El Jardin Redux? Developer eyes historic hotel for affordable housing

BROWNSVILLE — Early indicators are promising, but a proposal for renovating the derelict Hotel El Jardin in downtown Brownsville has many obstacles to overcome before it can become a reality.

MRE Capital LLC, based in Kansas City, Mo., has a plan to redevelop the long-abandoned property into an affordable-housing complex that would be called “El Jardin Lofts.” Seeing the project through depends on the success of MRE’s applications to the Texas Historical Commission and National Park Service for state and federal historic preservation tax credits, and to the Texas State Affordable Housing Corporation for affordable-housing development tax credits.

In 2015, Texas instituted a 25-percent tax credit for eligible historic preservation projects, designed to be used in tandem with a 20-percent federal historic tax credit. According to a preliminary feasibility study of the El Jardin project by THC’s Town Square Initiative Team, the use of both credits “has exponentially increased across the street, and they are proving to be the most powerful preservation-based economic incentive available.”

The feasibility study was conducted at the request of the Brownsville Main Street Program and the building’s owner, Reyes Ponce. TSI is an affiliate of the Texas Main Street Program, which is over the Brownsville Main Street Program.

For MRE to claim historic tax credits the El Jardin must officially be listed in the National Register of Historic Places. TSI said it has confirmed with the National Register program that the El Jardin is eligible for listing, due partly to the fact that the old hotel, built in the late 1920s, remains “largely intact.”

According to TSI, the developer will have to complete the National Register nomination process at the same time redevelopment is underway, while the listing process itself takes about a year.

MRE co-founder and member Daniel Sailler said his firm is applying for National Register listing and tax credits simultaneously. The building’s historical significance is a given, though redeveloping it will entail negotiating “what we want to do versus what the state historical preservation office and the National Park Service allows us to do,” he said.

“What inevitably happens is there’s a back and forth,” Sailler said. “That back and forth has already started.”

He said MRE’s redevelopment plan is viable, though the project won’t be feasible without the tax credits, including the low-income housing tax credit. TSI’s feasibility study estimates the cost of the project at more than $15 million for redeveloping the El Jardin as student housing, similar to MRE’s affordable housing concept, with retail on the ground floor. The firm has under its belt 14 developments in five states, including historic rehabilitation and historic adaptive reuse projects.

Sailler said the El Jardin scores well as a mixed-income housing redevelopment project, but concedes plenty can still go wrong. He said MRE will submit applications for the housing credit late this month or early in March and won’t have a final answer before July. If MRE moves forward on the project, it will buy the property from the current owner and register the project with the state as “El Jardin Housing Partners LP.”

“We’re in the first inning of a very long game,” Sailler said. “We’re just getting started.”

Constanza Miner, director of operations for the city’s planning division, said transforming the El Jardin into affordable housing would be in keeping with a goal of the Imagine Brownsville comprehensive plan to get more people living downtown in order to support surrounding businesses.

“The peso continues to go down,” she said. “We don’t get as many people as we normally did downtown. We’re looking for other ways to help our downtown businesses survive, and that includes bringing people to actually live in the core.

“They (MRE) have to submit their application and be successful, but they have been successful in the past. They have a great track record. We’re crossing our fingers, but they seem pretty confident, so we’ll see.”

On Feb. 8, Brownsville city commissioners passed a resolution in support of MRE’s plan for El Jardin Lofts.

Peter Goodman, Historic Downtown District director, said putting the property back into circulation “would make a tremendous difference for downtown” along with the rehabilitation of the 1912 Stegman Building, which will house the Brownsville Performing Arts Academy at 11th and East Washington streets when complete.

However, the agencies administering the tax credits have to be convinced of the merits of the project, he said.

“They want to know that this particular project will make a huge difference to Brownsville,” Goodman said. “They also want to know that we’re working on other projects. They’re not going to throw money at something that’s just sitting out in the desert.”

sclark@brownsvilleherald.com kcardenas@brownsvilleherald.com