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Wednesday, May 26, 2010
Written by Penny Font
Lafayette businessman Mike Moreno wants to transform 30 acres of prime Baton Rouge real estate linking LSU and downtown. But right now, the project is tall on intrigue and short on detail.**
The oak-lined boulevard along Nicholson Drive that leads to the gates of LSU is now considered one of the most critical developments to the future of Baton Rouge and its university...
**
Wednesday, May 26, 2010
Written by Penny Font
Lafayette businessman Mike Moreno wants to transform 30 acres of prime Baton Rouge real estate linking LSU and downtown. But right now, the project is tall on intrigue and short on detail.**
The oak-lined boulevard along Nicholson Drive that leads to the gates of LSU is now considered one of the most critical developments to the future of Baton Rouge and its university.
And a significant piece of it lies in the hands of a Lafayette oilman new to the game who's keeping his cards close to his vest, leaving many speculating about whether he can pull it off.
Mike Moreno - who has amassed an empire in Dynamic Industries, Dynamic Offshore Resources and related Moreno Group companies - has plans for building a smart-growth, new-urbanist development on 30 acres near Magnolia Mound Plantation, tentatively dubbed River District. It marks his first major go-round in the speculative real estate market.
This project and others along the boulevard are widely viewed as the key to creating a thriving corridor along Nicholson Drive, establishing a vital link between two of Baton Rouge's most important economic drivers - LSU and downtown. Some of Baton Rouge's biggest names in real estate - including Mike Wampold and Donnie Jarreau - are also acquiring property there.
"It's a tremendous opportunity," says John Fregonese of Fregonese Associates, a Portland land-use planning firm that is producing a comprehensive master plan for Baton Rouge. "The two biggest concentrated destinations in Baton Rouge are downtown and LSU. The area between is an area situated between two strong magnets, so any development will be able to draw from both."
Bulldozers have already made way for the project, demolishing some 37 homes around Magnolia Mound Plantation. Otherwise, Moreno's project largely remains a mystery.
Moreno, 41, has proven himself a success in the offshore construction business, transforming Dynamic Industries - which he purchased in 1998 - and oil and gas company Dynamic Offshore into a force of more than 2,000 employees and $450 million in revenues. Also in the late 1990s, he founded Southern Equine Stables, which breeds and races thoroughbreds. More recently, Moreno managed to avert the Stanford Group disaster, moving his $27 million out of Stanford CDs before the company crashed.
But his first major effort at speculative real estate development in the state appears mired in confusion over who is managing it and which big-name architect will be designing it. It has also been the subject of a now-defunct lawsuit alleging Moreno used the firm that brought him the concept to lay the groundwork for the project, then cut them out of the deal when it appeared to be viable.
All that is known is that the 30-acre development will target young professionals and LSU employees and faculty with multi-family residences, retail, and possibly a grocery store, hotel and office space. In an interview with Baton Rouge Business Report in March 2008, Lafayette architect Steve Oubre said it would be a "smart-growth, new urbanist community" but stopped short of calling it a traditional neighborhood development.
Initially, River District's most visible advocate was Braxton Moody IV's son in law, Matthew Emory, who lobbied for buy-in from the mayor's office on down to the neighborhood action group. That job has now gone to Moreno's sister Dalis Waguespack, also a newcomer to real estate development, who is managing the project through Moreno Properties.
Stephen Keller - the developer behind the hugely successful Towne Center in Baton Rouge - is also involved somehow, although his precise role isn't clear. Block Builders, run by Keller and his brother Jason, did the demolition work on the land, but sources close to the project say he is also taking on increasing responsibility for developing a concept.
Both renowned smart-growth architect Oubre and emerging Baton Rouge architect Trey Trahan have been consulted on the design; however, it isn't apparent who will ultimately produce the blueprints. Neither would discuss their role in the project for this story.
"It's hard to tell who's in the driver's seat," says one Baton Rouge community leader who's met on numerous occasions with Moreno's team. "Is it Steve Keller? Steve Oubre? Dalis Waguespack? Trey Trahan? No one knows for sure."
Others familiar with the project say there are questions about whether Moreno overpaid for some of the land, forcing him to amass additional property at a more reasonable cost to make the project more financially viable. One source involved in the early stages says the firm paid around $24 per square foot, when they realistically could have acquired it for $4.
Through their respective spokesmen, Moreno and Waguespack declined repeated requests for interviews for this story. Trahan did not return several calls to his office. Keller, too, declined to be interviewed, but did release a short statement saying only that "to date, Block Builders has demolished 37 homes along Nicholson Drive in anticipation of future development for the River District. We completed that work in February of this year."
In a news release back in October before demolition began, Waguespack said that "at the heart of this development is the chance to give something back to Baton Rouge and LSU. Baton Rouge will be very pleased with the finished product."
Pieces of the project's history are detailed in a lawsuit Emory filed last spring in Baton Rouge state court. Judge Janice Clark dismissed the case three months after it was filed, ordering Emory to pay court costs.
As Emory tells it, he envisioned the redevelopment of Nicholson Drive in 2005 after being involved in a similar project in Gainesville, Fla., outside the gates of the University of Florida.
He approached Moreno about financing a mixed-use development along Nicholson Drive, but the oilman wasn't interested. However, he allegedly did ask Emory to seek out other substantial development projects he might finance.
In July 2006, Emory and a business associate - Mark Archer - pitched a Florida condominium project called The Villages, and Moreno, Emory and Archer formed Lake Griffin Holdings to develop it.
