Columbus Dispatch: Apartments to supplant Short North condos

clipped from www.dispatch.com Financing difficulties force change; at least 70 buyers left in lurch Wednesday, January 27, 2010 3:05 AM By Jim Weiker THE COLUMBUS DISPATCH The Ibiza condominium project was to be "the embodiment of an idealized city life," an 11-story "home for visionaries" in the heart of the Short North. But now that developers have decided to build apartments instead of 135 condominiums on the site, those who signed contracts for Ibiza homes have other phrases to describe the project: a huge disappointment, a massive frustration and a shattered dream. "This dream will never come to fruition," said Maria M. Unterbrink, who deposited $7,500 nearly two years ago for a two-bedroom condominium in the project at N. High Street and Hubbard Avenue. Unterbrink is one of more than 70 buyers who deposited an estimated $1 million total on their condos. She and others now worry that they will never see their money again. The exterior of the 11-story project will remain unchanged as an apartment complex, said an official with a sister company to the developer. ">

"I think people are really concerned about getting their deposit," said Mark McGuire, who put down $16,000 nearly two years ago for a condominium.

Ibiza's developers insist that they are doing everything they can to return the deposits. But they acknowledge the money was spent on the project and that they must get the apartment funding before they can return deposits.

"Our goal is for their money to get returned. It's just a matter of time," said Raymond Brown, the managing partner of APEX Realty Enterprises, a sister company to the developer, ARMS Properties.

"We don't want to abandon the project," he said. "We're highly invested as well. We have more to lose than anybody."

In a letter to future occupants, developers blamed the change on "the meltdown of the mortgage market."

Brown said ARMS had an agreement with Huntington Bank to serve as the lead lender for the $35 million project, but that Huntington pulled out in late 2008.

"That left us in 2009 out in the market, and it was a shaky financial market," Brown added. "After we exhausted banks, we went to private-equity funds, and we kept hearing that if this project was a rental, we wouldn't have any problems financing it."

In the meantime, ARMS is "significantly delinquent" on a $4.8 million loan to purchase and prepare the land for development, said James Klein, the chief executive officer of the lender, Finance Fund, a Columbus-based nonprofit group that helps fund projects in low-income areas.

"Because of the nature of our funding, we have extended the workout period to give them every opportunity we possibly could.

"It was always our expectation when we moved into this project that it would go vertical, and at that point in time, with good, strong pre-leasing, it looked like it would do things that other condo projects have done, and then the bottom fell out."

Ibiza was to be a Short North landmark, the largest condominium project in the district: 135 units ranging from $159,999 for a one-bedroom, one-bath to $1,549,999 for a three-bedroom, four bath, two-story penthouse. It was to rise in two towers above ground-floor restaurants and shops.

Among the planned amenities were a roof-deck pool, concierge service, attached parking and a fitness center.

Brown said the exterior of the project will remain unchanged as an apartment complex, but the larger condos will be divided, giving the project about 155 apartments instead of 135 condos.

Brown said he hopes funding can be secured within 90 days for the apartment complex, with construction to begin soon after. He estimated the project would take 18 months to complete.

"Our goal is to convert it back to condos when the market comes around," he said.

Some buyers have expressed interest in renting an apartment in the building, Brown said. But others aren't sold.

"I absolutely do not want to live there in an apartment," Unterbrink said. "That is counterproductive to what I want to do, to purchase in a good neighborhood where my investment would grow."

Now, Unterbrink said she wants her money back, so she "can pick up the pieces and find a new dream."

jweiker@dispatch.com

Breaking: Ibiza Condos in Short North Turning into Apartments

clipped from www.columbusunderground.com The Ibiza condo project in the Short North has faced numerous delays since its announcement in 2006, and the lack of communication over the course of the past year have left many wondering if that dirt lot at High & Hubbard would ever see progress on construction. The veil of silence has just been lifted, and condo pre-buyers were informed via email that the project will now be moving forward as an apartment building instead. The developers are saying that there will be minimal design changes to the project, and that buyers would receive refunds on their investment in due time. The full email can be found below:

As you know, we have spent a year and tens of thousands of dollars to procure financing for the construction of IBIZA. The meltdown of the mortgage market has placed our primary lender in the position of being unable to take on new real estate loans at this time. (We had already begun construction with the assurance that our loan from that lender was in place.) Other lenders have reviewed the project and have even tentatively agreed to proceed, only to find out that they, too, were restrained by their liquidity and other issues unrelated to the economic viability of the project. (One of the reasons the lenders were so interested was that the loan-to-value ratio of the project would be 61%.) On the other hand, a number of lenders have indicated to us that they are ready and willing to proceed promptly with the necessary funding of the project as an apartment project. (Ironically, the rules for individual condominium unit loans have also changed, making it problematic for our buyers to obtain loans which, just a short while ago, were readily available.)

