In October 2017, when the city announced the total rehabilitation of all 578 of its Wichita Housing Authority residential units they projected construction would begin within a year, and by now, the work was supposed to be complete, or at least nearing completion. Instead, more than two years later, construction has not begun on either the city’s 352 scattered, single-family homes or the 226 senior units in Greenway Manor and McLean Manor high rise properties or the Rosa Gragg or Bernice Hutcherson Garden Apartments.
Residents are wondering, what happened to their shiny new residential units?
As it was announced, the City of Wichita’s Housing Authority had been awarded admittance into the U.S. Department of Housing and Urban Development’s Rental Assistance Demonstration (RAD) pilot program. As the name implied, RAD was a relatively new program that few housing authorities had used and never with a project the size the city was proposing.
Under the RAD program, local housing authorities are able to use private financing to complete substantial rehabilitation of their properties. By law, housing units have not been allowed to accrue any debt and because of this restriction the city’s housing stock was suffering from years and years of neglected maintenance and a lack of capital improvements. This project seemed to offer an answer, but it came with a lot of restrictions and the newness of the program left the City of Wichita working through federal regulations that often conflicted, said Sally Stang, director of the city’s Housing and Community Services Department.
Under the program, the City of Wichita would convert its portfolio of housing units from public housing to Section 8 units. With Section 8, the city pays rental housing assistance to private landlords on behalf of low-income households. To make this happen, the city would partner with a private developer who would rehab the properties then rent the units to Section 8 tenants.
By the time the city announced the project in October 2017, they had already found a developer, KBK Enterprises, a Columbus, OH-based developer with an extensive history of successfully developing and maintaining affordable housing projects. The project really did appear poised to move ahead rapidly.
However, the best-laid plans sometimes fall apart. According to Stang, the city spent the past two years working through a series of issues. The first year was supposed to be spent securing an investment partner and securing tax credits from the Kansas Housing Resources Corporation.
Initially, Bank of America was on board as the project investor and agreed to purchase the tax credits. However, after the developer completed an assessment of the improvements needed on the high rise units, they determined the units wouldn’t have enough income to support the debt. They finally found a creative workaround on that issue that HUD would accept, but by then Bank of America decided to pull out of the project, citing a change in their portfolio needs.
In spring 2019, the Federal Housing Authority notified the city that the single-family homes weren’t eligible for their funding because they were “too scattered.” It turned out the HUD Demonstration Project and FHA requirements were inconsistent,” said Stang.
The city and KBK applied for and tried other approached to make rehabilitation of the single-family units work, but finally, they decided to go ahead and proceed on the 226 high rise and senior units as a separate project.
They’ve secured a new investor, Affordable Housing Partners, a subsidiary of Berkshire Hathaway. However, because so much time has passed, they are going through and update to the environmentals and the capital needs assessment on the units.
“We have all of the money we need to move on the elderly projects,” said Stang. “I hope we will close in June and begin construction thereafter. The good news is we’re moving forward.”
That good news is just for 226 units. Stang says she’s still trying to find a workable solution for the renovation of the houses.
“My recommendation to the council was to step back and re-strategize how we tackle the single-family units,” said Stang.
Recently, she met with a number of local developers to see if they had some ideas for how the single-housing units might move forward.
So far, Stang thinks she’d like to sell 77 of the units and potentially divide the remaining properties into three different development projects. With the money generated from selling the 77 units, she’s considering building one or two new housing projects.
At this point, these are just ideas she’s considering and her final decision will balance the ideas that may come forward from developers with what provides the best outcome for the city and the Housing Authority tenants.
“I’m actually excited about it. It gives us an opportunity to be creative,” Stang concluded.