Hope for stalled Main Street projects

Bidder gives new impetus to revamp of 3 buildings

Developer Scott Reed said he still is interested in completing the 30-unit K-Lofts apartment project in the former Blass Building at 315 Main St. in Little Rock.
Developer Scott Reed said he still is interested in completing the 30-unit K-Lofts apartment project in the former Blass Building at 315 Main St. in Little Rock.

Three unfinished historic buildings along Little Rock's Main Street are again under contract, providing city leaders with hope that their vision for the downtown city corridor will be completed.

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Arkansas Democrat-Gazette

2016 file photo of the Boyle Building at Capitol Avenue and Main Street in Little Rock.

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Arkansas Democrat-Gazette

The Arkansas Symphony Orchestra had hoped to move into the M.M. Cohn building on Main Street in Little Rock. Work has been delayed for years and the symphony now is looking for another downtown space.

Sam Alley, chairman and chief executive officer of construction company VCC, confirmed his family is interested in properties at 510, 522 and 524 Main St. Alley said, however, that it is too early to discuss plans or the offer price for the former M.M. Cohn, Arkansas and Arkansas Annex buildings.

"We are in the due diligence phase," Alley said. "We have some time to devote, somewhere in the next 90 to 120 days."

Construction on the three buildings was slower than expected after work began in 2013 and stalled completely last year when changes to the state's historic tax credit laws were enacted, Main Street developer and property owner Scott Reed said.

Projects are now limited to a single tax credit of $125,000 per eligible property in a two-year period after previously being allowed to take multiple credits for one property.

Reed, of Portland, Ore., confirmed his interest in selling the buildings, but said he remains interested in finding a way to finish the 30-unit K-Lofts apartment project in the former Blass Building at 315 Main St. Currently, the downstairs is occupied by Club Level.

Because of ongoing legal action involving AMR Construction, the contractor for those properties, Reed said he was limited in what he could say about the properties.

"We remain committed to downtown Little Rock," said Reed, who is being represented in the property sale by Flake and Kelley real estate company. "We still like what we see happening in downtown Little Rock. We are committed to seeing the projects through to a successful conclusion."

Asked what he considered a successful conclusion, Reed repeated his comments regarding changes in the handling of historic tax credits. Reed said if the law changed he would consider finishing the projects himself.

"It's difficult to tell," Reed said. "You never know when the rules are going to change back or change to something else. It's hard to know exactly what that [successful conclusion] looks like."

City leaders, including Little Rock Mayor Mark Stodola, envisioned the "Creative Corridor," a stretch of Main Street between Third and Seventh streets, would include a mix of technology, businesses and nonprofit arts organizations such as the Arkansas Symphony Orchestra, the Arkansas Repertory Theatre and Ballet Arkansas.

Currently, only the Rep has moved into its Main Street space. Stodola said grants have been secured to help Ballet Arkansas finish out space in its building. An electronic message board has been posted across the street at Sixth and Main streets and a video board will be installed at Capitol Avenue and Main Street to keep residents updated on events.

Those cosmetic upgrades, construction progress for the Little Rock Technology Park, operating businesses in the area and the pending sale of the Reed properties leave Stodola "extremely optimistic" about the future Main Street development.

"It's been a very patient odyssey of love. ... It is going to happen. It will happen," said Stodola, who was among those who first encouraged Reed to invest in downtown Little Rock. "Unfortunately, it hasn't happened as quickly as I would have liked it to happen, but I think the light is pretty bright at the end of the tunnel right now."

Stodola continues to encourage the orchestra to locate on Main Street. That organization's executive director, Christina Littlejohn, said walking past the Reed properties that were supposed to be designed specifically for the symphony is difficult.

That move has been delayed by "years" and the Main Street crosswalks painted to look like musical notes are a reminder of the 12,500 square feet in the Cohn and Arkansas Annex buildings that the symphony would occupy.

It signed a lease on the space in 2013.

Reed recently released the symphony from the lease agreement and Littlejohn said a new search for a location downtown will begin soon. She noted the symphony would still like to inhabit the space on Main Street that it originally selected, but with costly renovations remaining, the organization must do what is "fiscally responsible."

"It's sad. I don't like walking on that block," Littlejohn said. "I can see the musical notes on the street. But, I am still hopeful. There's still a chance we can get into that space. I'm still rooting for that spot to work out in the future."

A deal appeared to be in place for the Cohn department store building at 510 Main St. in September. Reed was supposed to sell the building to the Chi Hotel Group, which announced plans in 2014 to build an Aloft Hotel in the Boyle Building next door.

Work on the hotel project also has been delayed by months.

A message left for Jacob Chi was not returned. Chi said in September that his family's $20-plus million hotel project next door was delayed and might be complete in the second or third quarter of this year. Chi said in that interview, "we have a hard time trying to execute a $22 [million] to $24 million project without knowing what's going to be happening with the rest of the block."

Property values have risen since Reed began buying downtown property in 2012. Reed Realty paid $1.5 million for the Cohn building and three other properties along Main Street and later sold one of those, the Boyle Building, for $4.6 million.

Sharon Priest, the former Downtown Little Rock Partnership executive director, said Reed's early interest in Main Street spurred other developers and helped increase property values.

Priest said the developer deserves some credit despite seemingly abandoning the projects when the historic tax credit funding evaporated. Reed would get even more credit if he finished the projects in the face of financial trouble, Priest said, pointing to the persistence of Little Rock developers Jimmy Moses and Rett Tucker of Moses Tucker Real Estate.

"I can't imagine the frustration that Jimmy and Rett felt when they were working to develop the River Market Tower and the economy went in the tank," Priest said. "They had to be frustrated, but they hung in there with the project. Credit Scott for getting Main Street started, but there's some real credit to be given when somebody like Jimmy and Rett stick with it and put their money where their dream was."

Further complicating progress on the projects has been legal action between Reed and AMR Construction. AMR President Manly Roberts did not respond to voice mail and email messages.

He said last year that work on the Arkansas Annex building was "95 percent" complete and estimated the Arkansas Building was between "65 and 70 percent" finished before his crews stopped working, citing lack of payment by Reed.

Developing in Little Rock hasn't been the experience that Reed hoped, he said. Reed, who has projects ongoing in Birmingham, Ala., said Arkansas needs the same development incentives neighboring states have in order "to unlock its economic potential."

"My CPA says [Little Rock] is about 8 percent of my portfolio, but he estimated 95 percent of my issues," Reed added.

Despite the headaches for Reed, delays for tenants and a yet-to-be-completed vision for Main Street, Downtown Little Rock Partnership Executive Director Gabe Holmstrom said the area is becoming what was envisioned years ago. Delays on renovation of historic properties shouldn't come as a major surprise, Holmstrom said.

"I think anytime people take on projects of mass and scale, there will be unexpected hiccups," Holmstrom said. "The reality is there are only so many buildings on Main Street and I'm confident that ultimately these projects will be finished. Five years from today Main Street will look a lot different than it does now in 2016."

SundayMonday Business on 07/17/2016

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