The luxury Lower Garden District apartment complex, owned by C.G. Multifamily New Orleans L.P., began mold abatement procedures in early October and hurricane-related repairs to the parking garages earlier this month, says Laird Sparks, an owner representative. The overall renovation of the complex, which will include new windows, doors and balconies, replaced stucco siding and added additional waterproofing measures, should commence by late November, he says. Repairs to the 11 buildings in the Saulet will be made in phases so residents can sign new leases as repairs to each building are complete.
The 703-unit apartment complex has been closed since Aug. 1, when about 60 remaining tenants were forced to move out with less than a month's notice. Evictions were announced after an engineering team hired by the property owner concluded that the complex had serious structural defects that could pose safety risks, according to Saulet spokesman Greg Beuerman.
While the company is shooting for reopening some buildings by the first quarter of 2007, Sparks says, "It's kind of like building a home. You set a timeline for when you want to move in, but things can come up along the way and push the date back."
As the reopening date draws closer, the company will ask former tenants if they'd like to sign a new lease. "Clearly, we will do everything in our ability to take care of our residents," Sparks says. They may be taken aback by the new rent, however, which he says could increase by as much as 30 to 50 percent.
"In our business plan, we will have to raise rents," Sparks says. "Not because of construction costs, but because utilities have gone up. And our insurance rates have gone up tenfold since the hurricane. So we will have to follow what the rest of the market is doing and what the competition is doing."
This past summer, the company was in such dire financial straits that it no longer could pay its staff, its light bill or provide security, let alone make repairs to the complex, Beuerman says. But by the beginning of October, its financial woes had subsided. The once-cash strapped company received a $20 million settlement from one of its many insurers, allowing it to successfully petition the Federal Bankruptcy Court to dismiss its June 12 Chapter 11 bankruptcy protection filing. The settlement will allow C.G. Multifamily New Orleans to pay off its unsecured creditors in full. The remaining money will be put toward repair costs.
"We anticipate the proceeds we have today will be able to fix the majority of the repairs," Sparks says, "but until the repairs get a little further down the road, we won't know if more repairs will be needed."
After receiving the settlement, the company also came to "a mutually agreeable plan" with its primary lender, Fannie Mae.
C.G. Multifamily "satisfied us that by using the insurance proceeds they could reconstruct the property and bring the loan to a performing level," Chrissie McHenry, director of media relations for Fannie Mae, wrote in an email response to questions. "There will be a disbursement schedule -- as there is with all construction loans -- that is between the borrower and the servicer."
Both Fannie Mae and Sparks refuse to comment on details of the settlement. Repair costs also are not being made public because the company is currently in litigation, Sparks says.
C.G. Multifamily filed suit in Dallas County, Texas, against the complex architect as well as subcontractors of Greystar Development Construction L.P. more than two years ago. The suit, which alleges substandard stucco was used in construction, was filed after numerous balconies were found to have water and termite damage. After Hurricane Katrina, the alleged structural defects worsened, causing mold to become a major concern, Beuerman says.
Due to the damages, the majority of the apartments were empty when the Saulet closed in August. Before Katrina, the complex had an occupancy rate of more than 90 percent, Sparks says.
"The property has been such a vital part of the economic development of the (Lower Garden District) area that I think we are all just hoping to get apartments open as soon as possible," Beuerman says.