The Wigwam Building Atlanta, Georgia Project Type: Residential Case No: C036010 Year: 2006 SUMMARY A 7,600-square-foot (706-square-meter), eight-unit condominium building located in Atlanta, Georgia s Martin Luther King, Jr., Landmark District, the Wigwam Building stands out from the predominant Queen Anne style houses due to its International Style architecture. The rehabilitation of this 1940s-era structure won the Georgia Trust for Historic Preservation s Excellence in Rehabilitation award and an award for excellence from Atlanta s Urban Design Commission. FEATURES Historic Preservation Urban Revitalization
The Wigwam Building Atlanta, Georgia Project Type: Residential Subcategory: Housing Multifamily Volume 36 Number 10 April June 2006 Case Number: C036010 PROJECT TYPE A 7,600-square-foot (706-square-meter), eight-unit condominium building located in Atlanta, Georgia s Martin Luther King, Jr., Landmark District, the Wigwam Building stands out from the predominant Queen Anne style houses due to its International Style architecture. The rehabilitation of this 1940s-era structure won the Georgia Trust for Historic Preservation s Excellence in Rehabilitation award and an award for excellence from Atlanta s Urban Design Commission. LOCATION Inner City SITE SIZE 4,971 square feet/462 square meters LAND USES Market-Rate Housing, Condominiums KEYWORDS/SPECIAL FEATURES Historic Preservation Urban Revitalization PROJECT WEB SITE www.jcknightproperties.com/description.htm PROJECT ADDRESS 589 Auburn Avenue NE Atlanta, Georgia 30312 DEVELOPER Judith Knight 130 Krog Street Atlanta, Georgia 30307 770-714-8618 www.jcknightproperties.com ARCHITECT David Cavender 1677 Dorsey Avenue, Suite C East Point, Georgia 30344 404-766-2797 Fax: 404-766-5572 BUILDER Gordon Builders, Inc. 2190 North Norcross Tucker Road, Suite 101 Norcross, Georgia 30071 770-416-6915
GENERAL DESCRIPTION The Wigwam Building is a 7,600-square-foot (706-square-meter), eight-unit condominium building in Atlanta, Georgia, built in the International Style, which is quite uncommon in the city. Named in honor of the steel cutout of an Indian chief perched on a corner of its roof, it was constructed in 1940 by Cornelius King, a local real estate developer, to provide housing for his family in the one- to three-bedroom units. While still owned by the family, the building eventually became a rental property and fell into disrepair. The property is a contributing structure to the Martin Luther King, Jr. (MLK), Landmark District in the Old Fourth Ward neighborhood. The rehabilitation of the badly deteriorated building and reinvigoration of its historic character were intended to transform the street corner into a chic urban setting. It has been recognized with an Excellence in Rehabilitation award from the Georgia Trust for Historic Preservation and an award for excellence from Atlanta s Urban Design Commission. THE SITE Located at the intersection of Randolph Street NE and Auburn Avenue NE, the Wigwam Building lies two blocks east of Dr. Martin Luther King, Jr. s birthplace and is a block away from a neighborhood retail corridor. The project is also about a mile (1.6 kilometers) from downtown Atlanta. The three-story cement building s flat roof, windows, cubic shape, and unornamented exterior are characteristic of the International Style, distinguishing it from the cottages and Queen Anne style houses that are more typical of the neighborhood. In the early 20th century, the Old Fourth Ward was a thriving African American neighborhood that suffered decline later. However, over the last decade, Auburn Avenue has been experiencing an ongoing revitalization, with numerous commercial and residential renovation and restoration projects. During the 1930s, King s home stood on the current site of the Wigwam Building. At that time, King owned a resort in Kennesaw, Georgia, called the Wigwam. When he sold it in the 1930s, he retained possession of the steel cutout Indian that had adorned the property. He completed the apartment building in 1940 and placed the steel Indian on top of the roof and the structure became known as the Wigwam Building. DEVELOPMENT PROCESS The project developer is J.C. Knight Properties, Inc., a one-woman firm run by Judi Knight. Formerly a clinical psychologist and CEO of a software company, she has turned to boutique real estate development. Knight believes real estate development is, in part, an artistic endeavor and one of her goals is to create or renovate one-of-a-kind places. With this goal in mind, she works closely with each project s design team to add distinctive touches such as nonmainstream colors and finishes. Living near the Wigwam Building, Knight became aware of the opportunity for purchase through a broker friend who thought it might be of interest to her. For the redevelopment of the Wigwam, she teamed up with investor Scott Peterson to create Wigwam Associates, LLC. Wigwam Associates bought the property from the King family in April 2003 with the goal of rehabilitating it, preserving and restoring as much of the architectural detail as possible, and converting the apartments to condominiums. Knight has since initiated an expansion of the Wigwam project with