neighborhood revitalization in a "cold" market

A recent Historic Macon Foundation restoration

Revolving Fund Projects: “Cold” Market

Friday, October 28, 11

P.O. Box 13358 Macon, GA 31208 Ph: 478.742.5084 Fax:478.742.2008 www.historicmacon.org

“Cold” Market

•Huge proportion of community’s housing is sub-standard or vacant•Properties languish on market for long periods of time•Your community was cited nationally for low cost of housing•Housing prices range from $60-$80 per square foot for good quality housing•Most expensive house ever sold maybe $110 per square foot



Soul of the Community



Rehab and Sale

•Cold Markets require acquisition, rehab and sale



Walkability


http://www.historicmacon.org


Even the National Association of REALTORS says:•“Two-thirds of Americans now see being within easy walking distance of places in their community as an important factor in deciding where to live”•“The coming demographic convergence will push construction inward, accelerating the rehabilitation of cities...”


REALTORS





Dog Park



Second Sunday



Mercer Village



Beall’s Hill





Control Development





Huguenin Heights

• Four square blocks• Bounded by Interstate, two major collector roads and a public park• 16 projects completed over five year period



Acquisition

1211 Ross St.Sold for $158,0001,900 sf=$83/sf

1295 Ross St.Possible Rehab project

1268 Ross St.Sold for $130,0001,500 sf=$87/sf

1525 Coleman Ave.Sold for $130,0001,510 sf=$86/sf



Estimating Value

• Average of $83 per square foot among these three comparable recent sales• Our proposed project, 1295 Ross St., has 2,100 square feet• $83 per square foot x 2,100 square feet = $174,300• The maximum sales price for this project once complete will be $174,300



Acquisition

Now think about acquisition:

•What are the costs to repair the home?•What is the cost of the money to be used for the repair?•How much developer’s fee do we need/want?•What will the Realtor’s fee cost?•How much will this cost to advertise?

Add up all those costs and subtract from $174,300

Now, what can you afford to pay for the house?



1295 Ross St.- Before



1295 Ross St.- After



Acquisition

Creative acquisition strategies:• Donation from City instead of tear-down or condemnation• Speculative donation from City to increase property tax• Donation from city after delinquent taxes• Use “land bank” to aggregate property• Donation from developer if building is relocated• Bargain sale• Out-right donation• Donation after fire or other insurance pay-out• Estate gifts• Code enforcement calls• Others?



Huguenin Heights

The reason you need a long time period and a concentrated impact is to increase the sales prices by a couple dollars per sale, so that the profits on projects sold at the end make up for losses taken in the beginning.



Know your market

Who is buying?72% Younger singles and couples without kids17% Empty nesters and retirees

What are they buying?Highly finished detached homes between 400 and 2,000 square feet

How much house to their incomes support?An average of $125,000



980 Maple St.- Before



980 Maple St.- After



1035 Elm St.- Before



1035 Elm St.- After



Interior- Before



Interior- After



Interior- Before



Interior- After



New Construction



Partnerships

•City of Macon benefits from reduced crime, reduced police responses, reduced fires•Rehabilitation eliminates need and cost of tear-downs•Increased property taxes•Increased sales taxes from construction materials purchased•Increased employment from construction workers•Elimination of slum and blight



Partnerships

•Mercer University needs increased campus security•Fences and patrols cannot provide the same security as a safe neighborhood•Faculty and staff living near the campus do not require parking•Five year retention agreements limit recruiting costs and retain talented faculty



Partnerships

•Area’s largest employer•Employs over 1,000 nurses•Nursing turnover averages 10% per year•Average cost to recruit a nurse tops $25,000•In addition, average parking space per employee costs $15,000 to construct plus land acquisition and maintenance•Medical Center can institute down payment assistance with five year retention agreement for employees who will buy a house within walking distance of work



Partnerships

9%

9%

9%

26%

47%

Historic Macon Foundation Knight Foundation City of MaconMercer University Housing Authority

