1st Street Lofts Rant/recap

[cannon_fodder]

[the Ross Group took over this project in 2016 and progress appears to be advancing]

The First Street Lofts are a project that was controlled by a developer who owns/owned much of the Blue Dome district property.  He acquired an interest in the building at 310. E. 1st around 1977. He received $1,300,000 in government loan money from Vision 2025 in 2006 or 2007.  The basic terms of the loan are this:  

You get $1.3 million to redo a vacant or underused building into quality  residential housing.  We will loan you this money interest free for 10 years.  In exchange, Tulsa gets quality housing, an increase tax base, and a growing pedestrian friendly downtown.  Also, we will not make our loan a first priority and you can get other financing that could undermine our interest in your property.  

The $1.3 interest free for 10 years will cost the government about $500,000 in interest.  It saves the developer much more than that as their borrowing costs would be higher. The City/County are probably exposed if he defaults.  What makes this work is that it allows development that improves the area and increases the tax base at a much more rapid pace – AND provides seed money for future projects.

Unfortunately, if a project doesn't run smoothly it ruins the concept.  The project is not generating tax revenue. Not adding life or synergy.  And the government is exposed to risk from any default.

It was originally scheduled to be completed in 2007 or 2008.  Then it was bumped to 2009.  In 2011 it was almost done.  In 2012 completion was 2013.  Now we will be done in 2015.  

BUT, there was an economic downturn.  There were redesigns.  Unexpected work.  Red tape.  OK, those are all true.  Those are all true of most major building project.  Since 2007 here is a list of projects that have been completed:

BOK Center.  OneOK Field.  Mayo Hotel.  420 Mayo Building.  Detroit Lofts.  Old City Hall converted to an A-Loft.  Empty building into Albert G's.  The MET was made into Rib Crib.  A couple empty buildings became Fleet Feet and Lee's Bicycle.  The Rusty Crane.  Hampton Inn was constructed.  Tribune Lofts II.  Cimarex Tower.  Guthrie Green.  Woody Guthrie Center.  Philbrook Art had a satellite center open.  TU Opened an art center in the Brady.  Gilcrease had an addition and a renovation done.  New apartments behind Renaissance downtown.  New apartments across from the ballpark.  St. Francis added an entire childrens hospital.  St. John's added their Broken Arrow hospital.  I-44 was started and is nearly finished.  I-244 had one new bridge completed.  The entire development at Tulsa Hills.  The Indian Store opened next to Dwelling spaces.  Joe Momma's.  The Max.  Dilly Deli.  The Dust Bowl.  Fassler Hall.  Back Alley BBQ opened, closed, and was replaced by White Flag.  Burn Co opened and moved to the 18th and Boston.  IN Oklahoma City Devon tower was conceived, designed, announced, and built to 50 floors, with construction starting in October of 2009 and ending in October of 2012. It took three years to build the Trump International Tower in Chicago, 98 stories, 2.6 million square feet, and a billion dollars.

I hope we REALLY learned a lesson.  Vision 2025 administration needs to have criteria set to hit the goals.  There needs to be transparency on where the public money has been spent.  There needs to be rules that it cannot be used to increase the planned compensation for the developer. The City/County needs to be a truly secured party.  The goal was to have a project developed quickly to add to the tax base and the synergy – even if the developer gets the project done this time, the "quickly" part of that equation failed miserably.   I'm not being (too) critical of the V2025 oversight on this project because it has NOT defaulted and is technically still in compliance, but we need to learn from it and strengthen the compliance in the future to show ACTUAL progress.

The recent Tulsa World Headline sure was reassuring.  Unfortunately, the World articles almost always are.  Let's review the news articles...

1/15/2006
Lofty ambitions for downtown landmarks:
. . .
First Street Lofts  
http://www.tulsaworld.com/archives/builders-focus-vision/article_6703749e-7736-5389-a56d-5e9fafe25248.html

310 E. First St.
Funds requested: $1,574,315
Total project cost: $2,824,315
Developer: Blue Dome Properties LLC
The proposal: A residential loft building that would be marketed as "creative spaces for creative people."
Sixteen units would range in size from 678 to 1,883 square feet and rent for between $700 to $2,100 per month.
The bottom two floors would be commercial space.


