City Council approves $5 million loan for 240-unit Vestcor affordable housing project

The developer says the public financing would help offset cost increases not covered by state low-income housing tax credits.

The Vestcor Companies Inc. plans Madison Palms, a 240-unit affordable housing apartment community along Merrill Road in Arlington.
The Vestcor Companies Inc. plans Madison Palms, a 240-unit affordable housing apartment community along Merrill Road in Arlington.
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The Jacksonville City Council approved a $5 million, low-interest loan to The Vestcor Companies Inc. to help finance Madison Palms, a 240-unit affordable housing apartment community along Merrill Road in Arlington.

In a 19-0 vote, Council passed Ordinance 2022-0784, which included the loan agreement, at its Nov. 9 meeting.

The estimated $56.5 million project at 8300 Merrill Road near Merrill Road Elementary School and Interstate 295 would be mixed-income, according to the legislation and a project summary from the city Office of Economic Development.

The 17-year loan is at 1%, well below current market interest rates.

Council members and city officials said during committee meetings Nov. 1 that the public financing would add to Jacksonville’s limited supply of affordable housing.  

Council will soon consider a request by Vestcor to rezone the 12.16-acre property to planned unit development. Ordinance 2022-0713 is in public hearings at the Council Land Use and Zoning Committee.

Vestcor has the property under contract from Lakeview Christian Fellowship Inc., formerly Merrill Road Baptist Church and Christian Ministry Center Inc., according to Vestcor subsidiary TVC Development President Ryan Hoover.

The Jacksonville-based multifamily housing developer’s funding model in the past decade for its affordable and workforce apartment projects, such as Lofts at LaVilla and Lofts at Jefferson Station Downtown, relies on low-income housing tax credits from the state of Florida. 

For the proposed Madison Palms along Merrill Road, the developer plans to secure tax credits, but the capital stack includes a $25.5 million mortgage; $5 million in general partner equity; $21 million in investor equity; and the $5 million city loan, which will act as a second mortgage. 

Hoover said Oct. 19 the city loan is necessary because tax credit equity does not cover the same percentage of project costs as it did pre-pandemic. 

“It’s difficult to get larger deals done with tax credits with (construction) costs going up,” he said. 

According to Hoover, Vestcor expects the state to increase the allocation of low-income housing tax credits within the next year but it is unclear by how much. 

Hoover said the city loan would allow all rents to stay affordable for tenants making 100% or less of the area median income.

The city summary says Madison Palms will be a mix of one-, two- and three-bedroom units with 132 set aside for households at or below 100% of the area media income.

Units at 100% of the area median income would be for single tenants making up to $58,000 per year and up to $86,000 for a household of four.

Vestcor plans another 97 units for households at or below 60% of the median income, which is $35,000 for one person and up to $50,000 for a family of four.

Another 11 units are for households at or below 33% of the median income, which would be up to $19,000 for a single tenant and up to $27,000 for a four-person household.

The wages align with the Florida Housing Finance Corp.’s 2022 AMI eligibility table.

City economic development officials provided a loan term sheet dated Oct. 4 that says the estimated $4,166.67 monthly payments would be interest-only with a balloon payment to pay off the loan in the final year.

The loan proceeds would be issued to Vestcor in one lump sum payout, the term sheet says.  

According to Kirk Wendland, executive director of the Office of Economic Development, a loan provision would require Vestcor to give the city any private equity return above 10% to be put toward the principal of the loan.

The developer told the city that construction would begin Nov. 1, 2023, and expects it to be completed by March 1, 2025.  

The site plan filed with the city shows the project architect is Bold Line Design LLC.