Another idea for affordable housing near Ellis Park isn’t going to work; city bought the land with state REAP grant to prevent it from being developed

Another proposal — this one made public just a month ago — to build affordable housing in and around Ellis Park is apparently going to bite the dust quickly.

Johnny Brown of J Brown Development Group of Cedar Rapids had pitched an idea to build two buildings with 30 affordable apartments each on a 6-acre, tree-filled city site between Ellis Lane and the Ellis Park.

Brown was calling his idea Ellis Preserve. Bart Woods, president of Primus Construction, was working with him on some of the planning.

However, Julie Sina, the city’s parks and recreation director, reports that the city purchased the land in question with a state REAP — Resource Enhancement and Protection — grant to prevent to it from being developed.

Sina says the city would need to talk to state officials to see if it is possible and what the ramifications would be if the city now decided to sell the land purchased with REAP dollars.

“The city of Cedar Rapids Parks and Recreation Department has a good relationship with REAP and has received funding over many years for the preservation of land,” Sina says. “… The Parks and Recreation Department does not support the sale of this piece of property.”

Brown says the status of the city property isn’t lessening his concern for people who he says remain displaced by last year’s flood and still need affordable housing.

“There are a lot of families who are suffering,” Brown says. “And we’ve got to do something to help our fellow citizens. That’s who I am.

“We’ve got people who are hurting, and it doesn’t seem to register on anybody’s radar screen. But it’s going to stay on mine.”

An earlier plan by another developer to put affordable housing nearby on the former 6-acre practice chipping area next to Ellis Golf Course fell apart in the face of neighbor opposition.

Ninety-unit Cedar Pond Townhomes development gets $15.3 million in federal tax credits; construction should start by Oct. 15

If all goes as planned, a Minnesota developer will begin construction in mid-October on the 90-unit Cedar Pond Townhomes development on 11.2 acres south of Williams Boulevard and north of Wilson Avenue SW.

The developer, EverGreen Real Estate Development, Prior Lake, Minn., on Wednesday was awarded $15.3 million in federal affordable-housing tax credits by the Iowa Finance Authority to help fund the project.

Greg McClenahan, president of EverGreen, said the firm’s plan was to start construction by Oct. 15 and be complete in a year.

The city’s Replacement Housing Task Force and the City Council, on a 6-2 vote in late March, backed the project over some objections from neighbors.

“It’s been a long process,” McClenahan said Wednesday afternoon. “I feel gratified that the city has been a big supporter of the project.”

Cedar Pond will feature 48 two-bedroom units and 42 three-bedroom ones with one of the units for an on-site manager.

The units are targeted to households who earn 60 percent or less of the area’s median family incomes.

McClenahan has other rental complexes in Iowa. A University of Iowa graduate, he was at the University of Iowa this week going through freshman orientation with his son.

Renovation of the empty, flood-damaged Roosevelt looks like it really will get going now

Minneapolis developer Sherman Associates Inc. is going to start its renovation of The Roosevelt, the former downtown hotel and now an empty, flood-damaged apartment complex, yet.

The start of the renovation has been pending for a few months now as Sherman Associates has worked out the details of its federal tax-credit financing that requires some local City Hall help.

On Wednesday evening, the City Council will alter its previously approved incentive to the project by increasing a temporary loan of $300,000 to $650,000, and by adding $26,000 to a long-term loan, bringing it to $1.632 million. The long-term loan will be paid back over 30 years at 1-percent annual interest.

Meanwhile, on Tuesday, Jackie Nickolaus, a Sherman Associates vice president with an office in Urbandale, Iowa, said the firm is hoping to close on the project’s financing as close to July 15 as possible. Work on the renovation of The Roosevelt will begin the day after the financing closes, she said.

The $10.3-million renovation will convert the 12-story building’s second floor to apartments and do away with the building’s small, efficiency apartments. In the end, there will be 96 units, 90 of which will have rents considerable “affordable” and targeted to those who make less than the median household income. The building’s first floor will remain commercial space.

Proposed, 81-home Sugar Creek development next to Ellis Golf Course has City Council asking: Will requested incentives really provide affordable housing?

A proposed 81-home development called Sugar Creek across Zika Avenue NW from the Ellis Golf Course was set aside for now by a City Council concerned last night that it was being asked to give big incentives for what really is market-rate housing.

