Kettler Brothers Inc., a major suburban developer, has reached an agreement with First Federal Savings Bank of Arkansas to complete the troubled Hillandale residential development on Reservoir Road in Georgetown.
M. R. Godwin, president of the Arkansas bank, said the "deal was finalized Tuesday," with representatives of Kettler Brothers and the bank in Little Rock.
"We have a handshake and the letters are in the mail" confirming the deal, according to Ronald D. DeLisi, vice president of Kettler Brothers.
The developer and the bank will be joint venture partners. "Kettler Brothers will be the general managing partner," Godwin said. The Arkansas bank will provide financing.
The Gaithersburg-based development firm is known primarily for its projects in Montgomery County, but it is also the developer of a luxury town-house complex in the District. That project, on Massachusetts Avenue NW near Ward Circle, is known as Westover Place and is now in the final stages of selling its 149 units. Ironically, that development was considered competition for the Hillandale development when both hit the market at approximately the same time.
Hillandale was sold in a foreclosure auction in January to First Federal, which held a $25 million first mortgage on it. The property was being developed by Hillandale Development Corp., which was part of the crumbling financial empire of Texan C. W. (Clint) Murchison. First Federal paid $14.5 million for the property at auction. During bankruptcy proceedings last year, the property was valued at $19 million.
"This is truly one of the prime pieces of residential real estate in the District of Columbia," DeLisi said. "We are very excited to have the opportunity to develop it and are delighted to be in a partnership agreement with First Federal."
Godwin and DeLisi said the legal papers are yet to be signed but both said the deal is firm.
"First Federal will provide a revolving line of credit of $6 million to do engineering, development and construction. That will amount to about $60 million over the build-out of the project," Godwin said.
Kettler Brothers, under this arrangement, will build and sell a certain number of units and then get funds for the next section, Godwin said.
Godwin said the Arkansas bank "interviewed 17 developers who came to us" before selecting Kettler Brothers. "The timing was excellent because they are finishing up their Westover Place project." Godwin called Westover a quality project with an appropriate image for the new developer at Hillandale.
Fewer than 10 units at Westover Place are unfinished. Units there have sold for between $275,000 and $300,000, DeLisi said. "We have done well at Westover Place. That is one of the reasons we are so excited about Hillandale," he said.
Godwin said Kettler Brothers has the capability of carrying out development at Hillandale from planning to marketing the finished product. "We felt it was really important to find a single builder to do the whole thing. I am very relieved," Godwin said.
Godwin and DeLisi said there may be some changes in existing development plans but there will be no increase in density.
DeLisi said his company is "in a conceptual stage of evaluating what is approved" for the Hillandale site. Current plans call for 151 additional town houses and 27 single-family homes. Six of the units built by Hillandale Development and now owned by First Federal remain for sale in the $300,000 range. Before its financial troubles began, Hillandale sold 43 town houses at the site.
DeLisi said he has no estimate of prices for units Kettler Brothers will build at Hillandale, but Godwin said he is sure they will be in the $300,000 to $350,000 range.
Even though no dates for new construction have been set, Godwin said Kettler Brothers' representatives "have already been on the Hillandale site to see what needs to be done to put the project back into first-class shape."
Hillandale is built on the 42-acre site of the former Archbold Estate, one of the District's most glamorous old homes. The house is still standing and plans for it are not known.