INVESTOR REPORT
QUARTER 2 2108
CONTENTS Overview
Political implications
City negotiations regarding design and zoning
Neighborhood negotiations and concessions
Modified plan
City Council voce and results
Motion for Conditional Use
Adoption of Final Ordinance
Design
Original Plan
Hybrid Plan
Construction Estimating and Consulting
Joint Venture between Lemoine and Plaza
Property Management
Financing
Summary
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Project Overview The Riverstreet Ventures (RSV) project commenced in an environment of political change in the City of New Orleans. At the time of commencement, the family that assembled and controlled this special 14-acre property was amid turmoil and disagreement as to the disposition of their assets. The property was owned by the principals of Mardi Gras World, an institution within the City. The members of the family ultimately divided their interests and RSV contracted with a faction to purchase two Squares for development. The existence of this undeveloped river frontage along with a demand for new market rate rental housing provided a unique opportunity to create a one-of-a-kind project in one of America’s most famous cities. The process of maximizing entitlement required our interests to design and submit application for bonus density and other advantages under the Riverfront Overlay District zoning. This overlay was initiated by the City after hurricane Katrina and provided a master plan for the redevelopment of this pristine riverfront property. RSV engaged a team of local professionals to plan and incorporate its vision. The architectural firm of Perez Architecture ( www.e-perez.com ) , a 100-year-old local firm, was chosen to design our project. Their interpretation of local ordinances and design direction were paramount in our decision-making process. In addition to the Perez team we engaged Sherman Strategies (www. shermanstrategiesllc.com) to provide legal zoning, land-use and
entitlement coordination and liaison with the City, community and neighborhood organizations. Once a design direction had been created, the process of working through the City agencies was initiated. This involved review by various City departments and meetings with local neighborhood groups as required by the processing outline and City Council members. The City of New Orleans and its council members enjoy broad subjective interpretation of its zoning code and regulations along with substantial deference to the voices of its local constituents. During our proceeding through the above steps an election for all City Council seats and the Office of Mayor was held on November 18, 2017. It was in this environment that our project was being processed for approvals. The local Councilwoman for our district was in a serious fight for her political future and exerted tremendous pressure on our team to modify our plans in response to local neighborhood objections and concerns. RSV endeavored to respond to all comments and input to avoid a protracted contentious confrontation that would impact our timing and economics. It is important to note that our property can be developed without any bonuses under the overlay district to a maximum of 167 units and 85 feet in height. With the bonuses afforded us under the current overlay district and
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ordinances we felt that we could plan and design 384 apartments with a required 38 affordable units included and 35,000 Square feet of commercial space on both Squares combined, The community neighborhood groups and consequently the local Councilwoman objected to our density and design regardless of our rights and compliance with the existing zoning regulations. We utilized our local professionals along with our intervention with all concerned to negotiate a satisfactory compromise that would gain the necessary approvals for us to move forward. We ultimately concluded that a good compromise was better than a protracted fight. While attempting to find the best solution, our local Councilwoman lost the November election and became a lame duck from November 2017 to May 2018. This further complicated our ability to negotiate with a willing partner and a compliant community. If the best solution is a good compromise, then RSV achieved some design criteria that addressed the Councilwoman and neighborhood issues while preserving the integrity of the project and its economics. We decided to remove one Square of our property from bonus consideration and develop it solely “Of Right�. This allows for 69 residential apartments without restriction in 7 stories, all oriented with views of the river, the bridge and the downtown/French quarter of New Orleans. Further we can develop a portion as commercial
property as we see fit within the demand of the community. The other Square would remain with all bonuses as planned and incorporate 15,000 square feet of commercial development which is earmarked for a grocery and pharmacy should we be able to negotiate a suitable tenant. We have already identified such a tenant and we currently engaged in discussions to see if a deal can be struck. With these criteria chosen RSV proceeded to process its plans through all City agencies, gaining approval along the way for 187 apartments, inclusive of 19 affordable units along with commercial property allocation. RSV met with all council members in advance of public voting and explained its compromises and concessions in respect of all input and comments from all City agencies and local neighbors. RSV negotiated with the local associations and have created a good neighbor agreement providing some benefits to the neighborhood in return for their support and on April 19, 2018 proceeded to a hearing before the City Council of New Orleans. This hearing was amongst the last to be conducted before the inauguration of the newly elected council and mayor. It was at this meeting that RSV was unanimously approved in a 7-0 vote.
