The Little Rock Technology Park Authority Board on Wednesday reduced the amount it will borrow to buy property in the first phase of the $100 million tech hub.
The Phase 1 loan will total $17.1 million, down from $17.5 million, Executive Director Brent Birch told the board during a conference call.
Board member Dickson Flake said the loan amount was lowered based on an appraisal of the value of the completed project, not the property's current worth.
Flake, a real estate broker with Colliers International, said he was pleased that the loan amount was not lower.
"The whole reason we exist is we're not going to be getting market rents from many of our occupants, so I was relieved," Flake said.
The park's mission is to provide an area where startup technology companies and budding entrepreneurs can share space and have the opportunity to bounce ideas off one another.
The Phase 1 purchase, which is expected to close Friday, will include an office building known as Five Main Place at 421 Main St., the vacant Exchange Bank Annex at 417 Main St., the soon-to-be-demolished old Stephens building at 114 E. Capitol Ave., a building at 415 Main St. that has housed the law offices of Mays Byrd & Associates P.A., and three parking lots.
Former Arkansas Supreme Court Justice Richard Mays Sr. is selling his property to the tech park for a little over $1 million. The tech park is buying the rest of the property from companies controlled by Warren Stephens for $11.6 million.
Total cost for the first phase is about $24 million, including construction and professional services, such as architects and surveyors. The $17.1 million loan will include two notes -- one for $7.5 million and another for $9.6 million that is exempt from federal and state income taxes.
Interest rates for the six-year loan -- which officials previously projected at 4.19 percent and 2.95 percent, respectively -- have not been locked in yet, Birch said in an interview after the conference call.
The remainder of the Phase 1 cost will be covered with more than $6 million collected to date from the park's portion of Little Rock's 2011 voter-approved city sales tax. The park is expected to collect about $22 million from the tax through 2022.
Birch said construction could start by early April. The park's first tenants could move in by December or by January 2017, he said.
Also Wednesday the board voted to accept a property insurance bid from Stephens Insurance, an arm of Stephens Inc., for Phase 1. The annual premium is $15,640.
The only other bid was a part of Colliers' umbrella policy issued by Regions Bank, and that premium was $24,806. The tech park also asked for a bid from BancorpSouth, but it was unable to supply a bid by the deadline, Birch said.
Birch told the board that, in conjunction with the loan, the tech park's bank account would be moved from Regions to Centennial Bank, which is leading the first-phase financing with a consortium of other lenders. He said the other lenders had agreed to the move. There is about $6.6 million in the account, Birch said.
Regions is not part of the consortium, and Birch said that at least $3.3 million had to be held at Centennial to be applied to the purchase price at Friday's closing.
Birch also told the board that it would need to conduct a second environmental study because of the possibility that there are underground fuel storage tanks in the parking lot at the northeast corner of Scott Street and Capitol Avenue, which is across Scott from the old Stephens building. About two-thirds of the the lot is owned by Texarkana Newspapers Inc., which is owned by WEHCO Media Inc., publisher of the Arkansas Democrat-Gazette.
Birch said he hoped the Arkansas Department of Environmental Quality would pay for the study as part of its program to clean up and redevelop potentially contaminated sites. The agency paid for the tech park's initial study, Birch said.
Business on 02/04/2016