Northern Hotel operators earn tax credits

Retail tenants tough to find

FORT COLLINS — Owners of the Northern Hotel in Fort Collins are breathing a bit easier after marking the first anniversary of the 100-year-old hotel’s redevelopment.

The $11.5 million dollar restoration project was spearheaded by Funding Partners for Housing Solutions, a community development financial institution dedicated to developing affordable housing.

The project restored the landmark hotel, providing 47 apartments reserved for people over 55 years old who earn less than 40 percent of the average median income — $17,040 in Larimer County. Nearly 13,000 square feet of retail space anchor the development on the ground floor.

About $4.5 million of the project’s funding came from the U.S. Department of Treasury’s tax credit program. To maintain the accompanying tax breaks, each of the 47 units in the hotel had to be leased at least once before the end of 2002 — a task that by midsummer seemed daunting, when only 20 units were rented.

“We weren’t filling the remaining 27 units as fast as we had hoped,´ said Joe Rowan, senior loan officer with Funding Partners.

The first 20 apartments to be occupied hold Section 8 designations from the U.S. Department of Housing and Urban Development. With a Section 8 voucher, rents are limited to no more than 30 percent of the resident’s income, with the remainder paid by federal funds allocated to local housing authorities.

The individuals who qualify usually carry the vouchers, but the Northern Hotel project earned project-based Section 8 designation.

Rowan said after a sustained lull in interest, Funding Partners went back to the Fort Collins Housing Authority to request the remaining units carry the Section 8 designation as well.

With 946 people on the Housing Authority’s Section 8 waiting list, the units began to fill quickly.

Rowan said there are only five units currently available, vacated by renters who decided not to renew their leases. As a result, the Northern reached the goal of renting all the units at least once in this year, thus maintaining the tax credit benefits.

But while the residential aspect of the project can finally be viewed as successful, the commercial space is filling slowly, with less than 35 percent of the available space occupied by three retailers.

“I’ve had triple the activity and interest than I’ve had in any other location I show in Old Town,´ said James Day, broker with Wheeler Commercial, the handling agency for the Northern Hotel’s commercial space. But interest and activity haven’t led to signed leases.

Day said that over the past year several nearly completed deals withered at the last minute. And with retail vacancy rates at 8.3 percent, many potential lessees opt for locations that don’t require tenant finishing.

“The owners believe it’s worth waiting for quality tenants that can benefit from the location and will pay the cost for it,” Day said.

Ridvan and Tami Uctuk, husband and wife proprietors of Puzzlering, were willing to pay the finishing costs for the visibility of the downtown location. After two years operating a dot-com business that sells Turkish jewelry and rugs, sales were good enough to move to a brick-and-mortar establishment. Tami Uctuk said they looked at a number of available spaces in Fort Collins, but the Art Deco restoration and the prime location kept drawing them back to the Northern Hotel.

The Uctuks spent $20,000 finishing the 600-square-foot space and expect to recover the cost during their five-year lease. “Business is not bad, but it’s not great,” she said. “We do get a lot of walk-in traffic. But hopefully they’ll fill the other spaces soon, and we’ll see more of that.”

And according to Day, that may not be far off. A restaurant, Spoons Soups and Salads, signed a lease last week to occupy a 2,225-square-foot space on Walnut Street, bringing the total leased commercial space to about 50 percent. A wireless dealer has a pending lease; a clothing retailer, another restaurant and a gift shop are also closing in on deals that would complete the success of the Northern Hotel’s redevelopment.

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