Bass Lofts. Atlanta, Georgia. Project Type: Residential. Case No: C Year: 1999

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1 Bass Lofts Atlanta, Georgia Project Type: Residential Case No: C Year: 1999 SUMMARY Adaptive use of a 1920s-era former high school and gymnasium for 103 luxury loft apartments and the development of 30 new units. To secure historic preservation tax credits as well as to offer unconventional living space to Atlanta's fast-growing population of young, affluent professionals, Bass Lofts retained many of the school's original features, including several rows of seats in the school's auditorium, a Depression-era mural painted as part of the Works Progress Administration, and the school's original trophy display case. Nearly all of the irregularly-shaped units feature a unique floor plan and original finishes such as classroom doors and transoms, blackboards, and wood floors. Units in the former gymnasium feature 30-foot-high ceilings. The project also creates an additional anchor in a once-declining area of the city. FEATURES Historic preservation tax credits High-tech features Gated parking Security features New and historic units

2 Bass Lofts Atlanta, Georgia Project Type: Multifamily Rental/Historic Preservation Volume 29 Number 03 January-March 1999 Case Number: C PROJECT TYPE Adaptive use of a 1920s-era former high school and gymnasium for 103 luxury loft apartments and the development of 30 new units. To secure historic preservation tax credits as well as to offer unconventional living space to Atlanta's fast-growing population of young, affluent professionals, Bass Lofts retained many of the school's original features, including several rows of seats in the school's auditorium, a Depression-era mural painted as part of the Works Progress Administration, and the school's original trophy display case. Nearly all of the irregularly-shaped units feature a unique floor plan and original finishes such as classroom doors and transoms, blackboards, and wood floors. Units in the former gymnasium feature 30-foot-high ceilings. The project also creates an additional anchor in a once-declining area of the city. SPECIAL FEATURES DEVELOPER Historic preservation tax credits High-tech features Gated parking Security features New and historic units Winter Properties, Inc Spring Street Atlanta, Georgia ARCHITECT Surber Barber Choate & Hertlein 1776 Peachtree Street NW South Tower, Suite 700 Atlanta, Georgia CONSTRUCTION The Winter Construction Company 1330 Spring Street Atlanta, Georgia

3 GENERAL DESCRIPTION Bass Lofts is the most recent project of Winter Properties, Inc., an Atlanta-based development firm specializing in the redevelopment of historic properties and the revitalization of urban neighborhoods. The 120,000-square foot, three-story former high school built in the 1920s offers unconventional living space to the city's fast-growing population of young professionals. Located just east of downtown Atlanta, the project represents the culmination of an idea that Winter Properties' president Bob Silverman had nearly two decades earlier. Eighty-five of the apartments are located in the former high school itself, while an additional 18 units were developed in the freestanding red-brick gymnasium, a separate structure built in To increase the project's feasibility, 30 new units were built adjacent to the school. Amenities on the seven-acre site include a swimming pool, health club, gated parking, and additional phone lines for computer modems and faxes. In addition to these modern conveniences, many original elements of the buildings were retained and integrated into the apartments. Several of the gymnasium units feature 30-foot-high ceilings, and most school units have irregularly shaped rooms. Others still contain blackboards and built-in cupboard space. The original vault in the principal's office now houses a water heater, and the former school nurse's station now serves as a kitchen. Where possible, the original classroom doors and transoms have been preserved, as well as school clocks, the trophy case, and a 1930s-era Works Progress Administration mural in the auditorium. In the gymnasium, the basketball court floor and bleachers have been retained and the building's red-brick walls left exposed. SITE Bass Lofts is located on a seven-acre site just east of downtown Atlanta in an area known as Little Five Points. The area is adjacent to Inman Park, an area of Victorian homes developed in the 1880s as Atlanta's first suburb but now considered part of the city proper. The Little Five Points area experienced some decline during the 1960s and 1970s, but in the 1980s, the area began to experience a resurgence as young, middle-class residents began to move back. In this and other areas of the city, the developer credits the local gay population with being the original urban pioneers in transitional sections of the city and stemming middle-class flight. The area is considered a funky, trendy, and largely retail/entertainment district of the city that attracts a wide range of people. The project sits on a plateau overlooking Euclid Avenue; it is bounded by a small expanse of open space and trees surrounding the parking areas. Private, single-family homes abut three sides of the site, which is conveniently located near theaters, restaurants, and supermarkets. Downtown is easily accessible by car, and the project also is within walking distance of a Metropolitan Atlanta Rapid Transit Agency (MARTA) station. DEVELOPMENT/DESIGN Although planning for Bass Lofts did not officially begin until 1994, Winter Properties president Bob Silverman first conceived the idea for the project almost 20 years earlier. While strolling through the neighborhood after attending a play at a local theater, Silverman passed the school and noted its potential as a residential development. Thereafter, he followed the listing of surplus schools as they became available, and in 1996 his company purchased the former Bass High School. The planning process in the city of Atlanta gives great weight to the input of local residents. Upon acquiring the school, Winter immediately enlisted the support of the neighborhood; the company's strong track record of historic redevelopment in Atlanta and its reputation for quality helped the project win neighborhood support. While the community generally supported the project and welcomed the high-income residents it would attract, traffic was a concern. The developer's original plan called for the development of 103 units within the school and gym structure and an additional 60 to 70 new units in a separate building; negotiations with neighbors resulted in scaling the project back to 30 new units. In addition, parking was divided into two distinct areas to allow Bass residents to enter and exit from both the east and north sides of the project and to provide for better traffic distribution. Plans to convert the gymnasium into retail shops and restaurants were opposed by residents, again due to traffic concerns. A vacant area at the entrance of the gymnasium currently is being converted to gallery space. The project was delayed 18 months when, while it was already under contract to Winter Properties, the Atlanta School District requested use of the school as a temporary elementary school. The developer complied; in return, the school district made some minor renovations. In December 1997, Winter was able to begin construction. While structurally sound, the building presented significant problems; the developer's decision to use the school's existing window frames and sashes made the job more complex. A double reglaze of each of the ten-foot-high windows was engineered, retaining the beauty and scale of the original building while also significantly increasing its energy efficiency. However, large amounts of asbestos were discovered in the window caulk, requiring its careful removal. In addition, much more paint was on the windows than expected, and recent federal regulations regarding lead paint added significantly to the cost of its removal. Abatement of the project ultimately cost twice what the developer had originally estimated. Besides abatement costs, all of the building's mechanical systems were deemed inadequate and replaced. And, as is often the case in preservation projects, a new roof was required.

