RSA launch expected in May

Mar 17th, 2002

By KATHY JUMPER
Real Estate Editor

Preconstruction work on the $32 million RSA Battle House Tower project in downtown Mobile is expected to start in late May or sooner if land purchases are complete.


The city should have acquired all the land by May 1, according to David Bronner, chief of the Retirement Systems of Alabama based in Montgomery.

"The project is a 'go,'" said Mayor Mike Dow. "The city is in the process of securing, through the tax increment, the cash flow that will allow us to do our part to move the project forward."

Bronner said he is eager to get started on the 800-foot office tower and 250-room hotel project. "We've been talking about it too long," he said. "A good time to get started is in the spring and we can get a lot of work done through the fall until the weather gets bad."

The project was approved by the Mobile City Council last June. The city committed $15 million to the project; so far, $2.5 million of that money has been used to buy the old Battle House Hotel.

The project will be built on land bound by Royal, Water, Dauphin and St. Francis streets. The city is also using some of the $15 million to buy the land in that area.

The contracts have been worked out with AmSouth Bank, SouthTrust Bank and the Mobile Housing Board to buy their property, and the city is helping SouthTrust find a spot to locate its drive-up teller window, Dow said.

Still, RSA is not getting all the land it wants for the project. The city and RSA had negotiated to buy a parking lot from Lyons Pipes & Cook at 2 N. Royal St., but the parties could not agree on a price.

"The law firm was looking for one of those deals where they think the property is worth two to three times more than what it was appraised at," Bronner said. "We are regrouping a little bit here. It makes it more difficult, but we'll work around it."

Dow had sent the law firm a letter dated March 7, that stated: "I need your help. Mobile needs your help."

According to the letter, RSA's offer of $600,000 for the law firm's 15,000 square feet of land, would mean the attorneys would be getting more per square foot than the other land owners who have agreed to sell. Dow said the $600,000 equates to $40 per square foot.

Dow also said in the letter that the Battle House land of 28,426 square feet was appraised at $925,000 or $32 per square foot. He said the remaining value in the Battle House sale was the hotel itself, and that owner Celia Wallace had invested more than $1 million in rehab work.

The partners at Lyons Pipes & Cook said it has been their position from the beginning that they did not want to sell their property.

"We were told that our property was not necessary by both the RSA and the city," said Cooper Thurber, a partner in the firm. "We are pleased that the project is proceeding without our property. We wish our new neighbors every success."

The city expects to close on land deals in April and will then turn the property over to Point Clear Holdings, which is partnered with RSA. The $132 million RSA-funded project is set for completion in late 2003 or early 2004.

The building contractor will be hired via a bid process, but the companies will have to be prequalified before they are allowed to submit bids, according to Bronner. He wants a contractor who has experience building high-rise office buildings. He expects to prequalify about six to seven companies. The companies must meet specific guidelines, including showing that they have built past projects on time and within budget; and that the company has a track record of building something comparable in size or bigger to the 35-story RSA office tower.

The construction company on RSA's staff will not bid on the project, Bronner said. But the company will help his staff go through the submitted bids to find the right contractor for the project.

Once a contractor has been hired to build the tower, the work will be subbed out to the local contractors. Bronner said he has already talked with union representatives in Mobile and they are ready to provide the skilled workers. He also plans to get as many minority workers involved in the project as possible.

Work will start first on cleaning up the hotel and demolishing the existing buildings at the site.

Bronner has said that the leasing agents have tenant commitments for at least 60 percent of the office tower. He said his focus lately has not been on tenants, but on getting the office building and hotel built within the budget he's set.

Dow said the building will be a magnet for tenants. The city's task will be to work with the state and the local chamber of commerce to help draw tenants for the RSA tower, and also help fill up the existing buildings that will lose tenants to the tower, he said.

"We're using this as an opportunity to build a stronger downtown," Dow said. "Our strategy is a growth strategy."