Friday, May 30, 2003

Urban condos feed on success


Pace picking up in Over-the-Rhine

By Ken Alltucker
The Cincinnati Enquirer

Elbow deep in construction plans and sand blasters at his long-vacant Main Street building, Chris Frutkin made a decision that would have a profound effect on Over-the- Rhine development.

Frutkin scrapped plans for an apartment complex and hatched what seemed a far-fetched idea for Cincinnati's poorest neighborhood: Build 18 moderately priced condominiums at the 1400 block of Main Street.

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Two years after riots scarred Over-the-Rhine's image, Frutkin questioned whether people would be willing to plunk down thousands to buy a piece of one of Cincinnati's most troubled neighborhoods.

But that skepticism melted quickly as buyer after buyer marched into his office and signed purchase contracts for the open floor plans and exposed brick of Crawford Lofts. All the units sold within three weeks.

That success has touched off a wave of new activity, with builders now hammering away or planning a half-dozen other condo projects totaling 91 units from Main Street to nearby Reading Road. The condo projects are unprecedented in Over-the-Rhine, a neighborhood that's long been a reservoir of poverty with three decades of federal and local housing policies directing the city's low-income, subsidized housing there.

Now federal housing policy dictates that low-income tenants be offered rent vouchers that allow them to live in outer neighborhoods and suburbs, and city officials want to spur Over-the-Rhine's redevelopment through loans and tax breaks on the belief that a mixed-income neighborhood will ease social ills such as crime and drugs.

The result: a dramatic decrease in Over-the-Rhine's low-income apartments and a rush to modify housing for all income levels.

"I'm very encouraged by the interest," Mayor Charlie Luken said. "Most of what we see in Over-the-Rhine has been rental. If you get a more stable base with ownership, that is where you are really putting down good roots for a neighborhood."

Some veteran developers have owned the vacant buildings now being converted into condos for years, waiting for the right conditions. Other newcomers such as Washington Redskins offensive lineman Alex Sulfsted view high-quality, affordable homes near downtown as a no-brainer.

"We were all of the mind-set that it had to be really expensive and glitzy to attract people downtown," Bill Baum of Urban Sites Properties said. Frutkin "really opened everybody's eyes with his project."

Crawford Lofts doesn't offer expensive amenities such as on-site parking or elevators that many developers long viewed as crucial to enticing urban dwellers. Frutkin has owned the building for years, making his initial investment lower than those of other developers new to the neighborhood and allowing him to squeeze out a profit while selling the condos at relatively low prices, $79,900 to $165,000.

That price and look was right for first-time buyers Chris and Jessica Pfeiffer. Two days after attending a kick-off party for the condo project, the Fort Thomas newlyweds decided to purchase in Over-the-Rhine.

"The two units we looked at were already sold," he said. "We realized ... we'd better jump on it."

The Pfeiffers settled on their new home - a top-floor, 1,800-square-foot unit with 20-foot ceilings. They signed a purchase contract of $165,000, and Fifth Third Bank approved a zero down payment loan. Also, Cincinnati offers a 10-year property tax break on condo renovations as part of a strategy to boost the city's 38.9 percent home ownership rate. They'll move in in October.

"We just always had this perception that living downtown was extraordinarily expensive," Chris Pfeiffer said. "But we didn't have to put 20 percent down."

Conversions a hot ticket

The rush to build new condos or convert apartment buildings to condos isn't unique to Over-the-Rhine. Condo "conversions" are a hot ticket in larger cities such as Atlanta and Chicago where apartment owners face scores of empty units as renters become homeowners, according to David Lockard, an apartment expert at the commercial real estate firm CB Richard Ellis.

"I wouldn't be surprised to see a lot more of it because of the low interest rates," Lockard said.

Greater Cincinnati lenders, too, are seeing the wisdom in these projects, said Jeanne Golliher, executive director of Cincinnati Development Fund.

"It's demonstrated more faith in the neighborhood than anybody envisioned," she said.

Urban Sites Properties is converting a six-unit apartment building above Shadeau Breads at 1336 Main St. to condos. One tenant wants to buy the apartment she occupies. Two other tenants are considering a purchase.

"With all this interest in homeownership, it seems like the perfect match," said Baum, whose firm may convert part of its portfolio of 150 Over-the-Rhine apartments.

But it's not just moderately-priced condos that builders are bullish on.

Baum's firm is stripping a long-vacant building at 400 Reading Road in Pendleton with an eye toward building six units priced from $160,000 to $275,000. That's next to architect Keven Speece's five-unit, $1.25 million Rosmur Lofts. And pro football player and Mariemont High School graduate Sulfsted is seeking to invest $1.8 million in seven upscale units at 214 E. 14th St.

Image an obstacle

As a kid, Sulfsted never would have considered venturing into Over-the-Rhine, much less investing $450,000 of his own money.

"Back before all those bars came in, it was really a place you'd never want to go," Sulfsted said. "In recent times, especially since the riots, there has been a lot more redevelopment. I think people are starting to feel safe there, but it's the image we must overcome."

Another image Sulfsted realizes developers must overcome - especially in Over-the-Rhine - is false promises. The neighborhood has been fertile ground for developers who have delivered little.

The most recent case involved the disappearance of former pro basketball player LaShawn Pettus-Brown, who accepted thousands in city of Cincinnati funds for fixing up the long-vacant Empire Theater. The FBI wants to question him about $92,000-plus in missing city funds. Meanwhile, little has been done on the Vine Street theater.

Sulfsted acknowledges that comparisons to Pettus-Brown are inevitable - both are professional athletes and Cincinnati high school sports legends who starred at nearby colleges (Pettus-Brown at University of Dayton, Sulfsted at Miami). But that's where the similarities end, Sulfsted said.

While not administering bone-crunching hits on the football field, Sulfsted picked up the ins and outs of the building trade with the help of his father, a Springboro developer. Sulfsted's also staking his own cash for up to one-quarter of the project's cost, and like Frutkin, he's not asking for city money.

So far, Sulfsted said he has one buyer lined up, and he'll take the penthouse - a 3,500-square-foot space on the building's top floor with sweeping skyline views.

He also plans amenities such as enclosed parking and an elevator that opens directly to each unit.

Sulfsted's game plans calls for even more Over-the-Rhine development. He plans six more condos atop a restaurant and another commercial space at 1341-1345 Main St.

Others have learned how difficult it can be to build a condo - no matter how small the project.

When architect Speece purchased his Reading Road building four years ago, he was bullish on Cincinnati's urban housing renaissance.

He had a difficult time convincing lenders to approve a construction loan. A bank required Speece to "pre-sell" three of his five units.

"In Cincinnati, people aren't going to buy what they can't see," Speece said. "That held up my project up for some time."

E-mail kalltucker@enquirer.com




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