4 Besides the windows, many of the original finishes were left intact and incorporated into the project, both to differentiate Bass from other residential projects and to satisfy historic tax credit requirements. The U.S. Department of Interior, which administers the tax credit program, required the developer to preserve the basic elements of the school, resulting in the loss of several thousand square feet of living space on the first floor of the classroom building, where the original 14-foot wide corridor as well as all of the lockers, which have been welded shut, had to be retained. On the second and third floors the developer was able to narrow the corridor, thus creating somewhat larger units on those floors. In the auditorium, the developer was required to preserve ten rows of the original seats. Winter Properties left many other attributes of the school in place voluntarily. All units in the school building have the original wooden floors, and many sport the original doors and transoms. In some units the original chalkboards and built-in cabinets have been left in place. A vault in what had been the principal's office now holds a water heater, and the school nurse's station has been converted to a kitchen. In the auditorium, besides the seats that were preserved, the developer also restored a mural depicting women dancing that was painted during the Depression as a project of the Works Progress Administration. The developer still was able to put 17 units in the auditorium, with four units built directly on the stage. Eight two-level units were developed in the former gymnasium; they feature 30-foot-high ceilings, the original basketball court floor, bleachers, and red-brick walls. In addition, ten units were built on the sides of the gymnasium. The addition of patio spaces for these units creates a unique outdoor area for tenants. Combined with the historic touches are the amenities that upscale residents have come to expect in a modern apartment complex. The basement of the school houses a 1,500-square-foot, fully equipped exercise room and a laundry room. Each of the project's units also features modern wiring that includes six phone lines for computers and fax machines. Both the buildings and the parking areas are served by a key card electronic security system. Each unit also is individually metered for gas and electricity. The concrete and brick exterior of the school and gymnasium were in very good condition, requiring only minor cleaning and repointing. The cafeteria, a more recent addition to the school building, was demolished. In the courtyard, the developer constructed an in-ground swimming pool and courtyard. A new access road from Euclid street was constructed and 226 parking spaces were provided in two separate lots. Great care was taken to preserve the existing large oak trees on the site while grading for the access road and parking lots. The 30 new units are housed in two separate buildings located behind the former gymnasium. The three-story structures were finished with stucco of the same color as the brick used in the former school, and they feature large palladium-style windows like those in the existing structure. Including the new units added critical mass to the project to help bring in the revenue necessary to the project's feasibility. While the units in the new buildings are fully leased, many of the current tenants are on a waiting list for apartments in the school and gymnasium when they become available. FINANCING While Winter Properties' track record and reputation made financing easier to obtain, it can still be difficult in a market such as Atlanta, where many lenders are unfamiliar with historic preservation and adaptive use projects. Market research indicated that the developer could obtain rent of about $930 for a one-bedroom apartment, a rent similar to that for garden apartments in more upscale sections of the city. In fact, the project has performed better than expected, with one-bedroom rents nearing $1,000 and rents for the two-bedroom, two-level gymnasium units topping $1,600 per month. The developer was able to obtain a construction and acquisition loan with the interest rate tied to LIBOR (London Interbank Offered Rate), resulting in significant interest savings. The project ultimately came in on time and near budget. Cost overruns due to unexpected additional abatement costs were absorbed by the interest savings and the high contingency budget, which the developer insists is always a necessity in adaptive use projects. In addition to the use of federal historic preservation tax credits, the developer also made use of local redevelopment tax abatement programs that freeze property taxes for a specific period of time. Further tax relief was achieved by donating the facade of the school to Easements Atlanta, Inc. Under this program, the owner agrees to leave a historic building's facade intact. An appraisal of the value of the building's facade then is made, and the value is treated as a charitable contribution. MARKETING/MANAGEMENT Leasing began in January Marketing initially was done primarily through signs posted on the site and through the Internet via the RentNet service. As often is the case in central city locations, attracting the family market can be difficult, in large part because of concerns over school quality; marketing therefore targeted single, young professionals and empty nesters. One reason the units were equipped to handle modern telecommunications was the developer's belief that the space could be marketed successfully to high-tech, live/work tenants. While some tenants do fit this category, tenants ultimately have been a more eclectic mix of single and divorced urban professionals. The average age of tenants at Bass Lofts is 33. Because of the city's well-known traffic congestion, easy access to downtown was a strong selling point, but the unconventional layout and unique features of the project have been its biggest draw. By September 1998, the project was fully leased.