The probable impossibility of proceeding as a condominium is forcing us, reluctantly, to shift our focus to obtain financing for the construction of IBIZA as an apartment project. Millions have been spent through and including the commencement of construction, and only minor changes in layout and design will be required to make the project appropriate for apartments. (We will try to maintain the flexibility of keeping the option open for conversion at a later date when the market and lending rules permit.) We will be working with each buyer to refund their deposit. This will require a period of time to accomplish. We truly regret this complication.

We are diligently working with our lenders, architect, and legal team to accomplish this end. Once the project is funded, we will refund all of your deposits and statutorily required interest.

We are truly sorry for this turn of events, but it has been out of our control.

Thanks for understanding and working with us to make this a successful transition.

Sincerely,

APEX Realty Enterprises, LLC

Central Ohio Home Sales Jump 11% in December

clipped from www.dispatch.com Fueled by a federal tax credit, home sales in central Ohio closed the year out strong, prompting hope that 2010 will finally bring a housing recovery to the Columbus area. December's 11 percent increase in central Ohio home sales capped four months of steady gains, according to figures released this morning by the Columbus Board of Realtors. The increases were not enough, however, to push 2009's total sales over the previous year's. The 20,235 homes sold in central Ohio in 2009 were the fewest sold since 1997. Throughout the state, home sales declined 3 percent in December, and finished the year 8 percent below 2008. Experts remain hopeful that the market will stabilize this year, helped by a federal tax credit for home buyers that has been extended until June 30. Still, they acknowledged, the housing market remains dependent on a fragile economy.

"You're seeing signs that the market is getting better, but the two considerations hanging like dark clouds are the unemployment rate and the number of homes that continue to go into foreclosure," said Robert Fletcher, the chief executive of the Ohio Association of Realtors.

Home sales throughout the nation plummeted 17 percent from November but nonetheless closed the year out 5 percent above 2008, for the first annual gain since 2005.

"The market is going through a period of swings driven by the tax credit," said Lawrence Yun, chief economist with the National Association of Realtors.

"We'll likely have another surge in the spring as home buyers take advantage of the extended and expanded tax credit. By early summer the overall market should benefit from more balanced inventory, and sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery job creation is key to a continued recovery in the second half of the year."

FHA Home Loans: Harder to get an Uncle Sam mortgage

Some changes are happening. They will not effect a large number of buyers.

clipped from money.cnn.com NEW YORK (CNNMoney.com) -- It's going to be harder to get a government-backed mortgage from now on. Looking to shore up its weakening finances, the Federal Housing Administration is set to announce stricter standards on Wednesday. The agency, which insured nearly a third of new mortgages in 2009, will increase the premium it charges for its mortgage insurance and require those with weaker credit scores to come up with larger downpayments. The FHA will also reduce the amount of money a seller can provide a homebuyer for closing costs, as well as tighten its enforcement of lenders. "Striking the right balance between managing the FHA's risk, continuing to provide access to underserved communities, and supporting the nation's economic recovery is critically important," FHA Commissioner David Stevens said in a statement. "Importantly, FHA will remain the largest source of home purchase financing for underserved communities."

FHA loans have skyrocketed in popularity during the mortgage crisis since the agency backstops banks if borrowers stop paying. But housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. (Cash cushion shrivels for FHA.)

In November, the agency reported that its reserve fund has dropped to .53% of its insurance guarantees, well below the 2% ratio mandated by Congress and the 3% ratio it had last fall. The fund covers losses on the mortgages the agency insures.

