NEIGHBORHOOD WATCH: Charleston, S.C., townhouses are conceived with working families in mind

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The project is a rare sight in the Peninsula’s red-hot housing market
By David Slade

The Post and Courier, Charleston, S.C.

RISMedia, Oct. 27 ? (KRT) ? Across the street from a new uptown development where houses sell for as much as $700,000, the city of Charleston soon hopes to build up to 50 townhouses near the Ashley River for first-time homebuyers with moderate incomes.

The project is a rare sight in the Peninsula’s red-hot housing market and represents a rarer-still deal between private and public interests to address a growing scarcity of housing that is affordable to working-class people.

The city is still negotiating with Longborough developer The Beach Co. on the final design and cost of the townhouses on 10th Avenue above Hampton Park, but they are expected to start at around $125,000 for a 1,000-square-foot, two-bedroom unit.

The complex will go up on a site formerly occupied by the Shoreview low-income apartment complex, which was demolished to make way for Longborough.

Former residents of Shoreview will get the first opportunity to buy the townhouses, but few, if any, of them will be able to afford one.

“Having worked with almost every family and individual at Shoreview at the time they were moving out, I know their incomes,” said Debby Waid, assistant director of Humanities Foundation, a local nonprofit focused on affordable housing issues. “My opinion is, they wouldn’t come close to qualifying for a loan on one of those properties.”

The townhouses, in fact, won’t be built for people with low incomes. Rather, they are part of a citywide initiative to create housing for the middle-class, or working class.

Charleston officials believe the townhouses would be a good fit for teachers, police officers, nurses, municipal employees and others with moderate incomes who have been priced out of the city.

A review of recent real estate listings shows that on the open market, $130,000 in downtown Charleston could buy a boarded-up house in the shade of the Cooper River bridges or a cottage in need of major renovation in a marginal neighborhood.

That helps explain why a pile of applications from people who hope to buy one of the new townhouses at Longborough has already started to pile up at the Charleston Department of Housing and Community Development.

The project near Wagner Terrace and Hampton Park is easily the largest single development of moderately priced homes in years on the Peninsula, and the city has crafted an unusual 90-year deed restriction to protect its $6.25 million investment.

The restriction says that if the townhouses are later resold, they must be sold either to qualified first-time home buyers or back to the city, at prices linked to the area’s median income. So, if a person buys one of the units next year for $125,000 and decides to sell 10 years later, the selling price could be no more than the original sales price plus the percentage increase in the area median income.

“We had to come up with a way to keep these units in our affordable housing inventory,” Adelaide Andrews, deputy corporate counsel for the city, said in explaining the reason for the restriction. “The last thing we wanted to do is go through all this time and effort, and have a homebuyer flip the property after a few years and reap all the equity.”

Mayor Joe Riley had hoped to make the deed restrictions permanent rather than 90 years, but Andrews said a permanent restriction wouldn’t stand up in court.

Several nonprofit groups in the area are working with the city to develop additional housing for first-time buyers that will employ the same 90-year restrictions.

“I understand the mayor and city council’s desire to assure that neighborhoods remain affordable to all people,” said Bonnie Lester, executive director of the Humanities Foundation. “(But) I think there is some concern that it restricts their ability to increase their wealth.”

Shoreview, a 161-unit apartment complex, was for years home to predominately low-income residents who paid the rent in part through Section 8 housing subsidies from the federal government.

The apartment complex, however, was not directly subsidized and was owned by The Beach Co.

“With Shoreview, The Beach Co. had the right to demolish the apartments and develop the property, which they did,” said city Housing Authority CEO Donald J. Cameron.

When The Beach Co. announced plans to evict the tenants and demolish Shoreview in 2000, the city pledged to replace some of the affordable housing that would be lost. The Housing Authority considered taking control of the entire property through eminent domain, but concluded the apartment complex would be too costly to renovate.

What followed was a two-part deal that led to the development of a 36-unit apartment complex for low-income senior citizens on King Street and the townhouse plan at Longborough.

Under an agreement signed in 2001, The Beach Co. agreed to sell up to 50,000 square feet of housing at Longborough to the city for $125 per square foot, for a total of $6.25 million. The company also agreed to sell a property at 1054 King St. for the seniors complex at the below-market price of $450,000, receiving an unspecified tax write-off for the difference.

The city gave up the notion of seizing the Longborough land through eminent domain and approved a permit to demolish Shoreview.

The Beach Co. moved ahead with plans to develop 82 single-family homes on the 15-acre site by the marsh along the Ashley River. The city, in turn, then gave the option to buy the King Street property over to the Humanities Foundation, which spent $3.4 million developing the 36-unit North Central Apartments complex, restricted to low-income seniors.

That project is complete, and tenants started moving in this month.

Debby Waid of the Humanities Foundation said she doesn’t believe any former Shoreview residents will live at North Central Apartments, though many would meet the age and income guidelines. She said Shoreview residents have resettled and generally don’t want to move again or can’t afford to.

“It’s so expensive to move,” she said. “For people with very low incomes, coming up with $1,000 for moving, security deposits and other costs is just not possible.”

The units at North Central Apartments are meant for people earning less than 50 percent of the area median income. The townhomes at Longborough are intended for those earning between 50 and 120 percent of the median income as calculated by the U.S. Department of Housing and Urban Development. The median income in the region for a family of four is $55,900.

The exact number of townhouses that will be built has not been finalized, because the city’s agreement called for up to 50,000 square feet of housing rather than a specific number of homes.

Kent Johnson, a Beach Co. vice president of development in charge of the Longborough project, said that question and others will be addressed in the negotiations with the city.

The city’s counsel, Adelaide Andrews, said the Riley administration expects that permits for the townhouses will be sought by the end of the year.

“We’re entitled to 50,000 square feet, and we want every square foot we can get,” Andrews said. “We expect there will be less than 50 units, because some will be slightly larger three-bedroom units.”

The city money for the project is mostly from the Housing Authority. Andrews said the city expects to sell most of the townhouses before construction is complete, recouping the money it invested.

“The area itself is very desirable,” Cameron said. “There’s a public park nearby, the views of the marsh are gorgeous, and it’s a real quiet part of the city.”

Andrews said the city hasn’t yet decided whether to offer the townhouses on a first-come, first-served basis or through some sort of a lottery. About 15 applications had been turned in by last week.

? 2004, The Post and Courier, Charleston, S.C. Distributed by Knight Ridder/Tribune Business News.

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