Highlights of the affordable component of the Fourth Street Affordable Housing Special Use District.
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555 4th Street
Conversion of an Approved Live/Work Project with an affordable component.
The proposed legislation for the Fourth Street Affordable Housing Special Use District is innovative and imaginative for the following reasons:
- The private developer is required to turn-key at no cost a completed residential building to a non-profit organization.
- The private developer will be responsible for the soft costs, such as architectural and engineering costs as well as arranging for construction financing.
- The non-profit agency will own and operate the affordable housing building.
- The income from the affordable units will accrue to the non-profit agency, which can be used for social services or for constructing more affordable units.
- The non-profit agency will decide the type and mix of the affordable unit sizes in order to meet the demand of its community.
- The only obligation of the nonprofit agency is to assist the developer to obtain approval of the project and to secure the land or air parcel to construct the building.
For example, the proposed legislation will require the developer to construct an affordable residential building with 33,488.1 square feet. If the affordable building reflects the breakdown of the project to be constructed on Fourth Street, it will contain 19 two-bedroom units, 11 one-bedroom units, and 20 studios. The non-profit agency has the option of requesting the developer to construct fewer but large family housing units or single room occupancy units. If SROs are constructed, the affordable building can contain as many as 135 SROs. Over 50% of the current occupants of SROs are African Americans.
What distinguishes this affordable housing legislation from the previously adopted affordable housing special use district is that the non-profit agency only has to work with the developer in identifying the land and the unit mixed. Except for operating expenses, which is about 15% of the annual income for a new building, and capital reserve for long-term maintenance and replacement items, the non-profit agency will receive an income from the building without having to raise funds for the soft costs, engage in capital fundraising to meet the construction short fall, go through lengthy application processes for federal funding or state bond financing, and will have no mortgage payments.
The private sector can produce the housing cheaper and quicker than non-profit agency. This legislation is a good pilot ordinance and could be used as a model for an ordinance that will allow smaller developers to combine their requirements into one building.