Mixed-Use Heaven: Downtown Tulsa Development Covers All Bases

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The Mayo 420 Building, a new mixed-used development in downtown Tulsa, Okla., is truly a place where people can live, work, eat – and exercise.

The $34.5 million project, funded in part by federal new markets tax credits, contains 67 market-rate apartments, offices, a YMCA, and a restaurant in an historic 10-story building. Wiggin Properties, LLC completed construction in 2010 and achieved full lease-up by August 2011, says company President Chuck Wiggin.

“One thing we learned from this,” he said, “is that the demand for downtown housing was every bit as strong as we could have hoped for – perhaps stronger.”

“These are a mix of one- and two-bedroom apartments that address a cross section of downtown living. It’s everything from young professional singles to small families to middle-aged singles, retired couples, and working couples. About half our tenants are over 40 and the other half under 40.”

‘Pioneer’ Development

Mayo 420, located at 420 South Main, has been what Wiggin calls a “pioneer” in creating a critical mass of housing in downtown Tulsa and helping spur subsequent real estate projects that now keep the downtown’s streets alive after 5 p.m. But, as Wiggin admits, “Nothing about this deal was simple.”

For starters, the building itself – once a gem in the city – was a white elephant. The structure was constructed in three phases. The Mayo Brothers, owners of an early furniture store, began with a five-story structure in 1910 during Tulsa’s oil boom. They added a five-story wing in 1914 and five more floors in 1917. The Mayo Furniture store relocated from the building in 1921, making way for other retail tenants; oil companies occupied much of the office space above. In 1978 the Mayo family sold the property, and the building was closed and vacated in 1994. After that the building deteriorated rapidly.

According to Wiggin, the keys to the building’s redevelopment were the city’s vision and support plus federal tax credits. “It was a very intentional thing on the city’s part to encourage our project and other projects that would bring housing downtown,” he says.

City Assistance, Tax Credits

The city established a $10 million Vision 2025 Housing Fund to offer incentive loans to help finance new residential projects in downtown Tulsa. The city issued a request for proposals and Oklahoma City-based Wiggin Properties responded. “We received $3 million for our project in the form of a 10-year, interest-free loan,” says Wiggin.

The city also approved a tax abatement for Mayo 420 and allowed Wiggin Properties to construct a walkway from the building’s third floor – where the apartments start – to a city-owned parking garage across an alley where Mayo residents can rent parking.

The funding package for the project was complicated. National Trust Community Investment Corporation, based in Washington, D.C. provided an allocation of federal new markets tax credits for the development and monetized the new markets tax credits and the federal and state historic tax credits through one of its funds. The NMTC financing from NTCIC was in the form of both equity and debt.

Wiggin Properties arranged a conventional construction loan with an option to convert it to a seven-year term loan after construction was completed. But by that time, Wiggin says, “we realized there was a much better option for interest rate and maturity if we could get the HUD office to approve a 223(f) first mortgage loan.” The company was successful, after getting waivers, in obtaining a 35-year Section 223(f) mortgage insured by the U.S. Department of Housing and Urban Development that will carry the project well past its seven-year new markets tax credit compliance period. But a few issues had to be ironed out before HUD approved the loan. One was to get HUD comfortable with the transaction’s master lease structure utilizing historic rehabilitation tax credits. A second was that about 30% of the building was non-residential space, generating income from community and commercial uses.

Mix of Uses

The building’s ground-floor has a restaurant, a popular downtown lunch spot called Billy’s on the Square.

The YMCA occupies 25,000 square feet of space on the lower level, first, and second floors, containing a fitness center, administrative offices, and other facilities. The second floor also contains offices for several small businesses and Wiggin’s management office. The apartments are located on the third through tenth floors.

The building also has a community room on the second floor and a rooftop terrace open to all tenants. The YMCA, which relocated from another downtown building, opened its new fitness center on January 1, 2010. Residential tenants began moving in during the spring of 2010.

The Mayo 420 Building has won several awards, including a 2012 J. Timothy Anderson Award for Excellence in Historic Preservation from the National Housing & Rehabilitation Association.

Wiggin says his company has another, similar new markets tax credit venture in the works. “We are planning another project very much like this two blocks away. We have a building under contract and we’re working hard to get it started later this year.”