What are the Murillo Flats?
The Murillo Flats were a historic building located in downtown Des Moines, Iowa. The building was part of a rehabilitation project and qualified as one of the biggest rehabilitation projects in 2008. The building was relocated because the original property was bought by a company that wanted to construct several new buildings.
The Move
The Murillo Flats were cut from their foundation and the preparations took a total of 17 days. The building was placed on a series of wheels and moved several blocks away to 611 16th Street in Des Moines, Iowa. The Flats are now listed on the National Register of Historic Places.
A Look into How Rehabilitation Projects Work
After the move was completed, the developer, Ryan Galloway, needed to obtain funds to complete site improvements and rehabilitation at 611 16th Street. Here’s how the funding works for a rehabilitation project.
On April 25, 2011, the City Council approved $250,000 of a Community Development Block Grant for Galloway’s company called Murillo Flats, LLC. During the meeting in April, the City Council heard questions about the timeline of the project, meetings within neighbors, and improvements being made to the Flats.
Prior to the meeting, Ryan Galloway purchased the Murillo Apartment Building at 611 16th Street for $175,000. The cost of rehabilitation along with site improvements totaled about $365,000, and the improvements would satisfy Plan and Zoning Commission requirements. After the improvements are made, Galloway will meet with the Permit and Development Center and Neighborhood Conservation Inspector to make sure the improvements meet code.
In order to save operating costs, Galloway opted out of a developer fee and will manage the building himself, and he will have $100,000 in owner equity. The mortgage and construction financing was borrowed from Bankers Trust with a 6% interest rate for five years, and the loan is required to be refinanced in 5 years—a normal condition for such projects today.
In total, Galloway received $175,000 from First Mortgage, $210,000 from City CDBG Mortgage, $40,000 from a City CDBG Lien, $100,275 from owner’s equity, and $38,025 from Enterprise Zone Equity—reaching a total of $563,300.
The City Council approved a 10-year tax abatement for the Murillo Flats if Galloway presented a certificate of occupancy by the end of 2011. The certificate of occupancy is possible because of conditions under the City’s CDBG loan. Four units in the Flats will be rented to low income families with restricted rent for the next five years. Two of the units will have rent of $650 per month with an annual increase later determined by HUD. The other two units will have rent of $875 per month with a 3% annual increase.
Because of the five years of affordable rent, the City will forgive $40,000 of the funding during the five years. The other $210,000 is paid at 0% interest over the next 20 years. Galloway will receive State Historic Tax Credits after he has maintained ownership for five years.
Source: https://www.dmgov.org/Government/CityCouncil/Communications/2011/11-404.pdf
