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City Council Meeting September 13

City cranks up its "affordable housing" program
What about Ansonborough Field?
Marc Knapp

Affordable Housing was the main topic in last night's council meeting. Fortunately, the discussion was more civilized than that of the previous Council meeting. Nor was there anything contentious.

Up for discussion was the change in the arrangement with the developer of Morris Square. The developer, originally Civitas but now Smith -Morris Company LLC, was obliged to proved the City with 6 units which would be available for sale as "affordable housing". Under the new arrangement, the developer will sell these properties at market and pay the proceeds to the City. The net proceeds are expected to be close to $1 million but the developer is guaranteeing $900,000. As part of the new arrangement with the City, the developer is deeding 3 parcels of land in Phase II of the development to the Episcopal Diocese CHDO (EDCHO) for future development as "affordable housing".

The funds from the sale of the 6 units referred to above as well as a $196,000 grant from the Charleston Housing Trust are to be passed on to the EDCHDO for the development of "affordable housing". Under a separate agreement before the Council last night, the City will transfer about 17 properties to the CHDO for development as "affordable housing". The funds received for the grant and the sales of the 6 Morris Square units will be used to finance new housing or renovate existing homes on the sites, including the 3 parcels in the Phase II development on Morris Square.

The 17 lots being transferred to the EDCHDO include the 3 lots in the Phase II development and 14 other properties on the Peninsula. As the original cost of these latter lots will be considered part of the subsidy for final buyers, we presume the transfer price will be nominal. We did a quick search of County records to find the cost each of the lots. They range from $500 to $64,500 but with an average of about $20,000. This is well below the cost of some transfers the City has made in recent times to other "affordable housing" providers. The EDCHDO expects that development and sale of all units will be completed by 2012.

All of the units will be sold under the City's "affordable housing" program and will be offered to families earning 120% or less of the area's median income. We note Council member George's comment about the shortfall of the City's program, in that buyers will not able to full capitalize on the gains that accrue on the value of affordable housing units, the gains being limited to the percentage growth of wages in the area. This has been a factor in restraining some potential "affordable housing" purchasers. The Mayor responded in saying that he did not think that house prices would continue to rise in future at past rates and that it would not be an issue.

We think that the arrangement the City has made is good. As well as providing more "affordable housing" it will help is some way to restrain gentrification in run-down parts of the City. And there is no doubt after looking at the photos of the properties that the renovation planned will be uplift for the communities.

Council member Lewis rebukes the Mayor
Mayor Riley received an unexpected rebuke though when he went on in his inimitable way to praise the City's Capital Projects group for arranging the deal. Council member Lewis, "affordable housing's" greatest advocate on Council told the Mayor in no uncertain terms that he was wrong. Capital Projects had done "diddly" before this deal. And there was no smile on his face.

What about Ansonborough Field?
We would like to think that the deal approved by Council last night will be the first in a number of similar deals. It makes sense to sell units in high priced developments at market and take the proceeds to develop "affordable" units in depressed areas where land values are much lower. We suggested this a number of times in relation to the development of Ansonborough Field. Here the City is planning on mixing "affordable" and regular condominium units. We grant that the units will be indistinguishable from each other but the economics argue for the sale of all at market rates and the proceeds used elsewhere. The "affordable" units on Ansonborough Field will probably have a market value of about $350 a square foot or about $350,000 for a 1000 sq ft condominium. With some 40 or more "affordable housing" units to be constructed, there could be a lot of cash for more "affordable housing" on the East and West Sides.

And as the Mayor noted, there was the potential for another 250 units in the area that would become available with the demolition of the old bridges across the Cooper River and access roads. We assume that most units will be "affordable housing" and that funds will be needed for the development.

City to sell property to Pastors Inc executive director
The sale of a piece of City property to Orland Newkirk was before the Council last night. Mr. Newkirk is the executive director of Pastors Inc, the non-profit group that Council member Gallant was once a director. He wants to buy 76 Lee Street from the City for $184,793 and under the City's Affordable Housing program. According to the documents submitted to Council, Mr. Selkirk will receive a subsidy from the City of $37,700 to be applied against the purchase price. The City paid $20,000 for the property in 2002 but there is no record available as to what the City spent on development of the property. Council member George questioned the sale and was assured by the Mayor that the property had been listed with the Space Company and had been appropriately advertised.
Upper King Street contract questioned
Some Council members questioned the high cost of the Street Scape project for Upper King Street. The $12 million cost has already been noted in the daily press. Only one company bid - Gulfstream, a subsidiary of the Beach Company. The City stated that it hoped there would be more bids but for a number of reasons, there was only one. Four contractors had been requested to make bids but two of these had so much work already, that they could not consider the contract. The remaining was whittled to one when Anson Construction took on other contracts and was too stretched to post the necessary bond. Anyhow Anson Construction was likely to be a major subcontractor.

The City noted that the final bid came in 7% above the estimate by the City. In reflection, this was not a surprise in that in the interim period, some costs had risen, particularly of petroleum-based products.

Council member Gallant asked about the participation of minorities in the contract. The answer was "not much". The City had made an attempt to increase minority participation but it was expected to be less that 4%. This reflected more than anything else the very limited number of minority firms that were eligible to participate.

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