Friday, June 26, 2009

Inman Park Properties implosion leaves neighborhood landmarks in limbo

Posted By on Fri, Jun 26, 2009 at 11:54 PM

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UPDATE: This article has been expanded with additional reporting.

Little has changed about the Clermont Hotel — or its time-capsule strip club — since Atlanta real estate mogul Jeff Notrica took over the Ponce de Leon Avenue landmark six years ago.

Just as he promised when he bought the 85-year-old building, Notrica resisted the typical developer’s temptation to chop it up into condos or turn it into modern apartments. Downstairs, the storied Clermont Lounge was left untouched and remains its gloriously seedy self.

But it may be that the hands-off approach Notrica, 44, has taken with the Clermont and many of his other properties — a land baron’s acquisitiveness tempered by a collector’s appreciation for each new bauble — has simultaneously helped bring his intown real estate empire crashing down.

Unless a deal is struck between Notrica’s Inman Park Properties and New York-based lender Fairway Capital — or unless a deep-pocketed buyer steps forward — the Clermont Hotel and its lounge will be auctioned off on the courthouse steps July 2.

If that happens, it will be only the latest, if largest, in a long series of foreclosures suffered by Inman Park Properties over the past three months. The company’s apparent meltdown has involved some of the most recognizable and beloved buildings in East Atlanta, Little Five Points, Poncey-Highland and Midtown — causing many residents of those same neighborhoods to cheer the company’s downfall.

A five-minute drive south on Moreland Avenue will take you past the turn-of-the-century Kreigshaber House, popularly known as the Wrecking Bar; the old Gordon Elementary School; and a former bank building whose modernistic design hints at what might result if the High Museum mated with a giant spider. All three have sat vacant and decaying for years and all three were, until recently, owned by Notrica.

And there are other, even more historic landmarks still in the Inman Park Properties portfolio that local preservationists are eyeing with renewed concern: the former Ansley Inn, the 1907 Tudor mansion built by menswear magnate George Muse; the Antebellum-style Craigie House across from Piedmont Park that was home to the nation’s second-oldest Daughters of the American Revolution chapter; and, most significantly, the Castle, the sprawling, quasi-Victorian house that sits atop a stone wall overlooking the Woodruff Arts Center.

“His buildings may have been in terrible condition, but at least they were still there,” says Boyd Coons, longtime executive director of the Atlanta Preservation Center. “We now have real fears about what’s going to happen with all these properties.”

Coons first became aware of Inman Park Properties several years back, the same way most Atlantans did: by seeing its “For lease” signs pop up in front of architecturally interesting buildings around town — and then remain there, sometimes for years.

The company quickly gained a reputation for seeking out old, unusual or landmark properties, but Notrica himself remained largely a mystery. Described as shy and withdrawn by business associates, he rarely speaks to the press and avoids talking about himself. He did not return repeated calls for this article.

But acquaintances and former employees provide glimpses of an unconventional developer who hoards historic properties. A native Atlantan, Notrica didn’t come from wealth; his father owned a small Old Fourth Ward grocery store. Instead, Notrica made his first real money dealing in rare coins. According to his company’s website, he got started in development in the mid-’80s by rehabbing and selling houses in Inman Park and Candler Park.

Within a decade, he’d begun stockpiling unusual and historic properties in Atlanta’s trendiest neighborhoods and in downtown Savannah and Birmingham. Some he redeveloped and leased; others collected weeds, despite his repeated pledges to restore them. Notrica seldom seemed interested in selling an empty building or vacant lot simply because it wasn’t generating income.

Notrica tried to bring the Cotton Club music venue to his 1940s-era Hilan Theatre in Virginia-Highland in the late ’90s, an effort that was defeated by neighborhood naysayers. He later renovated the art deco space, located behind the Ben & Jerry’s, for use as an event facility, but it remains unoccupied. Last month, the building narrowly avoided foreclosure.

Inman Park Properties was targeted by the Atlanta Preservation Center when the advocacy group compiled its annual “Most Endangered Historic Places” list. In 2003, the APC listed the saucer-shaped Trust Company Bank building at Monroe Drive next to the I-85 overpass and the 100-year-old Fire Station No. 11 next to the North Avenue MARTA Station. Both were then owned by Notrica and had been vacant for several years. They now house Eros Tapas Bar and Engine 11 Firehouse Tavern, respectively. Notrica lost the Trust Company building in foreclosure in March.

Still, Coons took a risk a few years ago and invited Notrica to join the APC board.

“That was controversial among our members, but we were trying to reach out to someone who controlled a large number of historic properties,” explains Coons, who says he quickly realized Notrica wasn’t a typical developer. “Notrica told me he had an affinity for old buildings, which really surprised me because that’s not what I’m used to hearing from developers. The status quo among many developers is to buy an old building and then level it.”

Coons’ forgiving attitude about Inman Park Properties, however, likely places him in the minority. In several intown neighborhoods, Notrica’s name is a four-letter word.

“There are a fair number of people who are almost dancing in the street over Notrica’s financial troubles,” says Marc Takacs, business association president for the East Atlanta Village, where Inman Park Properties scooped up dozens of parcels over the years.

“In the short run, the foreclosures will be negative for the community because we won’t know who owns what,” he says. “But in the long run, it’ll open the door for a better mix of owner-occupied professional buildings. And, ultimately, it’ll bring prices down.”

Three years ago, several East Atlantans who’d lost patience with the decaying buildings and poorly maintained lots launched a vocal campaign against Notrica, selling “slumlord” stickers at a brisk pace.

As a result of the bad press, Notrica became more active within the business association, Takacs says. Still, a number of his properties saw little improvement. Last year, his company bought a former grocery store on Flat Shoals Avenue and ousted the antique mall that had occupied it in recent years. The largest building in the commercial district, it remains vacant.

Mark McDonald, president of the Georgia Trust for Historic Preservation, says Notrica also has snatched up historic buildings in Savannah only to let them decay, a practice McDonald calls “demolition by neglect.”

Larry Culbertson, a commercial real estate broker with Keller Williams, is now listing several properties formerly owned by Notrica, but says a brief inspection convinced him to pass up a chance to market the old Gordon School, which has sat rotting in East Atlanta for a decade.

“That building has trees growing out of the second-floor windows,” he says. “It’s in awful condition. I can’t imagine what could be done to save it.”

Inman Park Properties certainly isn’t the only Atlanta developer suffering from the real estate downturn and the banking crisis, but Notrica’s quirky way of conducting business almost certainly contributed to his company’s implosion.

To keep hold of properties that produced no revenue, Notrica was constantly refinancing mortgages based on ever-higher appraisals, cashing out the equity and using that money to buy more property. It was a risky leveraging practice that became all too common among developers during the heyday of the real estate bubble, but by most accounts, Notrica pushed his luck to dangerous extremes.

His company began to unravel in February, when the first of at least three dozen foreclosure actions against his properties was initiated. If all the foreclosures went through — it’s difficult to tell because of a lag in public record-keeping — the value of the defaulted mortgages in Georgia alone would top $30 million. He’s now desperately trying to sell the Clermont and other buildings before he loses them, but the market conditions couldn’t be worse.

Scott Pendergrast, who manages large chunks of commercial property in Little Five Points and East Atlanta, says Notrica was notorious in real estate circles for demanding sky-high rents and asking prospective tenants to pay to renovate his buildings. The result was that many spaces went unleased, while others were so costly that the tenants — usually restaurants — had to be strikingly successful to afford to stay.

Says Pendergrast: “It was a strange business model.”

(Photo by Tara-Lynn Pixley)

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