The Kenai city council took a step toward donating two parcels of city-owned land to not-for-profit housing developer Kenai Peninsula Housing Initiative (KPHI), which seeks to have the land donated for the creation of two housing complexes, one low-income and the other for seniors.
After discussing the decision in a closed executive session, the council directed Kenai City Manager Rick Koch to draft resolutions that would give KPHI control of approximately two acres on Redoudt Avenue, where KPHI intends to build a six-plex unit of low income housing, and 1.25 acres on Second Avenue, its prospective site for senior housing. The council will vote in the future on whether to award control of the land to KPHI. In its decision, the council also rejected a competing offer to purchase the 2nd Avenue property by Daniel McKeirnan, who owns an adjacent property.
KPHI Executive Director Steve Rouse met with Koch and Kenai Mayor Pat Porter earlier this year regarding the donation proposal, according to a presentation Rouse gave to the Kenai council on May 4.
Rouse said KPHI began in the mid-1990s as a advocacy group providing information and referrals to those in need of housing. It became a development organization 13 years ago with its first housing project, Homer’s eight-unit Brookside housing complex, completed in 2005. Since then, KPHI has built 190 housing units on the Kenai Peninsula, 96 of which it continues to manage. None are presently located in Kenai.
“It’s time for Kenai to have theirs,” Rouse said.
Both the prospective housing complexes in Kenai would contain six units. The senior housing would be open to those 55-years-old or older, and the low-income housing to those earning less than 50 to 60 percent of the area’s median annual income.
Rouse said rents at the low-income housing complex would be restricted by the terms of the state and federal grants that would fund their development. He told the council that current rents for a one-bedroom low-income unit were around $686, including $93 for utilities. Rouse said KPHI also accepts the Alaska Housing Finance Corporation’s housing choice waiver grant, which reduces a qualified tenant’s rent to 30 percent of their income, with the remainder paid by the public corporation.
For the senior housing, which would have no income requirement, Rouse said the current market-rate was between $700 and $775.
Rouse said that giving KPHI control of the two properties would allow KPHI to begin seeking grants without exposing the city to risk.
“(Site control) is all we ask for,” Rouse said. “Preferably for three years, so we have a couple other years in case we don’t get funded the first year. It doesn’t mean that you give the land and we hold on to it and if nothing happens, you don’t get it back. It only transfers to KPHI when the grant award is made and the Alaska Housing Finance Corporation determines to approve funding to make the project a go. So you are protected in that sense.”
Rouse said the eventual donation would be economically necessary for KPHI to keep its rent low.
“The reason we need the land is very simple,” Rouse said. “Development costs are way above what we can charge for rents.”
A donation would also help KPHI seek the grants necessary to fund the project, Rouse said.
“The (Alaska Housing Finance Corporation’s) Senior Citizens Housing Development Grant provides us with some funding, but we have to demonstrate community support and community involvement,” Rouse said. “The best way to do that is to show that the city can donate that land. It’s the easiest way to leverage that money.”
Rouse said KPHI intends to start applying for Alaska Housing Finance Corporation grants soon.
“The application period for the grant is in the fall, and we find out by January,” Rouse said. “So we will know by January 2017 whether we have the money. We would initiate a property transfer at that time. Our engineers and architects and everybody goes to work, and we could break ground as soon as weather would permit this time next year.”
Rouse declined to be interviewed for this story.
Reach Ben Boettger at firstname.lastname@example.org.