Faced with rising costs of steel and concrete, the developer of a nine-story loft condominium project near downtown’s Bicentennial Mall said he will try to sell the property as he works to scale back the building’s height and change its design.

Van Christian, president of Brentwood-based Chi Development Inc., said if the land doesn’t sell, what was formerly known as the Harrison Lofts will be retooled to include 80 units — 40 more than the latest plan — in multiple buildings, none higher than four stories, with stick frame construction instead of steel and concrete.

“We had reserved 50 percent of the units at one point,” Christian said. “Fortunately the market was strong. The weak link was the cost of building a concrete and steel structure of that size.”

The 1.65-acre parcel at Harrison Street and Third Avenue North soon will be listed for $1.6 million, said Catherine “Chuck” Collins, a broker with NAI Mathews Partners.

Meanwhile, Christian said, “I’m going to proceed with obtaining financing for construction for this stick-frame building. But we’re basically having to start from scratch.”

Collins said the parcel is zoned for mixed-use intensive and falls within the city’s urban zoning overlay, which allows for variations on parking requirements.

“There are townhomes being built across the street at Fourth and Harrison,” she said. “So, I think this area is ripe for development. It’s close to state offices, [and] between downtown and Germantown.”

Christian purchased the Harrison Street tract in July 2004 for $525,000. He originally planned to build 36 condominium lofts, ranging in price from $171,400 to $492,000. They were to be built in three phases, with the first phase to be completed by October 2005.

By December 2004, Christian had increased the number of units to 40 and rescheduled groundbreaking for the following February, with 17 units reserved.

By Judith R. Tackett
December 12, 2005

The Metropolitan Development and Housing Agency (MDHA) has started the demolition of the John Henry Hale Homes north of Charlotte Avenue and hopes the new public housing will be finished by 2008.

Construction is scheduled to begin in early 2006 and first residents will be able to return in early 2007, MDHA spokeswoman Terri Woodmore said.

John Henry Hale was constructed on 32.4 acres north of Charlotte Avenue and west of I-40 near downtown in 1951. MDHA plans to replace the original 490 units with 188 public housing duplexes and town homes, plus 40 market-rate apartments.

Another 40 affordable single-family for-sale homes will be built off site.

During the renovation, MDHA will increase the size of the previous apartments. For example, a one-bedroom unit, which was 450 square feet will be increased to 750 square feet. A two-bedroom unit will increase from 550 square feet to 1,000 square feet; a three-bedroom unit from 625 square feet to 1,350 square feet, and a four-bedroom unit from 710 square feet to 1,500 square feet, Woodmore said.

The existing community building will be renovated and expanded to accommodate resident activities as well as house social service providers, which are currently scattered throughout the development.

The entire project will cost $39 million, with $20 million coming from a federal HOPE VI grant and the rest from MDHA, Metro government and contributions from public and non-profit agencies such as Tennessee State University, Affordable Housing Resources, Bethlehem Centers, the Nashville Housing Fund and NES.

The national HOPE VI program is administered by the U.S. Department of Housing and Urban Development and started as a 10-year pilot program in 1992 with the goal to tear down dilapidated public housing units and replace them with mixed-income developments.

The HUD administration did not recommend that the program receive continuous funding beyond the 10-year deadline because it found that many cities have not completed their HOPE VI projects. However, Congress has continued to support the program.

As of August 2005, the HOPE VI program had issued 224 grants, but only 42 developments were completed and $2.3 billion remains unspent, according to HUD spokeswoman Donna White.

Congress has appropriated more than $5 billion in HOPE VI grants in the past years, and Nashville has received a total of $88.5 million.

Nashville received $13.5 million in HOPE VI grants in 1997 for the renovation of Vine Hills, $35 million for Preston Taylor in 1999, and $20 million for Sam Levy in 2002.

By Richard Courtney
November 04, 2005

The National Association of Realtors (NAR) held its annual conference last week in San Francisco, where David Lereah, the chief economist for NAR, delivered his assessment of the current housing market and predictions for next year.

As has been reported, 2005 will set records for home sales across the country, a trend that the Nashville market has enjoyed. Lereah has consistently asserted that there is no real estate bubble. He has preferred the term “balloon,” and has said that, at some point, the air would slowly escape the balloon.

Today, most real estate practitioners agree that the air is leaving the balloon. As Lereah predicted, it is leaving very slowly, but things are slowing. As one San Diego Realtor put it, “The real is back in real estate.”

Lereah said the market has him “as nervous as a two-tailed cat in a room full of rocking chairs.”

He said he believes interest rates will climb slowly, reaching 7 percent by the end of 2006. To today’s borrower, a 7 percent rate seems exorbitant; however, historically, anything under 9 percent is acceptable, and 9 percent may be on the horizon. It always seems to cycle around.

Sales will slow, as will appreciation, most likely to 4 percent to 6 percent per annum. That is, unless Congress heeds the advice of the President’s Tax Reform Commission.

In its infinite wisdom, this commission has recommended the repeal of the income deduction for interest on residences as well as eliminating the deduction for secondary residences. By the way, second homes accounted for one third of all real estate sold last year as many moved their money from Wall Street to Main Street.

If this tax reform is passed, Lereah suggests that all real estate values will immediately plummet by a minimum of 15 percent, and probably more than that. It happened with the Tax Reform Act of 1986. For those of you that are historically challenged, many savings and loans were closed, the Resolution Trust Corporation was formed and billions of dollars were lost.

Hopefully, the whole tax reform commission was Scooter Libby’s idea, and will be forgotten. Just to be on the safe side, contact your members of Congress and beg them not to support the elimination of the interest deduction. If you see Sen. Bill Frist’s house hit the market, sell yours.