There are major renovations planned for Kokomo’s affordable housing units.
Roughly 335 units at Terrace Towers, Civic Center Tower, Dunbar Court and Pine Valley are slated to receive extensive renovations costing tens of millions of dollars within the next few years, housing authority officials announced last week.
The renovations include new kitchen cabinets and countertops, new doors, electrical upgrades, new safety systems, new paint, flooring, roofing and windows where necessary, sinks, toilets, bathtubs and some exterior renovations. The rehab will be done by Advantix Development Corporation, a nonprofit development instrument of the Evansville Housing Authority, which most recently developed and now manage Trailside Homes.
In order to fund the renovations, KHA is utilizing the Housing and Urban Development’s Rental Assistance Demonstration (RAD) program. The program allows local housing authorities to fund renovations at its properties by converting their public housing properties to Section 8, project-based voucher housing and allowing private investment to pay for the renovations.
More information on HUD’s RAD program can be found at www.hud.gov/rad.
Due to severe underfunding for years by the U.S. Congress, the Kokomo Housing Authority has no choice but to seek private money to fund much-needed repairs at its various properties, its CEO Derick Steele told the Tribune.
“The properties have a need of around $40 some million in repairs,” Steele said. “We don’t receive a fraction of that each year from HUD ... the majority of these structures are older, so as we go further and further out from construction, the needs become greater and greater, and you can’t just keep putting a Band-Aid on it.”
The total cost of the project will cost around $40 million, Dave Umpleby, of Indianapolis law firm Taft Stettinius & Hollister, told the Kokomo Common Council last week. Nearly half of the funding will be paid for by the issue of bonds by the city, totaling no more than $22.5 million. The remaining nearly $20 million will come from the sale of low-income housing tax credits that will be bought by a private investor and other forms of private dollars.
Unlike typical municipal bonds, these limited obligation bonds will not be paid back through city money, Umpleby said. Instead, revenue from the housing units will go toward paying back the bonds. The bond issue also will not be counted towards the city’s debt nor will the city be held responsible if the bond were to default, Umpleby added.
A special purpose entity called KHA Rad 1 LP – made up of the nonprofit Superior Street Development Corporation created by KHA, and a private investor who will own 99% of the entity for 15 years for tax credit compliance – will take over the management of the properties. KHA will still hold control of the properties through a long-term ground lease.
The council unanimously voted to allow the project developers to move forward in finalizing the financial details of the project. Final financial approval will have to come from HUD. Once that happens, the plan will come in front of the city council again for a public hearing and a vote at a later date this year, likely in the fall. Construction isn’t expected to be completed for another two and a half years.
But when construction does begin, a temporary relocation process will begin for residents, Steele said.
Affected residents will be relocated while their unit is being renovated, ideally to a unit within the same building, but that’s not a guarantee. Residents will be able to return to the same unit they had before the renovations after construction is completed.
Steele stressed that residents will not be charged for any relocation costs, will continue to pay no more than 30% of their adjusted income for rent and will maintain the same basic rights under a public housing program. The RAD program, though, does allow tenants, usually after a year, to switch to a housing-choice voucher that allows them to seek housing on the private market if they choose.