Vestcor seeks $5 million city loan for Merrill Road affordable housing

The Jacksonville-based developer says the $56.5 million, 240-unit apartment complex could be completed by March 2025.

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The Vestcor Companies Inc. multifamily developer has asked the city for a $5 million, low-interest loan to build a 240-unit affordable housing apartment community in Arlington along Merrill Road. 

The estimated $56.5 million project at 8300 Merrill Road near Merrill Road Elementary School and Interstate 295 would be mixed-income, which a project summary from the city Office of Economic Development says would add to Jacksonville’s limited supply of affordable housing. 

City Council introduced Ordinance 2022-0784 on Oct. 11 that would approve the 17-year, $5 million loan at 1% interest.

Vestcor’s funding model in the last decade for its affordable and workforce apartment projects like the Lofts at LaVilla and the 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. 

Ryan Hoover, president of Vestcor subsidiary TVC Development, 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. 

The 12.05-acre site at 8300 Merrill Road.
The 12.05-acre site at 8300 Merrill Road.

“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 allocations 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 that are 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 or 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 up to $27,000 for a four-person household.

The site is west of Interstate 95 across the street from Merrill Road Elementary School.
The site is west of Interstate 95 across the street from Merrill Road Elementary School.

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

“We’re looking for ways to try and increase affordable and workforce housing in Jacksonville,” he said. 

The project summary calls the loan a material factor to enable Vestcor to develop the apartments at affordable rental limits. 

The loan term sheet dated Oct. 4 provided by city economic development officials 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 Office of Economic Development Executive Director Kirk Wendland, 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.

“I appreciate the way you structured this,” city CFO Joey Grieve said during an Oct. 10 Mayor’s Budget Review Committee meeting.

 “A, the fact that it’s a loan. B, the fact that, to the extent the developer does better than projected, we get some share to protect the city’s $5 million.” 

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.

Hoover said Vestcor has the 12.05-acre site under contract from Lakeview Christian Fellowship Inc., formerly Merrill Road Baptist Church and Christian Ministry Center Inc.

Driver, McAfee, Hawthorne & Diebenow partner attorney Steve Diebenow has filed a rezoning request for the property with the city to take the property from Public Buildings and Facilities-2 (PBF-2) District and Residential Medium Density-A (RMD-A) District to Planned Unit Development (PUD) 

The Council Land Use and Zoning Committee held its second reading on the rezoning bill, Ordinance 2022-0713, on Oct. 11. It scheduled the first public hearing Nov. 1.