The surprise discovery of asbestos in the Forrest Block building at the intersection of 4th and Brady streets in Davenport has caused developer Restoration St. Louis to seek a $1.8 million bridge loan from the city.
Work was halted on the 100-year-old building in October after workers discovered additional asbestos in the building that had not been noted by either the city-hired Stanley Consultants or Restoration St. Louis' environmental abatement contractor.
Plans for the long-vacant building call for 22 market-rate rental units, including two large ground floor apartments that will be combination living/work spaces, suitable for artists, architects or other professionals who wish to work from home
The company was going to finance its share of the $3.5 million project - with a city grant of $500,000 and Iowa state tax credits of $475,000 making up the balance - through Regions Bank of St. Louis. However, after the asbestos was discovered, Regions Bank put a halt to its commitment, pending further environmental testing, said Alan Guard, the city's finance director.
This jeopardizes the entire project, Guard said, because under Iowa law the building must be finished by December 2010 or the tax credits will not be awarded.
"This is a timing issue," Guard said. "This is a company that can get this done and they have the financial wherewithal to make sure the city gets paid."
Under the proposed terms of the bridge loan, the city would get 5.75 percent interest over four years. In addition, Restoration St. Louis would receive no payments until at least 25 percent of the project was complete.
A majority of aldermen at Wednesday's Committee-of-the-Whole meeting spoke in favor of the loan - which is scheduled for a vote at next Tuesday's city council meeting - but a few had serious misgivings.
"I understand some people think this is a significant building in Davenport," said 8th Ward Alderman Mike Matson. "I don't get that. I don't see the significance in saving this building."
Fifth Ward Alderman Bill Lynn said the city should stay out of the lending business.
"We're not a bank," he said. "On the surface it looks good. But we can't loan private companies money incessantly."
However, proponents of the loan said, refusing to act could result in a historic building meeting the wrecking ball at one of the most important and busiest intersections downtown.
With market rate apartments being snapped up as fast as they can be built in the central city, Davenport also stands to reap a nice 5 percent return-on-investment in 48 months, said 1st Ward Alderman Nathan Brown.
Seventh Ward Alderman Barney Barnhill said Forrest Block has been one of the city's worst eyesores for decades, and lamented the possibility of seeing it destroyed right when it was on the verge of being resurrected. If the loan is approved, the building can be sealed and work can begin in earnest during the winter months, he said.
"That building will be an anchor in that area and a real architectural gem," he said. "We know Restoration St. Louis is a good firm. I feel comfortable with the bridge loan."