Wednesday June 11, 2003
Mayor Jerry Abramson today announced that Louisville Metro Government is participating in a unique public-private partnership that impacts nearly 500 units of affordable housing in several historic urban neighborhoods.
Louisville has directed $1.6 million in HOME funding from the U.S. Department of Housing and Urban Development (HUD) toward the purchase of 466 units in seven urban neighborhoods by limited liability partnerships formed by New Directions Housing Corporation, a Louisville-based non-profit provider of affordable housing. T
he housing units – located in Chickasaw, Portland, Parkland, Old Louisville, California, Shawnee and Russell – had previously been owned through private partnerships controlled by an out-of-state principal owner. Management had also been provided by a for-profit company, headquartered out-of-state, that managed these and an additional 1,335 units in Ohio.
“We were presented with a rare opportunity,” Abramson said during a Wednesday morning news conference to announce the partnership. “We acted in partnership with a local non-profit leader in housing development to help restore and preserve nearly 500 units of affordable housing. It’s precisely the kind of partnership opportunity we hoped to create in merging our governments. It’s an efficient and responsive use of public dollars that will benefit our community.”
The transfer of ownership of the affordable units has been in the works for two years. It is part of a HUD program called Mark-to-Market which renegotiates expiring subsidy contracts to adjust rents to market levels while it restructures existing project debt to levels supportable by the new rents, said Joe Gliessner, executive director of New Directions Housing Corporation.
The combined two-state transaction impacts nearly 1,800 units and is the largest HUD Mark to Market program in the nation completed to date.
In addition, about $1.2 million in repairs and renovation will be made to the units in the next two years. New Directions can also use new HUD resources for resident services, such as after-school tutoring, computer training and financial literacy training.
As part of the transaction, Louisville Metro Government takes ownership of second and third mortgages for the properties involved. The assigned 30-year mortgages involved have a combined net present value in excess of $4.75 million. Abramson says the project will ultimately realize a return to Metro Government of nearly $3 for every $1 invested.
“This is the single largest transaction in the 35-year history of New Directions,” Gliessner said. “Our multi-family development efforts typically center on the creation of new housing. In this transaction, however, our challenge was to ensure that the community retained the use of 466 units that will remain financially accessible to families who need them.” With this acquisition, New Directions manages 1,068 units serving families, elderly and disabled residents.
New Directions Housing Corporation, established in 1969, is one of Kentucky’s largest non-profit providers of affordable housing and related community based services. Lat year, volunteers gave 10,200 hours of service through various initiatives, including the agency’s Repair Affair and Learning Center programs.