the acquisition of two adjacent lots on Auburn Avenue. Because one lot had been the site of a deteriorated duplex rendered structurally unsound for renovation after a fire, she undertook a historic reconstruction of the building. The other lot, currently vacant, will accommodate a new residential duplex that will share a courtyard with the Wigwam and be built in a similar architectural style. FINANCING The financing for the rehabilitation of the Wigwam occurred simultaneously with Knight s acquisition and redevelopment of the two adjacent lots. The total cost of the Wigwam Building was $406,000 and the two adjacent properties were purchased for an additional $205,000. Knight and Peterson put in $285,000 in equity 70 percent from Knight and 30 percent from Peterson. Working with Main Street Bank, a local lender, they leveraged a $1.09 million land acquisition and construction loan at an interest rate of 4.5 percent, with a debt coverage ratio of 80 percent. The Wigwam construction hard and soft costs came to $857,148, including a $100,000 developer s fee to Knight for her project coordination. Combined with acquisition costs, the overall cost of the Wigwam property and its restoration was $1,263,148. The sale of the eight units, less commission and closing costs, came to $1,425,296, which netted $162,148. The carrying costs of the money required a cash infusion of an additional $65,000. Since the Wigwam was in an advanced state of deterioration, the total renovation costs were difficult to pinpoint at the front end. In an effort to control these costs, Knight chose a cost-plus arrangement with the general contractor rather than a fixed-fee agreement. In a cost-plus agreement, the contractor does the work, submits all the invoices
and labor charges to the client, and adds a certain percentage for the contractor s profit and overhead, typically 20 percent. In a fixed-fee arrangement, the contractor promises to do the work specified at a certain cost. Any later changes would have to be negotiated with the contractor separately. However, Knight was concerned that in the latter scenario, a contractor would be obliged to pad the stipulated sum to cover the assumed risk. Knight found that overall, the cost-plus contract worked out fairly well. However, when the plaster work part of the rehabilitation went well above budget, she discovered that a cost-plus contract can require an additional layer of supervision from the developer to control costs most effectively. With the donation of a facade easement to Easements Atlanta, Inc., the developer received a $300,500 tax deduction. In addition, the redevelopment qualified for a city and state property tax freeze over a ten-year period. Knight considered the possibility of a federal rehabilitation investment tax credit, which would have given her a tax credit of 20 percent on qualified rehabilitation expenses. However, this incentive would have required her to hold the property as an investment for a period of five years. With the soft rental market at the time, she decided to forgo that option, turn the units into condominiums instead, and pass the tax freeze onto the buyers. APPROVALS Because the Wigwam is a contributing structure in a preservation district, the city of Atlanta Urban Design Commission (AUDC) required Knight to submit restoration plans for approval prior to obtaining a permit. Prior to the formal process in city hall, input is also required from neighbors and the area neighborhood planning unit. The AUDC requirements applied only to the exterior of the building. However, to qualify for the state property tax freeze on the rehabilitation of a historic structure, Knight also had to comply with rules set by the Georgia Department of Natural Resources that pertain to the preservation and restoration of both interior and exterior historic features. DESIGN AND CONSTRUCTION Knight s goal was to redevelop the Wigwam into modern condominiums while preserving as much architectural detail as possible. The units original footprints and terraced entrances were kept intact, although both of the original three-bedroom, one-bathroom units were converted to two-bedroom, two-bathroom units. In addition to more typical considerations such as choices in lighting, paint colors, and appliances, Knight worked closely with the architect and general contractor to determine logistical factors to accommodate modern amenities in a historic building, such as how to fit washers and dryers into each of the units. Because the building s interior was in poor condition, all systems needed complete replacement when rehabilitation began in July 2003. The renovation involved going through each unit and adding new HVAC systems, installing separately metered electric and water services, and redoing the wiring and plumbing. An important design consideration was how to run the wiring and duct work in the least obtrusive manner, since the walls were inaccessible in the concrete building. In most cases, these services had to run along the sides of the walls and in corners. To accomplish this, Knight worked with the electrician and the HVAC contractors to identify the least obtrusive locations to place the wires and the ducts. The