New crowd-funding plan could help downtown Tacoma Elks temple owner finance building rehab

Staff writerApril 2, 2014 

The former Elks temple viewed from downtown Tacoma's Spanish Steps.

JANET JENSEN — The News Tribune

The owners of Tacoma's former downtown Elks temple say a new crowd-funding program they're trying on a Bothell hotel project could also help raise equity needed to convert the temple into a hotel and entertainment center.

Larry Dortmund, chief financial officer of Oregon's McMenamins, the temple's owner, said the crowd-funding plan the company rolled out Wednesday for its Anderson School project in Bothell could provide a model for raising funds to rehabilitate the historic Elks building.

The crowd funding plan, authorized last year by federal officials, would allow McMenamins to raise funds directly from qualified investors for the Anderson School project.

McMenamins plans to give the former junior high school a new life as a 73-room hotel equipped with swimming and soaking pools, bars, a brew-pub, a restaurant and a first-run movie theater.

McMenamins owns the former school in downtown Bothell, but it needs $8 million in equity to help fund the $26-million project.

The crowd-funding program will allow the hotel company to contact investors directly, bypassing brokers and private equity firms. 

Dortmund said the Anderson School project may be the first program in the nation to use the crowd funding program that the Securities and Exchange Commission approved last year.

McMenamins had approached private equity firms about investing, but they seemed uninterested in investing in a non-standard project, Dortmund said. The same holds true for the Elks temple project, he said.

McMenamins, which operates some 50 properties in the Northwest, specializes in converting iconic old buildings into hotels and entertainment venues.

The Oregon company is hoping that publicity about their crowd-funding deal will attract well-to-do investors willing to invest $250,000 or more for a share of the Anderson school project. Those investors must have a net worth excluding their homes of at least $1 million or yearly income of $200,000 for single investors or $300,000 for couples.

The prospectus advertises an 8 percent annual return plus perks such as reduced rates and tickets.

Dortmund said McMenamins needs about $6 million to $7 million in new equity to fund the Elks project in addition to bank loans. McMenamins paid $1.2 million for the old temple at 565 Broadway in 2009.

McMenamins now is working on finding what's called an "EB-5" investor to invest equity for the Elks project.

EB-5 is a program in which foreign citizens invest in American job-creating projects. In return for their qualified investments, they may receive permanent resident visas or "green cards" to live permanently in the United States.

If the EB-5 effort fails to produce enough investment, McMenamins may try the crowd-funding plan if it has proven itself in the Bothell project.

The former Elks temple, a towering multi-story building near downtown's Old City Hall, has stood vacant for years. McMenamins wants to convert the building's ballrooms, recreational facilities and meeting rooms into a hotel with club-style facilities for entertainment and dining. Originally local investors had planned to partner with McMenamins on the project, building an apartment and hotel structure north of the old temple.

That new structure, however, never moved forward because of financing issues.

John Gillie: 253-597-8663
john.gillie@thenewstribune.com

 

 

 

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