With residents moved, buildings demolished, and construction well underway, officials expect the Beecher Terrace redevelopment will finish by its 2023 deadline. But higher construction costs mean the Louisville Metro Housing Authority will spend $34 million more than first projected, and changes to federal law mean there’s less revenue for the project, prompting officials to search for money-saving opportunities and more funding.
Vision Russell, the initiative overseeing the redevelopment under the Louisville Metro Housing Authority, started construction on Beecher Terrace in 2017 with a $29.5 million U.S. Housing and Urban Development grant. According to 2016 documents provided by the housing authority, officials anticipated spending $172.6 million on the redevelopment with equity from low-income housing tax credits covering nearly a third of the bill. But construction costs have increased since then, and LMHA Executive Director Lisa Osanka said 2017 changes to the Low-Income Housing Tax Credit program decreased LMHA’s return from the credits.
“The financial assumptions that were made at the time that the grant applications were put in, in our case in the summer of 2016, are different than they are now,” Osanka said.
To cover some of the additional costs, LMHA applied for an up to $5 million supplemental grant reserved for housing authorities who need more funds. City housing officials said Louisville is one of only seven housing authorities HUD invited to apply for the grant; HUD plans to award grants of varying amounts to five of those applicants. The agency expects to announce grantees in December.
If LMHA doesn’t get the grant, Osanka said the department has found money in its reserves to cover financial shortfalls, and would also pursue additional funding. The department also merged two phases of the redevelopment to save money and could merge two more if there are not enough funds from low income housing tax credits.
“It made sense to do [the phases] at the same time so that the transaction costs are less,” Osanka said. “But in terms of the overall numbers — they have not changed. We still have one-for-one replacement of all the hard units lost at the Beecher Terrace development.”
Officials will give Beecher Terrace residents priority to move back into the development once it is completed.
Construction on the first phase of the redevelopment — a building for residents 55 and older — is expected to be finished by the middle of next year. The entire Beecher Terrace redevelopment is expected to be finished by 2023.