Board of County Commissioners authorizes loan to partially finance affordable housing apartment complex in Shawnee

The Johnson County Board of County Commissioners has authorized a $1 million loan to partially finance the construction of a new affordable housing apartment complex in Shawnee.

This is the first time Johnson County Government has provided funding for this type of project, and received authorization from the BOCC on Thursday, May 26.

The Hedge Lane Apartments is a joint venture between Sunflower Development Group and Consolidated Housing Solutions. The $30.5 million project will be built just west of K-7 Highway and 75th Street. All apartments will be dedicated to workforce housing.

Zoning, building permits and oversight in constructing the apartment complex are under the jurisdiction of the city of Shawnee which approved the project last year.

“This project supports both working families and employers in need of a workforce as we face the challenge of rising housing prices and affordable housing needs together,” said Chairman Ed Eilert.

The authorization approved by the BOCC involved “a $1 million investment structured as a non-interest-bearing deferred mortgage lien with a 15-year term and affordability period,” according to a briefing sheet outlining the proposal. The loan will be used to cover a funding gap in the affordable housing project due to inflation and increased construction costs.

No Johnson County property or sale taxes will be used in the financing of Hedge Lane Apartments. Funding comes from Countywide Support Fund in the county’s use of the lost revenue component of the American Rescue Plan Act (ARPA).

The agreement requires annual principal reduction payments in the amount of $10,000 for 14 years with the remaining principal balance repayable at the end of the 15th year.

Approximately 40% of the project funding comes from Low-Income Housing Tax Credits (LIHTC) by the State of Kansas. A fixed-rate, first mortgage lien by the developers will fund approximately 47% of the project. Remainder of the funding will be provided by other financial sources. This project was approved based upon the use of LIHTC.

Hedge Lane Apartments features 42 one-bedroom units, 80 two-bedrooms and 22 three-bedrooms. Construction is expected to start this summer following closing on final financing as early as May 26. Completion of the project is targeted by the end of 2023.

Rents will be set as determined by LIHTC guidelines, which “are compatible with current Housing Choice Voucher Program payment standards,” according to the briefing sheet. Rent limits are set annually by the Department of Housing and Urban Development.

A one-bedroom unit at Hedge Lane Apartments is estimated to cost roughly $1,100 and a two-bedroom unit would rent for approximately $1,300. 

Johnson County’s Housing Choice Voucher program is managed by the Department of Planning, Housing and Community Development. Housing choice vouchers (formerly known as Section 8) will be accepted through the 15-year affordability term of the loan between the county and developer. The project is considered workforce housing, meaning tenants would be people who make less than 60% of AMI.

Hedge Lane Apartments will provide “a partial replacement” of a projected 349 Housing Choice Voucher-eligible units being lost by sales between January 2020 and the end of this year, according to the briefing sheet. Almost 700 people are currently on a waiting list to receive a Housing Choice Voucher.