The Tallahassee Community Redevelopment Agency (CRA) unanimously voted 5-0 in favor of authorizing the agency’s staff to execute a memorandum of understanding, paving the way for a $7 million loan to be granted for the construction of a 300-unit workforce housing development in downtown Tallahassee.
The agreement, forged with Global City, a reputable real estate development organization renowned for its successful projects in the southeastern United States, signifies a significant step towards addressing the growing need for affordable housing in the region.
Global City Partners with Bethel Missionary Baptist Church to Construct 300-Unit Affordable Housing Complex
The comprehensive application submitted to the CRA outlines detailed plans for a 7-story workforce housing complex situated at 309 West Tennessee Street. The development blueprint features not only 300 residential units but also includes a ground-floor retail space spanning 10,000 square feet, complemented by a convenient parking garage.
Within the housing complex, the unit mix comprises 100 studio apartments, 100 one-bedroom units, and 100 two-bedroom units. The studio units are expected to average 400 square feet, while the one-bedroom units would encompass an average area of 700 square feet. Additionally, the two-bedroom units are projected to have an average size of 1,100 square feet, ensuring a diverse range of options to accommodate various household sizes and preferences.
Ensuring Affordability and Embracing Community Partnerships for a Sustainable Workforce Housing Project
According to the project documents, preference in tenancy will be given to essential workers such as police officers, firefighters, teachers, medical professionals, and public sector employees falling within the income bracket of 80% to 140% of the area median income for Leon County. To achieve occupancy stability, Global City may consider leasing units outside of the targeted tenant preference, but only after conducting thorough marketing efforts to attract workforce tenants.
To ensure affordability, rental rates for the targeted tenants will be capped at 35 percent of their household income. Global City proposes placing a restrictive covenant on the property, enshrining these rent limitations that can only be altered with the approval of the City. The day-to-day management of the property, including tenant applications and rental rate approvals, will be entrusted to a professional property management company.
A noteworthy aspect of the proposed development is Global City’s partnership with Bethel Missionary Baptist Church (Bethel). Acting as an equity partner, Bethel will contribute to the development and take ownership of the multi-family complex once tax-exempt bond financing is secured. Currently, Bethel owns the development site, which is a vacant parking lot. The church has expressed its willingness to sell the property for $7.5 million, representing an essential aspect of the project’s financial considerations.
Financial Considerations and Project Timeline for the Downtown Workforce Housing Development
Considering the overall development budget, the estimated total project cost stands at nearly $100 million. The developers are seeking a $7 million loan, equivalent to seven percent (7%) of the project cost, from the Downtown (DT) District CRA. Acquiring this loan will enable the DT CRA to allocate sufficient funds for other programs and projects until 2034.
Additionally, Global City is pursuing tax exemption from ad valorem taxes to facilitate tax-exempt bond financing. This financing avenue will assist in settling the construction debt and equity, as well as repaying the CRA loan. Given the nonprofit status of Bethel, the partnership with the church is crucial in securing tax-exempt bond financing. It is anticipated that the financing will be finalized by early 2028.
Although the project’s timeline is still in its preliminary stages, planning documents provide a rough outline. Once major financing is secured, a definitive schedule will be established. As currently proposed, construction is expected to commence in October 2024, with substantial completion targeted for mid-2026.