Commission opts to wait on giving loan to Petroleum Tower developer

Redevelopment of the Petroleum Tower is slowly moving along — this time because of hesitation from some Caddo Commissioners.

The commission opted to postpone voting on legislation permitting the parish to enter into an agreement with Shreveport to each loan $600,000 — or a total of $1.2 million — to real estate developer Sari & Co. to help redevelop the tower.

At their most recent meeting, some commissioners balked at the idea of becoming second-tier lien holders for the developer and at leaving newly elected commissioners to deal with the consequences of a proposal that would have been approved before they take their seats next year.

"We are not venture capitalists," Commissioner Ken Epperson said during a recent commission meeting. Epperson, who refused to be interviewed about the proposal Wednesday, has called it a "bad deal" that would put the parish second in line in the event of a default. He told his counterparts he's "not going to be for it."

Sari & Co., from North Carolina, intends to redevelop the Petroleum Tower at 415 Edwards Street into a residence with 130 apartments and retail space on the ground floor. According to the company's website, it specializes in downtown and company redevelopment projects.

The Petroleum Tower project is estimated to cost approximately $13 million, according to commission documents. The project has been discussed for at least a year.

Shreveport City Councilman Jeff Everson said the city is on board with the project.

"We have made some arrangements already to support that project," Everson said in a telephone interview. "It did come up in a discussion after the Caddo Commission chose to table it, because we needed to see if we're going to continue to support that project or not. And the Mayor, and I did agree with her, decided we would continue to support that project."

Shreveport's Chief Administrative Officer Brian Crawford was not immediately available. Everson said it is hoped the commission will choose to participate.

Every commissioner isn't against it. Commissioners Michael Williams and John Escude said they supported the project but both men were not re-elected.

One of the tallest buildings in downtown, the Petroleum Tower is currently off tax rolls and has been empty for decades, Everson said. The current owner is a tax-exempt organization.

Redeveloping it is key to economic development downtown, he said.

"A low-interest loan is a fairly minimal amount of risk to take in order to get such a large property back on the tax rolls and back being productive," Everson said.

The developer also would be asked to create public parking spaces, in addition to building a planned parking garage.

When asked how the public can ensure the deal won't turn out like the old General Motors Assembly Plant and Elio Motors, Everson said the loan agreement has provisions for repayment.

"There could be risks involved in anything. With a loan, you have guarantees in that loan. You have protections in that loan," he said. "At the same time you also have some things you want to see happen, and the addition of a parking garage in that area of downtown is something we couldn't do for $600,000 if we spent it ourselves."

Parish attorney Donna Frazier told commissioners Sari & Co. intends to stabilize occupancy a year after renovations are completed. Repayment of the loan would take place over a 10-year period and would begin one year after occupancy stabilization takes place.

The way Caddo Commissioner Lyndon B. Johnson sees it the project mostly benefits the city. He questions why the company needs the additional $1.2 million when private investors and bankers are involved.

"If you have $12-14 million in your money and private investors and the bank, why is it that you can't get the other one point two?" said Lyndon B. Johnson via telephone Wednesday.

He said some of the project's details have changed. For example, it's unclear if the apartments will be considered affordable housing or market rate, Johnson said.

"It goes back and forth to how much would be affordable housing, if any. That changes all the time. I guess whenever they come back to the table they will give us a definite answer," he said.

The issue will be revisited in January once the new commissioners are sworn in, he said.