PARTING SHOTS

APARTMENT FINANCE TODAY • APRIL 2008

Building on the Frontier

Two developers make a new market for apartments in historic Old North St. Louis.

By Bendix Anderson

St. Louis — In Old North St. Louis, some blocks have more grassy vacant lots on them than houses, and nearly 40 percent of the residents live in poverty, according to the 2000 Census.

It doesn’t seem like a natural place to build 38 new apartments renting at market rates, much less 33,000 square feet of new retail space. But the first market-rate units will open this summer at Crown Square, a plan to put the heart back into this old neighborhood by reviving its commercial center.

“We are really creating the market,” said Stephen Acree, executive director of the Regional Housing and Community Development Alliance (RHCDA). RHCDA has partnered with the Old North St. Louis Restoration Group (ONSLRG) to develop the mixed-use project that is rehabilitating 11 historic buildings on the mostly shuttered 14th Street shopping strip.

The Crown Square development relies on financing from New Markets Tax Credits, a federal program that aims to spur investment in low-income communities. The $19 million development received $4.5 million from the sale of these tax credits and another $6 million from the sale of state and federal historic rehabilitation tax credits.

The federal government also provided a $1.5 million transportation grant to help tear out a pedestrian mall that blocked cars from driving down 14th Street and choked off traffic to the stores there, which once included a J.C. Penney department store.

A $1.65 million loan from Enterprise Bank and Trust along with a Community Development Block Grant from the city rounded out the funding.

The developers are in lease negotiations with retail tenants at prices averaging about $8.50 per square foot a year. The spaces are mostly sized between 2,000 and 4,000 square feet and are expected to fill with small businesses, including restaurants and an accountant’s office.

Crown Square is expected to benefit from the loft conversion boom in downtown St. Louis less than a mile to the south and a redevelopment of public housing into mixed-use and mixedincome housing between Crown Square and downtown.

RHCDA and ONSLRG have been working in the neighborhood for nearly a decade and have finished and sold 19 single-family homes. The most recent sale of a 2,000-square-foot home closed in October at a price of $230,000.

The two nonprofits have also built 32 affordable apartments using federal low-income housing tax credits and are creating another 42 affordable apartments in 16 more buildings just off the main street in Crown Square.

The rents at these apartments are set to be affordable to renters earning up to 60 percent of the area median income. However, market-rate rents are still low in the area, and those subsidized affordable rents are about the same as the rents at unsubsidized apartments.

Rents at the market-rate apartments start at $620 for a 900-square-foot onebedroom and go up to $785 for a 1,400- square-foot three-bedroom.

Demand is high, and the developers have a waiting list of more than 100 people for the new apartments in Crown Square.