The residential/commercial development project being proposed by KCG Development for the Chalmers property on the City of Amsterdam’s south side has the potential to be a game-changing initiative for the city. Impressed by the beauty of the recently completed pedestrian bridge, Anthony Ceroy, vice-president of development at KCG, came across to me as genuinely enthusiastic as he spoke before the council earlier this month. The broad vision in the letter of intent signed between the city and KCG paints a picture of a vibrant community complete with an incubator for new restaurants to get their start, spaces for events, a farmers market, and plenty of green space.
I’m personally excited to see how this project progresses and hopefully becomes a catalyst for even further development. However, there are some potential snags in this deal that I think Amsterdam residents need to know about, so that we as a city go into this with eyes open.
First, there is one clearly spelled-out condition that would allow KCG to completely back out of the deal and even get their $30,000 deposit back. That condition is whether they are able to secure low-income housing tax credits (LIHTC) for the project.
Given this clause, low-income housing seems likely to make up some percentage of this project. While local officials stress that “market rate” housing will be a part of the project, nobody has said that low-income won’t be a factor.
I reached out to Ceroy via email to ask about the low-income aspect, and here is an excerpt of his reply:
Our initial observations show Amsterdam’s working families and empty nesters need more modernized, quality housing. The questions of unit scale and rental rates will be answered during our market diligence in the weeks ahead. As long-term owners of our properties, and to protect the anticipated tens of millions of our private investment, we leverage eligible tax credit incentives, build attractive long-lived facilities and market to qualified employed or retired residents. Employees at the industrial park, empty nesters desiring maintenance free living close to family, civic servants teaching our youth or protecting the city, and young working individuals and families are likely community based residents.
So we should be looking for the results of the upcoming market study to tell us exactly what the mix of housing types will look like.
I think it will interesting to see how residents react to this possibility. About ten years ago, developer Uri Kaufman sought to rehab the then-standing Chalmers building into a luxury apartment complex, but came under intense public scrutiny as to whether a business model based on high-priced units would fly. Will the inclusion of low-income housing in this project convince the public that this is a more realistic, viable project? Or will the negative connotation associated with low-income housing become a sticking point? It’s worth noting that according to U.S. Department of Housing and Urban Development, owners who receive low-income housing tax credits cannot turn away renters with Section 8 vouchers.
The second thing I believe that residents need to know is that Mayor Michael Villa balanced his proposed 2017-2018 budget based on receiving the full $300,000 purchase price for the building.
Not only is there a potential deal-killer in regards to the LIHTC’s, but the letter specifies that KCG has an 18 month option on the property. So as of yet, there is no written obligation for KCG to give the city the final check before the end of the next fiscal year, June 2018. Furthermore, the letter allows KGC to purchase up to two 90 day extensions by putting down additional $10,000 deposits.
The latest word from Villa is that he is in the process of negotiating a purchase agreement with KCG, so we will have to see if that nails down an exact purchase date.
Now even if we are all 100% positive and hopeful that this project goes ahead quickly, the reality is that it takes time to secure funding for, plan, and execute a project of this size. I believe the flexibility the city has given KCG in the letter of intent is very reasonable. But I think it’s very risky for the mayor and common council to approve a budget based on the expectation of this revenue. Of course, the proposed budget is already very close to the state-imposed tax cap, so I think it may be very difficult if not impossible to make cuts or find revenue to make up that difference. If KCG needs more time before finally purchasing the property, or if for any reason has to back out, the city may have to appropriate fund balance to make up the difference.
The last thing I want to see is anyone use these concerns as fodder to bad-mouth the project. However this is a big deal for the city and residents need to stay informed. I’d rather people be prepared for potential twists rather than be surprised by them.
