At the last minute, Ohio-based development company Edwards Cos. reached an agreement with Louisville Forward, the city’s economic development arm, to add 19 affordable housing units into its planned 195-unit apartment project on the former Mercy Academy site. However, those units seem to be less affordable than some market-rate apartments.
Still, the agreement seemed to allay many concerns Louisville Metro Council members had about awarding Edwards up to $2.6 million in tax breaks for the Mercy project and another $4.9 million in incentives for its nearby Phoenix Hill apartment project. Previously, several Metro Council members vocalized their opposition to awarding tax incentives to the company because neither apartment development included affordable housing.
After the announced agreement, Metro Council’s Labor and Economic Development Committee yesterday approved the tax incentives. The project will go before the full council on Thursday, July 28, seeking final approvals for the incentives.
“In the end, there was a lot of pressure from the city,” said Bill Bardenwerper, the Louisville attorney representing Edwards. “We don’t disagree at all with the value of providing affordable housing. It was just a question of what projects could do that.”
However, simple math shows the affordable apartments included in the Mercy apartments will actually cost more per square foot than a similar market-rate apartment in Germantown.
Edwards agreed to lease 19 of its 22 studio apartments at the Mercy site for $838 a month. Monthly utilities are estimated to cost an additional $100 a month. The Phoenix Hill apartment complex won’t include any affordable housing units.
Bardenwerper told Insider the monthly rent and utilities numbers provided at the meeting were calculated by Louisville Forward staff. The 19 apartments are supposed to be affordable for Louisville residents who earn 80 percent or less of the median average income. For Jefferson County, those are individuals who earn $37,500 or less annually, according to the U.S. Department of Housing and Urban Development.
The studio apartment at the Mercy development will be about 500 square feet, according to the developer. That means the apartments cost $1.68 per square foot, excluding utilities. The apartment complex will include a pool, a landscaped courtyard, parking and a clubhouse, and it is close to the bustling Highlands neighborhood.
For comparison, Insider looked at another brand new apartment complex in the city that only offers market-rate housing, the Germantown Mill Lofts. It, too, has parking, a pool and landscaped courtyard and is located in a neighborhood with plenty of restaurants, coffee shops and bars nearby. Both Germantown Mill Lofts and the Mercy apartments have washer and dryers in their units.
But the smallest apartment at Germantown Mill Lofts — a 540-square-foot studio — is only $752 a month, according to the complex’s leasing office. That works out to be $1.39 per square foot — $86 a month cheaper than the affordable housing units Edwards agreed to put in its Mercy development.
Germantown Mill Lofts’ developer Underhill Associates received roughly $175,000 from Louisville-Jefferson County Metro Government’s coffers to fund environmental work on the Goss Avenue site and for a study related to Phase 2 of the development. Underhill Associates also received $4.6 million in historic tax credits from the federal government because the project included renovating 130-year-old buildings.
At 310 @ NuLu on Hancock Street, the 505-square-foot and 510-square-foot studios cost $1.69 per square foot. A version of its 540-square-foot studio layout is $1.68 per square feet. Further away from downtown, the Springs at Hurstbourne offers a 525-sqaure-foot studio for $800.
That isn’t to say that all studios are cheaper than the proposed Mercy units. For example, a 430-square-foot studio at Vue at Third downtown costs $2.09 per square foot.
We reached out to Louisville Forward, which provided the numbers to Edwards, to try to understand how the rent was calculated. A spokeswoman for the department said they used the HUD Income Limits Documents System to determine the rent rates and estimated utility costs.
She could not comment on why the affordable Mercy apartments cost more than some market-rate units, and no one within Louisville Forward was available by press time.
Louisville Metro Councilman Bill Hollander, D-9, is one of the Metro Council members who has spoken about the need for affordable housing.
Hollander is currently working with the county attorney’s office to draft a resolution that would require multi-family developers asking for city incentives to make at least 10 percent of their units affordable to people who earn 80 percent or less of the average median income.
During the meeting Tuesday about the tax incentives, he applauded the inclusion of the affordable housing units in the Mercy project.
“I thank Edwards for making this concession quite recently,” Hollander said. “I am happy it was done in the Mercy project. I wish it was done in both.”
The Phoenix Hill apartments won’t have affordable units, but it could have a “affordable component,” Bardenwerper said. The Phoenix Hill development is “just so expensive,” he said.
That component, Bardenwerper referenced, is the five shotgun houses along Broadway that Edward saved after hearing feedback from the community. The company plans to donate those to local nonprofit preservation group Preservation Louisville.
Edwards has been talking to Charles Cash, former city planning director and current president of Preservation Louisville’s board, about how the houses can be repurposed.
Cash told Insider that Preservation Louisville has formed a committee to figure out what to do with the properties. Renovating the shotguns and renting them as affordable housing “will certainly be a consideration,” he said. In that instance, Preservation Louisville would partner with a nonprofit that focuses on housing issues in the city.
Still, affordable housing is only one option the committee is exploring. “I wouldn’t want to pick a label to stick on (the houses) yet,” Cash said.
Edwards is expected to transfer the property to Preservation Louisville this fall, Cash said.