The council has been willing to provide city incentives on projects that address the city’s need for affordable housing, a need exacerbated by all the affordable housing lost in the June 2008 flood.

However, most on the council last night were unclear how the plans of developer Darryl High, president of High Corp. of Cedar Rapids, met the affordability criteria. Only 20 of the 81 homes, which will be “rent-to-own” ones, clearly met the standard, some council members said.

High is seeking $2.5 million in incentives or $31,000 a home. Part of the money will go to him to help install streets and other infrastructure and part of the money goes to the builder to buy down the buyer’s cost of the home.

The council also noted that the city hasn’t identified a funding mechanism to pay for the incentives that High is seeking.

The state of Iowa only recently agreed to fund down-payment assistance for 177 new homes in Cedar Rapids in an amount equal to 30 percent of the cost of the home or up to $60,000.

The city is applying for a second round of that state disaster funding, and High might be able to qualify if it comes through, Marty Hoeger, the city’s real estate development coordinator, reported to the council last night.

Council member Chuck Wieneke said most of the High Corp. proposal seemed to him as if the city was being asked to subsidize a typical, market-rate housing development. He said it would be a terrible precedent to set and might open the City Council up to paying for infrastructure and other help for every new housing development that comes along.

Wieneke informed his council colleagues that the City Planning Commission turned down the Sugar Creek’s site development plan last week on a 4-3 vote because of concerns about water runoff and the density of the proposed development.

Long-expected renovation of the flood-damaged Roosevelt gets more tax-credit help; work could start by month’s end

The renovation of The Roosevelt, the flood-damaged apartment complex that once was a hotel, may now begin by month’s end, Jackie Nickolaus, vice president of developer Sherman Associates, said Wednesday.

Nickolaus was providing the project update as the Iowa Finance Authority, which met in Cedar Rapids, approved an additional $804,750 in affordable housing tax credits to help fund the renovation project.

Sherman Associates earlier had secured $5.985 million in tax credits from the state authority, but on Wednesday returned to ask for a supplemental grant.

Nickolaus said the additional tax credits were needed to cover additional costs for environmental testing and cleanup, elevator restoration, some demolition and pipe and mechanical system replacement.

The hope, she said, is to move tenants into the 12-story building’s top three floors six months after renovation starts. The project should be complete in a year, Nickolaus said.

The renovation will convert non-residential space on the building’s second floor into apartments, but will retain the first floor as commercial space. “Quite a few” possible commercial tenants have looked at the first floor, Nickolaus said.

In late April, Sherman Associates, of Minneapolis, Minn., put the total cost of the renovation at $10.3 million. The city has given the project a 30-year, $1.6-million loan at 1 percent interest, though the loan will lessen to $1 million if and when the project also secures historic tax credits.

Affordable housing projects dependent on federal tax credits have had difficulty getting started in recent months because of the economy. Nickolaus said Sherman Associates has investors to buy the credits for The Roosevelt project.

With tax credits, investors contribute money to a project upfront in exchange for credit against their taxes over a period of 10 years. Of late, the investors have only been willing to provide about 70 percent in upfront money of the tax-credit value they will receive. In better economic times, projects have received more than 90 percent of the tax-credit value in upfront cash, state officials have said.

Sherman Associates bought The Roosevelt in December for $2.2 million.

City Hall 30-year loan for downtown’s flood-damaged Roosevelt clears way for $10.3-million renovation to begin

The renovation of the flood-damaged Roosevelt building downtown is set to begin.

The City Council last night approved a 30-year, 1-percent loan of $1.6 million to help in the $10.3-million affordable housing project.

Much of the funding secured by developer Sherman Associates Inc., Minneapolis, Minn., consists of federal low-income housing tax credits. The city’s loan likely will lessen to a $1-million one once the renovation of the historic building secures historic tax-credit financing.

The city earlier provided other short-term funding for the project, which will be paid back once the renovation is complete.

The renovated Roosevelt, which was converted to apartments from a hotel some years ago, will consist of 96 housing units, 90 of which will be affordable ones.

Jackie Nickolaus, Sherman vice president, told the council last night that the top three floors of the Roosevelt, which had been renovated in recent years by the prior owner, might be ready to occupy within six months once the building’s mechanical systems are installed.

