Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 14, 1991 TAG: 9104100492
SECTION: BUSINESS PAGE: E-1 EDITION: METRO
SOURCE: MAG POFF/ BUSINESS WRITER
DATELINE: LENGTH: Long
Placing housing at the city's core, Hutcherson said, would supply the people and "guarantee the permanence of downtown."
That refrain is old. But action, prodded by a $1 million fund, now seems a real possibility, according to Hutcherson and other proponents of downtown housing.
Michael M. Waldvogel said there are developers now interested in specific housing projects. "The people are real," he said. "They're not just talking about it; they're spending money to bring it about."
The idea has simply "come of age," Waldvogel said, because more people visit downtown, both day and night, and have a good perception of its image. Over the past decade, downtown Roanoke has built an infrastructure of restaurants and entertainment facilities to support an urban lifestyle making it an appealing place to live.
Downtown housing, Waldvogel predicted, will "come to fruition in a short period of time."
Hutcherson, former vice chairman of CorEast Savings Bank, and Waldvogel, a commercial real estate broker, co-chair a new Downtown Roanoke Inc. committee charged with generating housing in the old central business district.
A major push for the effort is that local banks are supplying seed money.
Led by Sovran and Dominion, a consortium of banks will commit more than $1 million through a new Community Development Corp.
Regulatory approval of the plan is expected within a few weeks.
Although banks have joined in other community corporations to develop low-income housing statewide, the plan for downtown Roanoke would be unique in Virginia.
"It's quite explicitly a local CDC" aimed at specific census tracts in and near downtown, said Douglas Waters, a vice president at Sovran.
Waters said the banks are doing it, "at least in part," to comply with the Community Reinvestment Act by developing inner city housing for low- and moderate-income families. But, he said, "one of the target areas is, in fact, downtown."
The Community Reinvestment Act requires banks to take affirmative action in financing projects that assist low- and moderate-income residents.
The Community Development Corp., in contrast, can do more than lend money at low interest rates. Waters said it can invest in a project directly, recouping its equity when the property is ultimately sold.
The CDC equity investment, Waters said, can bridge the gap that often exists between the actual cost of a project and the amount that a developer can borrow based on his income likely from sale or rental of the property.
One of the challenges, according to Waters, is to design units that will appeal to a range of people.
The CDC will focus on people with 80 percent of the median family income for the Roanoke Valley. That translates today into incomes between $27,000 and $28,000.
But Waters said the program encourages a mix of housing for all types of families and income levels, "a cross-section of real life," as in most neighborhoods.
There are no guidelines for the amount of money or type of housing. "If it's a good project, it will be done," Waters said. The CDC is even flexible enough to work with other types of investors.
Waters sees the CDC supporting initiatives to convert lofts over stores into apartments and older commercial buildings and warehouses into condominiums.
It also would finance row houses and single-family homes in the Old Southwest, Southeast and inner Northwest neighborhoods. Waters said the CDC's projects also will complement other housing initiatives in some of those areas.
Franklin Kimbrough, executive director of Downtown Roanoke Inc., said housing is a top priority for his organization, ranking just behind development of a new Hotel Roanoke and conference center.
That's because round-the-clock activity by people living downtown is viewed as the key to continuing business growth and investment, especially of restaurants, cultural events and retail shops.
Maps developed for the 1990 census show only 18 people - all of them adults - live in the 20-block downtown area bounded by Salem Avenue, Franklin Road, Second Street Southwest and Williamson Road, said John R. Marlles, the city's chief of community planning.
Four different groups - three of them local - are trying to put together downtown housing packages, Kimbrough said. They are attempting to pre-lease their apartments and sell their condos.
Downtown Roanoke Inc. plans to develop an incentive program to assist in conversion of upper-level space over stores into homes. Kimbrough said it will be modeled after similar plans in Baltimore and Indianapolis.
Hutcherson has pursued the goal of downtown housing for many years, initially as a member of a city task force.
That task force commissioned a study that determined downtown housing is feasible, Hutcherson said. He said the consultants reported there is adequate parking for downtown housing and a lessening fear of crime.
