EAU CLAIRE — An apartment complex that’s already getting up to $800,000 in incentives from the city is seeking an additional $192,700 grant.
Developers for The Current have made the new request to the city due to rising construction costs that are making it difficult to make the complex’s second building at a price to keep most of its units affordable to low-income tenants.
“While we planned for normal inflation on this second phase, the last year has been anything but normal,” stated a joint letter from two developers behind The Current.
Tyler Warner, an Eau Claire native and founder of development company W Capital Group, and Nicole Solheim, vice president of nonprofit developer Cinnaire Solutions, wrote the letter requesting the added funds from the city in late May.
A public discussion on the request will be held during tonight’s (Monday) Eau Claire City Council meeting before the city’s elected leaders vote on it during their Tuesday afternoon legislative meeting.
Located along North Oxford Avenue in Eau Claire’s Cannery District, The Current already has built 71 units of market-rate apartments that opened last year in its first building. The second building in the complex will have 43 apartments — 36 of them specifically for people making 30% to 60% of Eau Claire County’s median income. That building is scheduled to start construction this spring and open in spring 2022, according to W Capital Group’s website.
According to Solheim and Warner, rising costs of lumber, plumbing, wiring and sheet metal along with a shortage of truckers to deliver materials to jobsites have caused the project’s price to rise by nearly $1 million over estimates made last fall.
City Finance Director Jay Winzenz reviewed bids received by the developer, which showed the building had a price tag of about $6.3 million in September, but that shot up to around $7.2 million when it was bid in April.
The developers worked with an architect and contractor on redesigning the building to use alternative materials that didn’t see the same price spikes. But green building requirements associated with the $483,430 in low-income state tax credits the building is receiving limits options for cost-cutting on materials. And raising the planned rents to cover the higher costs isn’t allowed as the project sought the tax credits to fit its intention of providing affordable housing.
The developers have already secured a grant from the Federal Home Loan Bank of Chicago and additional loan proceeds to help with the funding gap for The Current’s second building. They’re looking to the city to fill the last piece of the gap.
“Without additional support, we’re at risk of not delivering much-needed affordable workforce housing in downtown Eau Claire for individuals, families, and households with special needs,” wrote Solheim and Warner.
To provide the $192,700 sought by The Current, Winzenz is recommending the city tap a $500,000 affordable housing fund created in 2020.
“While staff does not feel the City should normally be in the business of mitigating developer’s risk, the cost increases being experienced are extraordinary in nature,” he stated in a memo.
Winzenz goes on to mention that the tax credits secured by the project come with deadlines, including a July 31 start for construction and the phase two building must be finished by the end of 2022.
Without the city’s assistance, he writes that it would put the new affordable housing — a priority of city leaders in recent years — in jeopardy.
“Failure to do so will likely result in the cancellation of the project and loss of affordable housing units,” Winzenz wrote.
The city signed an agreement in July 2019 with The Current’s developers that provides up to $800,000 to them for meeting construction benchmarks and keeping rents affordable.
Also during this week’s council meetings:
• Roderick Jones, who was appointed by the council earlier this month to fill a vacant seat on the council, will be sworn in and start a term that will last about 10 months.
• Eau Claire’s capital improvement plan — a document showing projects the city expects to undertake in the next five years — is slated for a public hearing tonight (Monday) before a vote during Tuesday’s meeting. The first year of the plan will then move forward this fall to become part of the city’s 2022 budget.
• Galloway Flats — a development with apartments, twin homes and single-family houses planned for vacant land by the intersection of Galloway Street and River Prairie Drive — is subject to a public hearing tonight (Monday) before the council votes on developer RyKey Properties’ plans on Tuesday afternoon.
• A new housing subdivision consisting of twin homes is planned for 22 acres of land along the North Crossing, at the far end of Hagman Street. A public hearing will be held tonight (Monday) before the council votes on rezoning the land for the new housing on Tuesday.