What is the target income demographic for the proposed Chalmers Mills apartment project? Since the plans for the 132-unit building to be built on the City of Amsterdam’s south side were released in April by KCG Development, city residents have expressed a number of concerns and complaints about the project. Most notably at the last planning commission meeting, several residents brought up issues with the affordable housing aspect of the project, the exclusion of the originally planned culinary incubator space, and the problem of providing adequate parking for the restaurant/banquet hall facility that will also be part of the site. I recently had the chance to ask questions about these issues to Stacy Kaplowitz, one of the vice presidents at KCG who is overseeing the project, and Bill Teator, managing director of DEW Ventures, a Saratoga, NY-based company partnered with KCG for the project.
The fact that KCG Development is seeking low income housing tax credits (LIHTC) was specified in the very first letter of intent signed with the city in April 2017, as well as in the purchase contract signed by the mayor and approved by the council in October 2017, and I specifically pointed it out in an opinion piece around that time as well. Even though this aspect of the project has been known for over a year, the issue seems to only be surfacing now.
What does the term LIHTC mean? Essentially, the federal government issues tax credits and distributes them to state governments who then issue them to developers such as KCG, who then sell the tax credits to investors in order to raise capital to build affordable housing.
Developers who are awarded the credits meet either a “20/50” rule or a “40/60” rule. Either 20% or 40% of the units in a project must be occupied by tenants making 50% or 60% or less of the area median income (AMI) respectively (source).
According to NY State Homes and Community Renewal, the AMI for Montgomery County is $58,000. Income limits are adjusted for the number of people renting each unit.
According to Kaplowitz, 80% of the apartments at Chalmers Mills will be income restricted. The income limits will range from $27,060 for a one person, one-bedroom apartment, and extend up to $83,590. With the percentage of restricted income units larger than required, KCG has the flexibility to allow a mixture of incomes and still abide by the rules.
Rents for income restricted apartments will start at $650/month for a one bedroom apartment and $730/month for a two bedroom apartment. The remaining 20% of the apartments will have market-rate rents, starting at $1100/month. Kaplowitz said that residents will be subject to credit checks for their ability to make payments consistently.
To get an idea of how the pricing might work, we can look at the income qualifications for another project that KCG is completing this year, the AP Lofts at Larkinville in Buffalo, NY.
Is it subsidized housing?
What most people mean when they use the term “subsidized housing”, is apartment complexes that are funded and managed by the U.S. Department of Housing and Urban Development (HUD), which is sometimes referred to as “Section 8 housing”. There are several of these types of projects in the city already which are overseen by the Amsterdam Housing Authority. So it seems clear that this project will not fit that definition.
However I can imagine there are others who would consider any type of tax credit a subsidy, whether it is a child tax credit or a low income housing tax credit. So it depends on how you view the semantics of the phrase.
Why not luxury housing?
I asked specifically if KCG looked at the feasibility of the higher-end of the market. Kaplowitz’s response to my question was:
Our market study identified a significant need for quality, modern rental housing that would serve the area’s regional workforce. Since the clear pent up need was concentrated around workforce housing, we designed our project financing to ensure we can offer rents appealing to Amsterdam’s and the surrounding region’s workers in the civic, healthcare, logistics, warehousing sectors, as well as empty nesters looking to downsize to a modern, maintenance free community.
I understand that many people would like to see luxury apartments on the Chalmers property. Being by the river and the Mohawk Valley Gateway Overlook pedestrian bridge, it seems like the location should be highly desirable by developers.
However, it’s been over six years now since the old Chalmers building was torn down. The property has been on the market all this time, and to my knowledge, there has not been a credible offer from a developer to build luxury apartments since then.
If you look at the portfolio of different projects that KCG has built or is in the process of building, you’ll see both luxury apartments and affordable housing projects like the one proposed for Amsterdam. The way I see it, if KCG thought they could make more money building luxury apartments, seems to me that’s what they would do.
Profit motive is not a bad thing. Large projects like this need to attract investors who look at the potential risks and rewards. If market analysis shows a strong demand for a certain type of housing, then that’s where investors are most likely to want to invest.
We may have to acknowledge that attracting a developer to build a 100+ unit luxury apartment complex may not be likely. I don’t consider it “settling” to recognize the market for what it is and move forward. And I don’t think leaving the land vacant is a better option.
And while I understand the way of the world is that there are renters who will not want to live near apartments labelled “affordable housing,” I reject this type of thinking as a matter of principle. I simply can’t subscribe to an elitist mentality that people with lower-middle to middle class incomes aren’t welcome here. From a purely economic standpoint, I just don’t see how anyone can think that bringing in potentially hundreds of people with the target demographic for this project won’t be a huge boost to the local economy.
Frankly, the city needs this project not only to improve its economy, but to improve its reputation. It needs to show that it can successfully see a large project like this through without the political parties bringing out the torches and pitchforks. The proposed project may not be the ideal project, and there are other issues, such as parking, which certainly need to be addressed, but I believe it’s still a good project overall, and one that is needed to propel the city’s downtown toward bigger and better developments in the future.
I’ll be looking at the issues of the culinary incubator project, and parking in my next two articles.
There will be a public meeting to discuss the project on Wednesday May 30th at 6pm in the community room at Amsterdam Housing Authority. The entrance can be found at 53 Division Street.