Board recommends Warehouse Arts District project receive $550K from city affordable housing fund

photo by: Rendering by H2B Architects

Penn Street Lofts

Lawrence’s Affordable Housing Advisory Board has voted to recommend a $550,000 grant for a mixed-use affordable housing development planned for the Warehouse Arts District.

The developer of the Penn Street Lofts project, Tony Krsnich, is requesting a $550,000 grant from the city’s affordable housing trust fund, which is largely funded by a special sales tax that Lawrence voters approved in 2017. Krsnich is also requesting $1.4 million in economic incentives, which are reviewed by a separate committee. At its meeting Monday, the AHAB voted unanimously to recommend that the city award the grant, though not without some residents questioning whether the project is what the voters had in mind when they approved the sales tax.

The affordable housing sales tax will sunset after 10 years unless voters choose to reauthorize it. Lawrence resident Steve Ozark said he applauded the project, which will provide dozens of affordable apartments for 30 years. However, he said he’d like to see developments that serve even lower income renters and that are permanently designated as affordable. He said he wasn’t sure voters would reauthorize the special sales tax if these were the types of developments it funded.

“I call on you to remember who we are serving here,” Ozark said. “And to hold strong to permanent affordable housing.”

Plans for the $11.8-million project call for a four-story, mixed-use development on three currently vacant lots at 800 Pennsylvania St. The ground floor would consist of about 4,500 square feet of commercial and retail space and seven market-rate live/work rental units. The upper floors will house 47 affordable units.

The project has already been awarded $7.9 million in Federal Low-Income Housing Tax Credits and $448,000 from the National Housing Trust Fund, and those funds come with certain requirements. The average rent of the affordable apartments is required to meet federal affordability requirements for those making 60% of area median income, which is calculated annually, and one of the units must be set aside for someone transitioning from homelessness. Krsnich also said the apartments would accept Section 8 vouchers. Originally, all of the 47 apartments were to remain affordable for 30 years, after which time they could be rented at market value. However, Krsnich said Monday he is working to ensure that 10% of the affordable apartments — or approximately five apartments — remain permanently affordable.

AHAB Chair Ron Gaches acknowledged comments from other board members who said that the trust fund dollars would be helping to support a for-profit development. However, he emphasized the project’s substantial amount of affordable units, its alignment with priorities in the city’s new comprehensive plan, and its leverage of other funding sources.

“Until we come up with other solutions, this is the best available tool we have for leveraging private sector money in big projects,” Gaches said. “It fits Plan 2040’s priorities of infill, it fits the priority for density, it fits the priority for affordable housing.”

Though the city’s goal is to create permanent affordable housing, city staff stated in a memo to the board that the 30-year affordability period is reasonable because units will require significant rehabilitation by that point in time. The memo also states that an analysis from the National Development Council, a consultant hired by the city, indicates that the affordable housing trust funds and the other incentives requested by the developer are required to make the project viable.

Typically, AHAB puts out a request for grant applications, and the board considers multiple applicants at once. Penn Street Lofts applied for the last two funding cycles, and though board members spoke favorably of the project and it was ranked in the top three projects during the last funding cycling, it was not awarded a grant.

The affordable housing trust fund is expected to have about $1.275 million to spend this year. Some board members expressed concern about breaking from its standard request for proposals process, and in its recommendation, the board stated that if the trust fund would have had sufficient funds at the time of the last award cycle, it likely would have approved the project. The recommendation goes on to state that the board would support the project if the City Commission wants to commit the funding.

Last week, the city’s Public Incentives Review Committee voted to recommend the economic incentives requested by the project. The City Commission, which makes the ultimate decision, will consider PIRC and AHAB’s recommendations at its meeting Feb. 18.


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