W. St. Clair St., immediately south of the existing development, and would save an estimated $2.4 million (or 40 percent) in property taxes on the project over the 10-year abatement period.

The company would still pay an estimated $3.5 million in property taxes on the development over that period and an estimated $634,400 annually on the improved property after the abatement period.

The 1.7-acre site, which is occupied by a warehouse, currently brings in less than $6,500 in annual property taxes.

The developer has acquired the property and would need to demolish the warehouse to make way for the apartments.

Also on Wednesday, the MDC is set to sign off on $7.2 million in developer-backed bonds to help finance the $41 million Ardmore development. The five-story mixed-use project by the base of Massachusetts Avenue is to be developed by Gershman Partners Inc. and Deylen Realty Inc. and owned by GP-Deylen LLC.

Plans for The Ardmore call for 126 apartments ranging from 553 square feet to 1,631 square feet; 20,000 square feet of retail; and 302 below-ground parking spaces. It is slated to be built on 2.8 acres at the southwest corner of North Delaware and East New York streets on property that is now used for surface parking.

Under traditional tax-increment financing deals, the city assumes the risk of a bond issue and must make up shortfalls if additional property tax revenue generated in a defined district falls short of debt payments. Under the developer-backed strategy, the developer is on the hook for shortfalls.

 

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