Affordable Housing Finance

REGIONAL REPORT

Southeast

Seniors Get It All

AFFORDABLE HOUSING FINANCE • February 2009

Mercy Housing builds seniors development in prime location

BY LYNN NORUSIS

CHAMBLEE, GA. Once a storm water runoff site for a manufacturing plant, this lot has become a popular living space for low-income seniors thanks to a public-private partnership among the city, DeKalb County, and nonprofit affordable housing developer Mercy Housing.

Located across the street from a rapid transit station and adjacent to the Senior Connections Center, Chamblee Senior Residences is made up of 32 one-bedroom and 33 two-bedroom units; 26 units have project-based rental assistance from DeKalb Housing Authority.

In 2000, the Atlanta Regional Commission rezoned the area and earmarked the site for seniors housing. The city bought land from Senior Connections—helping it to retire some debt—and contracted with Mercy Housing to develop Chamblee Senior Residences. “This was our first time working with Mercy,” says City Manager Kathy Brannon.

“It took the partnerships and the willingness to be creative and unconventional in solving a specific housing need in order to create the success at Chamblee Senior Residences,” says John Corcoran, vice president of development services for Mercy Housing. “The city made a concerted effort to vet this idea with the community for over a year before proposing that a specific senior development be done.”

The building features management offices, a common room, a kitchen/dining area, an arts and crafts room, and an exercise room. Rents range from $316 to $742 with 11 percent of the residents earning 30 percent of the area median income (AMI); 26 percent at 50 percent of the AMI; and 62 percent at 60 percent of the AMI. The remaining units are not qualified by income. Surrounding market-rate rents range from $679 to $1,955 a month, according to Corcoran.

The 55-year land lease has Mercy Housing paying the city $10 per year, with the land reverting back to the city at the end of the term; however, Brannon says the lease could be extended.

Prior to Chamblee’s construction, the city did have affordable housing, but none specified for seniors. The housing was needed: Five percent of the city’s population is 65 and older, with 7.8 percent below the poverty line, according to the U.S. Census Bureau. “The property was leased up within three months after opening,” says Corcoran, adding that 50 units were leased prior to opening.

SunTrust Bank offered the nonprofi t a permanent loan of $967,000 with an 18-year term and 30-year amortization at 7.5 percent, and a debtservice coverage ratio of 1.15x, with no loan guarantees. Mercy Housing also had $4.5 million in federal low-income housing tax credit equity and $1.4 million in state equity.

Working with both the city of Chamblee and DeKalb County, Mercy Housing received $56,107 in grants, as well as $34,018 in deferred developer fees. The loan from the county will be forgiven after 15 years of compliance with the low-income restrictions on the loan.

Mercy Housing put the money to good use. Through the convenient partnership and lease agreement with the city, the organization spent only $24,560 in land/building acquisition. Construction costs and soft costs came in at around $5.1 million and $1.8 million, respectively.

Corcoran says the 14-month construction period had relatively few hiccups.

One setback was that the soil had been contaminated due to the previous use as a storm water runoff area for a manufacturing business. And in 2006, the age and capacity of the water and sewer system caused concerns. A solution was quickly placed on the table, with the city dedicating $250,000 for Mercy Housing to construct a storm water retention system with a 100-year backup to prevent flooding in the area.

Once these hurdles were overcome, the development opened its doors in November 2007.

Mercy Housing, in its managerial position, has partnered with Senior Connections to bring residents of Chamblee Senior Residences the best amenities possible by providing them with access to county health and seniors centers, recreation facilities, performing arts, and services including Meals on Wheels.

Overall, the project is one Corcoran says worked extremely well and has not only given seniors an affordable place to live, but has also helped to revitalize the area as a whole.

“The surrounding community loves having this stable, affordable housing in the neighborhood to support the new retail around it,” Corcoran says. “Since its construction and opening, a new Wal-Mart, farmer’s market, and shopping center with food, local businesses, and restaurants have opened two streets away. The building of Chamblee Senior Residences brings balance to the ages of the population and types of housing available in this part of Chamblee, thereby revitalizing an industrial area that was unused and vacant for many years.”