Federal housing officials, who took several steps to shore up the agency's finances last year, promised to do more at a congressional hearing in December. The new announcement is the latest set of changes to FHA policies.
What the new rules mean

FHA is making these changes in order to bring its reserve fund up back up to the 2% ratio, Stevens said in a conference call with reporters. However, the agency also wants to make sure that the new rules don't disrupt the housing market and don't hurt FHA's ability to assist the underserved.

The agency will increase its up-front mortgage insurance premium to 2.25%, from 1.75%. It will also ask Congress for the right to hike its ongoing premium, currently as much as .55% monthly. The agency will then shift some of the increase in the up-front premium to the ongoing charge.

Raising the premium is the best way to add to the reserve fund, Stevens said.

The move isn't likely to hurt borrowers much, said Thomas Lawler, founder of Lawler Economic & Housing Consulting. Most homebuyers will likely finance it so it will only bump up their monthly payments by a little.

"This doesn't increase the amount they need to bring to the closing table," Lawler said.

The FHA will also require borrowers to have at least a credit score of 580 to qualify for the agency's 3.5% downpayment program. Those with lower scores will have to pay at least 10%. However, this rule may have little practical effect since Stevens recently said the average borrower score is 693.

The new policy also will reduce the amount of money sellers can provide to homebuyers at closing to 3%, down from 6%, of the home's price. That change will bring the agency in line with industry standards and remove the incentive to inflate appraisals.

Finally, officials plan to clamp down on lenders offering FHA mortgages. The agency will more closely monitor their performance, as well as seek legislative authority to require mortgage firms to assume liability for all loans they originate and underwrite. It will also publicly report lender performance data.

One thing the agency did not do is to broadly increase the downpayment requirement. Many industry observers said such a step is necessary to reduce FHA loans' high delinquency rates. Borrowers with little equity in their homes are more likely to default or walk away.

The agency has seen a spike in delinquencies amid the mortgage meltdown. Some 14.36% of FHA loans were past due in the third quarter, according to the Mortgage Bankers Association. This compares to 9.64% of all loans.

"They are not addressing the fundamental issue -- that FHA loans are too risky," said real estate finance consultant Edward Pinto, former chief credit officer for Fannie Mae (FNM, Fortune 500) in the late 1980s. Borrowers "need more skin in the game."

FHA did not increase minimum downpayments more broadly because its borrowers with credit scores above 580 were generally timely with their payments.

"The reason why we drew the line at 580 is that there are clear performance drop offs as you drop down credit score tiers," Stevens said.
Agency plays crucial role

As banks have clamped down on mortgage lending, the FHA program has emerged as one of the few ways people can buy a home.

Banks are more willing to make FHA loans because they come with a federal guarantee to cover losses if the borrower defaults. And borrowers can more easily qualify for FHA loans because they only need 3.5% down and can have lower credit scores.

As a result, demand for FHA loans has exploded. The agency guaranteed more than $360 billion in single-family mortgages in fiscal 2009, which ended Sept. 30, more than four times the volume in 2007.

The agency insured about 30% of home purchases and 20% of refinanced mortgages in 2009. Nearly 50% of first-time homebuyers go through the agency.

Wonder Bread Factory in Italian Village Reborn as Wonderland

clipped from www.columbusunderground.com Press Release: Artists, Musicians and Small Businesses Team up to Take Over Former Wonder Bread Factory It’s been almost a year since Wonder Bread moved out of their Italian Village bakery on 4th Street near the Short North. Now, a group of innovative entrepreneurs are looking to turn the 65,000 square foot factory into a hub for the creative class in Columbus and beyond. The project is being called “Wonderland” and it will combine artist studios, shared office space, band rehearsal and recording facilities, venue and performance space, gallery space, and a mix of start-up and established retail all under one roof. The goal is to provide a resource for artists, musicians, and small businesses to achieve individual success, as well as to establish an icon in Columbus that highlights our outstanding local creative industries to the world. More information can be found online at WonderlandColumbus.com

Getting things off the ground are Adam Brouillette (Couchfire Collective), Andrew Dodson (Central City Recording), David Hunegnaw (The Sandbox Columbus), Kevin Lykens (Lykens Companies) and Josh Quinn (Tigertree). The group is forming a non-profit organization to manage the property, to keep rent costs down and to provide a vehicle to seek donations and grants to encourage growth and job creation within the creative community. They will each focus on a specific area – arts, music, business, retail – and provide business counseling and information resources for tenants as well as day-to-day management of the property.

