Rumors of Exchange Place's demise have been greatly exaggerated, say its developers.
Real Development is again nearing a refinancing plan that developers Michael Elzufon and Dave Lundberg think will trigger construction on their Exchange Place downtown condo project sometime in early 2011.
Elzufon said the elusive refinancing of the Wichita Executive Centre at 125 N. Market, which was to have closed this spring, now appears headed for a fall closing with a new lender.
That latest deal, somewhere in excess of $7 million with a lender the developers have declined to identify, would allow Elzufon and Lundberg to refinance mortgages on the Market property.
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It also would allow Real Development to pay off almost $1 million they owe contractors, Elzufon said, allowing them to access $10.3 million in tax increment financing from the city of Wichita and finalize a $30 million HUD loan to build Exchange Place.
The plan for Exchange Place, on the northeast corner of Market and Douglas, includes 230 apartments and a high-tech parking garage.
"We've never stopped working on this project," Elzufon said. "We never will. We've done a tremendous amount of additional work on it."
Wichita Mayor Carl Brewer and council member Paul Gray said Wednesday that they're in a wait-and-see mode with Real Development.
"They say they're moving along," Gray said. "You don't really have a choice but to sit back and hope to God that's true. I'm no more nervous than I was about them."
The Market refinancing is an essential trigger that holds the key to the future of the Exchange Place project and Real Development's short-term ability to do business.
The refinancing deal — specifically the payment of the overdue vendor bills on the Executive Centre project — is necessary to trigger the city's tax increment financing for Exchange Place. No vendor payment, no TIF money, the Wichita City Council has said.
And without that tax increment financing, the $46 million Exchange Place project is in doubt, despite HUD's tentative approval of a $30 million loan.
Elzufon said the refinance will provide essential capital to "get us back into business leasing space, what we're supposed to be doing.
"We've been unable to operate, really, because of the economic chains placed upon us," Elzufon said, "the cash flow problems, the lack of funding for capital expenditures.
"We've used our operational income to cover operational expenses, obviously, and to chip and swing at taking care of certain capital expenditures."
The Real Development guys had a refinancing deal for Wichita Executive Centre in place in the spring with Metro Lending, a New York company described by Elzufon as a "hard money lender."
However, that $7 million deal began to wobble in May, Elzufon said, when Metro officials slashed their credit offer to $4.8 million, based on the proceeds of a hypothetical "distressed" sale of the property.
"Even if we had closed with them, and we were going to for a time, that put me in the position of having to find someone else, someone who's going to want to pay off Metro too," Elzufon said.
The success of Real Development won't define downtown, council member Gray said, but the group's failure would be a significant setback for downtown redevelopment.
"It could trigger foreclosures and repossessions, fire sales, and the problem created by that could be a market depression affecting the value of everyone else's project," Gray said.