Lafayette City-Parish Council on Tuesday approved a $1.5 million loan to the developer planning to renovate the notorious former LessPay Motel and a neighboring historic property.
An HRI executive, Josh Collen, acknowledged in an interview Monday that he expects minimal positive cash flow from the project after debt service to primary lien holders, including tax credit investors and private debtors, though he declined to provide specific figures.
Collen highlighted potential economic development benefits from the “Bottle Art Lofts” project, which is envisioned as an artist community with 40 apartment units with average monthly rent of $600. HRI is planning to break ground on the $15 million project in the first quarter of next year, Collen said.
The project includes demolition of blighted former motel and a restoration of an old Coca-Cola bottling plant that is listed on the National Register of Historic Places.
“It is very much structured financing for economic development, blight elimination, preservation, all of those key public purposes,” Collen said.
Approval of the loan is contingent on “availability of appropriate funds in the City of Lafayette’s University Avenue Initiative Activity,” according to the ordinance. The ordinance also calls for the chief financial officer to provide a written report detailing any budget revisions.
The chief financial officer, Lorrie Toups, said Thursday that she had not yet submitted the report because she was not sure of Robideaux's plans. Toups said she plans to meet with Robideaux on the matter soon. Robideaux will leave office on Jan. 1, when a new mayor-president, Josh Guillory, starts his first term. Toups said $4.3 million is available for the University Avenue Corridor Initiative.
The development and planning director, Danielle Breaux, did not respond to queries on Monday and Tuesday.
The proposed loan is structured in a way that does not guarantee annual debt payments to the city the from the developer, New Orleans-based HRI Properties, Inc. Instead, HRI would split its annual operating cash flow with the city.
Robideaux told council members local investment is necessary to secure tax credit investment through the Louisiana Housing Corp. He noted that HRI will not receive any property tax breaks.
“It’s a way to leverage tax dollars to get a significant amount of more tax dollars,” Robideaux said.
While there is no guaranteed annual payment on the loan, it would come due once the affordability restrictions expire after 45 years. The proposed arrangement allows the city a measure of long-term control over the property, which HRI would own, Collen said.
“After the affordability restrictions are up, then there is the ability to take up rents if that’s something the city would want to see happen to repay the loan,” Collen said. “You could do condominiums, you could do something else after that 45-year term. That’s what happens with these in general.”
The ordinance passed 7 to 2, with Councilman Jared Bellard and Councilman William Theriot voting against. Theriot said he was concerned that other business won’t receive “the same, how shall I say it, special treatment.”
Correction: This article has been revised to include the input of Chief Financial Officer Lorrie Toups. A sentence indicating a $0 budget for the University Avenue Corridor Initiative has been deleted.
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