These are my notes from the meeting. They are in no way comprehensive but my best attempt to keep everyone informed. For those in attendance, I think we can all agree the meeting started out presentations that were interrupted and became a big Q&A session. Therefore, these notes may seem disjointed or may not make a ton of sense. The information conveyed was all over the map. If I have missed anything, feel free to click the comments link above and add your thoughts or observations. Also if you feel any of these notes are inaccurate or mistaken, feel free to correct me and then I will make changes accordingly. Thanks for your understanding.
FINANCING This project is being privately financed by a group of investor’s - 13 year old non-profit. Apart from rent, HUD has nothing to do with the financial viability of the project. It’s a 5 year term, 25 year ??? (I couldn’t hear the end of this). They consider this development to be a philanthropic endeavor. He explained he is a financial investor in perpetuity. (Side note, a perpetuity is an annuity in which the periodic payments begin on a fixed date and continue indefinitely. It is sometimes referred to as a perpetual annuity. Fixed coupon payments on permanently invested (irredeemable) sums of money are prime examples of perpetuities.) They are pursuing affordability with a private sector approach: considering equity and debt. This is exclusively financed privately. They are targeting the “missing middle.” Typical barriers to a development of this kind are land acquisition and construction cost. TC Housing Commission and Socks Construction entered into the purchase agreement on December 21st, 2017 and it was a 90 day agreement. It was clarified that TC Housing Commission will own 51%, the private investors will own 40%, and Socks construction will own 9%. The goal of the project is workforce housing. They will be closing on the property within 3-6 weeks. As part of living at the apartments, you must prove your employment. Original consideration for location was the old third level crisis building which was purchased out from underneath the housing commission. On the East Bay Flats deal, they kept it under their lid until the financing was secured and the purchase agreement was in place. BUILDING CAPACITY Maximum occupancy of a one bedroom unit is 2 adults plus 1 child. Maximum occupancy of the studio unit is 2. At 60 units, this will be around 120 plus people. They explained that no-informal subletting will be allowed. STORAGE They are discussing on-site storage - have options: carports - issues with snow removal; old laundry room, in house storage. SCREENING Typical screening - multi-state background check, debt owed. Reasons for denial include criminal background within the last 5 years, work in conjunction with police departments and residents complaints are always investigated. COLLUSION Some people expressed concerns about a private construction company going into business with the housing commission. This is unusual. They explained it’s a write-off for socks, they plan to make money, and it’s an opportunity for them to learn about apartments. There were concerns of an ethical conflict of interest in regards to future bids for the city. The housing commission explained there is a process in which any entity has to bid for projects. East Bay Flats will primarily work with Socks in the build although for a few things they will get bids. FINANCIAL Additional concerns were expressed about the validity of the financial projections and the outlook for the economy and HUD funds. They explained further concern about the substantial needs of bureaucracy to run the development, the overhead involved, the risk inherent with this population, and questioned the validity of warehousing people to assist them. They have no concerns if the HUD funds run out as the way the individual apartments are designated can change at any particular time based on the economic climate and the ability of residents to pay their rents. Talked about changing the configuration of rooms and the structure of how they charge rent. Also explained it is unlikely that the investors will try to sell the building for profit as there objective is to hold the property long term. SERVICES TO THE YOUTH IN CONSIDERATION A large amount of time was spent discussing the services that will be provided to the youth who need support within the development and the validity of these programs. Alternative ideas to the programs that currently exist were offered - using current homes in the area and allowing individual homeowners to rent out rooms, airbnb, and granny flats. For students seeking education, have them seek housing at NMC, it’s reasonably affordable compared to $1000/month they will be charged at East Bay Flats. It was explained that no HUD funds can be awarded to students housed in dormitories. The average amount of time people spend in these support programs are around 2 years with the option of adding an additional 6 months. This type of program is called rapid rehousing. Concern was raised about whether this would be a magnet for people who need assistance from all around the state - and the program heads say that those individuals comprise less than 5% of the people they serve. There were questions raised if the number of residents who are at-risk can change over time and it was explained that it wouldn’t be financially viable if the building went beyond 15%. TRAVERSE CITY Traverse City is being used as a national example for these programs and services. Studies have shown that Traverse City is in need of 3,000 additional bedrooms. So 60 bedrooms makes a very small dent. FUTURE DEVELOPMENT It was also explained that the city has their eyes on the 8th street-munson avenue corridor for future developments. This project has the potential to expand to the other buildings within 3-5 years. Although those buildings may have similar purchasing structure but won't necessarily serve the same population of people or use the same programs. THE BUILDING & ITS OPERATIONS The property will be smoke free. Any plans for exterior improvements - blend building? main entrance will be in the middle of the east side next to the hotel, paint the building, maintain landscaping as is, maybe some screening, surveillance will be installed only at entrance. ZONING & TAXES The TC Housing Commission is currently exempt from paying taxes - the ordinance they are investigating will look to see if they can adjust that to have them pay the city for the services they provide, levying somewhere from 0-10%. It was discussed whether the city was concerned about a saturation point for the number of developments allowed in which the city will outgrow the infrastructure. They explained that this has been a concern of theirs as well but as far as they can tell we are definitely not close to reaching that. A commissioner explained this is a private property transaction. YOUR TURN OK, it's your turn. What did I miss?
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CALLING ALL INTERESTED COMMUNITY MEMBERS! Tomorrow, Monday March 19th at 1:30 pm city commissioners have been invited to the Country Inn & Suites to tour the site. If a quorum shows it will change to an open meeting and anyone can attend. I am planning on showing up to this meeting and am hoping other community members can make it as well.
I'd love to develop a set of questions/comments that represent our concerns as a community. If you can't attend, please share any questions/comments you have and I will share them with all in attendance at the meeting. Here's what we have so far:
All voices are important. Please share your thoughts with us. This story comes directly from the Traverse Ticker and is one of major reasons behind forming this site. It is imperative that our voice is represented in order to ensure the best outcome for our community. After clicking through to the Traverse Ticker please come back to Cromwell Terrace TC and share your take on what is happening in the comments section above. Would you be interested in forming a united front to try to get our voices heard? "Traverse City Ticker
By Beth Milligan | Feb. 24, 2018 A former Munson Avenue hotel building could be converted into a 60-unit city housing complex offering apartments for both at-risk youth and individuals in the “missing middle” of the region’s income and housing markets. The Traverse City Housing Commission and Socks Construction plan to partner on East Bay Flats, a new development planned for a former Country Inn & Suites building (pictured) at 420 Munson Avenue just east of Northwestern Michigan College. The partners have a purchase agreement on the property and are conducting due diligence ahead of a planned April closing; if finalized, the deal will bring 46 one-bedroom and 14 studio apartments to the site. Construction is estimated to start in May, with the first units available in July and the development completed by November. Read more here." |
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