The study identified 13 potential locations suitable for housing within an area of six to eight blocks, Hutcherson said. Most are scattered small sites.
He said some of the larger complexes are the former Grand Piano building at Second Street and Kirk Avenue, Lilly's Boarding House on Campbell Avenue, the old Hotel Earle, a building adjacent to Billy's Ritz restaurant on Salem Avenue, and a building next to Century Plaza, a half block off Jefferson Street.
Of those sites, Hutcherson is most optimistic about development of 15 units in the Century Plaza building. He said owner Richard Kurshan of Roanoke is determined to proceed with that project. That long-vacant building extends from Church to Kirk avenues between Century Plaza and the rear of the Lazarus store that fronts on Jefferson Street.
Kurshan said he was "still not ready to go ahead." His proposal calls for development of condos for sale, he said.
Hutcherson said his committee also is looking for a developer who can build housing on top of the city's new parking garage next to the fire station on Church Avenue. The city will construct the substructure so that it can support up to 60 apartments on upper floors. Bids are scheduled for opening this spring on the garage section of the building.
The garage concept is modeled after a similar and successful venture the committee visited in Lexington, Ky., according to Hutcherson.
He said some developers are interested in the old Grand Piano building, which has stood vacant for many years, and a good possibility exists for its conversion into housing.
Hutcherson said the role of the committee is to find a proper financing mechanism, recruit developers and help identify a market for the housing.
After encouraging banks to form the Community Development Corp., Hutcherson said, the Downtown Roanoke Inc. committee will serve as "managing agent to put together developers and potential consumers."
Ideal owners and tenants, he pointed out, are couples with double incomes who work downtown and have no children. To attract such people, he said, the apartments and condos must have high-scale amenities and all the modern conveniences.
Waldvogel said the effort to develop housing culminates a decade's work to improve downtown for businesses, including development of the City Market area with stores and restaurants.
Now, he said, the city and business community are creating the environment for residential development "to make housing an appropriate activity."
He believes downtown housing will develop in a combination of ways, from large projects in old warehouses to small apartments over stores. He said the committee is in "the formative stages" of an incentive program for upper-floor conversions.
But today's strongest interest, Waldvogel said, is in multistory, multifamily buildings, both condos and rental apartments. He cited the potential of the Church Avenue parking garage, which would be a joint project with the Roanoke Redevelopment and Housing Authority, and of the Grand Piano building.
He said the committee is working with two local owners of property suitable for housing conversion, but is also trying to attract developers with strong track records in other cities.
Paul Norris, who is handling the project for Dominion Bank, said the CDC project can invest in some areas of Williamson Road, Melrose, Gainsboro, Loudon, Harrison, Gilmer, Hurt Park, Highland Park, Belmont, Fallon Park, Kenwood and Morningside.
The CDC money might be used for landscaping or a new facade that makes a project possible, Norris said. Or it might be spent for residential support businesses such as laundromats and grocery stores.
Norris said the CDC might put money into a project that's "not able to stand on its loan merits but is able to stand on its investment merits."
Waters of Sovran said the CDC is "a money-making proposition." Interest on loans, even at below-market rates, will return to the fund. Equity investments, aimed at boosting appreciation, will be recouped at the time of sale and revolve into new housing projects.
Waters said chances of developing housing are greater "with the CDC in town than otherwise."
Arthur Strickland, a Roanoke lawyer, had planned to develop seven apartments above store fronts along the first block of Kirk Avenue Southwest. The problem, he said, was the high cost of meeting the building code that requires extra staircases and fireproof floors between the retail and residential spaces.
He could not charge enough rent to recover that heavy investment, Strickland said. "The numbers were not there; it came up short."
But Strickland said he's convinced a market exists for that type of apartment. "People like to live downtown," he said.
Downtown's commercial development has helped create a "comfort level" for downtown living, Waldvogel said. But people don't want to reside there alone, he said.
Waldvogel said the committee's challenge is to develop the "critical mass," a large enough number of initial units to ensure success for all.
by CNB