By Scott Smith
Tribune staff writer
Across from the old train depot, the Tudor building — a red brick, three-story warehouse dating back to the turn of the 20th century — is waiting its turn.
The roof will have to be replaced, and the interior, ruined by decades of neglect and water from the leaking roof, needs a ton of work.
No one in Kokomo was willing to take on the project, despite the city of Kokomo planning a trails project to run down North Buckeye Street, and a Washington Street apartment project rising a stone’s throw away.
Enter Jeff Broughton, the California developer who came to Kokomo to save some investor properties, and who has stayed to fund a string of downtown commercial renovations.
The California-based investor is now in the process of renovating most of the west side of the 500 block of North Buckeye Street near downtown Kokomo into what he hopes will sell as a mixed-use retail/residential development.
Inside, old plaster is coming down, new fixtures are going in and sagging roofs are being rehabbed. Some of the buildings, which were part of the old Currens-Zapfe printing business, haven’t had tenants for years, if not decades.
It’s exactly the sort of development the city of Kokomo, and its mayor, Greg Goodnight, are hoping to encourage downtown, and the outside money — Broughton doesn’t name his investors, except to say they aren’t local — is doing what local developers haven’t been willing to do.
So why does Broughton feel he’s not welcome in the City of Firsts?
“If I put $1 million into these buildings, and then lose them, who cares?” he said in an interview Thursday. “All I do is make neighborhoods better, yet there’s a lot of people who want to see me fail.”
There’s no doubt Goodnight, who has made downtown revival and beautification the main focus of his administration, has put hope in Broughton.
The city’s Community Development Corporation deeded the old Firestone Building, 219 N. Union St., to Broughton-led investor group, Home Banc Center Inc. There are ongoing talks about Broughton possibly building housing developments at Union and Superior streets, and at Apperson Way and Mulberry Street.
The city’s director of operations, Randy McKay, said the city tried, unsuccessfully, for years to find someone to take on the work Broughton is now involved with.
“Except for Jeff and [Kokomo developer] Scott Pitcher, we’ve had no outside or inside interest in taking on these old buildings to renovate them,” McKay said. “These guys are taking a hell of a risk.”
Case in point is the Firestone Building, which is close to 90 years old and has a roof which leaks and a basement full of water. It sat on the market for close to a decade before the owner, STAR Financial Bank, donated it to the city’s redevelopment commission.
“We went in and just started taking crap out of it, seven Dumpsters full of trash so far,” Broughton said.
His idea is keeping the upstairs windows — he said he just received a delivery of glass — and creating an interior arcade, businesses surrounded by a sunlit hallway.
On Buckeye Street, he has specific tenants he wants to see brought in, creating an arts/entertainment district he’s calling Panhandle Alley.
“When I came into this market, I looked at it like this: People would say, ‘Hey, let’s go get something to eat.’ They don’t say, ‘Let’s go eat downtown,’ because there’s only one or two choices. The only way you’re going to make it a destination for restaurants is to have a variety,” Broughton said.
Broughton originally came to Kokomo to save some properties he’d purchased in bulk, some of which had been slated for demolition as part of Goodnight’s increased emphasis on code enforcement.
Goodnight, McKay and other city officials started talking with Broughton, who showed interest in purchasing some tax sale properties, and convinced him to look at some of the commercial development opportunities downtown.
When Broughton’s aspirations of purchasing hundreds of tax sale properties, which would then be bundled and sold in tranches to other investors, ran into resistance from county officials, he started to focus on the old downtown buildings.
The attraction, he says, is the low price of getting into the buildings, either through the city, on contract from an owner, or through an outright purchase.
Developers like to talk about capitalization rates, defined as the yearly income a property can produce, divided by the total cost of the project.
In California, Broughton said, his cap rates are usually around the 6 percent to 8 percent range, meaning it would take 12 to 15 years for the income on a property to pay off the investment cost.
In Kokomo, he’s envisioning cap rates of 20 to 25 percent. His hope is every building he finishes gets leased, and that he can leverage the lease income to obtain long-term financing on other projects.
For now, however, Broughton said he’s doing projects on a cash basis. The two projects furthest along include plans for a bakery (some of the kitchen equipment already has been delivered) at 503 N. Buckeye St., and for a pizza place to be called The District, that will be located in the former Elks building, 107 E. Sycamore St.
Above the bakery, Broughton’s crew of 18 is building four apartment units, which Broughton envisions as extended stay, corporate rentals.
“You make the reservation, and we give you a door code, and there’s maid service. It’ll be a 4-star place, but it wouldn’t be open to the public. It would be for corporate customers,” he said.
He’s a bit apologetic about ever mentioning his hopes of luring a Trader Joe’s grocery to the Firestone Building, but said he’s still working on it. That’s part of being a developer creating “spec” commercial space. You build it, and you sell it. Broughton has specific lessees in mind for each of his projects.
There’s no doubt Broughton has his detractors, who privately voice concerns he won’t succeed.
His decision to purchase two rental properties from Goodnight drew notice, as has his involvement in a Federal Trade Commission action against a mortgage relief services firm in 2010. The FTC banned him from the business and imposed a suspended monetary judgment against Broughton and his co-defendants.
“If you get into all of that, you’d have to start at the very beginning,” he said. “No one knows the whole story, and no one’s even asked me about it until now.  was a painful year, but all of the connections I’ve made were from when I was growing a 1,000-employee business back then.”
City officials, and Broughton, are adamant all of that is irrelevant, compared to the money Broughton is bringing to the table to improve downtown properties.
“I’m just buying properties. I’m not doing anything illegal,” Broughton said. “I’m just trying to redevelop a portion of the city.
“I came here because of Randy and Greg. They shared their vision, and I agree with it. But the only way it’s going to work is if someone comes in and develops it.”
Scott Smith is on Twitter @JasonSSmith1 and can be emailed at firstname.lastname@example.org.