McCollum Hall on Dr. Martin Luther King Jr. Boulevard in Fort Myers. / news-press.com file photo
The future of McCollum Hall is on hold as the developer works on hunting for alternative sources of cash.
Projects with higher priority have bumped McCollum Hall to the standby list when it comes to tax credits, said Larry Newsome, president of Urban Development Solutions, the project’s contractor. He told the Fort Myers Community Redevelopment Agency Board on Monday.
The building in the 2700 block of Martin Luther King Jr. Boulevard has a famed local history as a dance hall, retail center and meeting place for black Americans. It was built in 1938 as a segregated dance hall and attracted Duke Ellington and Louis Armstrong, among others. But the building fell in disrepair and has remained vacant for years.
Newsome was shooting for New Market Tax Credits to help cover the money it’s going to cost to restore the old hall. Those kinds of tax credits are the federal government’s way of stimulating projects in low-income neighborhoods. Investors get a break on their federal income taxes.
The federal government doled out about $40 million to a company that distributes the tax credits to qualified projects. But the company has more projects than cash: about $100 million in projects.
“There’s just a lot of projects chasing just a few dollars,” Newsome told the board. “When you’re competing against projects that have a lot larger community impact, chances are they are going to get a slightly higher priority than ours.”
Though the news was disappointing, snags along the route of this kind of project are not unexpected, said Michele Hylton, redevelopment manager for city’s Community Redevelopment Agency.
“This is the kind of the project that is not a market-rate project,” she said Thursday. “We understood from the very beginning that it was going to be a long process.”
Newsome explained that projects that entail a grocery store, for example, will likely go before McCollum Hall because a grocery store will create about 125 jobs. The envisioned restaurant for McCollum Hall will likely create about 45 to 50 full- and part-time jobs.
Sylvia’s: Queen of Soul Food — a Harlem-based restaurant — remains the preferred tenant. Ideally, Newsome’s company will find some other way to cover the project financially; the project can’t take on market-rate debt because it’s not expected to generate enough cash immediately to take on the burden, he said. The restaurant is expected to generate an estimated $1.8 million a year.
“The problem now is that we’re competing on a national scale,” said Newsome, adding that if he can’t find the cash this year, he can reapply by February.
Fort Myers Mayor Randy Henderson said he understood that Newsome is facing a challenge with the McCollum Hall project, as everyone struggles to emerge from the recession.
“These are just complicated projects,” Henderson said. “Coordinating all that is extremely hard.”
Councilman Johnny Streets asked Newsome if there were ways the board could encourage distributors of the tax credits to take a second look at the project. But Newsome said the board had done everything it could; there’s just too much competition going on.
“We’re out beating the bushes,” Newsome said. “Unfortunately, these projects sometimes take a while.”
Newsome used his company’s Manhattan Casino project in St. Petersburg as an example. He said it took about four to five years to get it up and running. The Tampa Bay Times reported the project broke ground in late May. The Manhattan Casino project almost mirrors McCollum Hall: both hosted famous jazz musicians and both will house a Sylvia’s.
If other projects with higher priority fall through, there’s a chance Newsome will have good news for the board before October, he said. He hopes to not have this project take four to five years.
“I do small but very difficult projects,” said Newsome just before he finished addressing the board. “We’re going to make this happen, guys.”
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