The developer of the 700 block of Market Street in downtown Chattanooga says plans for a condominium project may change because a key investor, the Chattanooga Housing Authority, isn’t ready to go forward.
“From our standpoint, we’re going to proceed with the project, but it could be in a different manner than if they’d (CHA) been involved,” said Trey Stanley of Trafalgar Development Corp. “Everything is on the table.”
Mr. Stanley said the housing authority, which is undergoing financial problems, has indicated it’s not in a position to provide the $1.35 million it pledged to the project in addition to more than $2 million it already has turned over.
He said the authority “isn’t in a position to respond to our request for funding at this time. I get a sense they’re not going to be in a position for a while.”
He also said that housing, which was seen as a big component of the $16 million, multistory development, may or may not be a part of future plans.
“We’ve got plans in place that allow us a great deal of flexibility,” Mr. Stanley said. “We might move in a different direction. We might move in a similar direction.”
Mr. Stanley said he doesn’t plan to file suit against the housing authority.
“I don’t think legal action is in anybody’s best interest,” he said.
Bill Lord, the housing authority’s chief information officer, said until the housing entity starts generating cash from the sale of its properties, it’s not going ahead on a number of issues, including Mayfair.
“We’re working with HUD (Housing and Urban Development) to determine what our priorities are going to be,” he said.
The housing authority had borrowed $3.65 million from mortgage lender Fannie Mae for the Mayfair project. In return, the authority received a pledge that 18 of the planned 58 condo units would be earmarked for more affordably priced units in the range of $150,000 and up.
However, earlier this year, the housing authority discovered there were so-called “inappropriate borrowings” of nonfederal funds to meet operating expenses, including $1.2 million which had been earmarked for Mayfair.
A report issued earlier this month said the housing authority has $173,000 of the original loan in a separate account. But Mr. Lord said the authority has defaulted on the loan and is working to resolve that problem.
The housing authority has agreed to sell two assets by Dec. 31 to pay the interest on the Fannie Mae debt until a resolution can be reached on the loan default, which isn’t expected before Dec. 1, according to the report.
Paul Brock, president of the downtown nonprofit redevelopment group RiverCity Co., said he wants to see a timely reuse of the 700 block.
But, he said, there has been a downturn in the real estate and credit markets, and it’s a more challenging economic environment than it was when the project was unveiled two years ago.
“It’s a critical piece,” Mr. Brock said. “We need to get a quality development on it. It could take several forms.”
Mr. Stanley said he has about six to eight weeks of demolition left on almost half of the east side of the 700 block. He would not say the problem with CHA will delay the project.
“It’s not our intent to let this sit around,” Mr. Stanley said.
At this point, the housing authority is “more of a hindrance,” he said, and he is ready to move forward. But, he said, the economy has changed drastically and the development’s configuration may as well.
“We want to respond to what the needs of the city are and address them,” Mr. Stanley said.
Jim Sattler, vice chairman of the housing authority board, said his position is that all the parties involved need to explore options.
“CHA definitely has a plan in place to sell properties and have those funds available,” he said.
Lori Jenkins, president-elect of the Chattanooga Area Chamber of Commerce’s Downtown Council, said she still thinks affordable housing is important for the central city. Many younger professionals would like to live downtown, but it’s too expensive, she said.
Demolition of the old, dilapidated buildings on the 700 block began in March, about two years after the original plans were announced. Originally slated as apartments, Mr. Stanley shifted to condominiums in June 2006, citing market conditions.
Mike Pare, the deputy Business editor at the Chattanooga Times Free Press, has worked at the paper for 27 years. In addition to editing, Mike also writes Business stories and covers Volkswagen, economic development and manufacturing in Chattanooga and the surrounding area. In the past he also has covered higher education. Mike, a native of Fort Lauderdale, Fla., received a bachelor’s degree in communications from Florida Atlantic University. he worked at the Rome News-Tribune before ...