3/10/2006
Vision money funds lofts
Four downtown buildings will be renovated to hold residential units.
http://www.tulsaworld.com/archives/vision-money-funds-lofts/article_c6804a82-3aa7-5304-adb4-8852d92a1a25.html

More than 160 residential units will be created in four downtown buildings with the help of $10 million in Vision 2025 funds, Mayor Bill LaFortune announced Thursday.
The sites include the historic Mayo Hotel, 115 W. Fifth St.; Mayo Building, 424 S. Main St.; and Transok Building, 2 W. Sixth St.; and a building in the Blue Dome District at 310 E. First St.
. . .
First Street Lofts: Developer Michael Sager through Blue Dome Properties LLC requested nearly $1.6 million but will receive between $1.2 million and $1.3 million.
Sager said there is enough funding to move ahead with the full 16-unit proposal.
The lofts will be marketed as "creative spaces for creative people" and range from 678 to 1,883 square feet and rent for between $700 to $2,100 per month.
The bottom two floors will be commercial space.
The total project cost is estimated at $2.8 million.

03/21/2007
Vision 2025 residential construction breaks ground
http://www.tulsaworld.com/archives/vision-residential-construction-breaks-ground/article_1b85054c-1366-56e7-8d9a-ce4eefc23fc5.html
Construction began Wednesday on the first Vision 2025 residential project.
The First Street Lofts in the old Jacobs Hotel at 301 E. First St. will include 19 units ranging from 650 to 2,000 square feet and will rent for about $1 per square foot.


3/22/2007
Downtown building being converted into lofts
http://www.tulsaworld.com/archives/downtown-building-being-converted-into-lofts/article_731479bc-3a1f-59a6-b01b-b20f1a31aad9.html
The project, which began Wednesday, is partially funded with Vision 2025 money.
Construction of the first Vision 2025 downtown residential project began Wednesday with a jackhammer's boring into the concrete floor as city leaders covered their ears."This project has been a dream of mine for 30 years, and now it's coming true," said Michael Sager, the developer who bought the former Jacobs Hotel at 310 E. First St. in 1977.

3/23/2007
Lofty plan
Downtown housing projects under way
Tulsa's much-desired revitalization got a big boost Wednesday with the "floor-breaking" ceremony for the planned First Street Lofts, to be located in the old Jacobs Hotel at 310 E. First St. A jackhammer was used to begin the restoration project in the five-story structure, built in 1916.The lofts are the first of four residential projects that are to receive interest-free loans from $10 million generated by the Vision 2025 sales-tax program. Tulsa developer and building owner Michael Sager, who has been active in downtown redevelopment, said the project has been a dream of his for 30 years. "I would never have been able to get this project off the ground without the Vision 2025 money," he said. "It's just too risky for the banks." Sager will receive $1.3 million from sales-tax proceeds. The total estimated cost of the project is $3 million. Under the Vision 2025 residential development initiative, developers are required to pay back the money loaned to them, so that repaid funds can go toward other future projects.
http://www.tulsaworld.com/archives/lofty-plan/article_e9d23aff-03e6-5f7f-a618-a3eeefef53c5.html

4/19/2008
Lofts project gets going
http://www.tulsaworld.com/business/realestate/lofts-project-gets-going/article_5b8dde26-a19c-5a9a-b96a-d7debdd2da49.html

Michael Sager's plans to convert the former Jacobs Hotel into lofts and retail space have moved a lot more slowly than the developer expected.
But conversion work for the First Street Lofts is finally under way in earnest — a gigantic hole punched into the west side makes that clear.
"We're putting in a 16-foot-high glass wall," Sager said. "It'll overlook some of the best of the Tulsa skyline."
Sager said administrative matters slowed the development of the building at 310 E. First St. after a ceremonial jackhammer ceremony was held in March 2007. But the red tape has been cleared and workers are expected to finish the first loft by fall, with the residential side of the project completely done within a year.


11/16/2009
Downtown residential projects (more) eye Vision funds
http://www.tulsaworld.com/news/government/downtown-residential-projects-eye-vision-funds/article_61cc2814-e9a0-5812-b142-619ad0a0c242.html
Four downtown residential projects are vying for $769,000 in Vision 2025 funds that will be awarded as a no-interest, 10-year loan. . .
First Street Lofts: Developer Michael Sager through Blue Dome Properties LLC.
Sager requested the full amount, which he said would complete the project that will ultimately have 18 residential units, of which 12 are single-level units and six multi-level units. There also will be a rooftop deck with a view of ONEOK Field.