interior rehabilitation involved a combination of restoring historic features and renovating other components. The interior doors were sanded down and repainted, original door hardware was restored, and bathtubs were resurfaced. New elements included completely overhauled kitchens, with cabinets and lighting in a 1940s-era style. Bathroom renovations included new floor tile and tub surrounds, and replastered ceilings and walls. The building s original flooring consisted of pink-colored concrete. Because the concrete was difficult to seal and because of Knight s aesthetic vision for the interior spaces, the floors were covered with bamboo hardwood. On the exterior, the stucco was repaired and repainted, a new roof was installed, and the curved art deco style railings were restored by patching, sanding, and repainting rusted areas. The contractor re-created crumbling parts of the concrete windowsills and stair landings, and poured a new shared concrete courtyard behind the units. Each of the metal casement windows needed to be repaired, sanded, and repainted. New wooden garage doors, an exact match to the originals, were installed. Exterior doors and lights were repaired or replaced, and new trees, shrubs, and flowers were planted around the building. The construction and rehabilitation efforts were completed in April 2004. The MLK historic district rules restrict off-street parking to locations behind or beside a residence. The Wigwam contains four parking spaces in a garage located under the units. Though there is ample street parking around the property, Wigwam Associates acquisition of the two aforementioned neighboring properties will allow for the addition of a total of eight new off-street surface parking spaces behind the new duplexes. Thus, the development of the two adjacent lots will bring the parking ratio to one to one and into compliance with historic district parking requirements. MARKETING, TENANTS, AND MANAGEMENT In light of the high demand for condominiums when the property was purchased, Knight chose to redevelop the Wigwam Building as owner-occupied units rather than rental apartments. Sales prices were determined based on market research for the intown Atlanta condominium market. To advertise, real estate agents held open houses and ran ads in the local alternative weekly newspaper. As an incentive, a sales agent held a promotional open house with a drawing for a Vespa motorbike as a giveaway. Other promotions have included hosting an art show on the
premises. The awards from the AUDC and the Georgia Trust for Historic Preservation recognizing the success of the rehabilitation of the Wigwam have also helped generate favorable publicity. As a marketing tool to lure buyers, the property tax freeze awarded for the rehabilitation of the historic structure has also reduced property taxes for the first eight years from an estimated $3,600 annually to less than $1 when a homestead credit is applied. Buyers have tended to be in their 20s and 30s, mostly white, single or newly married, and creative types. When the condos went on the market in April 2004, the first four sold in the first three months, and six were sold within a year. However, as Atlanta s condo market reached a glut stage in 2005 2006, the last two units took longer to sell. After remaining on the market for two years, they went under contract in spring 2006. The developer has been running the condominium association for the past 24 months, but as of June 2006 is in the process of working with the owners so that they can take full responsibility of the organization and the property. EXPERIENCE GAINED Consider a fixed-fee agreement with a contractor. A cost-plus job requires that the developer exercise regular supervision and adequate control over the project to contain costs, and even then this can be difficult in a historic rehabilitation with many variables and unknowns. Knight calculated that a fixed fee with a contractor, while more expensive to start with, would have likely cost the same or less in the long run and saved time spent on supervision, too. Do your own permitting. As a one-person firm, Knight found an advantage to doing certain tasks herself, like acquiring permits. First, taking care of it herself helped contain costs. Second, doing the rounds for permitting in city hall allowed her to have face-to-face contact with municipal staff. Establishing these relationships, she found, was time well spent. The right programs can make a big difference. The opportunities to donate a facade easement and obtain a property tax freeze for the rehabilitation of a historic structure were important to the financial feasibility and marketing options for the project. Develop a good relationship with the urban design commission. The developer s strong relationship with the Atlanta Urban Design Commission helped move the development and permitting process along more quickly. And in 2005, the AUDC recognized the project with an urban design award. Patience and financial reserves are essential. Market fluctuations and other unpredictable forces are part of the risk in any project, but persistence and a financial cushion are important factors to coming out ahead.