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BY RICHARD THOMPSON | APR 20, 2018
Plans for a scaled-back,187-unit
APARTMENT COMPLEX IN ALGIERS GET OK FROM CITY COUNCIL A scaled-back proposal to build a mixed-use apartment complex adjacent to the Mississippi River levee in Algiers has won support from the New Orleans City Council.
close proximity to employment sectors, including the CBD, Algiers Point, Uptown and the Vieux Carre.” By comparison, the council’s approval Thursday was quick and lacked the same contentiousness.
Until recently, developer River Street Ventures LLC was seeking to build a 354-unit project that would have spanned two city blocks on roughly three undeveloped acres just upriver from Algiers Point. Instead, the plans that the council unanimously approved Thursday call for 187 units on a single block.
The smaller complex will have two eight-story buildings and about 15,000 square feet of retail. The developers are eyeing a grocery store and pharmacy, and say they want to build a public plaza on Brooklyn Avenue.
After hearing the proposal in February, the City Planning Commission could not reach a majority decision on whether to recommend the project to the City Council, which has the final say. At the commission’s meeting, neighbors opposed to the project seemed to turn out in louder, if not larger, numbers than supporters.
Earlier plans to build a pedestrian walkway along Lamarque Street were also scrapped in the latest designs. Nineteen of the 187 units will be marketed to people who earn no more than 80 percent of the area’s median income.
In an earlier report, the planning commission’s staff noted that the “incorporation of the proposed mixed-use development at this site will provide additional housing units, including affordable housing units, to an area of the city that is currently underutilized and is in
River Street Ventures lists Philip Spiegelman as a managing member.
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Project Overview The technical procedure that now takes place is known as a 21 day lie over after which the approved motion for conditional use goes to the City Council for a final adoption along with all provisos (conditions) that the council has attached. This is scheduled for the first available meeting in June. The new Councilwoman, Kristin Palmer, for District C, will now have the final disposition and right of approval. Once again RSV will have to negotiate a satisfactory rapport with this new party to have her buy in and engage ownership of our project. A face to face meeting is tentatively scheduled for the week of May 14, 2018 to reach a rapprochement with the new Councilwoman and obtain her commitment to work with RSV for the benefit of all concerned. It is clear that our investment will change this neighborhood and invite the type of economic development that the new mayor has clearly made the focus of her tenure.
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design
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River Street Ventures Development Old Algiers Riverfront Along Brooklyn Ave
SQUARE 216 New Orleans, LA, 70114 Conditional Use Application Package 09/25/17 Final Document for City Planning Commission 01/23/18 Revised Document for Council Motion 04/16/18
CONDITIONAL USE REQUEST NATURE OF CONDITIONAL USE REQUEST: APPROVAL OF RIV RIVERFRONT DESIGN OVERLAY DISTRICT HEIGHT & DENSITY INCREASES
Riverfront gateway design standards and height limit increases: The proposed development requests the following height and density increases per section 18.13.G: Increase in building height from from 7 stories to 8 stories total.
Proposed features applicable to the general design standards: Streetscape design along Brooklyn Avenue.
Proposed loading and service areas are accessible from the side streets (Lamarque and Dearmas). and are located on the ground floor of the building and internally situated on the development block.
Proposed features applicable to the design standards for the riverside of Floordall or Levee: There shall be no work on the riverside of Floordall or Levee.
Existing riverfront promenade to remain (outside of devel opment scope of work).
Lamark and Dearmas Streets shall remain public access corridos, which shall remain open to the publix and free of gates or other impeding obstacles. Existing walking and bike access to the riverfront orimenade shall remain accessible at Dearmas Street.
