The City Council OK'd a low-interest loan Thursday for a development firm looking to re-create the graffiti-marred Judson Candy Building as a condominium project — even though city staffers concluded it didn't need the incentive. Without the $435,000 loan, Judson Lofts Ltd. stood to make an estimated profit of $3.5 million on the $16 million project, according to a staff memo prepared for council members.
The 9-1 vote cleared the way for negotiations for a loan from the city but funded with federal House and Urban Development funds set aside for District 1. Developer Phillip Allen's Judson Lofts sought the loan for the renovation of the building's historic facade. The company is looking to build 84 condominiums at the site at 831 S. Flores St.
The Judson Candy Building — built in 1912 and vacant for more than 30 years — is on the southern edge of Councilwoman Mary Alice Cisneros' District 1, and she got the loan placed on the council's agenda. The redevelopment, she said, would help fuel the revitalization of Flores Street south of downtown. "For those of us who have driven down South Flores in the last few months," Cisneros said, "there is continuing renovation going on all the way down to the city's One-Stop Center."
In an interview before Thursday's vote, she said: "Yes, they stand to make a good deal of profit, but this is a loan they will pay back." Her support for the loan — to be repaid in no more than five years — put her at odds with city staffers. They recommended not making the loan from her district's HUD 108 funds, which can be tapped for housing rehabilitation, economic development and large-scale development projects.
Assistant City Manager T.C. Broadnax said the city's practice had been to dispense HUD 108 funds to builders with "funding gaps" — when their expenses exceed projected revenues — for projects in areas with little economic growth. City staff was "excited" about Allen's project, he told council members, but couldn't endorse a loan. Councilman Kevin Wolff cast the only "no" vote. "The reality is that a funding gap doesn't exist," he said. "I don't blame the developer for doing it, but the problem is that that isn't what HUD 108 funds are for."
Initially, Judson Lofts had pursued a grant, not a loan. But lobbyist Bobby Perez, who represents Judson Lofts, said the loan request was far more modest than incentives — such as tax abatements — granted to developers of projects with funding shortfalls. He also said a portion of the property falls within a flood plain, and that the cost of raising part of the parking lot didn't factor into the revenue and expense projections provided to the city.
The property's currently valued at nearly $2 million. Once the condos are sold, Perez said, the value could jump by $10 million, meaning substantially more tax revenue. The interest rate on the loan will be negotiated, but it wouldn't be more than 5 percent.
In late May, on one of his last days as District 1 councilman, Roger O. Flores sought to put the proposed $435,000 loan on the council's agenda. But Broadnax said staffers kept it off "as a courtesy" to Cisneros, Flores' incoming successor — to give her a chance to learn about the project.
Source: MySA.com