Yay! 268 new residential rental units coming soon to River North!

By Jennifer Hiller – San Antonio Express-News

The long-stalled and highly visible 1221 Broadway project received a $23.4 million loan this week, giving a shot in the arm to downtown and the city’s efforts to draw more rental housing and mixed-use development to the area.
Workers put up safety railings Friday, and construction work could start as early as Sunday, the developer said.

It’s hoped that the first residents will be in apartments in April, with the entire project finishing in a year.

“Everyone wants the eyesore gone. It’s a double benefit,” Mayor Julián Castro said. “You get rid of the eyesore and get something that adds value.”

Converting the skeletal and abandoned buildings into a project with 268 residential rental units and a parking garage is considered critical to improving an entrance to downtown and to jump-starting revitalization in the blocks surrounding the new Museum Reach of the River Walk, known as River North.

“It will be enormously different from what you see there today,” said David Adelman, a principal at the development firm Cross & Co., the principals of which control a partnership that owns the property. “This is going to be a true game changer for downtown and River North.”

The 1221 Broadway will move forward at a time when it’s been virtually impossible for commercial developers to secure loans.

The government-backed loan comes through the New York-based Rockhall Funding Corp., a commercial mortgage bank that specializes in apartment and health care lending.

The U.S. Department of Housing and Urban Development approved the financing and is insuring the loan through the Federal Housing Administration, Adelman said.

Under the city’s incentive package, the developers will spend money upfront to improve things such as streets, sidewalks, landscaping and lighting on public property near the project. The city will set aside the property tax the project pays for 10 years, which will be used to reimburse the cost of those public improvements.

“It complements well the investment the city has made in the Museum Reach of the river and demonstrates that projects can move forward in this environment,” Castro said. “Obviously there’s city funding and there’s federal government support. But with creativity and partnerships, it’s possible to get these projects going.”

The loan closed Wednesday, and the construction team held its first safety meeting Thursday. By April, Adelman expects the garage to be completed, along with the first 10 to 12 rental units. Each week after that, another 10 to 12 market-rate apartments will open to renters.

Adelman said the fast-tracked 12-month construction pace is possible because, with little else happening, it should be easier for contractor CF Jordan Construction to schedule skilled subcontractors.

“It’s not like a few years ago when everyone was too busy and there was a labor shortage,” he said. “Now they’re looking for work.”

Downtown boosters have been waiting for something — anything — to happen with the property.

“It became a symbol of deterioration and disinvestment,” Deputy City Manager Pat DiGiovanni said. “This is a wonderful opportunity to see that property revitalize.”

The complex, once called the Villaje del Rio, has sat vacant for years and has a tangled legal history.

According to San Antonio Express-News archives, construction stopped in October 2004 when the original developer, George Geis, sued his general contractor, claiming it had been overpaid by more than $2.5 million.

After Geis defaulted on the $26.7 million loan, lender Deutsche Bank Berkshire turned it over to HUD, which had insured the loan. Geis sued HUD, claiming the government had wrongfully taken management of the 4.5-acre property.

But HUD sold the debt to another San Antonio-based company before Geis could get a court order to stop it. He filed for bankruptcy protection a day before the new owners were set to foreclose.

A four-year legal battle between Geis and the current developers, the Colina Del Rio partnership, ensued. By the time the new partnership had clear title, the economy had soured and the credit markets dried up. And thieves had stripped air conditioners, copper water lines and wiring.

The result was a set of dystopian-looking buildings that seem like part of the set of “The Running Man.” They loom over Broadway and jut high enough to catch the eye of drivers on the Interstate 35/Interstate 37 exchange.

“How many thousands of people see it every day from the (freeway)?” asked Ben Brewer, president of The Downtown Alliance. “This will be a welcome sight. With that development moving, it helps everyone. It helps other development companies, and it helps the lending entities to see that there really is a market here.”