The Chattanooga Housing Authority Board (CHA) on Thursday afternoon approved $30 million in improvements at the Cromwell Hills Apartments at 3940 Camilla Dr.
The project, aimed at the development of additional housing for low income citizens of Chattanooga while using tax credits to help with part of it, will be carried out by Pennrose Properties, a longtime partner of CHA.
Louann Smith, of the Baker Donelson law firm, gave the board an overview of the proposal to raise the money needed for the rehabilitation and redevelopment of the affordable housing units.
The plan is to renovate the 200 existing units and construct an additional 50 townhome units. That number could change if the cost increases.
Ms. Smith presented a summary of the bond issue that will fund the project. They will be sold as revenue bonds because they will be paid with revenue generated from the Cromwell Hilll Apartments. The bonds will be issued under the provision that would make them exempt from federal income tax under a qualified residential rental project that requires a percentage of the units to be for low-income tenants. The term of the bonds will be about 10 years, she said.
The bonds would be placed in the market by an underwriter who would find the buyers. The $30 million would be loaned for constructing the apartments. That company will make payments to CHA for the cost of the bond payments. The real property will be pledged as collateral. This method qualifies for a four percent tax credit.
After a public hearing was held on the issue, where no one from the public came to give an opinion, the board voted to authorize the issuance of the bonds.
Another project that is in the works would be the redevelopment of 111 rental units at CHA scattered sites at Missionary Heights Apartments, Glenwood Heights Apartments (East and North), and Woodside Avenue. Naveed Minhas, vice president of development for CHA, received approval to enter into a pre-development loan agreement to prepare and submit to the Tennessee Housing Development Agency (THDA) with the application in the attempt to receive a nine percent tax credit. The process to obtain the “innovative tax credits” started in late October for renovating the scattered sites, when CHA submitted a HUD-approved plan. This plan was chosen as one out of the four finalists.
This plan will engage for-profit businesses that will mentor residents of the renovated apartments. The businesses have pledged to hire qualified residents for their own programs. If accepted into one of the private sector jobs, that person will have a career path and a road out of public housing, said Mr. Minhas. Some of the businesses that have said they would assist in this mission include CHI Memorial, the Chattanooga Chamber of Commerce, EPB, The Enterprise Center and Chattanooga State.
The plan is innovative, said Mr. Minhas, because the private sector will lead their own programs, not CHA.
This plan is in competition with four other submittals. The board voted to approve a pre-development loan agreement and additional documents needed in support of the application to THDA for the nine percent tax credits. These are due Feb. 1 and the winner will be announced sometime in June or July.
Board Member Mike Sabin reported to the board that the renovations at Boynton Terrace will be ramping up. During the first quarter of next year, CHA will be looking at relocation during the work.
One-year contracts were authorized to be renewed with Kirkland’s Pest Control for general pest eradication for the amount of $81,252, and for the inspection, treatment and control of bedbugs for $95,000. Contracts with four vendors for lawn and grounds maintenance were approved for a total of $333,050.
Executive Director of CHA Betsy McCright reported that she is working to stagger the terms of board members so they all would not leave at the same time. She said that Carl Henderson with Henderson, Hutcherson and McCullough will replace Jim Steffes, who is leaving the board after serving on it for 11 years.
The board was also told that the EPA will be soon be doing soil sampling at College Hill Courts for lead and arsenic that may be present as a result of foundry sand. If it is found, the CHA will have to do remediation.