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COVER STORY: The ‘new’ public housing: mixed-use, mixed-income

Lagniappe Weekly December 31, 2014

Last month, as the Mobile Housing Board decided to move forward with a $750 million redevelopment of public housing communities on the city’s south side, it selected three developers to get a part of the massive project that would transform three of the oldest and most blighted housing developments in the city.

Hollyhand Development, Columbia Residential and Pennrose Properties Global Development Group — each of which have experience with similar projects around the country — will get about a third apiece of the 330-acre project, Program Director James Brooks said. The plan is to redevelop R.V. Taylor Plaza, Thomas James Place and Frank W. Boykin Tower.

Members of the MHB and staff took tours of housing developments for which the three were responsible in Tuscaloosa, New Brunswick, N.J. and New Orleans.

Hollyhand was a big part of the success of redevelopment plans for Rosedale and McKenzie Apartments in Tuscaloosa, director of development at the Tuscaloosa Housing Authority Chris Hall said.

Both were mixed income redevelopment projects of two of the oldest public housing communities in the city, Hall said. Each date back to segregation, he said, and were built at around the same time, with Rosedale constructed for whites and McKenzie for blacks.

Both redevelopment projects were awarded U.S. Department of Housing and Urban Development Hope VI grants, pouring $20 million of federal money into each, Hall said. The city and county each chipped in $1 million in matching costs. Hall did note that with McKenzie, the city contributed monies in the “millions of dollars” for each phase of the $58 million project.

MHB officials have said the 956 residents affected by the redevelopment of the 1,300 units in those three communities will be relocated, per HUD rules. The same was true in Tuscaloosa, Hall said. In fact, the Tuscaloosa Housing Authority had five meetings with residents before they submitted an application with HUD, Hall said.

“We consulted with residents and let them know exactly what our plans were,” he said. “We had to give them options on where to relocate. We had to work with them to prepare them for relocation.”

Once the project was approved by HUD, Hall said they gave residents a 90-day notice. Mobile’s project has not yet been approved by HUD, but will have to be before construction starts.

Rules for the relocation of residents in public housing were established with passage of the Uniform Act in 1970, HUD spokeswoman Gloria Shanahan wrote in an email message. According to the HUD website, the Uniform Act requires public entities displacing people from their homes to provide relocation advisory services to those tenants, a minimum of a 90-day notice, reimbursement for moving expenses and payments for the added cost of renting or purchasing comparable replacement housing.

“Typically, housing authorities also may provide housing vouchers or access to other housing authority properties as housing options for those who wish to remain in the area,” Shanahan wrote.

“Residents are allowed to come back based on the leasing requirements for the new development. For instance, mixed finance developments usually have a portion of units designated low income; prior residents are provided the opportunity to reapply for those new developments.”

Hall said a survey provided to tenants revealed that 80 percent of the residents in both Rosedale and McKenzie wanted to come back once construction was finished. Only 40 percent came back, he said. In many cases, Hall explained, once residents go to the trouble of moving out it’s not worth it for them to come back.

McKenzie, which has not seen all phases completed, originally had 340 units, but will drop to 256 units. Rosedale, which was built on 15 acres, increased from 188 units to 274. Hall said the two communities are currently at 100 percent occupancy and “try to stay close” to that at all times.

While it remains unclear what role Mobile Development Enterprises, a non-profit arm of MHB, will play in the redevelopment project, Hall said THA’s non-profit, Tuscaloosa Affordable Housing Corporation, doesn’t play a role in the management of their developments. Hall said, as of right now, the non-profit only manages THA’s home ownership program, which targets the highest earning residents and prepares them for home ownership.

While the housing authority controls the day-to-day operations of both Rosedale and McKenzie, Hollyhand has oversight in both complexes, Hall said. Hollyhand’s oversight into the management of the development stems from the company’s application for tax credits and an interest in making sure the appropriate guidelines are followed, Hall said.  

Tax credits

In addition to the grant awards for Rosedale and McKenzie, THA benefitted from 9 percent tax credits through the Alabama Housing Finance Authority, which are the largest available and very competitive, Hall said. He praised Hollyhand and their experience for winning such a competitive award. Hall said Hollyhand applied five times with the state for the tax credits for these projects and was successful each time.

“That’s why I think it’s great they chose Hollyhand,” Hall said of the Mobile Housing Board. “They’re one of the best in the state. Every application we’ve submitted has been awarded. It’s a testament to Hollyhand and their relationship with the state Housing Finance Authority.”

The tax credits, which come from the federal government through the states, are considered private financing because they can be purchased by banks, Hollyhand President Win Yerby said. Attaining the tax credits isn’t easy, he said, but it’s where the bulk of funding for these types of development projects is available.