There will be an informational meeting on January 29th at Junctionview Studios (889 Williams Ave, Grandview Heights) from 6:30pm-9pm for anyone who may be interested.

Hotel planned in Short North moves across High Street and grows

clipped from columbus.bizjournals.com Plans for a hotel and parking garage complex in Columbus’ Short North have expanded across High Street. Pizzuti Cos. expects to show its revised plans Jan. 19 to the Italian Village Commission calling for a boutique hotel of up to 130 rooms on a city-owned parking lot a block north of the Cap at Union Station. The Columbus-based developer initially proposed building the hotel and related development on the west side of High Street, on the site of the former United Commercial Travelers of America building at 632 N. Park St. and an adjacent surface parking lot. That site remains part of Pizzuti’s plan and would get a parking garage with up to 46,000 square feet of offices above it in the revised proposal. Developments on both sides of the street would offer ground-floor space for retailers and restaurants. “We want to create a dynamic front door to the Short North,” said Joel Pizzuti, the company’s president. “It’s a wonderful project for the city and for the Short North.”

High hopes

Redevelopment of the United Commercial Travelers property has languished since Dublin developer Patrick Grabill proposed a condominium tower and parking for the site in April 2007. Pizzuti Cos. took over the contract to purchase the property and in February 2008 unveiled plans for a 160-room hotel. It later reduced the hotel rooms to 130 but added 60,000 square feet to the complex for offices.

It also said it would fill the front portion of the United Commercial Travelers building with the acclaimed fine arts collection of company CEO Ron Pizzuti.

But the project stalled amid concerns by the Victorian Village Commission, which steers development on the west side of the Short North. At issue was the project’s 10-story height, nearly twice the 60-foot-high limit developers face in the Short North without needing a zoning variance.

Original plans also called for demolishing the back of the cross-shaped office complex, a sensitive issue in the historic neighborhood.

Pizzuti’s most recent plans call for a hotel as high as 15 stories in Italian Village on the east side of High Street, depending on the number of guest rooms. The Italian Village Commission approved a variance for the 11-story Ibiza condominium tower at 830 N. High St. That project, which includes a public parking garage, remains unbuilt while its developer tries to secure financing.

Rex Hagerling, a Moody Nolan Inc. architect who serves as Italian Village Commission chairman, said the hotel’s height will drive much of the debate over the proposal.

“There are a lot of questions,” he said, “so I’m sure there will be a lively discussion.”

Pizzuti said some details of the project will depend in part on how many guest rooms the Italian Village Commission approves for the hotel and what the Victorian Village Commission will OK for the office space and parking garage elements.

“All the numbers are going to change,” he said, “because it depends upon how much (development) the commissions approve.”

Columbus Development Director Boyce Safford III in a Dec. 21 letter to Pizzuti supported the developer’s plan to add a parking garage in the Short North.

“If this project does happen,” Pizzuti said, “it will be a private-public partnership and the city will have a big role.”

The city had hoped the Ibiza project, with a parking garage bolstered by city financing, would provide about 250 public spots several blocks north of Pizzuti’s proposed development.

Pizzuti Cos. has hired Smallwood Reynolds Stewart Stewart & Associates Inc. of Atlanta as the project’s design architect and Jonathan Barnes Architecture and Design Ltd. of Columbus as the urban planning consultant.

Pizzuti said the developer will present “massing studies” of the hotel project showing its relative size to surrounding buildings.

“It has yet to be determined what those buildings will look like,” Pizzuti said. “It will certainly fit into the neighborhood.”

Earth Day Moving to Franklin Park from Goodale Park for 2010

clipped from www.columbusunderground.com Columbus’ Annual Earth Day Celebration will be ringing in the new decade with a relocation from Goodale Park to Franklin Park. This year’s event will be titled “The Update” and consists of both large-scale volunteer efforts as well as a celebratory festival of what is to be accomplished. The volunteerism aspect will take place on April 17th and 18th at various worksites located throughout the city, while the festival takes place on April 22nd at Franklin Park. The event is organized by Green Columbus, who have set this year’s goal at engaging 10,000 volunteers and making the Columbus Earth Day efforts the largest in the nation. If you’d like more information on getting involved, visit Update2010.org.