5 Winter Properties, Inc. believes in the ability of historic rehabilitation projects to energize people and foster a sense of community among them. One function of the on-site manager at Bass is to encourage neighborliness by organizing informal social gatherings; the gatherings have been quite successful, consistently attracting a cross-section of tenants. Tenants themselves also have begun to organize events, making a genuine neighborhood of the project. EXPERIENCE GAINED Prior experience and reputation can be important in developing adaptive use and historic preservation projects. Winter's reputation went far in assuring tenants and local residents that a quality project would be developed. Because historic preservation projects invariably entail unforeseeable circumstances, the budget should always include a significant contingency fund. The biggest risk, according to the developer, is not the market, but cost overruns. Working with local planning authorities and residents is critical to project success. Without their support, a developer is likely to experience significant delays and the related expenses. In negotiating with planning officials and residents, calculate the costs and benefits of concessions accurately. Developers who do not fully appreciate the financial effects of certain concessions may soon find their projects over budget. An architect with experience in historic preservation is important to the success of the project. The architect, general contractor, and various subcontractors should be engaged early in the project and made part of the development team.

6 PROJECT DATA LAND USE INFORMATION Site area: acres Dwelling units planned: 133 Dwelling units completed: 133 Gross density: 19 units/acre Off-street parking spaces: 226 LAND USE PLAN Use Percent of site Buildings 24 Roads/paved areas 36 Common open space 40 Total 100 RESIDENTIAL UNIT INFORMATION Unit type Average unit size (square feet) Number of units (planned/built) Initial rent range School /68 $630-$1,175 Auditorium 1,090 17/17 $950-$1,600 Gym 1,191 18/18 $750-$1,660 New units 1,035 30/30 $860-$1,620 DEVELOPMENT COST INFORMATION Site acquisition cost: $1,143,213 Site improvement costs Excavation/grading: $124,332 Sewer/water/drainage: 31,226 Paving/curbs/sidewalk: 250,180 Landscaping/irrigation: 67,950 Fees/general conditions: 76,068 Other: 217,871 Total: $767,627 Construction Costs Superstructure: $1,556,764 HVAC: 411,374 Electrical: 641,834 Plumbing/sprinklers: 851,528 Finishes: 3,091,518 Graphics/specialties: 2,500 Fees/general conditions: 818,845 Total: $7,374,363 Soft costs Architecture/engineering: $341,745 Project management: 535,000 Marketing: 15,960 Legal/accounting: 88,667 Taxes/insurance: 24,595 Title fees: 17,124 Construction interest and fees: 381,460 Other: 80,092 Total: $1,484,643 Total development cost: $10,769,846 Total development cost per unit: $80,976 Construction cost per square foot Gross: $65.65 Rentable: $81.38 DEVELOPMENT SCHEDULE Site purchased: November 1996 Planning started: March 1994 Construction started: December 1997 Leasing started: January 1998 Lease-up completed: October 1998 DIRECTIONS

7 From Hartsfield Airport: Take I-85 north to Freedom Parkway. Bear right on 42 east, cross North Highland, and turn right on Moreland Avenue. Turn right on Euclid Avenue. Bass Lofts will be on the right at the end of the retail development. David A. Mulvihill, report author David A. Mulvihill, editor, Project Reference File Eileen Hughes, managing editor This Development Case Study is intended as a resource for subscribers in improving the quality of future projects. Data contained herein were made available by the project's development team and constitute a report on, not an endorsement of, the project by ULI-the Urban Land Institute. Copyright 1999 by ULI-the Urban Land Institute 1025 Thomas Jefferson Street, N.W. Suite 500 West, Washington D.C

8 Bass Lofts, a three-story former high school building built in the 1920s, offers distinctive living space to the city's fast-growing population of young professionals. Additional two-level units were developed in the adjacent gymnasium, as well as 30 new units in a separate building.

9 Original finishes, such as the wooden classroom floors and windows, are featured in many of the units. Some units have blackboards and bookshelves from the original classrooms.

10 Units in the former gymnasium offer two-level living, with the original basketball court floor and brick walls left intact.

11 Site plan.