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Board looks further into HUD loan
Wisdom of funding option questioned
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Forsyth County News

 

While questions from residents persist, Forsyth County commissioners have voted to take the next step in helping a developer secure a loan from a U.S. Department of Housing and Development program.

The Section 108 loan could in part fund construction of Towne Club at Windermere, a high-end senior rental housing community proposed by Kennesaw-based developer Almquist Hansen.

The project qualifies for this type of HUD loan because it would reportedly create jobs for low- to moderate-income workers.

The developer is seeking a $5 million loan to help fund the $30.8 million project.

The remainder of the funding would come from another pending HUD loan of about $19.2 million for senior rental housing under Section 232, as well as about $6.6 million in private money.

The local government, in this case Forsyth County, is needed to submit the application and, if the loan is approved, act as a conduit between the developer and state and federal governments.

Forsyth County commissioners voted 4-1 on Thursday, with Todd Levent opposed, to transmit the pre-application to the Georgia Department of Community Affairs.

The department will respond to the county with further information about the specifics of the loan.

At that point, the county can decide whether to commit to the process, which if so would include another public hearing.

“Based on what counsel has said with no risk to the county ... and we need commercial growth in this county,” Bell said.

“I believe it would be prudent to at least send the application down [to DCA] so that we can get the information to then make a full decision.”

The DCA will decide whether it will back the project with its community block development grant funds received from HUD, which distributes money from private investors to states to offer the loans.

In 2010, DCA received $43.6 million. No non-entitlement communities, of which Forsyth County is one, have ever sought to use this funding.

As developer Greg Almquist said, the county would be “pioneers” in the block grant program for which the DCA wants to find uses.

If approved, the project is expected to create 150 full-time permanent jobs, and a majority of those hired must come from the target salary range of about $40,000 to $57,000.

Though HUD is often equated with low-income housing, this project would create a rental community with resort-style living for seniors 55 and older on an 18-acre site at Windermere Parkway and Trammel Road.

Most units would be for independent living, while a few would provide additional assistance. The average rent would likely be about $3,850 per month.

Ethan Underwood, attorney for the group, noted that potential benefits to the county would include an increased tax base, job creation and no burden on the school system.

County Attorney Ken Jarrard discussed some of the potential risks, which could come about if the project defaulted.

The state provides the “collateral” on the project loan, pledging its future HUD block grant money, Jarrard said.

The loan is not backed by Forsyth, he said, which means the county’s bond rating could not be affected by a default.

“However, Forsyth County does believe it could become ineligible for further DCA loans and grants, until the state is made whole,” Jarrard said.

According to Jarrard’s presentation, DCA records show that Forsyth has not received any grants from the department since 1995.

In the case that the bank holding the loan defaulted, the county government’s money is collateralized and protected, said David Gruen, the county’s director of finance.

The process, which all parties admit is complex, left some residents and at least one commissioner wary of moving forward Thursday night.

Citing the housing crisis and recent U.S. bailout of banks, Staurt McMinn said he couldn’t understand how this appeared to be a viable project with government funding.

“Sorry, you can’t get a loan. Apparently, the bankers think it’s a bad idea. Guess what? Bankers are financial experts,” said McMinn, a member of the Forsyth County Tea Party.

“I can’t imagine why [the board] is still thinking of this. I’m dumbfounded.”

Dan Gribler agreed that private funding would be the best option for the project.

Fellow resident Emily Crabb questioned how long HUD itself will survive, considering the nation’s debt.

“How, in the name of common sense, is Forsyth County willing to get entangled and put us at jeopardy,” Crabb said.

Brant Meadows asked commissioners about the trustworthiness of the HUD program and the benefit of inviting federal government programs into the county.

As a former planning commissioner, Meadows said he voted in favor of the senior-living development in 2008.

“I’m against the HUD involvement,” he said. “This might seem like the opportunity of a lifetime, but at what price?”

During a public participation meeting a week earlier, Almquist said the developers are seeking the loan because “the financing markets have simply changed.”

Obtaining a private bank loan isn’t as simple as it once was, he said, and this program matches what the group intended to provide in terms of jobs.

Commissioner Pete Amos agreed that banks often aren’t extending loans for land acquisition and development, which is in part what the Section 108 HUD funding would go toward.

Levent, who voted against submitting the pre-application, pointed out that several senior communities with private funding have been approved for construction or are proposed in the county.

“Why would the county put anything at risk to come up with projects, when we have a lot of private [ones] coming forward now, looking for approval?” Levent asked.

Bell noted that the other projects are still in earlier stages, while the developers have committed to this one.

Two Windermere residents, including Nancy Marvin, spoke in favor of the moving forward with the project.

As a former employee in the senior living industry, Marvin said she’s noticed this county “has a tremendous need for these types of communities.”

She has visited the group’s Towne Club at Peachtree City, whose design is identical to what’s proposed for Windermere.

However, the Peachtree City project did not use a HUD loan.

Pending approval at the county, state and federal levels, Almquist said the development could open in fall 2013.