SPECIAL PLANNING AND DEVELOPMENT COMMITTEE SEPTEMBER 11, 2003

MUNICIPAL COMPLEX, ROOM 103

Committee Present: Joe Bustos, Chair, William Van Nort, Kruger Smith Committee Absent: Paul Gawrych Council Present: Thomasena Stokes-Marshall Staff Present: Joel Ford, Colleen Jernigan

Mr. Bustos called the meeting to order at 10:00 am.

Ms. Stokes-Marshall thanked everyone for attending and stated that this was a follow-up from the regularly scheduled September Planning Committee meeting in reference to addressing affordable housing in Mount Pleasant as it relates to permit allocation. Even though some permits have been issued it has been very few in relation to the overall numbers. She stated that she invited several people that represent low income housing to discuss how the Town might partner with them to bring about affordable housing in Mount Pleasant.

Mr. Smith stated that permit allocation is not a problem and that there are far more permits available for affordable housing that anyone would ever need.

Mr. Ford stated that the number of permits is not a problem, that the question might be the amount to qualify as low-income housing. He stated that the magic number based on HUD and Fannie Mae and the types of indicatorses used for the region set that number at $120,000 to qualify as a low-income home.

Mr. Bustos stated that there is a program in place to grant impact fees up to $1800 per home.

Mr. Smith asked how much money was in the program. Ms. Jernigan stated that there is $14,000 in the grant program currently.

Mr. Montez Martin, President of Lowcountry Housing & Economic Development Foundation, Inc. stated that the $120,000 represents a 1200 square foot home.

Mr. Tom Faulkner, President of Nehemiah Corporation, stated that if you have soft money that is not a grant but it is effectively something that the homeowner does not have to pay, it goes a long way to helping build affordable housing..

Mr. Martin stated that the cost of construction, not the cost of the land or the cost of building the house or the fees, but the simple cost of construction is approaching $100 per square foot.

Mr. Bustos asked what the target price should be for the whole package. Mr. Martin stated that he did not have an estimated cost for the entire project.

Mr. Smith stated that maybe the question should be what rules are applied to low income housing to determine the $120,000 as affordable housing. Mr. Ford read the Oordinance for the Committee.e ___ .

Mr. Martin explained that as an example – there is a home in a neighborhood, the value of the home is determined just as any appraiser would do, and if the sales price is $150,000 the last thing you want to do is sell it for $100,000 because then you have impacted the value of every single house in that neighborhood. He stated that then the argument of affordable housing in the neighborhood has lowered the value of the home and this is obviously not desired. He stated that a family that can afford a mortgage of So you want to use soft money to pay the market value. Y$100,000, would leave a $50,000 gap that has to be filled. He stated that anything that the Town can contribute toward closing the gap would be helpful.

Mr. Bustos stated that there are at least two developments going on right now at the $150,000 price.

Mr. Smith stated that the sales price is what trips up the situation. That is the term that HUD uses instead of construction price.

Mr. Faulkner stated that the few houses they have been constructing, Town staff has been very flexible in not seeing it as sales price but as the amount that is actually being financed so that the price is below the $120,000. He stated that the challenge is to come up with the soft money to get below the $120,000 and that is why they are asking the Town to become a partner to help meet the soft money needs by offering significant incentives.

Mr. Smith asked what all the inspection fees add up to on a home. Mr. Ford stated that it varies, but is approximately $500. Mr. Smith stated that if another $500 were added to the grant fees already in place that would not put much of a dent in the soft money needs.

Mr. Faulkner agreed, but it sends a message when they go to HUD or the State that shows that the Town of Mount Pleasant is taking a symbolic step toward saying that there a lot of people in our the community that want to become homeowners but cannot afford to do so.

Mr. Smith stated that so the question is that you they would like the Town to consider offering inspection fees within the grant. He asked if there were any other costs that would fit into something that the Council would consider. Mr. Martin stated that every single dollar that is contributed reduces the gap and when they approach others, the question is asked who is helping and at what level. He stated that participation from the Town plays out very well in the scoring of the application.

Ms. Henrietta Woodward, Director of Foundation Operations, Lowcountry Housing and Economic Development Foundation, Inc., stated that Mr. Bustos made a comment that there are two $150,000 developments and in the Town’s population there may be people that can afford to purchase those homes without assistance. When you are talking about affordable housing, those individuals cannot afford to buy that house without supplemental assistance.

Mr. Van Nort asked how the Town compares to other municipalities. Mr. Martin stated that a comparison with other municipalities was not available at this time.

Mr. Faulkner stated that in Aiken, South Carolina, the housing authority created a development corporation, and partnered wit the City of Aiken to provide quality affordable housing to all of their residents.

Mr. Van Nort asked for a copy of Aiken’s program. Mr. Faulkner stated that he would get a copy for the Committee.

Mr. Smith suggested that every time a single family home is built in the Town, the Town does not recover enough in taxes to pay for the services.

Mr. Faulkner stated that Aiken is looking long-term and that every time a large residential development is built, a commercial shopping center is built nearby.

