Cedar Rapids launching search for nonprofit to own, manage affordable housing complex

Cedar Rapids City Council members say their approval Tuesday, Oct. 10 of a resolution requesting proposals from nonprofit organizations to manage a 25-unit affordable housing facility represents a key step in addressing a longer-term city issue: The longstanding shortage of affordable housing options. The city purchased the vacant, blighted former Colonial Center building, now known as The Heights, in December 2021, and has been at the forefront of a $6.9 million project to rehabilitate the building into 25 affordable housing units – 22 one-bedroom units and three two-bedroom units. Six of the units are also fully ADA compliant, and all are ADA convertible, housing services manager Sara Buck told the council Tuesday. The renovation project, boosted by four federal grants, will incorporate several amenities, including office spaces, a computer lab, a meeting room, on-site laundry tenant storage, and a gas-powered backup generator. The project is well under way and is due to be completed by March 2023. Ms. Buck said the city is now beginning the process of identifying a nonprofit organization to own and manage the building under a 15-year pro forma agreement. Several criteria are being used to evaluate and the appropriate nonprofit to manage the development, Ms. Buck said. “We want to ensure that the owner has capacity and financial feasibility,” Ms. Buck said. “We’re looking at previous management experience in affordable housing and the overall financial feasibility of the owner, and that will be reviewed as part of that 15-year pro forma and ensuring that there's adequate reserves for long-term maintenance of the building.” Non-profit applicants can earn extra evaluation “points” if they intend to serve a higher-need population or plan to provide additional services or amenities to residents, Ms. Buck said. Council member Ashley Vanorny said the new units will help fill a critical need for lower-income housing, especially ADA-compliant units. “A lot of us who were hands-on during the derecho have those memories that'll probably never really leave us of going on site and seeing people that were pretty destitute,” she said. “Unfortunately, we just really didn't have any other place to put them, and it wasn’t for lack of trying. We didn't have dozens of people looking for full ADA, but we had a few, and for those who need it, it’s critical that everything is accommodated to them so that they're on that main floor. It seems like a small number, but it’s a pretty big impact in our community.” Under stipulations of the federal grants, units in The Heights will be available to residents with incomes up to 80% of the federal poverty line. Council member Scott Olson, however, said the city should consider an agency willing to provide units as a much lower income threshold. “One of the top priorities that came out of our last strategic plan for the council is affordable housing,” Mr. Olson said. “There's not many agencies that can get a building of this quality for no money, so there should be no reason that this can't be very affordable housing. I think we need to have a tougher standard than 80%. A builder can't build this type of housing and make the rents and the numbers work with today's interest rates and pandemic costs. So we have a very unique situation here, because we can go in and have a building provided to a nonprofit that has the experience. They will have all their costs covered by what they do from their rents, but we cannot let our rents get to that 80% level. We need to have somebody that's going to hold those rents down, because it can be done, and we have a rare opportunity to provide 20-plus units that are truly affordable, that are beautiful and new. So hopefully in your RFP (request for proposal), you put a tougher standard in there and see if they can meet it.” Council member Dale Todd agreed with the sentiment, but said a dramatically lower income threshold may not be practical. “At 80%, you can make it work,” Mr. Todd said. “But I think it's unrealistic to go lower and not have a corresponding increase in operation cost and some type of support services cost that would be involved for whatever nonprofit operates it. So while the intent is good, my question (is) why a nonprofit would go into a project like this, knowing that they're going to run a risk or loss and not having a supportive services component. That's a recipe for failure to put this amount of money into it. We don't want to see that, and we've had those happen in the past, where six or seven years down the road, the model the non-profit is using isn’t working.” In response, Ms. Buck noted that the city’s request for proposals will include the pro forma property lien “so that they can show, over that 15-year time period, how they're going to have adequate reserves for maintenance, based on the rents that they're proposing. So that will give us some of that additional information on how they plan to do that.” The proposals for managing the facility are due Nov. 6 at noon. A committee will then evaluate the applicants before the council selects an agency at its Nov. 21 meeting. Cedar Rapids mayor Tiffany O’Donnell stressed the development is a significant step in the city’s push to provide more affordable housing options. “Hopefully the right people are listening: We are still nowhere where we need to be as it relates to affordable housing,” Mayor Tiffany O’Donnell said. “This is an incredible signal that we are on our way, and I hope it signals to the people of Cedar Rapids (and) reinforces the commitment of the council about affordable housing and the need for more.” Ms. O’Donnell also said The Heights project will become a “gateway” to Wellington Heights, and that she hopes it can help bring even more affordable housing options to the economically disadvantaged southeast Cedar Rapids neighborhood. “Mark my words: Keep an eye on (this area), because it's going to look radically different – improved, bright and innovative – in the next year or two,” she said. “Thank you for taking on this project and making sure that it lives up to what the citizens here deserve.”