“You have to be experienced in it and it takes a little luck,” Yerby said, adding that many applications for the 9 percent tax credits are unsuccessful. In fact, he said only about 25 to 30 percent of those applications are approved. He said Hollyhand is confident that it can get approved for the tax credits for their portion of the Mobile project, but he compared it to the football teams at Auburn University and the University of Alabama competing for a Southeastern Conference title each year.

“We do have a good track record that we hope we can continue in Mobile,” Yerby said. “We’re as confident as anybody.”

The state also gives developers 4 percent tax credits, but Yerby said those provide less equity and “requires much greater resources from other sources.” He said he doesn’t see a lot of potential in using 4 percent tax credits, but is open to discussing the possibility with MHB, if it’s necessary.

As much as 70 to 80 percent of a project can be funded through these tax credits. The rest is usually funded with public money, he said.  

The Alabama Housing Finance Authority has established housing priorities for 2015. These priorities are what the organization will look for in awarding tax credits for future projects. According to the AHFA website, the group will be looking for projects that add to, or upgrade the existing affordable housing stock; projects that without the credits would not set aside affordable housing for low-income residents; projects that use additional assistance and projects that help create a balanced distribution of credits throughout regions in the state.

Little is known about the total scope of Mobile’s project. The MHB approved the developers last month, but it will take as long as six months for a master plan to be drawn up, Brooks said previously. The project will be completed in phases over a number of years. Yerby said Hollyhand doesn’t yet know where it fits into the project, but given their experience with public housing they would most likely be involved in that phase. He also noted, “you don’t see a lot of mixed-use developments” in the state.

Redevelopment elsewhere

The George and The Vue housing developments in New Brunswick, N.J. are both similar to the project officials are looking for in Mobile, Pennrose Properties spokeswoman Lee Reedy said. Both developments, which are similar to what might be developed in Mobile, are mixed-use and mixed-income properties that have been built and leased in the last four years, she said.

The developments are mostly filled with market-rate apartments and have 100 percent occupancy, Reedy said. Of the 104 units at The George, 21, or about 20 percent, are for low-income residents.

Of the 150 units at The Vue, 38 are for low-income residents and 112 are market-rate. MHB Executive Director Dwayne Vaughn said in other places the percentage of low-income units in a mixed-income development is about 30 percent.

Shanahan wrote that HUD doesn’t require a certain percentage of low-income units for similar developments. She said the number of units depends on the “mixed-finance arrangement,” which includes federal funding. Shanahan said the financing for Mobile’s project will be reviewed once it’s submitted.

Each of the housing developments has a first floor dedicated to mixed-use purposes. The VUE has a Barnes & Noble bookstore on the bottom floor, which is one of the main bookstores supplying students at Rutgers University, Reedy said. In addition, The George has retail space on the bottom floor. Both developments have fitness centers.

Pennrose was the developer of both projects for DEVCO, a non-profit in charge of the revitalization of New Brunswick that has no affiliation with the New Brunswick Housing Authority. Pennrose handles the management of both developments, including day-to-day operations, Reedy said.

Reedy said mixed-use developments and mixed-income developments are becoming more popular throughout the country.

“We’re not isolating the economic sector anymore,” she said. “We’re making it more of a melting pot.”  

Greg Fortner, executive director of the Housing Authority of New Orleans, said a Hope VI grant, Community Development Block Grants, private investments and 9 percent tax credits helped fund a $190 million redevelopment project known as Columbia Parc.

The plan, developed by Columbia Properties and shown on the cover of this issue, is a mixed-use, mixed-income space that includes a space for a charter high school, Fortner said. The plans are still in motion too, he said. There’s room for more units at the complex, which saw a decrease in units from about 1,600 to 683 when it was redeveloped.

Of the 683 units there now, about one third are for low-income residents, on par with the national model. He said that makes sense, given the level of funding housing authorities receive from HUD.

Fortner said the project wouldn’t have been completed without the mixed-income aspect. He said HUD provides less than $400 per unit.

“It usually takes two (market-rate) units to pay for one public housing unit,” he said.

As for trouble leasing market-rate units in a mixed-income facility, Fortner said there is none. He said all the housing is incorporated into a single plan and “you don’t know who you’re living next to.”

The landfall of Hurricane Katrina, which happened midway through the project, affected the relocation of residents, Fortner said. All displaced residents were given vouchers to use to move elsewhere. HANO reached out to residents to see how many wanted to come back, Fortner said, and fewer than 60 percent indicated they would. In actuality fewer residents than that made the trip back.