Sherman Associates bought the building in December for $2.2 million.

Some say ‘no vouchers next to me;’ city official reminds that voucher safety net gives 2,453 ‘very low-income’ decent housing

It’s easy to paint a less-than-pretty picture of the poor.

Much of that has gone on in recent months in and around City Hall as the owners of single-family homes and condominiums have turned out to object to proposals to build new “affordable” housing developments with substantial help from federal tax incentives to replace housing lost to the June 2008 flood.

One objecting neighbor who referred to “those” people didn’t win fans among some on the City Planning Commission.
The developers and supporters of the affordable projects can sound kind of similar. They spend much time noting that affordable housing is really “work force” housing and that people who live in those rental units typically have jobs.

Affordable housing is different, the proponents take pains to point out, than the federal government’s housing “voucher” program.

It is different. But sometimes, one objecting neighbor pointed out at a recent Planning Commission meeting, managers of affordable housing complexes let those with vouchers rent from them. …

Once a year, Scott Seibert, the city’s housing services manager, comes before the City Council to talk about the voucher program as required by the U.S. Department of Housing and Urban Development.

Seibert was on hand last Wednesday evening to provide the latest update on the federal program that he said provides a vital assist to allow very low-income families, the elderly and the disabled to rent decent, private-market housing.

At the same time, the Cedar Rapids voucher program provides $4.4 million a year in rent assistance payments that go to the metro area’s landlords, he noted to the council.

Seibert reported:

Currently, 1,055 households and 2,453 people in them currently are living in rental property using vouchers in Cedar Rapids, the metro area and elsewhere in Linn and Benton counties.

Eighty percent of the heads of those households are female (down from 86 percent a year ago); 45 percent of the households consist of a single person, some of whom are elderly or disabled; 37 percent of the households have someone bringing home income; and 89.6 percent have annual household income under $20,000 a year.

Those in the program pay, on average, $201 a month in rent.

The voucher program aims to de-concentrate poverty by encouraging landlords from every area of the city, metro area and Linn and Benton counties to participate in the program.

In 2008, 178 vouchers were used in southeast Cedar Rapids; 305 in northeast Cedar Rapids; 303 in southwest Cedar Rapids; 74 in northwest Cedar Rapids; 120 in Marion; and 36 in Hiawatha.

Seibert told the City Council that 155 households are participating in a part of the program called “family self-sufficiency,” which provides some assistance to help households get out of the voucher program. In the last year, 24 succeeded in moving off the voucher program, 13 others no longer need support from welfare payments and two purchased homes, Seibert reported.

One young mother in the program told the council that the voucher assistance has provided the stability she needed to finish her college studies and a disabled woman said the voucher program had been a lifesaver for her.

First post-flood victory for new ‘affordable’ replacement housing: Cedar Pond Townhouses to go up on a part of what had been Chapman Fun World

Neighbors out along Wilson Avenue SW near Williams Boulevard and Westdale Mall lost out this week on their attempt to block the construction of 90 rental units on about 11 acres of land.

Part of the site used to be home to the Chapman Fun World, but for opposing neighbors, the fun is long gone. Some 224 people signed a petition against the development, called Cedar Pond Townhouses.

The 6-2 City Council vote in favor of the development clears the way for the first newly built, affordable rental housing to be built to replace affordable housing lost in the June 2008 flood.

Much has gone into City Hall’s effort to do just that, build more affordable housing, since the first months after the city’s flood disaster.

The City Council created a Replacement Housing Task Force last September and then it successfully lobbied the federal government to increase a key federal funding tool – federal tax credits – for the state of Iowa.

The Cedar Pond development will use tax credits and some local financial incentives for much of its funding. For the tax-credit financing piece, private investors pay money upfront for a housing project’s construction and, in turn, have their federal tax liability reduced.

The upfront money allows the developer to take on much less debt, and, as a result, the developer can and must keep rents affordable. At Cedar Pond, only those earning at or below 60 percent of the average medium income for Linn County can rent the units.

The opponents made good arguments on Wednesday evening about potential problems with water runoff from the proposed development and about traffic problems that already exist in the area.

District 5 council member Justin Shields — this is his council district — was convinced. He said the site was too wet for the development. And he said he had heard before how a developer’s engineers were going to take care of everything, and then they do not.

