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Built in 1913, the Merchandise Mart Annex stands as one of the city’s true landmarks, yet it remained vacant for years. Realizing the potential in property that was only minutes away from Busch Stadium, Union Station and the TWA Dome, Heller bought the building. A longtime proponent of adding residential development to downtown, Heller began a $7 million project converting the building into high-finish apartments. This marks the first attempt by a St. Louis developer to create downtown loft condominiums and the results have been encouraging. Only three weeks after completing his display unit, Heller had reserved each of his 31 apartments and a waiting list swelled. The units range in size from 1,500 to 3,100 square feet and in price from $135,000 to $340,000. Only a five-minute walk from Union Station, Busch Stadium and the TWA Dome, residents enjoy the attractions of downtown without the commute. Finally, each apartment boasts a picturesque view of the St. Louis skyline with all the amenities of home. The spectacular views and the apartments’ chic modernity most obviously appeal to young St. Louisans, nevertheless the building’s tenants are diverse, ranging in age from 25 to 60. Empty-nesters seem just as eager to rediscover living downtown as young professionals. According to Heller, the demand for downtown loft apartments is enormous, but few spaces are available. “People call me all the time looking for units. It’s a shame that there aren’t more out there.” Rehabilitation projects like these require a great deal of money and Heller might never have been successful if not for a delicate partnership with his financiers. Heller’s company, Loftworks, Firstar, and most notably the State of Missouri, were able to work together using state tax credits to turn an otherwise impossible project into reality. In a 1997 legislative session, the Missouri General Assembly and Gov. Mel Carnahan created the Missouri historic rehabilitation program. This program dictates that where rehabilitation expenses exceed 50 percent of total cost basis on a state historic structure, a tax credit equal to 25 percent of the qualified rehabilitation cost is given. Missouri’s program is unique in that it allows developers to transfer, sell or assign these credits. Thus, Loftworks was able to sell its apartments at cost and make money by selling the tax credits to the Missouri Tax Credit Clearinghouse, a division of the Firstar Community Development Corporation. The Clearinghouse, which later resells these credits to taxpayers with Missouri State tax liability, has been fundamental in the development of many projects, investing $130 million in the last 18 months in downtown alone. Missouri tax credits have proven essential in projects such as this. “The state credit is absolutely vital. These things would never happen without it,” says Zack Boyers, assistant vice president of Firstar’s Community Development Corporation. According to Heller, the 10th Street Lofts project is only the beginning. He has already purchased several other downtown properties and will soon begin work on another project, again using state tax credits. Heller believes that such residential expansion will give rise to other urban growth. “When people live downtown, retail will come back.”
The significance of the 10th Street Lofts project is obvious. As the first attempt at downtown loft condominiums, the project is gauging interest in a new urban lifestyle. It remains to be seen how far interest in downtown living will go, but so far, so good. “It sends the message that money can be made in downtown development,” Boyers comments. Hopefully, that message will resound. Scott Hall is an associate of DFC Group Inc., tax credit consultants to the Firstar Tax Credit Clearinghouse. |
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