By Eric Curl
May 13, 2022 – The race is on for state low-income housing tax credits, with applications due by May 20, and the city is attempting to boost the chances of multiple affordable housing projects by lending its support behind the highly competitive process.
The actions approved by the Savannah City Council city council on May 12 include a $560,000 loan to Mercy Housing Southeast for the renovation of the Heritage Place Apartments in Cuyler Brownville. The loan bumps up by two points Mercy’s 2022 low-income tax credit application to the Georgia Department of Community Affairs. The tax credits are typically sold to private investors, earning the developer capital that allows them to keep rents at an affordable level, which the developers pledge to maintain for at least 30 years. In the case of the Heritage Place renovations, the credits are expected help leverage about $14.4 million in financing and tax credit equity, according to the staff report.
The 88 affordable apartments for low-income families are located in two historic buildings, the former Charity Hospital and Florance Street Elementary School, that date back to 1931 and 1929 respectively. The former hospital and school building were rehabilitated as multi-family housing in 2001.
The loan is being drawn from the city’s affordable housing fund and administered by the Community Housing Services Agency, a 33-year-old nonprofit that has been financing similar projects for the city since 2012.
Former fairgrounds property
In addition, the council OK’d a resolution authorizing the transfer of a portion of the city owned former fairgrounds property at 4801 Meding St. Under the plan, about 3.8 acres of the 65-acre fairgrounds site will be transferred to the Chatham County/City of Savannah Land Bank Authority in support of a tax credit application to develop 80 affordable apartments for low-income senior citizens. The city will retain the property if the tax credits are not awarded. Development costs, estimated at about $16 million, will be largely financed through the sale of the tax credits and private financing.
The proposed resolution comes after city council approval last October of P3 Venture Group’s mixed-use development plan for the fairgrounds property that includes senior housing, along with a film production studio, job training center and recreational space. On March 24, the city council approved new residential zoning that allows for the construction of the senior housing on the site fronting Meding Street.
At Thursday’s meeting, the city council also approved amending a redevelopment plan for the Tatemville neighborhood, where the fairgrounds property is located. The amendment is to increase housing investments for low- and moderate-income residents. The amendment also extends the date of the neighborhood revitalization plan through Dec. 31, 2031 so it coincides with the 10-year Housing Savannah Action Plan, adopted last October. The amendment’s adoption is supposed to amount to five points in support of housing tax credits.
A second chance
Thursday’s proposed support for the low-income tax credit initiatives came after the city council’s authorization in April of a $1.26 million loan to Pinyan/Procida Development Group for the development of 42 affordable apartments on former city property at 1700 Drayton St. and 104 East 34th St. That loan is expected to support a low-income tax credit application and leverage $11.74 million in additional funding.
The city sold the property to the development group for $750,000 in late December for the purpose of developing affordable housing there. The city council approved the sale in February 2021 after the city’s Code Compliance Department building at the site was destroyed in a fire in 2020.
The affordable housing fund loan is contingent on Pinyan/Procida Development Group’s tax credit 2022 application being approved. This will be the second attempt to get tax credits for the project following a failed application last year.
Far from guaranteed
It is not uncommon for submitted projects to not make the cut. The DCA’s housing tax credit program typically reviews about 180-200 applications a year and approves about 100 to 120 of them, according to a 2020 report.
The DCA also denied a tax credit application submitted by the Housing Authority of Savannah’s development partner last year. The credits were to help finance the second phase of the River Point development, which includes 53 mixed-income units near the Wheaton Street and Waters Avenue intersection.
To support the project, the Housing Authority board had approved a predevelopment loan in May 2019 to River Pointe II Phase II, LLC in the amount of $378,895, according to an April 14 staff report. As of mid-April, a total of $134,292 has been lent by the housing authority to cover part of the predevelopment costs incurred by the owner.
After an appeal of the tax credit decision was denied by the DCA, the development team is analyzing other funding opportunities, according to the staff report.
While the applications for the two projects within Savannah’s city limits were denied last year, a senior housing development in unincorporated Chatham County was awarded credits, according to the DCA’s 2021 recipient report. The proposed development in the Berwick Plantation community will include 63 low-income and 21 market rate units, according to the tax credit application.
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