But in these discussions about affordable housing, a central concern, too, is just who might live in affordable housing.

It’s clear it’s an issue, not so much by what opponents say, as what proponents and the developer say.

In this instance, Greg and Candace McClenahan, of EverGreen Real Estate Development Corp., Prior Lake, Minn., are the developers, and Candace McClenahan emphasized to the City Council and to the opponents in the audience that people who live at Cedar Pond must have jobs so they can pay up to $570 in rent and $78 a month for utilities each month for a two-bedroom apartment and $670 and $101 for utilities a month.

There is even a new term — work force housing — for these kinds of developments, which Mayor Kay Halloran used to express her support for the project. Given the affordable housing lost to the flood, this is “new housing for our work force,” she said.

Council member Tom Podzimek took exception to neighbors who called the rental development incompatible with the area.

“Affordable housing doesn’t seem like an incompatible use,” he said.

At the end of the day, the opposing neighbors had a tough case to make, in large part, because an early development on the same site had been given approval a few years ago. And that development had three-story buildings, not two-story ones, and it had 38 more rental units.

The McClenahans also came along with a plan at a good time when the City Council was eager to replace some of what the 2008 flood destroyed. And the McClenahans spent much time refining their plan and scaling it back as they worked to please the city’s Replacement Housing Task Force. Task force member Ben Henderson told the council just that on Wednesday evening.

Two members of the City Planning Commission also came to the council meeting to explain why the commission earlier had backed the project.

Chris Dostal, a 2005 City Council candidate, was among neighbors arguing against the development because of the traffic nightmare that he said already exists on and around Wilson Avenue SW. But the timing of that argument wasn’t the best either: the city’s multimillion-dollar viaduct project on 33rd Avenue SW will be ready for traffic in the fall and should reduce traffic on Wilson Avenue by a third, a city engineer said.

Cedar Pond now heads to Des Moines to secure tax credits from the Iowa Finance Authority. This comfortable territory for the McClenahans: They’ve built 11, regulation-heavy, tax-credit projects in Iowa and Minnesota in the last 12 years.

Three other new, new-construction, tax-credit projects have been proposed for Cedar Rapids since last September. One intended for the former Ellis Golf Course chipping area has been abandoned in the face of neighbor objections. A second at 1100 O Ave. NW is opposed by neighbors and has gotten a lukewarm reaction to date from the City Planning Commission. A third project, planned for the Oak Hill Neighborhood has yet to secure tax credits.

Victorious arrival of federal tax credits hasn’t brought new affordable replacement housing; economy, neighbors’ distaste, iffy sites may factor in

Last fall the City Council and state policymakers billed the arrival in Iowa of a significant new commitment of federal affordable-housing tax credits as a victory for disaster relief.

To date, more than nine months after Cedar Rapids’ 2008 flood disaster, no part of the new pot of tax credits has done anything to bring more affordable housing to Cedar Rapids to replace affordable housing lost to the flood.

Last week in an interview with Iowa Finance Authority officials, though, they assured that tax-credit projects will be forthcoming despite a downturn in the national economy.

Projects are “taking a little longer,” Dave Vaske, IFA’s tax-credit manager, said last week.

But Vaske pointed out that in the best of economic climates it typically can take nine months between the IFA’s award of tax credits for a developer’s project and the actual start of construction.

In recent months, the city’s Replacement Housing Task Force has recommended and Cedar Rapids City Council has voted to provide City Hall financial incentives to five different developers — all out-of-towners experienced in the regulation-heavy tax-credit program — and their tax-credit-financed proposals.

The one of the five projects most likely to get moving in the foreseeable future is the renovation of The Roosevelt, the former downtown hotel-turned apartment complex that is now flood-damaged and empty. Sherman Associates Inc. of Minneapolis said recently that work could begin as soon as April.

In December, the IFA awarded $598,525 to Sherman Associates to acquire and renovate The Roosevelt, and the IFA also awarded $725,464 in tax credits to MetroPlains LLC, St. Paul, Minn., for the construction of Cedar View Apartments, a proposed 45-unit senior-living complex at 1100 O Ave. NW. Cedar View, though, has run into neighborhood opposition and some questions from the City Planning Commission.

In a third project, Sherman Associates has withdrawn plans to build apartments and town houses on a 6-acre site that the city’s Ellis Golf Course formerly used as a practice chipping area. Neighborhood opposition was too organized and strong.

