‘Preservation Genius’ Works Wonders Developer Helps Turn Urban Eores Into Housing Projects, Retail Centers

Randy Alexander dubs it the new urban village.

Once-vacant downtown buildings - a warehouse in Cleveland, a 1920s utility building in Fort Worth, Texas, a high school in South Bend, Ind. - have been rehabilitated and transformed into housing and retail centers.

Tax breaks and low-income credits make the apartments affordable to single parents, retirees and entry-level professionals.

“Every one of our developments is like a small town,” said Alexander, founder of Alexander Co., a company that has created affordable housing and thriving retail stores in blighted neighborhoods.

Urban redevelopment requires a mix of public and private financing - and a vision of what formerly-proud buildings might look like with a multimillion-dollar makeover. Alexander’s associates say he supplies the vision.

“He’s a preservation genius,” said Michael Matts, director of programs in the Chicago office of the National Trust for Historic Preservation. “He’s developed a national reputation for tackling properties no one else wants to touch and turning white elephants into cash cows.”

Alexander’s biggest Wisconsin project - the $16 million conversion of three 1880s Fox River paper mills - turned an abandoned Appleton eyesore into a waterfront community of 175 apartments and townhouses in 1992.

The city was about to pay $300,000 to have the buildings razed when Alexander and a partner, the housing division of areas Wisconsin Power & Light Co., stepped forward.

In exchange for new housing and a new property tax base, and preserving a symbol of the city’s papermaking heritage, Appleton issued tax exempt-bonds, made a $600,000 loan and provided $600,000 in tax incremental financing.

Typically, projects also use Community Development Block Grants, municipal tax abatements, energy-conservation grants, federal low-income tax credits and historical tax credits.

Alexander is “probably the most aggressive and sophisticated developer we have in the state in historic preservation,” said Jeff Dean, administrator of Historic Preservation for State Historical Society of Wisconsin. “He saves them rather than replaces them with cookie cutter buildings.”

He started in 1980 as a 25-year-old who had already tried his hand at renovation work in Chicago and a short stint in residential real estate sales in Madison. Since then, Alexander, 42, has overseen $250 million worth of developments.

In Cleveland, Alexander is leading the $28 million conversion of the National Terminal Building, a historic warehouse on the city’s waterfront that once served Morton Salt, Hormel, Gerber and Nestle. The warehouse had been vacant at least a decade while other development plans came and went.

The building is being broken up into 249 one-and two-bedroom apartments, with 45 percent set aside for tenants earning no more than 60 percent of Cuyahoga County’s median income - $23,160 for a family of three.

In Racine, Wis., Alexander recently finished the $8.3 million transformation of a former J.C. Penney department store and two other Main Street buildings. Craftsmen refurbished plaster and tin ceilings and restored terrazzo floors.

The affordable and market-rate apartments vary by as much as 35 percent in rent, but not a lick in style.

Bridget Bungert, 27, a court reporter-cum-deli owner, has a Lake Michigan view and hopes of opening a restaurant across the street.

“You never know what to expect with affordable housing. My mother thought of the projects. I thought only the market ones would be nice, but all of them are,” she said. “It’s a real nice diversity of people.”

The cornerstone of Alexander’s financing mechanisms is the tax credit that Congress created in 1986 to encourage historical preservation.

“If not for those credits, it wouldn’t make sense to even begin to look for the gap financing tools necessary for an inner city project,” Alexander said. “It would be a death knell for the majority of the projects if it were to go away.”

In Toledo, Ohio, the tax credits for the conversion of a former Macy’s store are going to Alexander’s project partner, Housing Horizons LLC, a Dallas-based subsidiary of Kimberly-Clark Corp.

Housing Horizons receives federal low-income residential tax credits that allow limited partnerships to write off up to 90 percent of their housing investments over 10 years, and historical tax credits amounting to 20 percent of the cost of rehabilitation, taken in the first year.

“We were able to simultaneously reduce our tax rate and provide a very needed social benefit,” said Tony Gamron, president of Housing Horizons. “There isn’t a city in America that has enough affordable housing.”

The company counted on the first two advantages, but was surprised by a third - the rebirth of a downtown.

“Most of Alexander’s projects turn out to be cornerstones of downtown redevelopment in the cities where they do these projects,” Gamron said.

“Once they get one project down, it’s like a domino - you see another down the block. Pretty soon the whole downtown is being revitalized,” he said.

The company’s active avoidance of economic segregation is important to another financial partner, the Wisconsin Housing and Economic Development Authority.

“He debunks this view that you have to have a development where everyone is in the same tax bracket,” said Wyman Winston, director of WHEDA’s emerging markets. “You can’t have a community where everyone is a laborer or a CEO.”

“We don’t have any problem with people making a quarter of a million dollars living next to someone making $16,000 a year, or a single mother living next to a married couple. A racial mix,” Alexander said. “They create, in themselves, the neighborhood.”

Rents in the 106-unit Electric Building in downtown Fort Worth range from $425 for a one-bedroom affordable apartment to $2,000 for the penthouse. The 18-story former home of Fort Worth Power & Light opened in December after receiving a $9.85 million make-over.

The Alexander Co. also renovated a hotel in Moline, Ill., and a knitting mill and high school in South Bend, Ind.

“He’s giving the preservation movement, nationally, real examples that show the doubting Thomases, the naysayers, that you can make your community more vital,” Matts said.

“He takes tough buildings and makes them work financially and comes up with creative living spaces,” he said. “It’s that combination that makes it so successful.”