Mr. Bustos asked if the City of Aiken owned the land that the housing project was built on. MMr. Faulkner answered that the housing authority owned it at the time.

Mr. Dudley Gregory, HUD Area Manager for the State of South Carolina, stated that he looked at the City of Aiken’s project and that it is extremely creative. He asked whether or not the Town of Mount Pleasant would be willing to use its Community Development Block Grant fund of around $250,000 per year toward a housing project. Ms. Jernigan stated that that money does not go directly to the Town. She stated that the Town has to submit projects for approval just like everyone else.

Mr. Smith stated that if a development authority were created then the block grant money might come through that authority and then maybe part of it could go toward building houses.

Mr. Dudley stated that he is suggesting that if the Town wants to try and deal with the soft money gap the Town may want to submit a proposal that deals specifically with trying to increase the affordable housing inventory in the Town. He stated if the Town owns any land, the Town’s contribution of the land toward the development of affordable housing could substantially decrease the gap. He stated that it is the spirit of the Town and whether or not the Town wants to use its block grant funds for affordable housing.

Mr. Bustos asked how affordable houses are marketed. Mr. Faulkner stated that there is a pre-purchase counseling program advertising the houses and then beginning to pre-qualify the families with the banks to then determine the amount of soft money needed. Mr. Bustos asked who sells the house. Mr. Faulkner stated that Nehemiah would sell the house at market value, using a deferred, no-interest second mortgage that is due and payable on sale. Mr. Bustos asked if there was a commission paid to a real estate agent. Mr. Faulkner stated that there is no commission, but there is a fee. Mr. Bustos asked what the fee was. Mr. Faulkner stated that no more than 10% or say up to $15,000 on a $150,000 home. Mr. Bustos asked how much of that fee Nehemiah was willing to waive. Mr. Faulkner stated that he has not been paid retirement for two years, he has lost salary for months, and that question angers him.

Mr. Bustos stated that Nehemiah is asking the Town to come up with a pretty fair amount of money for each home and he wants to make sure that this is truly the spirit across the board. He stated that if you they are asking the Town to give up taxpayers money then he wants to make sure it is across the board giving.

Mr. Faulkner stated that he has been trying to work with the Town since 1994 to get these houses built and he has never charged anyone else for the time that he has spent to date.

Mr. Smith stated that maybe the Town could create a development authority so that grant money could be funneled through the authority as the Town is able to get and if the CDBG funds could be used that would go a long way towards helping.

Mr. Martin stated that he does not know the answer.

Mr. Smith stated that the town is trying to help.

Mr. Martin suggested that if the Town appealed to Charleston County to use a portion of the CDBG funds for affordable housing, it would be accepted.

Mr. Smith stated that the Town does not necessarily have to form a development authority then.

Mr. Ford stated that the Town receives a small portion of the CDBG funds because of the Town’s demographics. The Town has never been successful in receiving HUD money or CDBG funds. He stated that what money the Town does receive is currently used for projects such as Mount Pleasant Waterworks sewer and water improvements, but if this focus were changed to an affordable housing project, and the Town was supportive of the project, then it becomes a higher priority for the grant administration.

Mr. Smith stated that to facilitate communication, could the Committee ask Mr. Ford to discuss this further and report back to the Committee. Mr. Ford stated that this has to be approved by the Town Administrator, as he is also the CDBG Coordinator.

Mr. Bustos stated that the idea of adding inspection fees to the grant seems to be doable as well as asking Mount Pleasant Waterworks to participate.

Mr. Smith stated that when the grant funding was set up to help with affordable housing the council did not know there were other needs besides impact fees.

Mr. Van Nort stated that he was not aware how low income housing works before this meeting and suggested that the Town Administrator should be the lead person for this project.

Mr. Gregory suggested that if the Town wants to get an idea of what other cities are doing with CDBG funds to make housing more affordable, his staff could brief the Town Administrator at a subsequent meeting.

Mr. Smith stated that there has been a huge leap forward in understanding just with this meeting today.

Ms. Woodward stated that as affordable housing providers, their commitment to such a project is because they recognize the need for this housing in the community. He stated that there office receives a lot of inquiries and there is a a multitude of people that live in this community that really need affordable housing. She stated that two months ago they advertised a first time home buyers program that was held at the Mount Pleasant Library. Within a week and a half they had 30 families that were eligible to attend that session because of the need for housing.

Mr. Bustos stated that the addition of inspection fees to the grant would be on next month’s Planning Committee agenda, as well as discussion of including the Mount Pleasant Waterwork’s fees.

Ms. Jernigan wanted to make sure that everyone understood that the Town could only apply for CDBG grants for what is in the Town’s jurisdiction. The only two neighborhoods that are qualified in the Town are Greenhill and Remley’s Point. She stated that last year when the Town tried to do a project in the Six Mile community and the Snowden Community, the HOAs in those neighborhoods did not want to work with the Town and did not want to participate.

Mr. Martin stated that that is how they can help by going out into the community and be the visible force.

There being no further business, the meeting adjourned at 9:50 am.

Respectfully submitted, Laura Fleich