Reprint from the . . . .
Morck developers secure $9 million loan
Doug Barker Mon Jan 16th, 2017 10:02am
Developers who want to make the Morck Hotel the showpiece of downtown Aberdeen have received preliminary approval for a $9 million loan and say that puts them in position to secure the rest of the needed financing in time to start renovation construction in late spring or early summer and open next year.
Morck Renovation LLC, headed by Chester Trabucco, the LLC’s managing partner, envisions transforming the now vacant eyesore into an 85-room luxury hotel. Trabucco, who now lives in Edmonds, grew up in Astoria and renovated the Hotel Elliott there, spurring a downtown resurgence several years ago. He is currently developing the Astoria Riverwalk Inn there.
The $9 million loan would come from Ilwaco-based Craft3, a non-profit bank that specializes in funding for rural areas that need development financing but aren’t attractive to traditional lenders. Trabucco said he heard from the bank Thursday that its loan committee gave its approval. Because of the size of the loan, it still has to go before the bank’s full board, but Trabucco said he was told that is routine at this stage.
In June, Walt Postelwait, Craft3’s chief lending officer, said the bank liked the project because it has the potential to spread development through the city.
“The project in and of itself is not that interesting to Craft3,” he said at the time. “What is interesting is the impact it can have in Aberdeen and Grays Harbor County. We look at this project as a catalytic event to drive the economic development in downtown Aberdeen.”
Trabucco was part of a group that attempted to develop the hotel several years ago. That effort fell apart in 2008 when the recession hit and partners disagreed on the direction of the project. It ended in receivership and Morck Renovation LLC gained control. Several of the investors in the first effort are involved in this one.
“When the news came across my phone last night, it was a helluva moment,” Trabucco said. “I’m very appreciative of the City of Aberdeen, and the (citizens) of Aberdeen, for letting our team come back and take another crack at this.”
The total redevelopment cost is about $23.6 million, said John Warner, a Portland-based consultant who has helped structure the financing package.
He described the financing like this:
– $9 million loan from Craft3
– $9.6 million in revenue from federal tax credits that can be sold to other parties.
– $5 million in private investment
Warner said the tax credit aspect of the package is not finalized, but in the late stages, with commitments from four banks to purchase the credits.
The LLC has raised $1.1 in private investment so far — $600,000 from the LLC and $500,000 from an individual Trabucco said he couldn’t name at this point.
He said that raising the last $4 million from private investors should be easier now that the feasibility plan and financing plan have been scrutinized and accepted by a lender.
Warner said the hotel is expected to create 42 permanent jobs and 170 jobs during onstruction.
He said the developers have been working with Grays Harbor College on a program to train students for culinary and hospitality jobs.
The hotel would include a restaurant, along with banquet and meeting facilities and be managed by Columbia Hospitality, which has 1,600 employees in eight states.
The project has had strong support from local government entities, including the City of Aberdeen, Greater Grays Harbor Inc. (an economic development agency) Grays Harbor College and the Quinault Indian Nation, all of which wrote letters of support. Gov. Inslee and a long list of state and federal politicians have also written letters of support.
Trabucco said the project is in line with priorities identified by the City of Aberdeen in its three-year plan to revitalize downtown, which includes attracting a hotel and restoring landmarks, including the Morck. That will be seen as a positive for entities who might purchase New Market Tax Credits designed to spur revitalization.
The Morck, at the corner of Wishkah and K streets, opened in 1924, built by Ernest A. Morck, a Danish immigrant who had been in the hotel business in Seattle. It is the only building in Aberdeen that is on the National Register of Historic Places. Two others, the Union Pacific Depot and the Finch Building, were on the register, but have been torn down.
When the hotel opened, according to the application for historic status, it included the Morck Coffee Shop, a barbershop and beauty parlor, an art shop, a radio supply shop, a cigar stand and the Yellow Cab Company.
Under the Morck family the hotel was a popular gathering spot and widely considered the nicest hotel in the area. In 1961, the hotel was sold out of the Morck family, and sold again in 1968. In the 1980s it was a low-rent apartment building in serious disrepair. It has been vacant for the past decade or so and is now boarded up.