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COLUMBUS, Ga. — The Columbus Consolidated Government just approved a $22.7k bailout for the Legacy Terrace housing project, located on Ninth Street at Eighth Avenue.
The move also happened during the same meeting at which council approved to apply for a separate state-funded bailout for an additional ‘affordable housing’ project by NeighborWorks on the verge of bankruptcy; there seems to be a theme.
The approved bailout funding for Legacy Terrace comes after the housing project’s extensive history of recent repairs exceeded the totality of the city’s designated fund for the housing units by just over 20%.
After a presentation by deputy city manager Pam Hodge during the city council meeting held on July 11, 2023, all city councilors present voted unanimously to approve the bailout funding to cover the cost of extensive repairs at the property.
The repairs — and the story behind them — trace back nearly fifteen years.
LEGACY TERRACE ORIGINS
Legacy Terrace is a senior living facility located at 801 9th Street in the Liberty District. The small 17-unit housing project was constructed from 2006-2007 as part of the U.S. Department of Housing & Urban Development’s Home Investment Partnerships Program (HOME).
Fourth Street Towers, Inc., a Columbus-based 501c3 nonprofit organization, was the City’s designated Community Housing Development Organization (CHDO) beginning in 1992. As part of the HUD HOME Program, a minimum of 15% of the jurisdiction’s entitlement goes to the CHDO annually.
In January 2004, the Community Development Advisory Council (CDAC) reviewed and approved the initial $350,000 for Fourth Street Towers, Inc. That funding was then approved by city council in June 2004. A total of $944,367 from HUD’s HOME program was also utilized for the facility between fiscal years 2005-2007.
Despite all the federal funding from taxpayers’ money, the project’s construction costs still weren’t met. To fill out the total $2.5 million price tag, Fourth Street Towers, Inc. secured a private loan from SunTrust Bank. The organization collateralized that private loan with eight other properties.
BELLY UP
As a foreseeable result of building 17 subsidized housing units next to a railroad line at a cost of $2.5 million — $147,000 per unit — and then renting them out for $550/month, the housing project quickly became insolvent.
Shortly after the subsidized housing project’s opening, Fourth Street Towers, Inc. was only able to rent out 4 of the project’s 17 units. Altogether, the entire complex was only generating roughly $2,200 per month in revenue.
However, Fourth Street Towers, Inc. still owed SunTrust Bank $1.5 million on the private loan they used to meet the project’s construction cost. The organization defaulted on the loan in February of 2009.
As a result of the predictably-stupid business practices, the project now risked going into foreclosure.
Since the project was a part of the HUD’s HOME program, the Columbus Consolidated Government would have been required to return $1,667,000 to HUD for Legacy Terrace as well as for other eight HUD properties used to collateralize the loan.
CCG: LANDLORD EDITION
To avoid paying $667,000 more than they had to, CCG decided to bail out Fourth Street Towers, Inc. in 2009 by purchasing Legacy Terrace for $1,000,000. That 2009 bailout was unanimously approved by city council.
The city then contracted with the Housing Authority to manage the property, which included the overall operations and maintenance of the property, collection of rents, issuing new leases, and the renewal of existing ones.
However, the financial situation of the poorly-planned and ill-kempt housing project would continue to perpetually bite them in the rear.
From 2009-2019, the city’s Legacy Terrace Reserve Fund had only accumulated to $323,772.95. Bear in mind that the construction cost was $2.5 million and CCG paid just $1 million. However, after ten years of ownership — a freaking decade — the subsidized housing project only produced enough positive net revenue to cover 32% of CCG’s low-ball offer, which was only 40% of the cost of construction to begin with.
What a brilliantly-sound financial plan this is! Not. But wait! There’s more!
TERMITES. TERMITES EVERYWHERE.
Ten years into CCG’s ownership of the botched-built check-the-HUD-box housing project, major repairs depleted the city’s $323k in dedicated reserve funding for the housing project all the way down to a measly $80,204.81.
Then, after quite obviously not taking the necessary home construction steps to prevent insect infestation, termites utterly ravaged the entire complex.
In February 2022, a whopping $91,000 of repairs related to termite damage were approved by City Council.
After three years, 2022 Reserves were back up to $95,854.88, though that funding would be used for yet another six-figure sum of repairs last year in 2022 which totaled $135,496.
THE PRODIGAL BAILOUT RETURNS
On July 11 of this year, deputy city manager Pam Hodge reported to city council that the city’s dedicated Legacy Terrace Reserve Fund held just $112,706.15 of the $135,496 needed, leaving a need for an additional $22,789.85 to come from someplace else.
Without hesitation, councilors moved, seconded, and voted unanimously to approve the bailout funding for what is quite possibly the most expensive subsidized property per square foot in the entire southeast region.
THE BOTTOM LINE
Imagine being stupid enough to perpetually run your own house this way time after time again over the course of nearly fifteen freaking years.
Have we mentioned that your tax dollars are paying for CCG to do exactly that?
How aMaZiNg.
Facts are stubborn things — and we’ll keep publishing them, whether city officials like them or not.
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