Charleston’s $20 million bet on affordable housing is official. Now City Council has to decide how fast to borrow the money.
The council’s Ways and Means Committee voted unanimously Tuesday to approve a resolution declaring the results of the Nov. 7 referendum, according to the committee’s minutes. The ballot asked whether, to assist with the “acquisition, construction and equipping of safe and affordable housing for persons and families of low to moderate income,” the city should be “empowered to issue not exceeding $20,000,000 of General Obligation Bonds.”
In the Charleston County part of the city, 6,050 voters, or 70.26%, said yes and 2,561, or 29.74%, said no, according to the county’s official results. Those figures don’t include city voters in Berkeley County.
Timing the debt
Councilmember Mike Seekings asked when the bonds would go to sale and whether they would be sold in stages, the minutes show. He said he wanted to make sure the city did not borrow too far ahead and end up paying debt service instead of building housing.
Councilmember Bill Moody, the committee’s chairman, asked whether the city could leverage the $20 million into $60 million, and whether it could use a bond anticipation note or a loan during a five-year build-out before issuing the bonds. He noted that the city’s budget included $700,000 to pay interest on money that would otherwise just sit.
Mayor John Tecklenburg said the city was under no obligation to sell the bonds at any particular time, and that waiting could save a few hundred thousand dollars in next year’s budget. The city could issue $10 million next year and another $10 million a year later, he said, as it works out how the money will be used.
First projects
Tecklenburg said Geona Shaw Johnson, the city’s director of housing and community development, was working on deals to bring to council. One, with the Michaels Organization, could come at the end of the year and would probably be the first approval of money from the bond, he said, though even those funds would not be due for another year.
Councilmember Robert Mitchell said part of the money would go to the Michaels Organization’s work at the Cooper River Bridge site, and that $10 million to $12 million could be used for affordable housing in that area. He said he did not want that project held up again.
Councilmember Keith Waring said the former International African American Museum site next to the Aquarium Garage was supposed to be sold, with the money going to affordable housing. Having that $3 million or $4 million, he said, would spare the city some interest and stretch the $20 million.
The city’s last housing bond
The new bonds follow a $10 million voter-approved general obligation bond the city issued years ago in partnership with the Charleston Housing Authority, according to minutes of the May 30 Ways and Means meeting at which the committee approved putting the question on the ballot.
Under that model, the city issued the bonds and the housing authority paid rent equal to the debt service, said Charlton deSaussure, part of the city’s legal team. He said voter-approved debt does not count against the city’s 8% limit on general obligation debt.
Don Cameron of the housing authority said the first bond produced 64 units in three developments: 26 at William Enston Homes on Huger Street, 10 at Simons Commons, a rehabilitation of buildings on Simons, King and Romney streets, and 28 at Blakeway. The housing authority added $1.7 million, bringing the cost to $11.7 million, he said.
Seekings said at the May meeting that the cost worked out to $182,812.50 a unit, which he called a big number for affordable housing. He asked that the city tell voters before November where the new projects would be and how many units they would produce.
Tecklenburg said then that the city was working with the housing authority on specific properties, unit counts and costs, and expected private partnerships to fund more units than the last bond did.