Elimination of the minimum lot area per dwelling unit requirement (MJ-2 requirement is 800sf per dwelling unit).
The proposed development shall provide the following items in support of the requested height and density increase: Landscaped public open space - publix plaza along river.
Utilization of energy efficient design - development shall comply with the energy star multi-family high rise program (prescriptive path).
The development shall provide dwelling units reserved as affordable for households equal or below 80% of the area median income. The affordable housing impact statement is included herein.
AFFORDABLE HOUSING IMPACT STATEMENT PER SECTION 17.5.H.2 OF THE NEW ORLEANS COMPREHENSIVE ZONING ORDINANCE, FOLLOWING IS THE AFFORDABLE HOUSING IMPACT STATEMENT FOR THIS PROJECT:
Proposed features applicable to the design standards for the land side of the Floodwall or Levee: Brooklyn Avenue is the major access corridor
80% AMI level units added: 19
Proposed ground floor space shall be commercial/retail use
Bedroom mix for AMI housing units: One bedroom: 9 Two Bedroom: 10
AMI units removed: 0
Canopies shall be provided at ground floor retail en trances. Along Brooklyn Avenue, and continuing around to side streets.
Total number of units added: 187 Total number of units removed: 0
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Construction Estimating and consulting
Property Management
RSV has engaged two general contracting firms to advise and review design during its process to remain on target for budgeting and efficiency. The Lemoine company ( www.lemoinecompany. com ) and Plaza Construction ( www.plazaconstruction.com ) have been selected. Lemoine is a long term local New Orleans and Louisiana firm while Plaza is a more international firm. It was important to RSV to select firms with local roots. The president of Plaza graduated from Tulane University and consequently has long term roots to New Orleans and remains active with the university today. We believe this is a strong partnership that will benefit RSV’s interests in the future.
In anticipation of the prospect of leasing and managing the Riverstreet property, RSV has begun interviewing and considering its options for property management services. We have begun discussions with the firm Property One ( www.propertyone.com ). This is a long term experienced local firm for multi-family properties. They will work with RSV to analyze our design criteria with efficiency in mind for long term stabile operations. By engaging their input at this stage RSV intends to incorporate the most modern and efficient systems to maintain the best cost model once the apartments are brought on line.
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Financing
Summary
RSV is exploring its construction financing options currently. We have engaged in a process of discussions with professional mortgage brokers who are assisting in identifying the active lenders and best programs for Riverstreet Ventures apartment construction. Toward that end we believe that the HUD 221(d) program is of particular appeal and interest. While this is a government guarantee program which provides for 40-year amortization and favorable interest rates, it involves a detailed review and processing system. Now that we have City Council approval we will request a regional review of the project for suitability and acceptance. This is determined through the regional offices in Fort Worth, Texas. Once they have reviewed and determined if the project meets their criteria, RSV will be advised that they may apply for a complete and thorough review process.
RSV is happy with having engaged all stake holders from municipal authorities to neighborhood activists while achieving a satisfactory compromise and preserving the integrity of the Riverstreet project. Although the processing involved unintended delays, RSV is now positioned to move forward with the appropriate stages of development as intended. We will continue to provide updates of our progress as we successfully move forward. Thank you for your participation in this transformative residential property.
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BY LEIGH KAMPING-CARDER | DEC 6, 2017
NEW ORLEANS GETS A CROP OF NEW CONDOS The Big Easy may be known for its stately mansions, but a new breed of developers is testing the market for high-end units with posh amenities
John and Kim Andrews of Laguna Hills, Calif., had all but given up on finding a pied-à-terre in New Orleans—where they had enjoyed jazz and football for more than a decade. After years of touring apartments, most in former industrial buildings, “we didn’t see anything that really knocked us out,” said Mr. Andrews, a 62-year-old audio-video executive.
for the city’s walkable downtown, and newcomers ready to buy into the Big Easy’s eclectic lifestyle. Some 1,933 condos were listed in 2017 as of late October, 51.7% more than in all of 2016, according to listings website Trulia. The median list price was $244,060, up from $240,000 in 2016 and $169,250 in 2015.
