ESSEX — On Wednesday afternoon, the sheetrock was up in several of the apartments under construction on the second and third floors of the long, brick building at 90 Main Street known as Spencer’s Corner.
The $5.1 million project, called The Lofts at Spencer’s Corner, invests $4.5 million in construction costs to redevelop one of the central commercial properties in the village of Centerbrook.
“This is exciting, I hadn’t seen these spaces yet,” said Loretta McCluskey, operations manager for Hope Partnership, Inc., as she walked into one of the units under construction.
McCluskey led the way through a sawdust-scented hallway of metal studs strung with electrical wires and conduit.
“Back in the 80s, I guess they needed a lot of office space and this would have been perfect, but unfortunately as time went on, there were more and more vacant units and the association was negotiating possible foreclosure and it was in need of some help and we were looking for an opportunity,” she said.
Hope Partnership, a regional non-profit developer of affordable housing, acquired 15 of the 29 commercial units at 90 Main Street and began converting the spaces into 17 units of affordable housing in April.
The Town of Essex Zoning Commission granted The Lofts a special exception for mixed use on July 16, 2018.
The project, designed by Point One Architects of Old Lyme, contains two 1-bedroom units, two 1-bedroom “deluxe” units, nine 2-bedroom units, one 2-bedroom “deluxe” unit, and three 3-bedroom units.
Rents will be based on a percentage of the area median income, or AMI — in Essex about $87,000.
The rents range from $460 for a 1-bedroom unit for a tenant earning 30 percent of the area median income, or about $26,100, to as high as $1,650 for a 3-bedroom unit rented to a tenant earning 80 percent of the AMI, or $69,600.
Of the 17 units, Hope Partnership plans to rent to three tenants earning up to 30 percent of the AMI, eight units to tenants earning up to 50 percent of the AMI and six units to tenants earning 80 percent AMI.
Most of the units feature 2-story “loft” floor plans, according to a release.
Currently, Hope Partnership is in the process of hiring a property manager, which will market the project, create an application for tenants and a waiting list, collect rents and maintain the property.
Michael Santoro, Community Development Specialist with the Department of Housing, said affordable housing projects must follow certain guidelines depending on the greatest source of funding, in this case, $4.23 million from state bonds and $300,000 is from the National Housing Trust Fund, a federal agency.
“In this case we are the big dog at the table, if you will, so we get to set the rules and that’s generally the way it works when there’s governmental funding involved,” he said. “Whoever’s got the most investment generally sets the rules and everyone else subordinates their rules to the big guy at the table until their money goes away and everybody else’s rules follow.”
One requirement, explained Santoro, is that Hope Partnership must complete an Affirmative Fair Housing Marketing Plan and must “affirmatively market” the project.
“The form is a template but the contents are project specific depending on the market that the units or the property is being built in,” he said. “For example, what we tell most developers and property managers as well is you have to look at your market area and you have to make sure you market to those least likely to apply.”
That means drawing a circle that includes the nearest metropolitan area and reaching into those market areas, Santoro said.
A bigger project will have bigger marketing footprint than a smaller project, he said.
“This is a relatively small project so we would expect a relatively small or modest marketing outreach effort because it’s not going to take long to get 17 applicants to fill the units,” Santoro said.
The Department of Housing typically needs to see a need for housing three times the size of the project, which is documented by a pre-application marketing analysis, he said. “Before we build it, we know there is the need for what they are building,” he said.
The project is also required to prepare a tenant selection plan specifying criteria, priorities and preferences for selecting tenants, which is overseen by the Department of Housing, said Santoro. Discrimination against any protected class is prohibited and the Department encourages property managers to use a very low credit score limit or no limit at all.
“We tend to want to make sure they allow people with not great credit to rent in part because the units are affordable — we want them to serve the people we want them to serve,” he said.
Using a point system for applications, priority will be given to individuals who live and work in the town of Essex, but the Spencer’s Corner project is prohibited from renting only to Essex residents.
According to section VII of the project affordability plan, marketing outreach will include analyzing “census and other data to identify racial and ethnic groups least represented in the population.”
The project can set a preference or set units aside as long as offsets are established with the Department of Housing.
“If they said, ‘listen we have three handicapped units as part of the 17. We want to set them aside first for persons with disabilities and second for persons with disabilities who live or work in Essex already.’ We would say, here’s the offset, you also have to do three units set aside for individuals or families that are least likely to apply.”
The department performs compliance and monitoring of the property management firm on an annual or biannual basis for the term of the mortgage, usually 40 years.
“What that means is we actually go out, we look at the tenant files, we inspect the property, we review their waitlist, we examine their affirmative housing marketing plan in comparison to what they actually did,” Santoro said.
If a property management firm breaks the rules, Santoro’s staff will create a corrective plan.
“We make it very clear we are not there to catch them or to get them, we are there to help them to comply,” he said. “Where we to find they were out of compliance in one area or another, we would help them develop a corrective action plan to help them get into compliance,” explained Santoro.
If a change in a tenant’s income pushes a unit up or down to a different affordability level, then Santoro’s staff will help identify the next available unit as an offset, even for a varying number of bedrooms.
“We would prefer that even swap, but depending on availability it could change the bedroom mix, but for us it’s about helping them to comply,” he said.
All property management firms, whether not-for-profit, nonprofit or for-profit, are audited once a year and the results are checked by Department of Housing staff, Santoro said.
“A lot of people are afraid of affordable housing and there is no reason to be so. Affordable housing is rental housing. It just happens we’re targeting people in need and making it affordable, so technically it’s a win for the community, it’s a win for the residents, it’s a win for the state of Connecticut because we’re helping our existing citizens, we’re maintaining the economic conditions within the community while at the same time offering help to people who need it,” he said.
According to McCluskey, because the building was constructed in 1988, building code compliance had presented a number of challenges.
“In some ways it’s great that the building is already here, but in others we’re fixing the sins of the past from construction in the 1980s,” she said. “For example, they had cut into one of the joists to accommodate a water main — no building inspector would have ever been okay with that and these are the kinds of things you discover when you take off the sheetrock, so we’re fixing those types of things.”
The project includes upgrades to three of the four on-site septic systems.
McCluskey said that an informal waiting list for the units has already started growing.
“That’s one of the things that’s been so encouraging and uplifting for me is the people that are calling and what I’m doing is keeping an interested parties list so when we are to the point when we can start taking applications I’ll be reaching out to those people,” McCluskey said. “We look at this as workforce housing and that applies to pretty much everyone and includes retired, disabled, or veterans. And that’s the thing that’s exciting for me is hearing from community members, that most of them are already here.”
The primary sources of funding are the Connecticut Department of Housing and Essex Savings Bank, said McCluskey.
The project is expected to be completed at the end of February.