Namaste Homes LLC, a St. Petersburg developer, plans to build 11 affordable townhomes in the South St. Petersburg Community Redevelopment Area.
The $2.5 million development, Sixteenth Square, is in line for up to $286,000 in tax increment financing from the South St. Petersburg Redevelopment Trust Fund, after winning approval Tuesday from the Citizens Advisory Committee for the South St. Petersburg CRA.
It’s the most recent affordable housing project in the city and one of a small number designed for home owners instead of renters. Proponents say home ownership is key to building wealth in a community.
In 2012, when city officials approved the South St. Petersburg Community Redevelopment Plan, 55 percent of the residents of South St. Petersburg spent more than 30 percent of their income on housing, the threshold for identifying “cost-burdened households.”
The Namaste project is located at the northwest corner of 16th Avenue South and Dr. Martin Luther King Jr. Street. The townhomes will each have three bedrooms and two-and-a-half baths and about 1,280-square feet. They will have energy-efficient elements including windows, insulated panels, air conditioning and appliances. They are expected to sell for $213,000 each and are designed for buyers or renters whose household income does not exceed 120 percent of the area median income. For a family of four, that would mean a maximum income of $84,360 a year.
A restrictive covenant limits the sale or rental of property to qualified households for 15 years. A homeowners association will be responsible for external maintenance and landscaping, with a fee of $120 a month.
The city will provide a payment of $26,000 per unit to the developer. If any of the townhomes sell for more than $213,000, the developer will refund part of that subsidy to the city, up to a maximum of $16,000 per unit. In no case will the city subsidy be less than $10,000, a memo from city staff outlining the project said.
The total project will cost $2.5 million, and it’s extremely tight with very little profit, said Glenn Larkin, Namaste Homes development manager for St. Petersburg and Pinellas County.
“Because we do all the work ourselves — the construction work, the development work and the realtor work ourselves — we do have those income flows,” Larkin told the Citizens Advisory Committee. “But it is very tight, particularly when it comes to giving a return on equity to someone who provides equity that isn’t us. We’re confident we can do it but it could be tight.”
If a townhome can’t be sold to a qualified household, it could be rented, said Rob Gerdes, the city’s neighborhood affairs administrator.
“We feel there is a strong market for home ownership at this price point and are very optimistic that the units will be sold to qualifying households. However, if the developer is not able to sell all of the units, our concept would be it would be mostly the developer who would be renting the units they couldn’t sell and that we would monitor those units through our housing department,” Gerdes said. “If the unit was sold to a qualified home buyer, they most likely are going to use our down payment assistance, and it’s our expectation they would be homesteading the property, they would not be turning around and renting it.”
The city’s down payment assistance program is expected to provide as much as an additional $110,000 for the 11 units.
The Citizens Advisory Committee voted unanimously to approve the TIF contribution.