11/29/2009
Coming along
Ball park, restaurants, lofts: Downtown progress continues
http://www.tulsaworld.com/opinion/mikejones/coming-along/article_d91df6ae-5ebb-5eb3-8595-980f8d6a5144.html

KJRH.com story from 12/21/2011 being VERY critical of Sager:
http://www.kjrh.com/news/local-news/2news-takes-a-closer-look-at-an-unfinished-vision-2025-housing-project
His reasoning? Despite the taxpayer seed funds, sufficient money wasn't readily available, contract negotiations took too long, and the real estate collapse halted construction.
"There are many projects that have taken years past the time of getting started," says Sager. "The fact is we are durable and we are still here."
The group in charge of handing over the $1.3 million of Vision 2025 money, the Tulsa Development Authority, has given Sager five extensions on the project, including one granted in October of this year.
"With the downturn in the economy and construction prices, we just wanted to have a little patience with him," says O.C. Walker, Executive Director for the Tulsa Development Authority.
. . .
"I'd like for them to give a good excuse on why that's not done," says Cullen. "It didn't appear to me or my clients that any of it was being spent for that building."
2NEWS poured through thousands of documents, including draw reports submitted by Sager to the TDA showing what he spent money on--little of which matched the original proposal.
$30, 975 was budgeted for construction management and administration. Michael and Patricia Sager are listed as construction manager and administrator, but more that double was paid out to them, according to the draw reports: $83,000. Plus, $46,065 was paid out to others listed as construction managers.
2NEWS : "That's quadruple the amount he intended on using for himself. Was that a red flag?"
Walker ( TDA): "It certainly was."
Walker admits there were several red flags.
. . .
Sager believes, despite setbacks, First Street Lofts will open as early as Spring of 2012.
He recently redesigned the project, adding more units for a more affordable price for renters. "Believe it or not, it's alive and well,"



2/13/2012
Tulsa could lose $1.3 million due to Blue Dome project delay
http://www.tulsaworld.com/news/government/tulsa-could-lose-million-due-to-blue-dome-project-delay/image_125c3e8d-6651-5cfa-ab56-676a82503880.html
Developer Michael Sager is pictured in front of the First Street Lofts at 301 E. First St. After several contract extensions, the project, once estimated to cost $3 million, remains unfinished and faces a possible foreclosure action. Project costs have increased to roughly $5 million.

2/17/2012
Stalled Downtown Development Moving Forward
http://www.ktul.com/story/16963653/stalled-downtown-development-moving-forward
Sager says Tulsans  won't be sorry they invested in him.  The 23 units building with 32 parking spaces, also has three businesses on the ground floor...they're already leased.  The city says that's good for everyone.  The project is now slated for completion on February 13, 2013.  Sager says he'll be ready.

05/15/2014
Tulsa's First Street Lofts, funded by taxpayers' dollars, still not complete eight years later
http://www.kjrh.com/news/local-news/tulsas-first-street-lofts-funded-by-taxpayers-dollars-still-not-complete-eight-years-later
"I don't feel guilty," said Sager. "We've continued to hold the course and we're still here to finish."

But Sager told 2NEWS the same thing in 2011 .

"Believe it or not it's alive and well," said Sager back then.

He said something similar in 2012 .

"Things are looking very up," said Sager two years ago.


5/22/2014
Q & A: Michael Sager a driving force in downtown resurgence
http://www.tulsaworld.com/homepagelatest/q-a-michael-sager-a-driving-force-in-downtown-resurgence/article_04160ce8-2453-5777-b5e9-4fe2a1b172a1.html
. . .For more than three decades Sager has been one of the driving forces behind the resurgence of downtown, especially in the Blue Dome District. That resurgence did not come quickly or easily.. .  
Sager has sold the Blue Dome Building and said he is concentrating his efforts on the First Street Lofts.
"We'll have 23 lofts for lease, from 780 to 2,000 square feet," he said. "I wanted all different sizes because I want this to be a neighborhood, and downtown is the core of the city."


07/31/2014
Work starting again on downtown First Street Lofts
http://m.tulsaworld.com/businesshomepage1/work-starting-again-on-downtown-first-street-lofts/article_28172494-5c1c-539c-ac17-50a030758b0d.html?mode=jqm
Work on the long-anticipated First Street Lofts in the Blue Dome District is set to start again, said downtown developer Michael Sager.

Sager and his real estate group Blue Dome Properties LLC have started work after years of delay on the apartment portion of the former Jacobs Hotel site at 310 E. First St. with plans to offer the project for bids in the coming weeks.
"We have been working for three to four months to revise all of our construction plans for completion," Sager said.
With the new plans, Sager said construction could start in the next 60 days, with 180 days of scheduled construction. That timeline would put the completion of the project sometime in the early spring of 2015 with apartment leasing to start shortly after.


6/14/2014
Downtown living options continue to multiply but may not be keeping pace with demand
Great news... According to the Tulsa World Sager will be working on the First Street Lofts soon...
http://www.tulsaworld.com/business/realestate/downtown-living-options-continue-to-multiply-but-may-not-be/article_f3397515-63b1-5c4b-ad4d-ae612fd7e565.html

7/9/2015
Work starting again on downtown First Street Lofts
http://www.tulsaworld.com/businesshomepage1/work-starting-again-on-downtown-first-street-lofts/article_28172494-5c1c-539c-ac17-50a030758b0d.html

7/10/2015
After nine years, 1st Street Lofts see rapid completion
http://www.kjrh.com/news/local-news/investigations/after-nine-years-1st-street-lofts-to-see-rapid-completion

[Conan71]

The irony about your "red tape" comment is Sager is frequently consulted on other construction projects because he knows how to navigate the red tape which is inherent in rehabbing old buildings in the CBD. 