PROJECT DATA LAND USE INFORMATION Site area (square feet/square meters): 4,971/462 Site area (acres/hectares): 0.114/0.046 Percentage complete: 100 Number of units: 8 Number of off-street parking spaces: 4 garage spaces/8 off-street surface spaces LAND USE PLAN Use Area (Square Feet/Square Meters) Buildings 4,076/379 82 Landscaping/open space 895/83 18 Total 4,971/462 100 Percentage of Site RESIDENTIAL INFORMATION Unit Type Number of Units Area (Square Feet/Square Meters) Sales Prices Unit A: Two-bedroom, two-bathroom 1 1,019/95 $259,900 Unit B: Two-bedroom, two-bathroom 1 1,065/99 $249,900 Unit C: Studio 1 542/50 $149,900 Unit D: Studio 1 515/48 $145,000 Unit E: Studio 1 552/51 $139,900 Unit F: Studio 1 518/48 $139,900 Unit G: Two-bedroom, one-bathroom 1 830/77 $205,000 Unit H: Two-bedroom, one-bathroom 1 797/74 $199,900 DEVELOPMENT COST Site acquisition cost: $406,000 Construction costs: $570,773 Soft costs: $286,375 Total Development Cost: $1,263,148 DEVELOPMENT SCHEDULE Site purchased: February 2003 Construction started: April 2003 Sales/leasing started: April 2004 Project completed: April 2004 DRIVING DIRECTIONS From Hartsfield-Jackson Atlanta International Airport: Take Interstate 85 north to downtown Atlanta and take the Freedom Parkway exit. Go to the first light and make a right onto Boulevard NE. Go to the third light and turn left on Auburn Avenue NE. Pass Martin Luther King, Jr. s birth house (located at Auburn Avenue and Howell Street NE). The Wigwam Building will be about a block away at the corner of Auburn Avenue and Randolph Street NE. Driving time: Approximately 18 minutes in nonpeak traffic. Deborah L. Myerson, report author Jason Scully, editor, Development Case Studies David James Rose, copy editor Joanne Nanez, online production manager 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 2006 by ULI the Urban Land Institute 1025 Thomas Jefferson Street, N.W., Suite 500 West, Washington D.C. 20007-5201
Built in the International Style, the 7,600-square-foot (706-square-meter), eight-unit Wigwam Building is about a mile (1.6 kilometers) from downtown Atlanta, Georgia, in the historic Martin Luther King, Jr., Landmark District.
Local real estate developer Cornelius King built the structure to house his family in 1940. However, the once-thriving African American neighborhood where the project is located fell into a period of social and financial disinvestment and the Wigwam Building became a rental property.
Named for the steel cutout Indian that adorns the rooftop, the Wigwam Building was bought and renovated into eight condominium units in either two-bedroom or studio configurations by J.C. Knight properties.
The curved art deco?style railings, one of the building?s distinctive features, were restored by patching, sanding, and repainting rusted areas.
The rehabilitation of the building included re-creating parts of the concrete windowsills and pouring a new shared concrete courtyard behind the units.
The interior rehabilitation included sanding down and repainting interior doors, restoring the original door hardware, resurfacing the bathtubs, and adding new floor tile and tub surrounds.
Wigwam Building site plan.