Then the couple walked by the sales office of the Standard, still under construction. The building, designed by Morris Adjmi, offers 89 luxury condos, an outdoor pool, outdoor kitchens, a concierge and covered parking—features that reminded Mr. Andrews of properties in New York or Los Angeles. They signed a contract for a 1,407-square-foot two-bedroom with two baths for just over $1.1 million.
The Standard is the third of four residential buildings planned for the South Market District, a five-block development that will have more than 1,000 luxury apartments, mostly rentals. About 40% of the for-sale units have sold, with asking prices ranging from $575,000 to $3.475 million, said Matt Schwartz, principal of the Domain Companies, the developer.
For the first time, New Orleans has a critical mass of luxury condos set to enter the market, with deluxe finishes and opulent amenities—and prices to match. Developers—some local business people relatively new to real estate—are betting they can lure a more discerning, affluent buyer: empty nesters shedding suburban houses
Domain began assembling land for the project in 2009, Mr. Schwartz said. New Orleans was experiencing a wave of post-Hurricane Katrina development while the rest of the country was reeling from the housing crisis.
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Developers were using state and federal tax credits to convert historic buildings, said Parke McEnery of the McEnery Company, a real-estate services firm, typically turning former warehouses into rental apartments.
$750 a square foot, she said, and residents moved in beginning October 2013. By contrast, homes in the French Quarter—the city’s most expensive neighborhood—typically fetch $400 a square foot, said Katie Witry, of Gardner Realtors.
New restaurants, galleries, food stores, hotels and museums drew residents to the Warehouse and Central Business districts, as did a refurbishment of the Mercedes-Benz Superdome.
“That was the only new game in town,” said Glennda Bach of Latter & Blum Realtors, who is handling the resale of a two-bedroom, one-bathroom unit in the building listed for $650,000.
But the residential offerings mostly had limited amenities: exercise rooms, street parking and run-of-the-mill finishes. Those weren’t enough to meet the demands of the post-Katrina influx of newcomers to the city—lured by the attention New Orleans was receiving or by the attractive business incentives being offered. They wanted the same amenities found in other urban new builds.
Now, several projects are planned downtown, including conversion of the long vacant World Trade Center site into 100 high-end condos and a Four Seasons hotel. Another incentive is a change of rules allowing homeowners to rent their units short-term—subject to certain limits. Buyers at Eleven Hundred Annunciation, a 90-unit, 16-story condo building due to be completed in 2019, can sign up for a management company to handle their short-term rentals, said sales director Shaun Talbot of Talbot Realty Group. Prices for the one- to four-bedroom units will range from $425,000 to $2.45 million.
“People were really looking for that Class A, very high-end condo product,” Mr. Schwartz said. New Orleans native Susan Brennan ran up against the gap between inventory and demand. She was looking for a three-bedroom condo with high-end appliances and perks like a pool, dogwalk, doorman and fitness center.
William B. Reily IV, the scion of a family food business, is building 44 condos at 700 Magazine Street, once a company garage. He is also converting the company’s 1902 headquarters and former coffee-roasting plant into 33 rentals.
Nothing for sale fit the bill, so she decided to build her home herself. She had already developed a couple of small residential projects and built a film-production facility, Second Line Stages, that she opened in 2009. With a bank loan—and no other investors— she built 42 condos, 425 Notre Dame Street, on land she inherited from her mother.
The Kalorama condos offer covered parking, 24-hour security, a fitness center and dog runs. They are set to go on the market by year end for $600 to $900 a square foot. Mr. Talbot is handling sales. “It was such an opportunity,” Mr. Reily said, “because the neighborhood has become such a magnet in the city of New Orleans.”
“The bank asked me where my marketing research [was], and I said ‘Me, right here,’ ” Ms. Brennan said. Units sold for $500 to
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954.766.2758 | RIVERSTREETRESIDENCES.COM 3445 N. CAUSEWAY BLVD. SUITE 505 METAIRIE, LA 70002