Johnson County debates $1 million loan for affordable housing in Shawnee

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SHAWNEE, Kan. – Johnson County may soon invest in a new affordable housing complex in Shawnee.

Next week the Board of County Commissioners (BOCC) will consider issuing a $1million loan to support the construction of the Hedge Lane flats.

The apartment complex is a joint venture between Sunflower Development Group and Consolidated Housing Solutions. The developers intend to create a 144-unit apartment complex near 75th Street and the K-7 highway in Shawnee.

Due to rising inflation and additional labor and material costs, developers are looking for a loan to cover a project funding shortfall. If approved, the county loan would cover about 3% of the $30.5 million project.

Jay Leipzig, director of planning, housing and community development, said developers have secured support from the Low-Income Housing Tax Credit (LIHTC) and have gone through all approval processes with the city. from Shawnee.

“It’s also a chance to create long-term affordable housing. There is a 15-year note associated with the tax credits. It would be an interest-free, amortization-free loan for this project,” Leipzig said.

Leipzig said at the end of the 15-year term there would be an $850,000 balloon on the property that could be assumed by a new buyer to extend the affordability period for future tenants.

All units in the complex will be dedicated to social housing. The developer intends to offer 42 one-bedroom units, 80 two-bedroom units and 22 three-bedroom units.

The project is considered labor housing, which means the tenants would be people who earn less than 60% of the area’s median family income.

Deputy Director of Housing Services Jessica Hotaling said rent caps are set each year by the Department of Housing and Urban Development (HUD), but estimates a one-bedroom unit would cost around $1,100. and a two-bedroom unit would cost around $1,300.

Commissioner Janeé Hanzlick said the investment will give county residents more options for using housing choice vouchers.

“Our $1 million loan could have impacts in the years to come on our ability to have our workforce here in Johnson County,” Hanzlick said.

According to county documents, between January 2020 and December 31, 2022, the county is expected to lose approximately 349 Housing Choice Voucher (HCV) units. Hotaling said nearly 700 people in the county are currently on a waiting list to receive HCV.

“We’re not just losing good properties, but we’re losing market-priced affordable housing because all of these apartments in Mission, Merriam, Overland Park come off the tax roll. Then we develop all those jobs,” Commissioner Becky Fast said. “We are moving in a direction that will force this commission to make housing a priority.”

Fast also expressed interest in the county developing a housing trust fund to address future housing needs.

Commissioner Charlotte O’Hara raised concerns about other developers seeking loans or inducements from the county in the future if this loan is approved.

“It will set a precedent and it will bring other projects to the county as it helps the down payment [for the developer]”, said O’Hara. “I would be very interested to know how much money this developer actually invests in it, because this million dollars will close the gap in terms of its cash investment.

The BOCC is due to vote on the loan issuance at the next regular board meeting on Thursday, May 26.

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