Update: Final Preparations Begin For Cupples 7 Demolition

Update 6.27.2013

As part of the continuing effort to save Cupples 7, City leaders met with the last remaining developer interested in restoring the historic building. At the meeting last week, both parties agreed that Vertical Realty Advisors, LLC’s proposed finance structure would not fit. Vertical is trying a different finance approach, but both parties agree that it is a long shot. 

Assuming Vertical Realty cannot pull its financing together by tomorrow, demolition will begin next week. It will take about three months to complete.

Under the proposal by Vertical Realty, the City would have had to become the Master Tenant of Cupples 7, meaning the City would have had a moral obligation to pay the unsecured debt if the development failed. That unsecured debt would have nothing backing it up other than a promise of future payments – by the City – if the developers ran out of money. If the City could not meet that financial obligation, it would default on its promise and trigger a downgrade in its credit rating.

“We appreciate Vertical Realty trying hard and trying an imaginative approach to saving this building. But, we cannot put either the taxpayers or the City’s credit rating at risk,” said Mayor Francis Slay. “Vertical Realty’s finance structure might work for public projects like new police stations or college dorms, but it does not fit here.” 

According to the City building commissioner and an independent engineering report, Cupples 7 is an imminent threat to public safety. City engineers and others who have inspected the building are afraid that it will collapse and hurt someone.

The City Treasurer’s Office purchased the promissory note for Cupples 7 on Friday, June 7, 2013, from Montgomery Bank for $850,000 in order to fulfill a contract negotiated by the previous treasurer.

“We are comfortable the City exhausted every avenue for redeveloping Cupples 7 before demolition,” said City Treasurer Tishaura Jones. “It is unfortunate we are forced to demolish a historic building, but our first responsibility is always to ensure the safety of our City."

The City’s building commissioner issued an emergency demolition permit on May 22, 2013. Spiritas Wrecking Company, which was awarded the $482,500 demolition contract through an open bidding process, has begun preliminary work on the site. The company will begin to move heavy equipment to the site over the next few days.

Spiritas Wrecking Company does not anticipate new street closures. Right now, 11th Street from Spruce to Poplar, and Spruce between 10th and 11th Streets are closed.

Background: Even though the building was privately owned, the City did due diligence to help save Cupples 7 by issuing a Request for Proposal in November, 2012 to help the private owners find a developer. No one came forward. The City then reissued the RFP in January and further publicized its efforts to find a developer, while making clear the conditions of the building and the requirements in order to purchase the property.

About Cupples Station: Cupples 7 is a seven-story brick building and is the only unrenovated structure remaining in the historic Cupples Station complex, which was built between 1894 and 1917. When Mayor Slay took office, there were nine of the original Cupples buildings standing. All of them, except Cupples 7, have been renovated into apartments, offices, restaurants and a hotel. The buildings were constructed by Eames and Young for Samuel Cupples, a woodenware merchant and business partner of Harry and Robert S. Brookings. The buildings are on the National Register of Historic Places. Cupples 7 was condemned by the City in 2008.

 

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One of the last two remaining developers with interest in saving the Cupples 7 building has decided against buying it because of the high cost of stabilizing the structure and the imminent threat of collapse. Cupples 7 is slated to be torn down to protect public safety unless a developer can both purchase the building outright and immediately stabilize it. Given the building's weakened condition and threat to public safety, time is running out.

The City Treasurer purchased the promissory note for the building on Friday, June 7, 2013, from Montgomery Bank for $850,000 in order to fulfill a contract negotiated by the previous treasurer.The treasurer's office is now liable for the property.According to the City Building Commissioner and an independent engineering report, Cupples 7 is an imminent threat to public safety.City engineers and others who have inspected the building are afraid that it will collapse and hurt someone.

Spiritas Wrecking Company, which was awarded the $482,500 demolition contract through an open bidding process, has begun preliminary work on the site.It will take roughly three months to complete demolition.

The City and the City Treasurer's Office, along with the St. Louis Development Corporation (SLDC), continue to work on a dual path to identify a developer with the ready cash to buy and stabilize Cupples 7.

Reed Realty Advisors, based in Little Rock, Arkansas, expressed serious interest and showed the ability to finance and finish the project on its own.However, when Reed Realty Advisors twice brought its team to St. Louis to tour Cupples 7 and the nearby Westin Hotel – also a Cupples Station building – it discovered that initial estimates to stabilize the building were underestimated.

"We estimate that it would take $2 million just to stabilize the foundation, plus an additional $1 million to secure the brick walls," said Scott L. Reed, managing director of Reed Realty Advisors."We are not going to make an offer on the property because of the high cost of stabilizing it.Secondarily, the property is in an advanced state of disrepair and appears to pose an immediate risk to public safety and neighboring properties."

That leaves one last interested party. The City still hopes the development group Vertical Realty can finance and build the project with available incentives, but without government guarantees.

"As long as the City is not included in the financial structure, which would put taxpayers at risk for this development proposal, we are very happy to negotiate a deal," said Treasurer Tishaura Jones.

"The City will offer every incentive and available tool to make this deal happen, including tax increment financing," said St. Louis Mayor Francis Slay. "But, we will not put the taxpayers at risk by guaranteeing the project's debt. I would not do that for Ballpark Village, and I will not do that for this project.I hate to see any historic building razed, but the overwhelming concern for public safety has to take precedence."

As publicly stated several times, the City will continue to diligently work through any and all proposals until the demolition date has arrived to restore public safety to the immediate area.

Background:Even though the building was privately owned, the City did due diligence to help save Cupples 7 by issuing a Request for Proposal in November, 2012 to help the private owners find a developer.No one came forward.The City then reissued the RFP in January and further publicized its efforts to find a developer, while making clear the conditions of the building and the requirements in order to purchase the property.

About Cupples Station: Cupples 7 is a seven-story brick building and is the only unrenovated structure remaining in the historic Cupples Station complex, which was built between 1894 and 1917. When Mayor Slay took office, there were nine of the original Cupples buildings standing.All of them, except Cupples 7, have been renovated into apartments, offices, restaurants and a hotel.The buildings were constructed by Eames and Young for Samuel Cupples, a woodenware merchant and business partner of Harry and Robert S. Brookings.The buildings are on the National Register of Historic Places.Cupples 7 was condemned by the City in 2008.