SHAWNEE, Kan. – Johnson County will help subsidize a new project to bring affordable housing to Shawnee.
On Thursday, the Board of County Commissioners (BOCC) voted 5-2 to issue a $1 million loan to support construction of Hedge Lane Apartments.
Developers Consolidated Housing Solutions and Sunflower Development Group intend to build a 144-unit apartment complex in Shawnee near 75th Street and the K-7 Highway.
The county’s interest-free loan will cover approximately 3% of the $30.5 million project, representing an investment of approximately $6,944 for each unit within the complex.
Commissioners Charlotte O’Hara and Michael Ashcraft voted against approving the loan. O’Hara raised concerns about the loan, which sets a new standard for other developers to seek loans or incentives from the county in the future.
“You have a plan. They’re a for-profit organization and it’s not up to us to give them $1 million without interest,” O’Hara said.
The developer will pay the county $10,000 annually for 14 years, with the remaining $860,000 payable at the end of the 15th year.
Approximately 40% of the project will be funded through government-provided Low-Income Housing Tax Credits (LIHTC). Approximately 47% of the project costs will be in the form of a mortgage lien and according to district records, the remaining balance will be paid for by deferred developer fees, equity capital contributions and construction proceeds.
Last November, the City of Shawnee approved approximately $30 million in multifamily bonds for the project. Jay Leipzig, director of planning, housing and community development, said the sales tax exemption for the project based on the bonds is approximately $1.5 million.
Hedge Lane Apartments will offer 42 one bedroom units, 80 two bedroom units and 22 three bedroom units. The project is considered working-class housing, meaning tenants are people earning less than 60% of the area’s median family income.
For a single person wanting to rent an apartment, the income limit would be set at around $40,680; a family of two could earn as much as $46,500 annually; and a family of three would be limited to an income of $52,320.
Housing Services Assistant Director Jessica Hotaling said not all apartment residents will use HUD’s Housing Choice Vouchers (HCV), but each renter must meet income restrictions.
“The 144 units in this particular development will not accept all housing vouchers. The developer will accept housing vouchers when we have customers who would choose to live there, but not all 144 units will be filled with housing vouchers,” Hotaling said.
Hotaling said the county did not estimate how many people with HCVs would occupy the apartment complex.
Sunflower Development Group director Jason Swords said the project would not move forward without the county’s investment.
“The dollars that we’re asking Johnson County if it’s a multi-million dollar loan, I’m willing to personally vouch for that loan. My company is willing to personally guarantee that,” Swords said.
Swords said the property currently generates about $2,906 in property taxes, but estimates suggest the company will pay nearly $199,000 in annual property taxes once the apartments are complete.
“I look at it as a fully secured, guaranteed loan that has no risk, or if there is a risk, [it’s an] extremely low risk for a county taxpayer,” said Commissioner Jeff Meyers.
About a dozen people spoke during Thursday morning’s public hearing. Kate Capps said the project could fill a housing need as rental prices continue to rise in the area.
“Any of us can have a family member or friend who owes rent even though they work. The Hedge Lane Apartment project will give people a head start towards financial stability and a step away from the possibility of becoming homeless,” Capps said.
Rebecca Shipley said she believes the loan is not structured fairly for taxpayers and it would be more appropriate to include a market rate of interest on the county’s contribution.
“My problem is that my tax dollars are now being treated like you [the county] are a bank that is making a very bad investment with our taxpayers’ money at zero percent interest,” Shipley said. “If they can personally guarantee the loan, why not personally come up with the money and make that investment?”
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