Proposed workforce housing project looks to trim construction cost
Proposed changes to move an income- eligible housing project forward drew questions and concerns from members the Medford city council on Monday night.
In May 2021, the city council approved selling a 4.4. acre parcel of vacant industrial park land near the Northcentral Technical College Campus on Progressive Ave. to Commonwealth Development Corporation of America as part of an effort to get affordable “workforce housing” in the city. The company was seeking a federal tax credit program to build a 40-unit multi-family workforce housing development on the parcel.
The tax credit program is awarded competitively, but the Medford project missed the initial limit with two municipalities scoring ahead of them for projects. According to Mayor Mike Wellner, at the time, Commonwealth advised the city that projects occasionally drop out which could move Medford’s project into qualifying.
See CITY on page 4 At Monday’s meeting, Wellner said the city was contacted in October with word that two projects had dropped making the project here viable. The challenge, though, was that between the project being developed in late 2020 and early 2021, and now, construction material, labor and interest costs have gone up. Wellner said this left Commonwealth with a $1.5 to $2 million funding gap with the company coming to the city and county to ask for help.
City Coordinator Joe Harris said the city was unwilling to give that level of support, but negotiated with the developers with what could be possible. On Monday, he presented those ideas to the city council to see if it was worthwhile to move forward.
Harris suggested that instead of selling the property to the company, the city could give it to them — something routinely done in development projects. In addition, the city would contribute another $50,000 from designated housing funds that are part of the closure of Tax Incremental District No. 12. Commonwealth also proposed eliminating a garage structure on the property and replacing it with asphalt parking spaces which will reduce the overall construction cost by about $500,000.
With the changes, Commonwealth would be able to begin construction of the apartment complex in Spring 2023.
If the city decided to start over with a different developer for the same credit program, they would not be able to make the deadline for this year and would have to wait to apply next year, with notification sometime in 2024 and the earliest work could begin would be 2025.
Council member Laura Holmes questioned how the developer didn’t realize they would be that short. Harris said the funding stayed the same but costs went up. “That is the gap there,” he said.
“Do we need it?” asked council member Dave Brandner, he noted the new apartment complex being built on Pep’s Drive and other projects around. He also noted that with wages higher in the community, qualifying to live there may be a challenge. He said you would have to almost not have a job to qualify.
Harris disagreed saying that the income limits go up for number of people in a household. He said that for a single parent with two kids, the qualifying income would be $55,000 per year and that for people working locally there are a number who would qualify.
Harris explained that the complex would be income eligible with the rent for 32 of the 40 units set at being no more than 60% of the average county income. The remaining eight units will be rented at market rate.
Wellner clarified that if the project moves ahead the financial responsibility for it is on the developer, not on the city. “They are the experts, if they put this up and can’t rent them out, that is on them,” he said.
Unlike subsidized housing projects in the past, such as those through Impact 7, the apartment complex would pay property taxes.
“As business people, I don’t think they would put them up without some pretty good numbers,” Wellner said.
Council member Greg Knight spoke in support of the project even without the garages. “There are a lot of apartments that don’t have garages,” he said.
As far as need, Knight cited a housing summit held a few months ago in the community with area business and industry leaders. “They seemed pretty adamant that we need all of these units to be built,” he said.
Having ones geared to lower income is also important so that employers can fill all the jobs that are needed in the community and that the workers still have a place to live.
“The message I got was that we needed these units,” he said.
Wellner noted that the goal of these is to give people a place to start and that over time the residents will move on to other apartments or into homes.
Council member Mike Bub was more critical about how much the company is actually putting toward the project while they seek help from the city and elsewhere for it. “They want everybody else to pay,” he said.
He quoted the mayor’s comments that the developers were the experts, but “They weren’t so expert when they made the presentation,” Bub said about the cost projections.
Harris said he has spoken with other developers and other cities with similar projects going on and said it is going on everywhere with the higher than projected cost. “It is the world we are in,” he said.
Knight said that the company had no way of controlling inflation or controlling the economy and said that if the credits were not used here to help the city they would end up being used in some other community.
“If we can get 40 housing units, that is not a bad way to spent $100,000,” Wellner said.
“I am not thrilled about cutting garages,” said council member Christine Weix. However she noted that they have been talking about this project for two years and if the city drags its feet now it will cause further delays. “One way or another we have to have this project,” she said.
At this point, the changes were proposed for review by the council with no formal action called for. Harris said he wanted to run it by the council to see the feedback so they knew if they should stop it entirely or move forward with something more formal to come before the council in January.
“They will come in January to answer all the questions,” Wellner said.
Council member Ken Coyer said they should invite the developers to present in January and be able to ask them questions then.
Bub noted the plans still included a clubhouse community space and asked if that could be scrapped to keep the garages. Harris noted that the clubhouse gives points for the project while garages do not.
Knight again supported moving forward with the project with the changes proposed. “To not do it would be stupid, we should get it done,” he said.
The consensus among council members was to have representatives from Commonwealth come to the January meeting to discuss the project and answer questions.
In other business, committee members:
Approved with Bub opposed hiring Ayres Associates to do the engineering work for the planned city bandshell project and for a shelter and splash pad on Whelen Ave. The cost of the engineering is not to exceed $71,000 for the Whelen Ave. project and not to exceed $54,300 for the bandshell with funds to come from donations and undesignated reserve. Bub said that when it was approved to have the city move forward with it a splash pad was not included as part of the Whelen Ave. work. “I would have objected,” he said, stating he felt it was a bad place for a splash pad and that it belonged by the pool. Knight and Holmes said a splash pad was always part of the Whelen Ave. project. This engineering is to prepare the projects to be put out for bid.
Approved a minor change to the police union contract for lateral entry and retention. This was in previous contracts and had been overlooked when the new contract was drawn up this fall.