Fitzpatrick Hotel: Bringing a Dream Back to Life
Georgia | By Joe Pettiford and Erica Stewart. Used with permission from Main Street News, the monthly journal of the National Trust`s National Main Street Center (No. 211/Oct. 2004). | Posted: 10/08/2004
The Fitzpatrick Hotel project in Washington, Georgia is another project that demonstrates the value of the Small Deal Fund to smaller historic properties. Vacant for over 50 years, this landmark establishment was returned to its former glory by a group of investors who brought it back to life as a 17-room boutique hotel with conference and commercial space. The Fitzpatrick opened for business in the summer of 2004, thanks in part to a $315,000 tax credit equity investment by the National Trust Small Deal Fund.
The Fitzpatrick Hotel first began as a dream shared by two Irish-American brothers in the late 19th century. A great fire had ravaged their hometown of Washington, Georgia, devastating the entire block of wooden structures on the west side of Public Square. Amidst the charred rubble, the enterprising brothers saw opportunity. Enriched by their successful mercantile business in South Carolina, they spared no expense in creating a grand hotel, and in 1898 the Fitzpatrick was opened. The three-story building was designed in the Queen Anne style and featured a seventeen-foot high pressed metal ceiling, three storefronts, an elegant lobby on the ground floor, hotel rooms, a parlor and large dining room.
For half-a-century, the hotel was a “top of the line” establishment, offering traveling salesmen refuge from the road, local families a Sunday dinner destination and area schoolteachers a place to call home. The hotel’s commercial spaces, at times hosting a barbershop, grocery, hardware store and restaurant were also important to the community. Yet, in 1952, the hotel’s second owners closed its doors and the hotel sat vacant for over 50 years. Various attempts to revive the structure—listed on the National Register of Historic Places in 1982—failed until a group of investors bought the Fitzpatrick in 2002. By this time, weather and time had taken its toll on the property. A cottonwood tree had actually grown through the back wall and climbed its way up to a second floor window. The absence of supporting steel had allowed the building to sag over time, causing cracks in the wall and masonry.
Again, a team of entrepreneurs rose to the meet the challenge. In 2002, a small group of investors acquired the property and after months of planning, began a meticulous rehabilitation that paid close attention to historic detail and quality craftsmanship. For example, it is estimated that as many as 30,000 bricks have been cleaned and stacked for reuse, personally done in large part by one of the owners. The original front lobby desk, the stamped tin ceiling and ornate window frames in the ballroom, interior arches, wrought-iron railings and the stained-glass accent windows of the six street-front suites have all been retained.
The partners’ attention to the property’s architectural integrity enabled the project to qualify for the 20% historic rehabilitation tax credit, valued at $363,000. Because of the relatively small size of the credit, the partners’ were unable to attract a conventional syndicator. Instead, they made plans to personally inject any additional capital required to complete the project and then take the credit themselves. A mere three weeks before construction completion, however, an associate introduced the partners to the National Trust Small Deal Fund, whose investment parameters fit the profile of the Fitzpatrick Hotel. Fast action by SDF president, John Bowman and a streamlined underwriting process enabled the partners to close on a $315,000 equity investment before the property was placed in service. Although the owners were able to complete the project without the tax credit equity, the equity will be available as cash reserves during the hotel’s operation.
The tables give a detailed depiction of how the SDF tax credit financing was calculated and paid-in to the project.
Fitzpatrick Hotel - By the Numbers
|Total Development Cost||$2,250,116|
|Qualified Rehabilitation Expenditures||$1,814,975|
|Federal Tax Credits||20.00%||$362,995|
|Percentage to Small Deal Fund||99.99%||$362,959|
|Federal Tax Credit Equity per $1 of credits||$0.87||$315,744|
|Installments as Follows:|
|12 Months Breakeven Operations||20%||$63,155|
|24 Months Breakeven Operations||20%||$63,155|
|36 Months Breakeven Operations||20%||$63,154|
|Buy Out Price (after Year 5)||15.00%||($47,366)|
Net Price Paid by the Fund
|Credits allocated to the Fund||$362,959|
|Asset Management Fee (1,000 x 5 years)||$1,000 annually|
|3% Priority Return (on invested capital, 5 years)||Yr.1 - $3,789|
|Yr. 2 - $5,684|
|Yr. 3 - $7,579|
|Yr. 4 - $9,473|
|Yr. 5 - $9,473|
The major source of financing for the project was a traditional bank loan. The City of Washington also provided $250,000 in CDGB funds that was loaned to the owners at less than 1% interest. The repaid funds will seed a revolving fund for other rehabilitation projects in Washington. The partners completed the financing picture with their own equity. The result is a glorious downtown landmark that respects the town’s past and will help define its future.
For more information contact:
Small Deal Fund
National Trust Community Investment Corp. (NTCIC)