DAYTONA BEACH — With fallout from the coronavirus pandemic making the need for affordable housing in the city more dire than ever, the Daytona Beach Housing Authority is about to dive into a $100 million-plus project to renovate 625 of its existing units and build 90 new units for low-income tenants.
“It’s really significant for affordable housing in Daytona Beach,” said Terril Bates, CEO of the Daytona Beach Housing Authority.
Work is hoped to begin early next year on the construction and extensive overhaul of the Housing Authority properties and wrap up in about two years. The housing will be for low- and moderate-income people, as well as the elderly and those with disabilities.
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Much of the city’s government-funded housing is 30-50 years old, so a little over a year ago the Housing Authority held a developers’ conference to find a partner to renovate the subsidized units concentrated in the city’s urban core.
The Housing Authority decided to partner with developer BGC Advantage on the vast project. A limited liability corporation made up of the two partners will be formed that will be the parent company of the housing projects.
The newly formed company will apply for various types of debt, equity, grants and other available resources, Bates said. A 20-year operating budget will be drafted, she said.
Part of the project will be financed with $58 million in bonds. Repayment of the bonds will come solely from revenues of the projects, she said.
Of the total $58 million from the bonds, $20 million will go toward renovation of the Windsor and Maley apartments on Beach Street that are the home of about 300 low-income elderly and disabled residents.
The Windsor and Maley units will undergo a total of $40 million in renovations. The apartments, located in two adjacent towers, will undergo assessments of their windows, doors, lighting, flooring, air conditioning, elevators, water meters and other things.
The plan is to re-do each unit’s bathroom and kitchen and to add energy-efficient appliances and modernize the look of the apartments. Residents will be moved into empty units as needed while work is going on.
Repairs will be made right away when called for, and money will be set aside for when the useful life of something has expired.
The Windsor and Maley will also be evaluated to see what services could help residents there, such as a hair salon and space for onsite diabetes testing and mental health services. The existing computer center will probably be expanded to add more computers and assistance.
Visitor space might also be added along with a new check-in desk that can help provide information, masks and a central spot for deliveries.
Part of the remaining $38 million from the bonds will go toward renovation of properties on Keech, Whitney and Ninth streets in Daytona Beach that will involve 325 family units.
If anyone has to temporarily move while work is going on, the Housing Authority will cover all expenses.
The other part of the $38 million will go toward construction of 90 new units for low- and moderate-income residents behind the Housing Authority’s Pine Haven Apartments a few blocks west of Nova Road and north of International Speedway Boulevard.
The city is not incurring any risk or debt, or contributing financially to the project. The City Commission had to OK the $58 million in bonds a few weeks ago only because the city created the Housing Authority in 1938, and it’s technically an instrument of the city, with its board appointed by city commissioners.
BGC Advantage, which has its headquarters in Louisiana, is providing the guarantee for the bond issuance. The bonds will be handled by a third-party company, Bates said.
“It’s investor groups,” she said. “We won’t be selling them. The Housing Authority will be a conduit issuer of the bonds. We’ll submit an application to the state. The state controls the bond pool.”
BGC President Holly Knight explained in more detail how the financing will work. The bonds do not make up the full sources, Knight said. They are the first step to receiving the tax credit allocation for the project. Applications to the tax credits will follow. These are made through the State Housing Finance Agency.
“We are leveraging tax-exempt bonds and paying them off within a short period of between 24 and 36 months,” Knight said. “These bonds allow the state to allocate non-competitive 4% tax credits. The tax credit allocation attracts the private investment. The project will be able to support permanent debt through the project’s income. The partnership will leverage other federal and grant resources as they become available, like the Federal Home Loan Bank Grant and the Care Act funding for COVID-related activities.”
The Daytona Beach projects will leverage $128 million in total sources, she said. The apartment rehabilitation and construction will also have a big local economic impact for construction industry workers, Bates said.
Since the bonds only provide part of the funding, the remaining financing will be provided by loans, tax credit equity and other sources, Bates said.
The U.S. Department of Housing and Urban Development, which many people know as HUD, will not provide funds for the project beyond vouchers that are attached after construction and occupancy, she said.
After construction is complete, the residents’ rent, government housing voucher subsidies and other operating income will cover costs, Bates said.
“There may also be an assumed value to the properties themselves which might contribute to the debt management,” she said.
Getting a private partner will be a huge advantage for the Daytona Beach Housing Authority, Knight said. HUD typically will provide $1,200 for each unit that needs improvements, but many need around $25,000 per unit, she said.
“It’s just a Band-Aid fix,” Knight said. “Daytona Beach is really one of those leading the pack.”
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