Johnson County approves $1 million loan for affordable housing project
SHAWNEE, Kan. – Johnson County will help fund 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 create a 144-unit apartment complex near 75th Street and Highway K-7 in Shawnee.
The county’s interest-free loan will cover approximately 3% of the $30.5 million project, providing an investment of approximately $6,944 for each unit in the complex.
Commissioners Charlotte O’Hara and Michael Ashcraft voted against approving the loan. O’Hara expressed concerns about the loan setting a new standard for other developers to seek loans or county incentives in the future.
“They have a plan in place. It’s a for-profit organization, and it’s not up to us to provide them with $1 million interest-free,” O’Hara said.
The developer will pay the county $10,000 per year for 14 years, with the remaining balance of $860,000 to be paid at the end of the 15th year.
Approximately 40% of the project will be funded by the Low Income Housing Tax Credits (LIHTC) provided by the state. Approximately 47% of project costs will be in the form of a mortgage lien and, according to county records, the remaining balance will be paid for by deferred development costs, partnership capital contributions and construction period revenue.
Last November, the City of Shawnee approved approximately $30 million in multi-family revenue bonds for the project. Jay Leipzig, director of planning, housing and community development, said that on a bond basis, the sales tax exemption for the project 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 labor housing, which means the tenants would be people who earn 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 approximately $40,680; a family of two could earn up to $46,500 per year; and a family of three would be capped at an income of $52,320.
Assistant Director of Housing Services Jessica Hotaling said not all apartment residents will use HUD’s Housing Choice Vouchers (HCVs), but each tenant must meet income limits.
“Not all 144 units in this particular development will accept housing vouchers. The developer will accept housing vouchers if we have customers who would choose to live there, but the 144 units will not be filled with housing choice vouchers,” Hotaling said.
Hotaling said the county had not estimated how many people living with HCV would occupy the apartment complex.
Jason Swords, director of the Sunflower Development Group, said the project would not move forward without the county’s investment.
“The dollars we’re asking for from Johnson County, if it’s a million dollar loan, I’m prepared to personally guarantee that loan. My company is prepared to personally guarantee it,” Swords said. .
Swords said the property currently generates about $2,906 in property taxes, but estimates that once the apartments are completed, the company will pay nearly $199,000 in annual property taxes.
“I view it as a fully secured and guaranteed loan that is risk free or if there is a risk, [it’s an] extremely low risk to a county ratepayer,” Commissioner Jeff Meyers said.
Around ten people spoke at the public hearing on Thursday morning. Kate Capps said the project could fill a housing need as rental prices in the area continue to rise.
“Each of us may have a family member or friend who has to pay rent despite working. The Hedge Lane Apartment project will give people a head start towards financial stability and a step away from the possibility of becoming homeless,” said Capps.
Rebecca Shipley said she felt the loan was not structured fairly for taxpayers and that it would be more appropriate to include a market value interest rate on the county contribution.
“My problem is that my tax money is now treated as if you [the county] we’re a bank that’s making a very bad investment with zero percent interest with our taxes,” Shipley said. “If they can personally secure the loan, then why wouldn’t they personally go and get the money and make that investment.”
Suggest a fix