Developer Hoping Apartment Project Fills Downtown Need

By Christine Laue, Omaha World-Herald, Neb.

Feb. 1–A Kansas City, Mo., developer plans to renovate a historic downtown building south of the Omaha Civic Auditorium into affordable apartments.

Gary Hassenflu, president of Garrison Development, bought the Logan Building at 1802 Dodge St. for $1.3 million and plans to invest $13 million to $15 million in renovations.

The building, which has been vacant for two years, will feature 105 studio, one- and two-bedroom apartments. Most units will be studios, with rent starting at $475 to $500 each, Hassenflu said.

The project would serve what Hassenflu said is an unmet demand in downtown Omaha for work-force housing — everyone from city workers and teachers to police officers and firefighters, especially young people starting out.

“We did a market survey that showed there was a strong need,” he said. “And you also have the new arena and the workers that work there, you have the new Union Pacific building, you have the First National Bank — a lot of major employers that have workers that would like more convenient housing.”

Hassenflu is seeking tax-increment financing, along with affordable-housing tax credits and bond financing.

The Nebraska Investment Finance Authority awards tax credits to deserving projects, and the project owners transfer them to investors, who use them to offset their federal income tax.

The project is not Section 8 housing or public housing in which rent is partly subsidized by the federal government. Instead, the subsidy goes to the construction cost of the project in exchange for a commitment for reduced rents over a 30-year period.

“The advantage of that is we don’t have to take on so much debt, and we pass on the savings in low rent,” Hassenflu said.

Eligible tenants must earn no more than 60 percent of the area median income, NIFA officials said.

That generally means a one-person household making $30,000 or a two-person household making $33,000 could qualify, Hassenflu said.

Hassenflu’s company has projects in six states and specializes in conversions of historical buildings into multifamily affordable and market-rate housing by obtaining financing from city, state and federal government entities as well as private conventional debt. Most recently, the company finished a $39 million, 224-unit conversion of Kansas City’s Cold Storage building into market-rate and low-income lofts.

It also has developed City View Apartments in Wahoo, Neb., and Maple Ridge Apartments in Chadron, Neb. Both are low-income family housing.

The Logan Building project is the company’s entry into the Omaha market, he said.

“I’ve been looking at Omaha for years, and this is the first opportunity to get involved in a building that fit our requirements in terms of location and price and condition,” Hassenflu said. “It’s in poor condition, but at the same time, it’s recoverable.”

He said the building will be gutted and fitted with all new electrical, plumbing and windows, which will look like the originals. Each unit will include washer and dryer hookups and carpeted floors, and the renovation will restore some of the more ornate features.

Hassenflu expects to start construction by May and to finish and be ready for tenants by April 2009.

According to Douglas County assessor records, the building was constructed in 1918. It formerly was the headquarters of the 30-hotel chain of Eppley Hotels and later was converted to apartments.

Lojean Inc., a firm co-owned by John Chudy, bought the Logan in 1981 for about $850,000, according to World-Herald files.

Chudy sold it to a group of investors in 1986 or 1987 for $1.465 million and bought it back for $700,000 in 1997 after the investors lost the building in a foreclosure, said Joel Chudy, John’s son, who handles his business.

Numerous businesses have operated out of the building’s street-level offices, including American Savings, a bar, dry cleaner, beauty salon, off-track betting business and a pizza parlor, Joel Chudy said.

Cashmaster Loan Corp. opened a pawnshop in 1991 and was the most recent business to operate there, leaving in 2000.

The building was listed on the National Register of Historic Places on July 22, 2005.

Hassenflu’s purchase of the Logan Building was completed in December. High downtown employment numbers played into his decision to buy the building, he said, and if downtown’s development continues, his company might be interested in doing more.

“We’ve always had an eye on Omaha, and we’ll be looking for more opportunities,” he said.

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