IS $12.5 MILLION a good deal for the purchase of Strathmore Estates?
It depends on how you look at it, but we feel it was a wise investment in light of the need to reverse the attrition of affordable housing in Savannah.
The failure two years ago of the 45-acre site of run-down low-income housing to sell at $10.9 million seems to indicate a 14 percent leap to this year's sale price might have been precipitous.
But a city of Savannah spokesman said the asking price had actually reached $15 million, but was negotiated down to the agreed amount.
The final amount comes down to about $280,000 per acre, which some local real estate experts not affiliated with the purchase say is a good price.
The purchase is being carried out by the development arm of the Community Housing Services Agency, a nonprofit organization comprising the city of Savannah and area banks and development professionals. The CHSA, formed in 1989, is aimed at providing affordable housing financing.
The purchase is being funded by a $7.5 million SunTrust bank loan as well as a $2.8 million loan from the city's Housing and Development Action Grant funds and a $2.7 million loan from community housing block grant funds administered by CHSA.
The additional $500,000 beyond the purchase price will go to pay closing costs and to establish operating and maintenance reserve accounts.
City officials say the general rise in Savannah property values influenced the decision to go ahead and buy the property at the higher price. City and CHSA officials also feared increased development pressure over time as the effect of inner city redevelopment spreads eastward.
In a memo to the mayor and aldermen, City Manager Michael Brown said the longer the CHSA were to wait on buying Strathmore Estates, the more likely a private developer would be to snap up the property.
That's a valid concern. And a private developer probably would not include affordable housing for working class Savannahians, opting instead for homes and condominiums sold at the market rate.
That's because private developers would be looking to make up their investment. The current project at Strathmore is expected to incorporate another $100 million in private investment to raze and rebuild the community.
The only way affordable housing can be a factor in a re-imagined Strathmore Estates is through the use of state tax credits. The only way that would have happened is if the city and its affiliated agency, CHSA, purchased the land.
A similar public-private model with tax credit incentives is being followed at Fellwood Homes, where the Housing Authority of Savannah is working with developer Melaver Inc.
In order to take advantage of those credits, Melaver must guarantee a certain percentage of low-income housing units within the overall development.
Plans for what portion of the new Strathmore will be affordable housing, market rate apartments, or owner occupied condominiums or homes are not yet final.
City officials should also take a strong stand to ensure their original purpose is met, and that the new development will provide at least as many affordable homes as are currently available at Strathmore.
It won't do Savannah's working poor any good if the new "affordable" homes are out of their price range. |
