The Capital Area Finance Authority on Thursday terminated an agreement to provide $1 million in funding for a Denham Springs apartment complex at the request of the developer, who is trying to get construction costs down.
The finance authority’s board had voted in November 2014 to provide the funding for The Palms at Juban Lakes, a 180-unit market-rate apartment complex that would be built across from the Juban Crossing mixed-use development. It was the first time the organization had teamed up as an equity partner on a real estate development. Traditionally, the finance authority had existed as a self-supporting mortgage loan funding source for primarily low- to moderate-income, first-time homebuyers.
Mike Airhart, executive director of the finance authority, said CST Land Developers came to his organization in February, saying construction and design costs for Juban Lakes came in too high. CST has hired a local architect to redesign the complex and reduce the costs.
Tom Delahaye, managing partner of CST Land Developers, said the costs of building Juban Lakes were about $1.5 million over estimates. Delahaye had said he wanted to spend $22.2 million to build the complex. “The two issues we had were the construction costs coming in higher and the interest rates had spiked,” Delahaye said. “So we had to go back to the drawing board.”
The finance authority’s money had been sitting in an escrow account. All of the money will be returned, plus interest.
Once CST gets the costs down for Juban Lakes, the plan is to get funding for a redesigned development. “They’re going to come back and solicit investors,” Airhart said.
The goal is to start construction on Juban Lakes in June, about a year later than originally planned, Delahaye said. The finance authority will again be asked to serve as an investor, he said.
CST has done several developments in metro Baton Rouge and New Mexico, including The Reserve at Jefferson Crossing and The Village at Juban Lakes.
The Village at Juban Lakes is at 11000 Buddy Ellis Road in Denham Springs, next to where The Palms at Juban Lakes is proposed. The success of the 144-unit Village is what led CST to consider a second development. Delahaye said the complex has occupancy rates of over 98 percent.
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