Thomas Breen photo
Ashmun/Canal development site: Soon to get city $ infusion?
The Elicker Administration has proposed spending $5 million of federal pandemic-relief aid on helping delayed affordable housing developments get off the ground in Dixwell, West River, and the Ninth Square.
That’s according to a legislative order submitted on March 17 by Livable City Initiative (LCI) Executive Director Arlevia Samuel to the Board of Alders.
The proposal calls for appropriating an additional $5 million of federal American Rescue Plan Act (ARPA) funds for the city’s “I’m Home Initiative Rental Development Program.”
If approved by the full Board of Alders, the legislation would direct $5 million in federal pandemic-relief aid to help close the financing gap for affordable housing projects across town that have been long in the works, and where construction has yet to begin.
In a March 17 cover letter, Samuel explained all of the projects to receive this aid include affordable rentals for tenants making no more than 65 percent of the area median income (AMI).
176 apartments, coming soon...
She wrote that $3.5 million of the requested funding would provide “gap financing” for “several existing shovel ready rental development projects” that should be done by the end of 2026. Those include:
• A five-story, 176-unit apartment complex planned at a fenced-in 1.7 acre site bounded by Henry Street, Canal Street, and Ashmun Street. That project will include 58 new income-restricted apartments, with the remainder to rent out at market rates. The Board of Alders voted in late 2020 to sell the property to local developer Yves Joseph for $500,000 and to fix the affordable units’ taxes at $400 per apartment for the first five years of a 15-year deal, with a 3 percent annual increase for the following 10 years.
• A 58-unit apartment complex at a vacant lot at 16 Miller St., which will include 44 income-restricted apartments. The Board of Alders voted earlier this year on a revised 17-year tax-abatement deal that set the annual tax burden for those 44 affordable apartments at $450 per unit per year, with a 3 percent annual increase.
• A 76-unit apartment complex atop at the corner of State and Chapel Streets, which will include 60 income-restricted apartments. That project also received a 17-year tax break deal from the alders that sets the 60 affordable apartments’ tax burdens at $400 per apartment per year, with a 3 percent annual increase.
“All three projects are approaching the final pricing stage and there is gap that cannot fully be made up through financing, additional equity, or value engineering,” city spokesperson Lenny Speiller said about the rationale behind this proposal.
In addition to funding those various projects, Samuel wrote in her March 17 letter, the city is looking to spend the remaining $1.5 million of this requested appropriation to “enable further investment in other pipeline rental projects, delivering approximately an additional 100 affordable rental units at or below 65% AMI by the end of 2026.”
Speiller and city Economic Development Administrator Mike Piscitelli told the Independent that LCI will go into more detail on this appropriation proposal at an upcoming aldermanic committee meeting.
This latest ARPA spending approval comes after the alders recently signed off on spending $3 million in federal pandemic-relief aid to fund a new math and literacy tutoring program, another $1.3 million on plow trucks and parks vehicles, and another $4.5 million on new police cars, fire trucks, and fire hydrant fixes. Local legislators have already approved spending $53 million in ARPA aid on a mix of housing, vocational technical education, youth engagement, business support, and climate resiliency initiatives, and an additional $43 million on everything from police department surveillance cameras to expanded youth employment programs to a new Department of Community Resilience to budget mitigation efforts for funds lost during the height of the pandemic.
A total disaster. Real estate developers and investors, whether market rate or "affordable", want to generate a certain return on their investment. If the return isn't high enough, they might as well invest in something else, like the stock market. That's why these projects haven't started construction yet. The rents being charged aren't high enough to generate the returns the investors expect. So the projects either stall until building material prices come down, they figure out a way to raise rents or add apartments, find some other revenue or cost savings, or they convince the government to subsidize their returns.
The Henry, Canal, and Ashmun Street property was worth millions, yet the City sold it for $500K. The State and Chapel Street developer paid millions for the property because it was worth that amount and the seller was a knowledgeable private real estate investor.