Sager can be so FOS, it's unreal.

[RecycleMichael]

Eight years.

Maybe the workers only have one hammer to share.

[DowntownDan]

My favorite quote from this week's article.

So far there aren't any firm commitments for renters, but Sager said he isn't asking for commitments until the property is actually done.

"I can pick up the phone and call 12 or 15 people, but we haven't been prepared because we want people to see it before they sign anything," Sager said.

Or maybe it's because you don't want a bunch of future tenants bugging you next year when there hasn't been any progress on the loft you promised them would be complete.

[sgrizzle]

My favorite quote in the latest article was that he started in 2007 and was going to do residential first,  but there was a high demand for retail so he did that first..... in 2012.

[Weatherdemon]

5/22/2014
Q & A: Michael Sager a driving force in downtown resurgence
http://www.tulsaworld.com/homepagelatest/q-a-michael-sager-a-driving-force-in-downtown-resurgence/article_04160ce8-2453-5777-b5e9-4fe2a1b172a1.html
. . .For more than three decades Sager has been one of the driving forces behind the resurgence of downtown, especially in the Blue Dome District. That resurgence did not come quickly or easily.. .  
Sager has sold the Blue Dome Building and said he is concentrating his efforts on the First Street Lofts.
"We'll have 23 lofts for lease, from 780 to 2,000 square feet," he said. "I wanted all different sizes because I want this to be a neighborhood, and downtown is the core of the city."


07/31/2014
Work starting again on downtown First Street Lofts
http://m.tulsaworld.com/businesshomepage1/work-starting-again-on-downtown-first-street-lofts/article_28172494-5c1c-539c-ac17-50a030758b0d.html?mode=jqm
Work on the long-anticipated First Street Lofts in the Blue Dome District is set to start again, said downtown developer Michael Sager.

Sager and his real estate group Blue Dome Properties LLC have started work after years of delay on the apartment portion of the former Jacobs Hotel site at 310 E. First St. with plans to offer the project for bids in the coming weeks.
"We have been working for three to four months to revise all of our construction plans for completion," Sager said.
With the new plans, Sager said construction could start in the next 60 days, with 180 days of scheduled construction. That timeline would put the completion of the project sometime in the early spring of 2015 with apartment leasing to start shortly after.

You should that the latest article indicates he has changed the plans since May with, "He is now planning for 23 units on the property, ranging from 700 to 1,100 square feet. The old plans called for units up to 2,000 square feet."

What a mess. At least the bottom floor is occupied.

[sgrizzle]

What a mess. At least the bottom floor is PARTIALLY occupied.

FIFY

[Townsend]

I was walking by yesterday and glanced over.

Anyone know of any changes?  Updates?  Lawsuits?  Pending arrests?

[sgrizzle]

I assume we have like three months until the next excuse article.

[carltonplace]

WARNING!!! UNSUBSTANSIATED ANECDOTAL STATEMENT FOLLOWS - THERE ARE NO FACTS INHERENT IN THE WORDS YOU ARE ABOUT TO READ


I think Whiskey Business is struggling, they are not stocking their shelves anymore and the cashier mentioned that they don't have money to replace stock right now. If they fail that leaves only S&Js active in this building. The space east of S&J seems to be filling up but only with more and more junk.

[Conan71]

they are not stocking their shelves anymore and the cashier mentioned that they don't have money to replace stock right now.

In most places that means: "GOING OUT OF BUSINESS SALE!!!!"
I always thought having a liquor store was a license to print money.  Shame they can't make a go of it, maybe they were a few years too early.

[swake]

In most places that means: "GOING OUT OF BUSINESS SALE!!!!"
I always thought having a liquor store was a license to print money.  Shame they can't make a go of it, maybe they were a few years too early.

It's an odd location since no one (today) lives in the Blue Dome district.

[DowntownDan]

I shope at Whiskey Business.  Was there just last week.  I would hate to see it go out.

[Conan71]

Haven't been in almost a year.  They would call me when a limited release would come in, but to be honest, it was a whole lot easier to run up to Parkhill's, park, run in, and be back on my way.

[rdj]

Great idea.  Bad location.  If Sager had the lofts upstairs it would change their location...  But, we could say a lot things would be different if Sager had his lofts done.