The developers of two other projects — Des Moines developer Jack Hatch’s plans for 96 apartments in the Oak Hill Neighborhood, and the plans of EverGreen Real Estate Development Corp., Prior Lake, Minn., for 90 town homes off Williams Boulevard SW — have yet to obtain approval from the Iowa Finance Authority for tax credits. Hatch’s plans, though, are not expected to see neighborhood opposition, and the EverGreen plan has won backing from the City Planning Commission despite neighbor opposition.

The IFA’s award of tax credits is just a step, and the IFA’s Vaske noted last week that the developer has a tougher job now to put together the entire financing package for a development because the market for tax credits is not what it had been just a couple years ago.

In recent years, he noted, it had been possible for a developer to find the purchaser of tax credits to provide 90 percent of the value of the tax credits to a project in return for the full value of the credits being applied to the investor’s tax liability over 10 years.

Now, the developer may get just 70 percent of the value of the tax credit to apply to a project.

As a result, the developer has to work harder to find other money to make the financing of a project work, the IFA’s Vaske said.

Nonetheless, the core of the financing of these proposed affordable-housing projects comes from the federal government’s tax-credit program. The idea is that the investor contributes money upfront and quality affordable housing gets built in exchange for forgiving the investor some of his tax liability. By getting the investor’s money upfront, the developer can build with limited debt and so can keep rents so they meet federal income guidelines. Arguably, too, developer can build better-quality buildings.

The IFA’s Vaske said the state agency is “hearing some optimism out there” despite the fact that pricing for the tax credits has dropped in the current economic climate.

Both local banks and local corporate investors are expressing interest in some of these tax-credit projects, he said.

The IFA, Vaske added, also is paying particular attention to the recent and sprawling federal stimulus bill to see if there is money in it that can be applied to tax-credit projects to help fill some financing gaps.

“We’ll see if it’s a way to help those projects come about,” he said.

At the end of the day, developers off these projects will often face a wrestling match with neighbors because the name of the tax credits is “low-income housing tax credits.”

In an assortment of public meetings over the last several months, each of the developers proposing projects in Cedar Rapids has argued that their tenants are people with jobs. In fact, a new term has surfaced here in the last year — “work force housing.”

At a recent City Planning Commission meeting, a local Realtor noted those who live in 90 percent of the metro area’s apartments can meet income guidelines for the new apartment projects being proposed. One opposing neighbor, though, noted that she really didn’t want those people living nearby.

At the same time, proposed developments can be badly placed and unfair to existing neighbors and the wider community. Not every opposition emanating from neighbors ranks as a NIMBY — Not in My Back Yard.

Long-in-coming help for flood-hit landlords is on the way

Help is nearly here for landlords of flood-damaged properties.

The City Council this evening is expected to hire a local firm, Transitions Made Better Inc., to administer housing rehabilitation funds for landlords with flood-damaged properties.

Paula Hinzman Mitchell, supervisor in the city’s Housing Services office, said the city expects the state Department of Economic Development to begin to release Community Development Block Grant funds to help flood-affected landlords soon once the city has its program to administer the funds in place.

To date, more than 500 landlords with a total of 874 rental units have applied for help from the program with the cumbersome name, Rental Rehabilitation – Small Projects Disaster Recovery Assistance Program.

Hinzman Mitchell said it would cost about $22 million if each of the units received the maximum rehabilitation award of $24,999. An additional $12,500 per unit is also available to cover added project costs, which include lead-based paint remediation in instances where it is necessary.

Landlords have been agitating for housing rehabilitation help for many months as both state Jumpstart funds and federal CDBG funds have come into the city for homeowners and small businesses.

The landlords have argued that they were a major provider of affordable housing in the city’s flood-damaged neighborhoods and that getting their properties renovated was the quickest, cheapest way for the city to reestablish affordable housing lost in the June 2008 flood.

“Certainly one of the goals of the CDBG program is to provide decent affordable housing, and so this activity will be consistent with that overall major goal,” Hinzman Mitchell said.

The landlord program is open to those with seven or fewer rental units, and the assistance will come in the form of five-year forgivable loans.

