Johnson County weighs $1M loan to help Shawnee affordable housing project

The developer behind the Hedge Lane Apartments says aid from the county is needed because of a more than 20% increase in the cost of construction materials. Above, a rendering of the project. Image via county documents.

With tax credits in hand and city approvals already made, the stars had seemingly aligned for a new workforce housing complex in western Shawnee. The Hedge Lane Apartments, an idea for affordable housing in Johnson County with an original site plan that dates to 1991, might finally be built.

Then came post pandemic supply chain and workforce pressures.

Now, developer Jason Swords of the Sunflower Development Group says he needs help with one of the last pieces of the puzzle. He’s asked the Johnson County commission for a $1 million loan – a final but substantial bit of the project’s total $30.5 million cost.

In a letter to commissioners, Swords said the county investment would go a long way toward addressing a “dire need for workforce housing in a quickly expanding industrial corridor along K-7.”

He said the additional money is needed because of a more than 20% increase in the cost of construction materials.

“The additional cost and rental limitation make affordable housing construction impossible without government support,” he wrote.

What rent would cost

Commissioners, who have been trying to figure out what to do about a continuing affordable housing shortage in the county, are willing to consider it and put it on the agenda for their next meeting Thursday.

Hedge Lane Apartments, 7405 Hedge Lane Terrace, would be built just west of Kansas Highway 7 and West 75th Street. It features 144 units, with 42 one-bedrooms, 80 two-bedrooms and 22 three-bedrooms.

About 40% of the project’s funding will be from Kansas Low Income Housing Tax Credits. Housing choice vouchers (formerly known as Section 8) will be accepted through the 15-year affordability term.

Rents will be set according to tax credit guidelines, but Jessica Hotaling, deputy director of Housing Services for the county, said one-bedroom rent would likely be around $1,100 and two-bedroom at $1,300.

If the county agrees, the aid would be in the form of a non-interest-bearing mortgage lien.

New type of agreement

The unattainable cost of housing for middle and lower-income residents has been a continuing problem for county and city leadership, as home values have consistently spiraled upward the past several years.

Building Hedge Lane could help offset the loss of 349 voucher-eligible units expected by sales from 2020 through the end of this year, according to a staff document. The voucher waiting list currently stands at just below 700.

The investment would be a new type of agreement for the county, made rare by the fact that the tax credits are hard for developers to get, staff members said.

That gave Commissioner Charlotte O’Hara pause. She suggested the commission delay its vote and instead study the proposal in a Committee of the Whole work session.

“Before we go down this road we need to acknowledge what our future investments are going to be. This is going to be a precedent and we need to know how much money we’re spending each year to subsidize these types of projects,” she said.

Chairman Ed Eilert agreed the county had to consider whether their action could open the door to other requests. He said for now, commissioners might consider it a pilot project with no guarantee of similar aid in the future.

Other commissioner comments

Other commissioners agreed the county needs to be careful and thoughtful but liked the idea of action on the housing crisis.

Commissioner Becky Fast said funding for the “gap” caused by increased construction costs is a critical piece for developers, and urged her colleagues to move forward as more jobs come to the county.

Fast said she’d also like to see a housing trust fund, similar to what Kansas City, Missouri has.

Commissioner Janee Hanzlick said she’d welcome this application and others like it. She added she’d heard from a distraught constituent who will lose housing as her subsidized building changes management.

Hanzlick said she’d recently attended a webinar held by the Kansas Housing Resources Corporation. But the webinar was totally devoted to rural housing problems and did not apply to Johnson County, she said.

“I think we have to look to ourselves,” to address the problem, Hanzlick said.

“My concern is at some point in the future, where are these folks going to live? Who is going to be teaching our kids, who is going to be working in our restaurants?”

Roxie Hammill is a freelance journalist who reports frequently for the Post and other Kansas City area publications. You can reach her at roxieham@gmail.com