The long-neglected exterior of Ypsilanti’s historic Thompson Block speaks to the years of barriers standing between its potential and its redevelopment.

The latest hurdle is the global financial crisis, which left owner Stewart Beal with architect renderings for retail space and apartments in the Depot Town building, two leases for tenants who still want to move in and partially completed work - but no lender to finance the $3.5 million project that he started in 2006.

Now Beal is repositioning the financing of the project, relaunching construction on the property and reopening his leasing office by Sept. 1.

And he says that the Thompson Block - proposed as the biggest redevelopment project in the Depot Town area - will be move-in ready by September 2010.

“We’ve started construction and we’re never going to stop,” Beal said. “… Right now we’ve got six people working in the building. As soon as we get our loan, we’ll have 30 people.”

Beal’s plans remain the same: To restore the 1860s-era, 30,000-square-foot building that suffered from years of neglect under a previous owner resulting in severe structural damage. He’ll turn the lower level - including a basement with daylight windows- into retail space, the upper two floors into 16 luxury apartments and the entire building into a showcase for Depot Town.

The concept was enough for Beal to attract a lender in early 2007, when Republic Bank committed to the project with some conditions - like clearing the title and leasing at least 60 percent of the first floor space.

Beal met those conditions by early 2008, but the massive changes in the banking industry had started. Republic was sold to Citizens Bank, which closed its commercial real estate loan division, and the loan evaporated.

Beal attempted to secure another lender as the capital markets froze and the Michigan economy repelled many investors.

“I spent most of the winter calling most of the banks in the Midwest,” he said. “Big banks, little banks, I even tried credit unions.”

At the same time, he was finding deals in buying foreclosed houses in Ypsilanti, which he’s also been renovating while seeking the Thompson Block financing.

He came close to a deal with KeyBank to write the loan, which at that point still looked like a traditional proposal: 80 percent loan-to-value, with 20 percent put up as equity.
But a staffing change at the bank stalled that loan.

Now, Beal says, he’s going to increase the amount of up-front equity to increase the chances of securing a loan that will allow the project to be completed by his deadline.

“We’re going back to the original investors and asking for more money, and new investors asking for new money,” Beal said.

Beal Construction will be putting up much of that funding, he added, supplementing funding from the eight original investors.

When he has $1.6 million in hand, Beal will seek another $1.6 million as a loan to finance the remaining construction.

Reducing the risk to a lender while also setting the construction in motion should signify his ongoing commitment to the Thompson Block, he added.

Finishing the work is a big deal for Depot Town, said Linda French, owner of the nearby Sidetrack Restaurant, since it will expand the district.

“This is tremendous for all of us here,” she said. “ … This will add to the (Downtown Development Authority) base and bring in potential customers.”

Meanwhile, Beal said his original leases with Broughton Music and bar operator Andy Garris remain intact, leaving about 8,500 square feet available for additional retailers.

Beal said the Thompson Block is his top priority, due to its significance to the community and investor commitment. He said he believes the project remains viable.

“This project will be greatly successful for the long term,” he said. “It’s just about how to get from here to there.”

Photos by Robert Ramey