|By P.J. Lassek, Tulsa World,
Okla.McClatchy-Tribune Business News
Apr. 11, 2007 - Loan in works to fund demolition
The Tulsa Industrial Authority is to vote Wednesday on a loan that would finance the demolition of the blighted Camelot Hotel, a project that is estimated to cost about $1 million.
Mayor Kathy Taylor announced the plan Tuesday during a speech at the Tulsa Press Club.
"Many have worked on this, but there has been one tireless leader who has said we must make this a priority, and that is City Councilor Cason Carter," Taylor said.
Carter said the Camelot property affects all parts of his District 9 and the city as a whole.
"The Camelot has been a priority with me from day one. It is dilapidated; it's an eyesore and a safety hazard for our community," Carter said after Taylor's speech.
Carter said the plan would give the hotel's owners the funds they need to raze it, stay in compliance with city ordinances and state laws, and address the community concerns.
"All along the goal was to reach a cooperative solution. The key question was how the remediation would be paid for," he said.
The Camelot, just west of Peoria Avenue and north of Interstate 44, was built in the 1960s to resemble a castle, complete with a moat, drawbridge and turrets.
A landmark in the 1960s and 1970s, the hotel became famous for having among its guests Elvis Presley and Presidents Richard Nixon and Gerald Ford. It was featured along with other Tulsa landmarks in the movie "Tex," based on the novel by S.E. Hinton, a Tulsa writer.
The Maharishi Ayur-Ved University, an institution that teaches transcendental meditation, bought the aging building in 1993 for $1.15 million with the intention of transforming it into what the organization called a "holistic, meditation-friendly" hotel.
But by 1996 the Tulsa City-County Health Department had condemned the building for health and safety code violations. Representatives of the Maharishi have said for years that they had a buyer for the building, but it never sold and it continued to deteriorate.
Economic Development Director Don Himelfarb said that everyone agrees that the building is not salvageable and has to come down, but that's expensive. The demolition is estimated to cost about $1 million, he said.
Representatives of the Maharishi have told the city that the building is the sole asset of a 501(c)(3) entity and it has no funds for demolition or any bank willing to lend the money with no stream of revenue to repay the loan, Himelfarb said.
"That may or may not be true," he said. "But the city needed to rid the safety hazard from that area. God forbid a huge fire occur in that building; the surrounding neighborhood would be destroyed."
George Hooper, a Tulsa attorney who represents the Maharishi, said his client was trying to be a good corporate citizen and do what it can "to work with the city in resolving a problem the city believes exists."
Hooper said the Maharishi had agreed to the loan terms.
Himelfarb said the Tulsa Industrial Authority would use its funds for the loan and charge market rate interest and closing costs. Final approval of the loan will take place at closing.
Himelfarb said the loan agreement would give the city a first mortgage on the property, and the Maharishi would have one year from the time of closing to repay the money. An additional stipulation is that demolition will begin immediately, he said.
"I told these guys, don't misread my business card; this isn't an economic development play, this is a public safety play," he said. "But, granted, out of it we get economic development."
The loan money will be put into an escrow account, which the authority will tap to pay the demolition contractor for each phase of the work until the job is complete, Himelfarb said.
In addition, the Maharishi must hire one of three demolition contractors that the city has recommended, Himelfarb said.
If the Maharishi sells the property within a year, then the loan can be repaid and the new buyer will redevelop the site, he said.
"There is no question that there's interest in that site," Himelfarb said.
Himelfarb sees the redevelopment of the site as a catalyst for extending development of the Brookside area between 41st and 51st streets, he said.
The current asking price for the property is about $3.5 million.
Hooper, however, said the uncertainty of the alignment for the widening of I-44 has made it difficult to find a buyer. He said he had yet to see plans for that alignment.
Himelfarb said that if the loan isn't repaid within a year, the city can foreclose on the property and turn it over to the Tulsa Development Authority for redevelopment.
Himelfarb said the loan agreement came about after the Maharishi realized that the city was serious about condemning the property as an alternative.
"We told them there is no negotiating. They either sign the term agreement or we're condemning it, as painful as that would be for the city," he said.
If the city condemned the property, it would have to pay for the demolition out of its general fund, which is strapped, he said. It could take years to put that money back, he added.
Hooper said the Maharishi agrees that the loan is a better solution then going through condemnation.
"It's always better to resolve something working together, than working in opposition," he said.
P.J. Lassek 581-8382 firstname.lastname@example.org
What happens now?
--Tulsa Industrial Authority approves loan.
--Closing on loan agreement, which includes selection of demolition contractor and a remediation and demolition plan.
--Authority puts demolition money in escrow.
--Remediation and demolition begins by midsummer. Work should take about 45 days.
--Authority pays demolition contractor directly as work progresses.
--Repayment of loan, plus interest, must be made within 12 months.
Copyright (c) 2007, Tulsa World, Okla.
Distributed by McClatchy-Tribune Business News. For reprints, email email@example.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.