Tallahassee, Fla. (February 23, 2009) – Funding approval for an affordable housing project in Jacksonville, Fla. that was initially given the go ahead by the Florida Housing Finance Corporation (FHCA), and then denied at the twelfth hour, is being contested by the developer.
In March 2007, The Richman Group of Florida, Inc. submitted an application for Pine Grove Apartments for tax-exempt bonds, State Apartment Incentive Loan (SAIL), and 4 percent tax credits.
The application received a perfect score and was awarded funding in October 2007. The FHCA provided a preliminary commitment for the funding and invited the developer to enter credit underwriting. The Richman Group of Florida accepted the funding and immediately entered into credit underwriting.
The underwriter completed its review of the transaction and recommended approval. The market study in the report indicated that there is currently demand for nearly 5,000 affordable housing units that would be served by the proposed 168 units at Pine Grove.
In October 2008 the FHFC, in an unprecedented action, reversed itself and denied the approval of the already accepted credit underwriting report citing Pine Grove’s potential impact on a nearby existing project known as Leigh Meadows.
In 1998 the FHFC provided credit enhancement for that project’s bonds. The Leigh Meadows 304-unit development has underperformed in the market since its inception. The FHFC has the potential financial exposure if the project should fail.
The Richman Group of Florida is recognized for the successful development of a wide range of affordable residential housing. Their expertise in identifying high-quality, well-situated properties with strong market potential and/or a favorable capital structure has been part of their success as a developer.
Oddly enough, the FHFC reversal comes at a time when the Jacksonville market has few developments that address the need for housing for families with annual incomes at or below 50 percent of the Area Median Income (AMI) and very low income families, households with annual incomes at or below 30 percent AMI.
In fact, only 7 percent of all units in the Jacksonville market are targeted to 50 percent AMI families and just 1 percent of all units are targeted to 30 percent AMI families.
The Pine Grove development was proposed to serve Jacksonville’s biggest need in the affordable housing market. The majority of the units will serve the 30 percent and 50 percent and below families. The balance will accommodate between 51 and 60 percent AMI.
Florida Housing was created by the state legislature more than 25 years ago to help Floridians obtain safe, decent affordable housing that might otherwise be unavailable to them.
In addition to providing affordable housing, the Pine Grove project would create 1,000 new jobs over the 18 month construction period resulting in $7,200,000 in new wages, produce taxes and fees in excess of $400,000 and add $130,000 to the annual real estate tax role according to estimates from the National Association of Home Builders.
The FHFC board of directors meets March 13 in Tallahassee, Fla.
