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Pevely fire aftermath

Pevely fire aftermath

If you were anywhere near South St. Louis or Midtown last Sunday (March 22, 2009) you couldn’t have missed the smoke coming from the huge fire at the former Prairie Farms building on South Grand near Chouteau. The fire claimed the entirety of one of the three main buildings of the complex, but in the aftermath, it appears that the planned redevelopment project for the site might have gone up in flames as well.

In terms of actual property damage, the fire claimed only one of the three main buildings along Grand. The least important one by all accounts. Although the sale contract on the building is apparently still intact, this could prove an insurmountable obstacle to redevelopment project as proposed by contract holder, Bruce Development. One of the keys to this project has been the use of historic tax credits. Bruce is currently in the middle of an effort to get the entire complex put on the National Register of Historic Places to secure these funds. Company representatives had previously made it clear that, in the current economic climate, they could not do the project without them.

At this point, its probably a safe assumption that the dairy will likely be added to the National Register. The concern is that even if it is, the now vacant lot on the southern end will almost certainly not be eligible. Even though the seller (Prairie Farms) will likely renegotiate the current contract to reflect the new value of the property, the elimination of tax credits from the equation could prove the death knell in a time of tight financing.

Despite this skepticism, there is still reason to hope. Its always possible that Bruce was exaggerating the importance of tax credits in their plan. They could still work out a scenario to afford to not only redevelop the existing buildings, but build something new on the now vacant space. Even if this isn’t the case, they could simply reorganize the deal to only purchase the remaining buildings or they could purchase the whole complex and sell off the vacant lot.

St. Louis University has made no secret of the fact that they would love to get their hands on the site, so there is a potential buyer in the wings. Prior to Bruce Development securing the contract, many preservationists were worried that SLU would purchase the site only to level it for new construction and parking. Thankfully that is not likely to happen but it would seem that fate is providing an opportunity.  Perhaps SLU might be a good partner to work with on the vacant lot. Everyone involved, especially the City of St. Louis, will benefit if the parties involved can figure out some way to work this all out. Let’s make a deal!

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Matt Kastner

Matt Kastner is an Investment Real Estate Consultant at St. Louis Real Estate Society in St. Louis, Missouri. He is also develops properties on the side through Threshold Properties. When he isn’t representing investors in the purchase or sale of multifamily properties, rehabs, foreclosures and other income producing properties, he is often taking on rehab projects himself. He lives in South St. Louis and has been in the real estate business since 2004.

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