$40M Historic Preservation Project Converts Courthouse to Apartments
- Jul 07, 2011
Well known in the real estate for its historic rehabilitations, The Alexander Co. (TAC) has worked its magic again, masterfully transforming the long-shuttered, 1930s-era U.S. Federal Courthouse in downtown Kansas City, Mo., into 176 high-quality workforce-housing apartment residences.
Originally developed in 1939, the neoclassical and Art Deco style Courthouse property has a significant history, one that is of national importance. More than a handful of landmark desegregation rulings, anti-trust cases and criminal trials took place within the courtroom walls, and in his pre-presidential days, Harry S. Truman maintained his local senatorial offices in the building. Today, Truman’s one-time office is the living room of one of the residences in the apartment community, which offers 109 one-bedroom units and 67 two-bedroom units with first-rate finishes. Barstow Construction served as general contractor for the conversion and rehabilitation endeavor.
Adaptive reuse of historic facilities is TAC’s niche, fortunately for Kansas City officials, who, after issuing RFPs, had been unable to find a developer to take on the challenge at 811 Grand Blvd. “It was empty for 10 years because no one knew how to work around the historic elements,” Matt Meier, senior project development manager with TAC, tells MHN. “One of the things that is unique about historic preservation is learning to use what’s there in the most efficient way you can. We had to design the units around the historic fabric of the building.” As a result, residents of the Courthouse Lofts enter a lobby with the original marble floors and ornate ceiling, and walk through doors with signs that read “Judges Chambers.” Also, one of the units features a bathroom entry that was formerly the door of a safe. “Tenants enjoy the history of these details. Not one floor plan is the same.”
In addition to successfully incorporating into the project the numerous elements that had to be preserved, the developer devised a way to create a 180-space underground parking facility in the 10-story, full-block structure, a feat that involved, among other tasks, the removal of 25 columns and the transfer of beams. TAC also added 10,000 square feet of retail space, a community room and theater, a fitness center and a rooftop terrace. “In a project of this size, it makes sense to have those amenities and keep the property valuable for the long term,” Meier says.
Bringing the $40 million public-private development to fruition was no simple achievement. In 2009, TAC was ready to sign on the dotted line of an equity deal, but consequences of the financial crisis put the kibosh on the plan. “The investor called the day before we were supposed to close to say it couldn’t do the deal—or any other deal. It just got worse and worse after that in terms of the availability of debt and equity and structuring the deals being considered by the limited resources out there. But we persevered.”
Fortunately, U.S. Bank, which had committed to supplying debt, remained onboard and switched to the equity side, ultimately providing $24 million in equity through the purchase of State and Historic Tax Credits. TAC filled the gap with Tax Credit Replacement Funds and the Tax Credit Assistance Program provided through the Missouri Housing Development Commission.
The developer relied on support from government entities ranging from the local to the federal level. “We teamed up with financial services firm Morgan Keegan, the State of Missouri and the U.S. Department of Housing and Urban Development on a risk-share deal, so we got the bonds sold,” he says. “There were a lot of different government bodies involved in the deal, including the Planned Industrial Expansion Authority and the U.S. National Park Service. One of the biggest hurdles we just barely cleared at the 11th hour involved the U.S. General Services Administration, which could take back the deed to the property if we didn’t meet certain deadlines. The government employees involved in the project worked so hard to get it done. There were emails flying back and forth, three a minute, all night long. I’d never seen anything like it.”
All told, it took TAC one year—and an incredible amount of effort and patience–to restructure the financing for the Courthouse apartments. “It’s ironic,” Meier notes, “that the building was originally built during the Great Depression and redeveloped during the Great Recession.”