SRHA bonds fight blightPublished 10:40pm Monday, July 15, 2013
The Suffolk Redevelopment and Housing Authority’s first tax-exempt bond issuance in a decade may set a trend fueling more affordable housing in the city, its executive director hopes.
Late last month, the authority’s Board of Commissioners approved partnering on the issuance with Silver Street Development Corporation, which has an office in North Carolina and has completed scores of affordable multifamily housing developments in various states.
Silver Street plans to use bond proceeds of up to $5.5 million to purchase and renovate Wilson Pines Apartments, a 104-unit Section 8 complex on East Washington Street.
In about 1980, real estate agent George Wilson also used tax-exempt bonds through the authority to develop the apartments, authority executive director Clarissa McAdoo said.
Under the plan approved by commissioners June 25, Wilson Pines will remain in the SRHA program for at least the next 30 years. Silver Street expects the U.S. Department of Housing and Urban Development to renew the Section 8 contract for 20 years.
City Council still has to approve the Wilson Pines plan. McAdoo expects a vote in August.
Silver Street’s Senior Vice President Adam McNutt said tenants would remain in place during renovations to the apartments.
The company aims to begin about 18 months of work after the sale closes in October or November, he said.
Renovations valued at about $38,000 per apartment will include flooring, kitchen cabinets, major appliances and air conditioning and heating systems will be replaced, some concrete around the outside repaired, and landscaping redone, McNutt said.
The authority has collected a $7,500 application fee from Silver Street and anticipates a further $27,500 when it earns half of one percent on the bonds, revenue McAdoo said will help improve the fiscal outlook of the Housing Choice Voucher program.
Project costs, including financing, acquisition and construction, will be paid through the bonds and a loan secured by Silver Street, as well with tax credits the developer will market, McNutt said. Profit for the developer will hinge on it bringing the project in on budget.
“Ultimately, it’s going to be how much it costs us to do this,” McNutt said, adding that other factors will include the impact of rising interest rates on debt-service costs. Based on its success, Silver Street could also earn a project fee, he said.
Legislation allows tax-exempt authorities like the SRHA to issue such bonds to encourage affordable housing, and not just inside their respective cities or counties.
The Suffolk authority’s last bond issuance, in 2003, involved a project in Henrico County. It has also helped develop affordable housing in Loudon County, Prince William County, Harrisonburg, Virginia Beach and Smithfield.
“The deals can be used to support the programs as the Board of Commissioners sees fit,” McAdoo said.
Indeed, she hopes the improving bond market and overall economy will bring more developers knocking, and the board could even decide to use bonds to pursue its own projects for the first time.
“It could be the housing authority wants to initiate its own deal,” McAdoo said. “It would have to be big enough to merit going through this process.”
Potentially, the authority’s next bond issuance could bring Section 8 housing to Bennett’s Creek, after the prospect of assisting a stalled development on the corner of Bennett’s Creek and Shoulders Hill roads was also presented to the board in June.
The authority received a $250,000 planning grant from the housing and urban development department for a future “revitalization” of the Cypress Manor and Parker Riddick housing complexes near White Marsh Shopping Plaza in the city’s southeast, along with the surrounding neighborhood, and will need to relocate families while the work occurs.
It’s working with the developer of Meadows at Bennett’s Creek to kick-start the 64-unit North Suffolk project as a potential relocation site. Other relocation sites include Center 800 on East Washington Street and October Downs off West Washington Street.
The planning period for what the authority calls the East Suffolk Community: Whitemarsh Initiative expires at the end of January 2014, when the authority will submit a “transformation plan” to the department in the hopes of securing a $30-million implementation grant, McAdoo said.
“They are only awarding three or four a year,” she said. “Our own bond issue could be how we implement the plan,” estimated to cost close to $60 million.
The project covers a large portion of historic Suffolk, extending north to Pinner Street, east to about John F. Kennedy Middle School, south to Parker Riddick and west to Carolina Road.
Other elements in the mix include multi- and single-family infill housing and senior housing. Transitioning public housing residents to affordable homeownership is a major goal, according to McAdoo.