Oak Hill Jackson Brickstones get $29-million backing from Iowa Finance Authority's affordable-housing effort

A plan to build two, 48-unit apartment buildings with “affordable” rents in the Oakhill Jackson neighborhood in southeast Cedar Rapids secured $29 million in federal funding support on Friday from the Iowa Finance Authority.

With the affordable-housing funding commitment now in hand, the project's developer, Jack Hatch of Hatch Development Group, Des Moines, said Friday afternoon that he is now expecting to start construction on the two apartment buildings along Sixth Street SE by very early next year.

In the meantime, he said he and his construction team, which includes Novak Design Group of Cedar Rapids and Hall and Hall Engineers of Hiawatha, will be completing pre-construction planning and design as final financing arrangements are worked out. Dale Todd, a former City Council member and president of the Southside Investment Board, will manage the project locally for Hatch.

A city loan of about $600,000 is part of the funding package and most of the land for the two apartment buildings is city-owned and will be donated to the project, Hatch said.

One of the Brickstones will be built on the east side of Sixth Street SE at 12

^th

Avenue SE and one on the west side of Sixth Street SE at Ninth Avenue SE..

Hatch intends to put parking on the first floors of the building to ensure apartments can't be touched by any future flood waters.

The affordable rents will suit people who work in nearby hospitals and in the downtown and elsewhere, Hatch has said.

Hatch's investment in the Oakhill Jackson Neighborhood, a core neighborhood long in decline, follows on the heels of new-home construction there by Skogman Homes, which has built 20 new homes with city incentives and has plans to build four more. A few other new homes also have gone up with city incentives intended specifically to revitalize a place in which no one has been willing to invest.

Hatch  first proposed the idea for the Oak Hill Jackson Brickstones on Sixth Street SE some 11 months ago when he and three other developers – the three others are from Minnesota -- experienced in the use of federal tax credits stepped up with plans to replace some of the affordable housing lost in Cedar Rapids' June 2008 flood.

Hatch, an Iowa state senator who has successful development projects in Des Moines, quickly won the endorsement of the city's Replacement Housing Task Force and the City Council.

A sour economy, though, has prevented the project from attracting investors willing to provide the money for the project's construction in exchange for federal tax credit against the investor's future federal tax liability.

A new federal program now has allowed states to trade  tax credits for direct federal payments to help get stalled tax-credit projects for affordable housing moving. The investor in Hatch's Oak Hill Jackson project on Friday received $20.5 million in tax credits over 10 years, which will provide the project with $13 million in actual dollars in return. Hatch said he will use only $10 million of the amount. The Hatch project also received $9.3 million in federal money provided in exchange for tax credits and it expects to use $8.6 million of that amount, he said.

In the last couple months, the Iowa Finance Authority also has approved federal tax-credit funding for Sherman Associates Inc. of Minneapolis to renovate The Roosevelt apartments in downtown; for MetroPlains of St. Paul, Minn., to build a 45-unit apartment building called Cedar View on O Avenue NW for seniors; and for a proposal by EverGreen Real Estate Development of Prior Lake, Minn. to build the 90-unit Cedar Pond Townhomes development south of Williams Boulevard and north of Wilson Avenue SW.

The MetroPlains project still must get City Council site approval.