News Column

Financing plan for shuttered apartments raises concerns

June 23, 2014

By Pat Kimbrough, The High Point Enterprise, N.C.



June 23--HIGH POINT -- How far should the city go to try to revive a blighted apartment complex?

That's one question hovering over a plan in which the city will partner with a nonprofit homebuilder to rehabilitate the Meredith Street Apartments, which have sat vacant since the city closed them down in 2010 for housing code violations.

The City Council voted 6-3 last week to approve an arrangement in which Unity Builders Inc. of High Point will purchase and redevelop 10 of the apartment buildings in the complex -- which is in the 500 block of Meredith Street -- from Schwarz Properties LLC of Asheboro.

Council last year approved a $460,000 loan to Unity Builders for acquisition of the property.

The loan was to be in the form of federal HOME program funds, which are given to states and local governments to use in the creation of affordable housing for low-income residents.

But the sale hasn't occurred yet.

Officials said the primary lender in the project, First Citizens Bank, is now requiring the city to guarantee the $945,000 construction loan. That means that if Unity Builders can't repay it, the city will have to.

"It's risky for the city," said Councilman Jim Davis, who voted against the arrangement, along with councilmen Jason Ewing and Jay Wagner.

Officials said the city has enough federal housing funds on hand to cover the $1.4 million project if Unity Builders defaults.

"It's been sitting there a long time. It's a lot of housing in one of the core city neighborhoods. We've worked with Unity Builders before," said Councilwoman Judy Mendenhall. "For me, it was an opportunity to try to bring about some good, decent housing in an area that needed the housing. I don't know that I viewed it as real risky."

The site has been a thorn in the city's side for years.

After closing the complex, council ordered part of it torn down when Schwarz Properties failed to bring the buildings up to code.

Council put off demolition after the Unity Builders deal emerged.

The money for the project will be available for one year.

Davis said this short time frame could be a concern, because no permits have been obtained for the project yet. The city's permitting and inspections process can be notoriously slow, he and others have pointed out for years.

"I think it's been made very clear regarding the expectations of this council, when it comes to permitting and inspections," said Mayor Bernita Sims. "There is a date-certain this has to be completed, so I would hope we would not be the source of any hold-ups."

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(c)2014 The High Point Enterprise (High Point, N.C.)

Visit The High Point Enterprise (High Point, N.C.) at www.hpe.com

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Source: High Point Enterprise (NC)


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