•$2 million total



Format

$800,000 ($250,000 pending match)- Cash (Knight Foundation grants, previous grants released from restriction and restricted by Board)

$700,000- Loans against our endowment at 4.75% interest only

$500,000- Loans at $2/sf guaranteed developer’s fee(low-interest loans managed by College Hill Alliance and contributed by the City of Macon, Mercer University and the Macon Housing Authority)



In-Kind



In-Kind•Scana Energy, Gas plumbing for gas log fireplaces and stove, $1,000•Lafarge Concrete, pervious concrete, $2,500•Conditioned Air, 15 SEER heat pump upgrade, $3,000•Georgia Power, two heat pump water heaters, $3,000•Traditions in Tile, tile, $3,000•YSY Construction, free tile installation, $3,000•ICI Glidden Paints, free no VOC paint, inside and out, $7,500•L.E. Schwartz, 20% off roof materials and installation, $2,000•ZT3 Placemaker, landscape design, $1,000•Ferguson, low flow plumbing fixtures, $500•LCBwoodturning, custom hand-milled balusters and trim, $1,000•Noland, sinks and faucets, $1,000•Morris Appliances, 50% off kitchen appliances, $3,500•Midstate Countertops, 50% off countertops, $3,500•Tobesofkee Cabinets, 50% off cabinets, $5,000•Cox Communications, cable wiring, $500•BAP Security, partial donation of security system, $500

Total- $41,000 in in-kind donations



Engage the public



Creative Contracting1. Fixed price construction manager hires hourly carpenters and manages sub contractors

2. Non-profit opens credit accounts at vendors

3. Non-profit finances draws for contractor

4. Commit to multiple projects at bid price without re-bid

5. Hire likely in-kind donors when the budget allows



Marketing

•90% of buyers come from the web•All properties are listed in MLS with a Realtor•Pay for Google Ad Words•Register Google Blogger articles on each property•3’x5’ full color interpretive signs•Open houses and parties



Incentives for homes

Georgia’s state income tax rate is 6%. A household with $50,000 in income pays about $3,000 in state income tax each year. Historic Macon

Foundation’s houses come with $30,000 in tax credits, meaning buyers with $50,000 in income would not pay taxes for ten years.

8.5 year property tax freeze at pre-rehabilitation value

25%-30% state tax credit ($100,000 max)

Homes in Macon are charged property tax every year. For a $135,000 home, that tax is nearly $2,260 a year ($188/month). Historic Macon homes have

values that are frozen, decreasing your property taxes drastically.


CASE STUDY

Purchase a home with tax credits in place


Restored homes from Historic Macon Foundation

include tax credits

This home at 980 Maple St. included frozen property taxes at $200 per year and $30,000 in state income tax

credits.

The net monthly cost to own this $130,000 home is

$500 per month

Homes


HomesHistoric home

Any other home

House Price $135,000 $135,000

Down Payment $4,725 $4,725

You Get a Raise! $2,700/year $0

Reduced Property Tax $205 $2,260

Total Savings $44,480 $0

Total Monthly Cost $500 $1,160


Down Payment Assistance

The City of Macon offers down payment assistance up to $25,000 for people of low

to moderate incomes

Mercer University offers $20,000 to all employees for

down payments

Georgia Dream can offer $5,000 to $7,500 to help with

down payment and closing costs


HomesHistoric home

Any other home

House Price $135,000 $135,000

Down Payment -$45,000 $4,725

You Get a Raise! $2,700/year $0

Reduced Property Tax $205 $2,260

Total Savings $99,480 $0

Total Monthly Cost $400 $1,160


Sales Sheets


Josh Rogers, Executive [email protected]

phone 478-742-5084 • fax 478-742-2008email [email protected] • site www.historicmacon.org


mailto:[email protected]




http://www.historicmacon.org/

http://www.historicmacon.org/

neighborhood revitalization in a "cold" market

Documents

square feet

square blocks

square footfriday

square foot x

83sf1295 ross st

salecold markets

comparable recent sales

proposed project