The Blue McKenzie project, an eight-story residential building with 84 market rate units and ground floor commercial space was planned to be located in a vacant lot at 740 A Street (between the Springfield Post Office and the former Buick Building). The Springfield Economic Development Agency (SEDA) Board and staff have been working on this project since 2019, supporting the development with agreements for both a $2.1M predevelopment loan and a $10M construction loan, funded through Urban Renewal dollars.
On June 26, 2023 the SEDA Board moved to restart the project due to volatility in the lending market and limited funding pathways to pay for the remainder of the project’s construction. The market and lending conditions have changed significantly since the Project predevelopment work began in Spring 2021 due to factors outside the project’s control. Construction costs have risen more than ten percent since May 2021, and in 2023, the Federal Reserve has raised interest rates to a fifteen-year high of 5.25%, which impacts SEDA’s ability to provide a construction loan and the developer’s ability to secure construction financing for the project.
Projects like Blue McKenzie are large-scale and complex and require constant management of changing conditions over time so that viability is regularly reviewed.
While the market volatility make this project a challenge, the Blue McKenzie project goals are evergreen and continue to be supported by the SEDA board for housing projects in downtown in the future.
- To create proof of concept to communicate viability and profitability of a new construction type/height in Springfield.
- To provide a market rate, high density, housing project to serve as a comparable to financial institutions approving similar future projects. This project is intended to create a market comparable, which does not exist today. By proving that it can be built, and it will be occupied, future developers and banks will find more confidence and see less risk in their ability to build and pay for similar projects.
- To create a dense development in Downtown Springfield, which spurs subsequent private, taxable, development and increases market rate housing stock.
Increasing available housing options continues to be a significant need in Springfield and across the broader region to meet community members’ needs now and in the future. Urban Renewal dollars are intended to be used for the redevelopment of Downtown Springfield and creation of new, taxable, development. The purpose of urban renewal is to use the Springfield Economic Development Agency’s (SEDA) funds to help developers, property owners, and businesses realize the potential of their sites in Downtown Springfield. The district was formed because the market analysis and data reflected a neighborhood of our community that would not be able to redevelop without public partnership.