Hinzman Mitchell noted that city had invited several entities to submit proposals to administer the landlord assistance program, but only Theresa Bornbach, president of Transitions Made Better Inc. in Cedar Rapids, submitted a proposal. Bornbach has experience administering state Jumpstart funds for local businesses, Hinzman Mitchell said.

The firm will receive an administrative fee of up to 2 percent to administer the program.

Keith Smith, president of Landlords of Linn County, told the City Council last night Bornbach has earned his respect in the way she has advocated for small businesses during the flood recovery. He said landlords were confident Bornbach would “meet our needs.”

Bornbach is founder/CEO of Corridor CoWorks Inc. and The Corridor Institute, and she is a former Alliant Energy vice president.

An ‘affordable’ housing project wins Planning Commission approval despite neighbor protests; city might get one of these projects built yet

The city might actually see some affordable housing built.

Most of the housing lost in the June flood was old, working-class housing, and many of the residents who lost out were on fixed incomes or were earning moderate to lower incomes.

For that reason, City Hall has been intent on building so-called “affordable” rental housing in the city to replace what has been lost.

In fact, the City Council and the state of Iowa both lobbied Iowa’s congressional delegation hard and successfully to secure additional federal tax credits for the state to help provide funding for affordable housing.

At the ninth-month mark of the flood, the City Council has backed in concept and with local financial support five different affordable housing projects, all designed to use federal tax credits to pay for the bulk of construction.

None of the projects, though, has started.

However, one of the five projects took a big step toward realization this week when it won the City Planning Commission’s approval to move ahead despite strong opposition from neighbors. The City Council now will vote on the commission recommendation.

The latest project calls for the construction of 48 two-bedroom units and 42 three-bedroom ones with affordable rents on 11.2 acres of land east of Edgewood Road south of Williams Boulevard and north of Wilson Avenue SW on property that, in part, used to house Chapman Fun World.

The developer of the Cedar Pond Townhomes is Greg McClenahan, president of EverGreen Real Estate Development Corp., Prior Lake, Minn.

McClenahan addressed the City Planning Commission this week as did a dozen or so neighbors.

One particular strong note from McClenahan: He pointed out that a previous developer – who abandoned a project a few years ago after some grading and sewer work — had gotten all the city approvals to build 128 apartments on the same site. And those units would have been three-story; the Cedar Pond development will have two-story units, he said.

The neighbors centered their objections around water runoff issues and around increased traffic in and out of their developments and on busy Wilson Avenue SW.

One line of reasoning that didn’t resonate with the Planning Commission members was the worry that people living in the new development of “affordable” rental units would lower property values and increase crime.

One objecting neighbor asked the commission “to protect us from these social differences of these people from us.”

McClenahan noted that those who will be renting apartments at his other tax-credit properties are people who work for a living.

Scott Olson, the local commercial Realtor who is one of six partners who own the land, argued to the commission that 90 percent of those who rent apartments in Cedar Rapids have the same incomes as those who will rent one of McClenahan’s units.

Some objectors noted that McClenahan is from Minnesota. He pointed out to the commission that he grew up in Iowa, graduated from the University of Iowa School of Law and practiced law in Cedar Rapids for three years.

He has 11 other tax-credit projects, including ones in Waterloo, Ames and Fort Dodge.

McClenahan has yet to obtain tax credits for the project from the Iowa Finance Authority, the authority said this week.

The authority has noted that there are fewer investors for tax credits now that the economy has taken a tumble.

In the tax-credit program, a private investor provides money upfront for a housing project and then the investor gets its tax liability over 10 years lessened by the amount put up for the project and some additional amount. The project developer then uses the money for construction, which means the developer does not have to take on so much debt and so can keep rents lower than the developer otherwise could. The local jurisdiction usually contributes money to the project as well.

As for the status of other tax-credit project proposals in Cedar Rapids:

One developer has called off one project, which had been proposed for the former chipping green area at the Ellis Golf Course, in the face of organized neighborhood opposition. A second developer’s plans for senior-living apartments on O Avenue NW also has drawn neighborhood fire as well as a cool reaction from the City Planning Commission.

Des Moines developer Jack Hatch’s plans for two new apartment buildings in the Oak Hill Neighborhood are still in the works, though he has not yet secured tax credits from the Iowa Finance Authority, IFA said this week.

A fourth project, the renovation of The Roosevelt downtown, may start by April, the developer said this
week.