The developer of a proposed town house community in LaVilla wants to increase the base sale price of each unit by nearly $100,000 in its land deal with the city.
The homes, originally planned for a base price of $250,250, would instead start at $350,000.
Johnson Commons LLC told city officials that rising construction costs are making the 91-unit project more expensive to build.
In 2021, Johnson Commons agreed to the $250,250 base price when the city approved a deal to give the developer 3.45 acres of land for the community near Lift Ev’ry Voice and Sing Park. The land was appraised at $3.58 million.
In exchange, Johnson Commons, a joint project of JWB Real Estate Capital LLC and Corner Lot Development Group, would give the city 50% of the net sale proceeds above the $250,250 threshold per unit.
Downtown Investment Authority CEO Lori Boyer said at an April 13 board committee meeting that Johnson Commons expects each town house to cost $310,000-$320,000 to build and the developer wants the price ceiling lifted so it can recoup construction costs.
“They (Johnson Commons) do think that their sales price of the units is going to be higher than what they originally contemplated to be able to absorb the construction costs that are going to be higher. Both of those things we accept,” Boyer said.
For example, under the terms of the current deal, a LaVilla town house sold for $400,000 would net the city $74,875. If the change is made, that same sale would net the city $25,000.
Boyer said officials will analyze Johnson Commons’ updated construction cost estimates and could bring an amended deal to the DIA board for consideration as soon as April 20. Boyer said the city permit review process for the project is nearly complete.
The Downtown Development Review Board approved the project’s design in September 2021.
Boyer said Johnson Commons representatives told DIA officials in an April 12 meeting that the company is willing to start construction before the city finalizes an amended agreement to stay on schedule.
The developer is expecting to break ground in December, according to Boyer.
In an April 13 text message, JWB President Alex Sifakis declined to comment on the town house project but noted that construction costs were up 45% from 2019 when the DIA set the $250,250 price.
Previously, Sifakis said the development team planned an $18 million investment in the project.
Boyer told board members she expects the amendment will increase the sale price threshold in the deal that triggers revenue sharing with the city but will likely not be eliminated.
“Know that we are not suggesting that,” Boyer said. “But we think it is appropriate to make sure this developer starts on time and gets moving. Because we had one hiccup on that (development), and we really don’t want to delay it any further.”
The town house project has faced starts and stops since it was first proposed in 2019.
At the time, DIA officials hoped the town house bids would fill what city officials call “the missing middle” — affordable market-rate housing Downtown.
Johnson Commons finished second to Vestcor Companies Inc. in a 2019 request for proposals issued by the DIA to develop the site, bounded by Adams, Lee, Houston and Forsyth streets.
City Council signed off on the redevelopment agreement with Vestcor in January 2020.
The DIA allowed JWB and Corner Lot to take over the project in March 2021 after Vestcor subsidiary VC LaVilla Townhomes Ltd. abandoned the project and returned the land to the city.
Ryan Hoover, president of Vestcor subsidiary TVC Development Inc., said at the time that Vestcor’s decision to return the land to the city and end the project was market-driven because of the pandemic and the company did not want to slow the city’s goal to redevelop the property.
JWB plans to build the town houses first. In the second phase, the developer is considering 10,000 square feet of stand-alone retail or a multifamily residential project with at least 10,000 square feet of ground-floor retail.
The town houses feature a shotgun-style design with gabled roofs, inspired by LaVilla’s architecture in the late 19th and early 20th centuries when it was a thriving and predominantly African American neighborhood.
The existing deal requires Johnson Commons to make a $150,000 donation to the city’s plan to create and program Lift Ev’ry Voice and Sing Park and $150,000 to the proposed LaVilla Heritage Trail.
Boyer did not say if a proposed amendment to the deal would impact the donations.