SHAWNEE, Kan. — Johnson County could soon be investing in a new affordable housing complex in Shawnee.
Next week the Board of County Commissioners (BOCC) will consider issuing a $1 million loan to support the construction of the Hedge Lane Apartments.
The apartment complex is a joint venture between Sunflower Development Group and Consolidated Housing Solutions. The developers intend to create a 144-unit apartment complex near 75th Street and K-7 Highway in Shawnee.
Because of rising inflation and additional costs for labor and materials, developers are seeking out a loan to cover a gap in project funding. If approved, the loan from the county would cover roughly 3% of the $30.5 million project.
Jay Leipzig, director of planning, housing and community development, said developers have obtained Low Income Housing Tax Credit (LIHTC) support and gone through all approval processes with the city of Shawnee.
“It’s a chance to create long-term affordable housing units as well. There is a 15-year note associated with the tax credits. This would be a non-interest bearing, non-amortizing loan for this project,” Leipzig said.
Leipzig said at the end of the 15-year period, there would be a $850,000 balloon on the property that could be assumed by a new buyer to extend the affordability period for future tenants.
All units in the complex will be dedicated to low income housing. The developer intends to offer 42 one-bedroom units, 80 two-bedroom units and 22 three-bedroom units.
The project is considered workforce housing, meaning tenants would be people who make less than 60% of the area median family income.
Deputy Director of Housing Services Jessica Hotaling said rent limits are set annually by the Department of Housing and Urban Development (HUD), but estimates a one-bedroom unit would cost roughly $1,100 and a two-bedroom unit would cost approximately $1,300.
Commissioner Janeé Hanzlick said the investment would give county residents more options to use housing choice vouchers.
“Our loan of $1 million could have impacts in years to come on our ability to have our workforce here in Johnson County,” Hanzlick said.
According to county documents, between January 2020 and December 31, 2022, the county is projected to lose approximately 349 housing choice voucher (HCV) units. Hotaling said nearly 700 people in the county are currently on a waiting list to receive a HCV.
“We’re not only losing voucher properties, but we’re losing market-rate affordable housing units, because all these apartments in Mission, Merriam, Overland Park are coming off the tax rolls. Then we are growing all these jobs,” Commissioner Becky Fast said. “We are moving into a direction that is going to force this commission to make housing a priority.”
Fast also expressed an interest in the county developing a housing trust fund to support future housing needs.
Commissioner Charlotte O’Hara raised concerns about other developers seeking loans or incentives from the county in the future if this loan is approved.
“This will set a precedent and this will bring other projects to the county, because this is helping with the down payment [for the developer],” O’Hara said. “I would be very interested in knowing how much cash this developer is actually putting into this, because this $1 million is going to narrow the gap as far as to what his cash investment is in it.”
The BOCC is scheduled to vote on the issuance of the loan during the next regular board meeting on Thursday, May 26.