City officials approved using tax increment financing (TIF) revenue from the central district to fund a grant the city is giving Thrive Alliance for phase one of their plans to build an affordable housing development.
The Columbus Redevelopment Commission voted to contribute an amount not to exceed $4.65 million for what city officials are calling the Midway Project, to be located at the former Columbus Health and Rehabilitation facility site at 2100 Midway St.
The matter will come before the Columbus City Council on July 16 for final approval because it is a city expenditure greater than $500,000, Director of Redevelopment Heather Pope said
Housing Partnerships Inc. (HPI), a non-profit that does business as Thrive Alliance, bought the 7.6-acre property for $1.5 million on March 22.
The development will eventually be a combination of workforce family housing and housing for seniors to be built over two phases, starting with 64 workforce family housing units with a childcare component and adding 64 units for seniors later during phase two, Kevin Johnson, executive director of Housing Partnerships at Thrive Alliance, has said.
The workforce housing will be for those making 30, 50 and 60 percent of area median income (AMI), according to Johnson.
“When you’re talking about (30, 50, 60 percent) AMI, you have to understand that these rents will be significantly reduced,” Andrew Lanam of Stifel Public Finance said. “So the actual amount of revenue that the property generates, you wouldn’t be able to charge the rents without a significant amount of capital coming in that really doesn’t have to be repaid.”
HPI will apply for an award of 9 percent federal low-income housing tax (LIHT) credits in the amount of $13 million to help with financing of the project.
The LIHT credits, which have to be applied for by the end of July and are awarded in November, would “pay for a very substantial amount of the actual cost of the project,” Lanam said, covering about 54 percent of the total project cost of $20.6 million.
To help fill the rest of the funding gap, HPI will also apply for $3.3 million in Regional Economic Acceleration & Development Initiative (READI) funds through the South Central Indiana Housing and Community Development Corporation (SCIHCDC).
How much TIF funds the redevelopment commission will actually end up contributing will depend on the amount of READI funds awarded, and will be reduced dollar for dollar on an award greater than $2 million.
“The amount of the CRC grant authorized herein shall be automatically reduced by an amount equal to any READI Grant awarded by the SCIHCDC for the Midway Project in excess of $2,000,000,” according to the resolution.
For example, if HPI gets a READI grant of $3 million, the grant from the redevelopment commission would be reduced to $3.65 million.
Because of this, the TIF dollars wouldn’t realistically go out until calendar year 2025, per Lanam.
The grant is also subject to three conditions including final city council approval, evidence of an award of LIHT credits and review of HPI’s proforma by Lanam.
The development is expected to encompass a build time of 15 to 18 months, Johnson said, with leasing getting started in 2026. The project will likely be up for bids in the second quarter of next year with construction beginning by the third quarter, Johnson said.
Notably, although the location of the development isn’t technically in the central TIF, the resolution includes language that the project will “directly serve and benefit the Central Economic Development Area.”
“The thinking is that spending the TIF dollars outside of the central TIF area on this particular project, serves and benefits the central TIF area, because the businesses located in that area, they need housing for workers,” Attorney Brad Bingham of Indianapolis-based Barns & Thornburg explained.
Representatives from Indianapolis-based Gratus Development, who will work as a co-developer on the project, attended the meeting as well.
Gratus Founder Jonathan Ehlke said Thrive Alliance will own the property outright. Gratus will be a part of the project until it stabilizes “and then we kind of ride off into the sunset at that point,” Ehlke said.
During public comment, council members Frank Miller, R-District 4, and Tom Dell, D-at-large, said they’d like to see the project moved forward, along with Mayor Mary Ferdon.
“Housing is a priority for the city, we’ve recognized that for a couple of years, and we have a wonderful opportunity with this project,” Ferdon said. “City administration is 100% behind it and has worked really hard to get it this far along with your help.”
“We know that we have a lot of residents who would benefit from this kind of housing.”
Director of Community Development Robin Hilber said legislation making the Midway Project property an economic revitalization area (ERA) is scheduled for the next city council meeting on Tuesday and added the city still expects to receive the results of the city’s housing study from consultant RDG Planning & Design in July with findings being presented to the public in August.
