The Sentinel-Record/Richard Rasmussen HOME MAKEOVER: Richard Herrington, left, executive director of the Hot Springs Housing Authority, and housing authority Finance Director Suzanne Felley, address contractors who gathered at the Webb Community Center Thursday for information on the project to renovate all of the city's public housing.

The Sentinel-Record/Richard Rasmussen HOME MAKEOVER: Richard Herrington, left, executive director of the Hot Springs Housing Authority, and housing authority Finance Director Suzanne Felley, address contractors who gathered at the Webb Community Center Thursday for information on the project to renovate all of the city's public housing.

Housing authority plans $22M public housing overhaul

By David Showers
This article was published April 21, 2017 at 4:00 a.m.

Contractors gathered Thursday at the Webb Community Center to hear the requirements for bidding on a $22.1 million construction project that will overhaul all 365 of the city's public-housing units.

Using complex financing that relies on a mix of public and private funds, the capital infusion will address what the Hot Springs Housing Authority's executive director said is more than $18 million in deferred maintenance at Mountain View Heights, Eastwood Gardens and Eastwood Heights.

Richard Herrington said the three Wittenberg, Delony & Davidson-designed properties haven't been upgraded since they were built in the early 1960s.

"They haven't had anything done to them since 1962," he said. "(The project) will address major capital needs in one swift operation."

The project will be financed under the U.S. Department of Housing and Urban Development's Rental Assistance Demonstration, a pilot program created by Congress in 2012. RAD uses the private sector to fund the capital needs of public-housing developments, which Herrington said have accumulated more than $25 billion in deferred maintenance as a result of chronic underfunding.

The program will convert the city's public housing into a Low Income Housing Tax Credit development that provides HUD Project-Based Vouchers to tenants paying rents capped at 30 percent of their household incomes. It requires the creation of a limited partnership involving the housing authority, Alabama-based developer The Bennett Group and Royal Bank of Canada -- the project's equity provider.

The housing authority will sell the city's public housing properties to the partnership, carrying the $16.8 million note rather than the partnership financing the purchase through a bank. The transfer is required to attract private capital and borrow against the properties. The housing authority will hold the ground lease and have right of first refusal on the properties when the 15-year contract between the partnership and HUD expires.

RBC will raise $17.2 million in private capital from investors who want to reduce their federal-tax liabilities through the purchase of 4-percent Low Income Housing Tax Credits. The Bennett Group applied to the Arkansas Development Finance Authority for the tax credits, which are allotted to states based on population.

The value of the credits will be more than their sale price, creating an incentive for investors to buy them. According to The Bennett Group, RBC will receive $397,528 for selling the credits. Herrington said the inclusion of the tax credits in the financing plan requires the housing units be made available to low-and-moderate-income tenants for 40 years.

Equity from the tax credit sale will be coupled with $13.2 million in debt financing from the mortgaging of the properties. The debt will be serviced over the life of the 15-year mortgage by the HUD Housing Assistance Payments that fund the Project-Based Vouchers and the income-based rents, Herrington said.

Other funds include $2.2 million from the capital fund and operating subsidy HUD annually provides the housing authority, $450,000 from the Arkansas Development Finance Authority and the housing authority deferring its share of the $5.8 million developer's fee.

The financing is expected to close Aug. 1, and May 18 is the deadline for submitting construction bids. Barry Collins of Louisiana-based B.A.S Construction, the project's general contractor, said it will take up to 14 months to renovate the 11-story Mountain View Heights senior tower.

Work will start on the top floor and progress toward the ground floor of the 120-unit building, with one floor being worked on at a time. Tenants on the floor being renovated will be relocated to other floors in the building, Collins said.

The renovations will include a new roof. Project architect Doug Arnold of Arnold & Associates said extensive plumbing and electrical work will be done.

"The plumbing is literally falling apart," he told the contractors. "The drain stacks are falling apart in that building."

The family units at Eastwood Gardens and Eastwood Heights will take up to 18 months to renovate, Collins told the contractors. The work will be done 20 units at a time, with tenants relocated to other units during the renovation. Collins told contractors each 20-unit block should take about six weeks to complete.

The two family complexes will also have site work done, Collins said, including tree trimming, new sidewalks, parking lots and water and sewer lines.

Herrington told contractors they will be bound by HUD requirements to provide work opportunities for low-or-very low-income residents in public housing and throughout Garland County.

"If you say you can't find anybody, we're going to send you back out," he said. "We're just not going to buy that argument anymore. It's a critical issue. Giving people the opportunity to work and developing a chance to earn an income is important for us."

HUD allows contractors to satisfy the indigent-hiring requirement by contributing 10 percent or more of their contract cost to training, scholarship or employment programs.

Herrington said the use of undocumented labor will not be tolerated.

"If they don't at a minimum have a green card, I would strongly suggest you not hire them," he told the contractors. "We'll be coming around and talking to people on the construction site, asking them how much they make, if they have a job title and asking for ID.

"If they can't answer those questions, they'll have to leave. This we will enforce. They need to have the ability to work in the United States."

Local on 04/21/2017
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