The Little Rock Technology Park Authority on Wednesday (Jan. 13) moved two steps closer to jump-starting the first phase of the downtown development the city hopes to market to attract startups, entrepreneurs and establish a tech focus to the city’s Creative Corridor.
In two separate actions, the board unanimously approved a $17.5 million consortium-back financing package to fund project and later OK’ed a resolution to approve the purchase price for three real estate deals are expected to close by Feb. 1. Following the votes, several board members expressed relief that final negotiations on the controversial project are near an end and construction on the downtown tech village will soon begin.
“There has been a lot of foreplay, but not a lot of activity afterwards,” Tech Park Vice Chair Kevin Zaffaroni said at the end of the meeting as other directors nodded their heads.
The board approved the financing deal following after a preliminary 5-minute hearing held before the regularly called monthly meeting to give the public a chance to comment on the project. Although no comments were made, that process allowed the authority to move forward with a financing deal with local banks as part of the legislative mandate to get public input from the taxpayer-backed project.
‘GOOD PROGRESS’ BEING MADE
Now, all that is left to do is working with lenders, buyers, title companies and others to finalize the fine details can move forward with construction later this spring, according to Brent Birch, executive director of the authority.
“It has been a lot of hustle on all parts for a ‘soft close’ on the week” of Jan. 25 and an expected formal closing Feb. 1, Birch told the board. “We are making good progress.”
Birch told the board that he expects construction on the first phase of the project to be completed by late 2016, at which time the authority can begin the process of selecting and finding tenants to lease space in the tech village. Already, Birch said, he has received handful of legitimate inquiries from established IT companies in the area interested in space and rates since the architectural renderings were made public at the Dec. 9 board meeting.
“I have also been working on several marketing-driven, strategic ideas that would greatly benefit the park before it launches,” Birch added.
Since the board issued the request for proposals (RFP) in late July seeking bids from local banks to finance the first phase of the multi-million dollar, multi-phase downtown development to boost the city’s much-talked about startup and tech community, it has taken nearly six months for the deal to get this far.
In early August, the authority approved a resolution to negotiate with a consortium of local banks in response to the RFP. Led by Centennial, the group also included Simmons First National, Bear State Bank, Arvest Bank, First Security Bank, Arkansas Federal Credit Union and possibly other financial institutions to be determined at a later date.
Under the terms of the proposed deal, the financial consortium would provide necessary funding in two parts to begin Phase 1 of the downtown project at fixed interest rates 4.19% and 2.95% over a period of six years. The $17.5 million loan will consist of two promissory notes, one taxable in the amount of $7.9 million and the other tax-exempt at $9.6 million.
But by October, questions were being raised concerning the financial arrangement after the Arkansas Federal Credit Union (AFCU) was omitted from the bank consortium. Little Rock attorney Richard Downing told the board on Oct. 14 that the consortium of six local banks led by Conway-based Centennial Bank left out AFCU in a proposed bid to provide financing for the project. He added that the authority could possibly face legal action from AFCU, but nothing has been filed by Downing’s law firm yet in local or federal courts.
On Nov. 16, the authority finally approved a measure by a vote of 5-to-1 to accept a letter of commitment from a local bank consortium to finance the first phase of the project through a $17.5 million loan over a 72-month term. Board member C.J. Duvall, who first raised questions concerning the AFCU rift with the consortium, voted against the measure.
Now that the final financing piece is in place, the authority is free to move forward with the downtown tech village that has been in the works for nearly nine years. At the board’s last meeting on Dec. 9, Little Rock’s Wittenberg Delony & Davidson Architects unveiled the architectural plans for the first phase of the city-financed project to lure established IT companies, startups, knowledge-based firms and entrepreneurs to Little Rock.
CONTROVERSIAL REAL ESTATE DEALS NEAR END
The key pieces of the development will be the three adjacent properties owned by the 415 Main Group LLC, Five Main LLC and DMT Ventures LLC. The 415 Main partnership is led by Little Rock Attorney Richard Mays, who accepted a $1.03 million offer from the tech park board in late November to purchase his centrally-located downtown law offices. The deal came together only after Mays threatened to fight back against an eminent domain taking.
The other two buildings, at 417 and 421 Main Street, are owned by a Warren Stephens-led limited liability partnerships that will eventually connect to the Mays building. The tech park board had earlier agreed to a purchase price of $11.6 million for those properties. In December, Birch told the board that he and Wittenberg Delony architects still have to make sure the design plans meet the authority’s budget before completing a final draft. If all goes as planned construction on the project will begin in early March, he said.
In other business at Wednesday’s meeting, the board unanimously approved an agreement to lease more than 44,000 square feet of downtown office space at the Five Main building to the Arkansas state Building Authority division of the Arkansas Department of Finance and Administration. The six-year lease will bring in more than $755,000 into the authority’s budget coffers annually, or about $63,000 a month, officials said.
Board member Dickson Flake said the state Building Authority was three-years into a 15-year lease with the Warren Stephens-backed partnership that now owns the building. The property also includes 78 parking spaces adjacent to the Five Main building at 421 Main St.
The board, however, tabled a resolution to pursue a contract with a downtown commercial parking operator to explore revenue opportunities associated with parking lots the Tech Park is inheriting in the real estate deal. The board asked Birch to research how much revenue the parking lots will be able to produce, and bring a proposal back to the board at a later date.