According to the lawsuit, Emory and Archer later formed White Sands Development Group to find and develop projects Moreno would fund. Emory then moved to Louisiana and ultimately presented 20 different potential developments to Moreno - again pitching the Nicholson Drive project. This time, however, a significant amount of property along the boulevard was for sale.
David Trusty - an agent with Gully, Phelps & McKey - had convinced a group of homeowners along the boulevard to sell their properties as a package.
By July 2007, Emory had identified what he termed a "critical Nicholson Drive property mass" of 40 acres - 23 on the west side of the boulevard and 17 on the east side. "Moreno agreed with Emory that the Nicholson Drive Development was viable and had a substantial monetary upside," the lawsuit says. "He requested that Emory begin negotiating and obtaining the necessary property included in the 40 acres identified and Moreno and/or Moreno Properties would finance the transactions."
Moreno wanted his sister, Waguespack, to be a member of White Sands, acting as his "eyes and ears and representative" on the projects. She accompanied Emory to closings on the Nicholson Drive properties and tagged along on his meetings with governmental agencies, organizations, LSU and consultants.
Around that time, Emory apparently tried to formalize his arrangement with Moreno. A proposed scope of services dated Dec. 19, 2007, asks for 2 percent from land acquisition and construction costs, an $18,750 monthly retainer and 15 percent equity in the development.
Moreno never signed the agreement, instead forming Nicholson Estates LLC, with Moreno Properties as the sole member, to assume ownership of the Nicholson Drive properties. The reason for the falling out is unclear. In the lawsuit, Emory accuses Moreno of having "now embarked upon a crusade to discredit [me]" but offers no specifics.
Emory initially indicated he would consider an interview, but then did not return subsequent calls.
Baton Rouge officials involved in the project confirm the central role that Emory played in selling the project to the community. Rachel DiResto, vice president of the Center for Planning Excellence, recalls meeting with Emory more than a year ago during an effort to make downtown a viable smart-growth community known as Plan Baton Rouge II.
"The development itself is of such scale that it's one of those catalytic projects that will transform that corridor and give it a new face," DiResto says. "We were pleased that early on they saw the significance of the historical Magnolia Mound and the canopy of trees along Nicholson Drive, and made sure that was incorporated into it."
However, she notes that a plan for the site has not yet been made public, and not much has been heard about the project since the land was acquired.
Emory initially recruited Oubre of Architects Southwest to develop a plan for the project. However, insiders say Keller has now pulled in Trahan, a Baton Rouge architect who has designed buildings and facilities, but never an entire mixed-use community.
There's no question that River District is a key project for Baton Rouge and LSU. A March 2009 study by Collaborative Community Research, an economic forecasting and feasibility firm, concluded the proposed project "would play a pivotal role in bridging the valuable connection between two major economic and cultural engines of Baton Rouge."
Richard F. Hunt, who wrote the opinion for CCR, noted that only a few retail businesses had been established along the corridor during its review. "What is evident is the need for an upgrade of existing retail and services along the Nicholson Corridor to bridge the gap between LSU and downtown."
A separate Zimmerman/Volk Associates study revealed a potential market demand of more than 1,620 new multi-family units - both for rent and for sale - at the site. CCR also identified markets for grocery, pharmacy, casual and family-style dining, professional offices, business services and an interconnected entertainment district featuring a range of restaurants, bars and recreational uses. Hunt recommends a minimum of 2 million square feet of development, contained in two- to four-story buildings.
Moreno's development could also go a long way toward eliminating blight in what is known as Old South Baton Rouge. Writes Hunt: "The scale of development at the subject site under the current development proposal will offset the conditions of blight in the immediately surrounding neighborhoods of South Baton Rouge and along Nicholson Drive from Magnolia Mound Plantation south to the new Fieldhouse condominium development just outside the entrance of LSU."
Additionally, a sewer treatment plant that is slated to be dismantled will give Moreno's property access to the Mississippi River.
Those familiar with the project also say Baton Rouge engineering firm ABMB has done a study concluding that mass transit could be a viable component along the corridor. Fregonese Associates is doing its own transit modeling study as well.
Fregonese notes that walkability will be key to any good development along the Nicholson corridor. "LSU is a huge traffic generator, and if you want there to be less traffic, putting people where they can walk, or bike or take transit to work or school is key to that."
CCR recommends Moreno's development be introduced in 2010 and estimates the value of the land could reach $40 per square foot. "The increase in values will still provide the project an advantageous market position when compared to other existing and planned development sites of similar scale in Baton Rouge," Hunt says. "None of the other sites benefit from the location along the important corridor linking downtown and LSU."
Jarreau, a real-estate executive who himself owns property along the corridor, predicts the Nicholson corridor will be one of the first areas where speculative development will return in Baton Rouge. Given market conditions, however, he doesn't expect to see activity until 2011.
Jarreau credits Moreno with being patient and cautious to ensure that the right development is built.
"They're not in a rush," Jarreau says. "Mike is a smart guy, and he and Dalis are doing all the necessary feasibility studies and market research and looking at all the possibilities to identify just what to do there. They have some great planners. Obviously in today's economy, speculative real estate is tough. The site might be very successful, but he's very conservative and doing everything he should on this development right now. All the right support is there."
Penny (Brown) Font, who has extensive experience covering news and business in Acadiana, is a freelance writer based in Baton Rouge. To comment on this story, contact her at [email protected].