ELKHART — A not-for-profit development corporation wants to build new homes in the historic State and Division street neighborhood near downtown in an effort to ensure that new housing in the city is not just high-end.
Lacasa Inc. has proposed creating eight new homes by constructing three new duplexes on State Street and turning one existing building into a duplex. The homes will be designated for families that are at or below 60 percent of the Elkhart County median household income of about $52,000 a year.
The three new buildings would be at 152, 156 and 160 State St., while 146 State St. would be converted. Combined, they would offer seven three-bedroom units and one one-bedroom unit.
The estimated rent for the three-bedroom units would be about $800 per month.
According to Lacasa, the highlight of the project would be the rehabilitation of 146 State St.
“This property has been vacant and boarded up for about a decade but has retained all of its historic charm. We intend to bring the property back to a beautiful example of a historic structure,” Lacasa said in a letter to the Elkhart Redevelopment Commission.
Lacasa said the four properties will be presented to the historic commission in January for a certificate of appropriateness. Lacasa claims a long track record with historic restoration projects, including the Roosevelt Center that was completed in 2009 to the National Park Service standard, and the 2012 rehabilitation on 112-114 Chapman St.
To do the project, Lacasa is looking for public funds from several sources, including the State of Indiana and the Elkhart Redevelopment Commission.
Lacasa has asked the commission to pay for the installation of new water and sewer taps for each unit and for a historically correct restoration of the brick street and the curbs and sidewalks. The cost of doing so is estimated at $145,000, which is 8 percent of the total construction cost of $1,771,354.
Installing infrastructure in a historic neighborhood is expensive, Lacasa said, which is why that cost takes up such a significant part of the total budget. Properly repairing the brick street will take up about half the $145,000, the developer estimates.
On Nov. 12, the Redevelopment Commission created its Infrastructure Assistance Program for Residential Redevelopment, which is where the money could come from if the commission decides to get involved.
In addition to the potential funds from the Redevelopment Commission, Lacasa is asking other institutions for a combined $1,241,204 and plans to borrow $385,150 from the state development fund. For the project to happen, Lacasa needs all of the proposed funding sources to come through, according to the organization’s vice president of real estate development, Brad Hunsberger.
He said he is confident Lacasa will receive the funding.
City Council on Monday night voted on a measure to rezone the properties to allow duplexes rather than only single-family housing. Councilman David Henke, R-3, spoke against the proposal based on it being paid for by taxpayers who will not see a return on their investment. Henke, a landlord, also argued that Lacasa is competing with local landlords and keep residents in poverty.
“You can call it affordable, but it’s costing other people dollars,” he said.
Kevin Bullard, R-at-large, said he does not like subsidizing the homes but that it might be worth it if Lacasa’s project starts a wave of development in the neighborhood.
The rezoning passed with Henke voting against. Gerry Roberts, D-1, abstained.
The project could clear another hurdle on Tuesday, as the Redevelopment Commission is scheduled to decide on financial assistance to the project.
At a pre-agenda meeting of the Redevelopment Commission on Friday, members of the Redevelopment Commission appeared to be in favor of the project. So was Abby Wiles, the city’s assistant director for community, economic and redevelopment.
“It’s exactly what the neighborhood needs – new construction meeting the historic district requirements," she said.
Commissioner Wes Steffen suggested that maybe it is time to lift the historic designation of the State and Division streets neighborhood.
“Because I look at the stock market, at the highest it’s ever been. Money is as cheap as it’s ever been. And they’re not developing there. So I look at, what’s the barrier? I mean, the land is there, but what’s the barrier to getting it developed?” he said.
But Wiles said urban development generally, not just in historic districts, can be expensive.
“Residential redevelopment in the inner city requires some capital infusion to make it financially feasible,” she said.
She added that Indiana Landmarks is looking at making historic districts more builder-friendly.
Commissioner Jason Fink said the Redevelopment Commission is not necessarily getting enough credit for its work to create low-income housing in the city, though many are quick to criticize when high-end development goes up.
“A project like this sometimes gets swept under the rug, but it’s really a big thing, especially for a community like ours,” Fink said.
Lacasa currently owns 146 and 160 State St. and has made agreements with the Redevelopment Commission to buy the remaining properties for $1 each. However, those deals will not be finalized until details of the project are set.
The properties would be tax-exempt, according to Hunsberger. When the Redevelopment Commission made a high-profile decision in 2019 to sell the former Alick’s property to private developers rather than a not-for-profit rowing club, one of the arguments for the developers was the expected tax revenue that would be generated and would eventually pay back the city’s investment in the land.
In the State Street case, the city’s expenses would not be repaid. However, commissioners and local politicians claim that the city has a serious housing shortage, which this project could help remedy. According to Lacasa, the project could help attract private development to the area.
Lacasa owns and operates 10 rental units at 169 State St., across the street from the three empty lots.
“We’re looking forward to bringing some more affordable housing to Elkhart and participating in the redevelopment of State Street,” Hunsberger said.
If the project goes as planned, construction will be done in December 2021.
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