Jay Simon was concerned with just two things when the construction company he worked for in 1982 was about to go bust: One, he had to ramp up his sideline remodeling business to take on the clients that his former employer would abandon when it closed its doors, and two, he'd have to use his wedding money to capitalize this company.
Simon made it work. Taking care of clients who were mid-project with his former company, Simon forged a solid reputation for his firm through his loyalty and his innovative design and construction skills. (And he managed a honeymoon one year later after becoming profitable in his first year at the helm of Metropolitan Design and Building — MDB.)
Enter Jeff Clark, himself a refugee from a similar situation. He was a principal in Series, a design/ build historic real estate development company fueled by federal and historic tax credits. Series closed when tax laws shifted out of its favor during the mid-1980s, and in 1988 Clark joined MDB, bringing with him knowledge of how to develop a strong design identity and a larger scale of operations.
The experience that each partner brought to the table created a unique company with expertise in sophisticated design, historic restoration, remodeling, and new construction. Twenty-four years later, MDB is one of St. Louis, Mo.'s preeminent design/build companies, completing about $6 million in residential and commercial projects in 2006.
Niche Play If you ask the partners what percentage of their business is restoration versus new construction, they laugh. “This year, the custom and the new construction jobs will outweigh remodeling,” Simon says. “But next year, that may not be the case.”
This fluid niche model — of flipping from one project type to another — may be one of the secrets of the company's success. The partners look for every opportunity, and with their unique combination of skills, make them pencil out.
For example, in 2005, nearly 80% of the company's projects were historic redevelopments completed using certified tax credits. (Like many of the nation's mid-sized older cities, large portions of St. Louis require special initiative programs, such as the state historic tax credit, to ensure their revitalization.)
MDB puts together financing from state historic tax credits, neighborhood preservation act money, and tax incremental financing to make projects profitable. “Using tax credits causes a lot of brain damage,” Simon admits, “but once you figure it all out, it can be palatable.”
This specialized knowledge has led the pair into unique development situations. “We've taken a position of going into areas under redevelopment and choosing abandoned or severely neglected buildings,” Simon says. “In Shenandoah Place we took four-family building groups and converted them to two-family residences using tax credits and the creativity of our architectural department.” The units sold for $200,000 to $225,000 apiece.
Another infill project, Ecco, a planned unit development on 3.5 acres, includes the renovation of a historical manor home and the construction of six new buildings, each housing two families. “Several developers wanted the site,” Clark notes, “but we were chosen for our sensitivity to the fabric of the neighborhood, beyond the obvious recycling of the site.”