July 13, 2024

Housing Finance Development

It's Your Housing Finance Development

Kalamazoo loans out $400K for affordable housing; approves Brownfield plan

KALAMAZOO, MI — The Kalamazoo City Commission approved a $400,000 loan to help fund construction of affordable housing units, and also approved a Brownfield plan to support the work.

The city commission approved a Housing Development Fund Gap Loan Agreement for construction at 315 E. Frank St., during the Tuesday, June 21, commission meeting.

Bogan Developments LLC plans to construction a mixed-use development at 315 E. Frank Street. The project will contain 13 residential units and one commercial unit. Two affordable housing units will be available for those with incomes at or below 60% of the area median income (AMI), and one unit for those with incomes at or below 80% of AMI.

The project directly addresses the lack of housing for this population through the creation of three new affordable units, the city said.

The city expects the project to help by adding housing units, will assist in enhancing the percentage of available affordable housing, and will impact the current availability of housing made specifically for those making 80% or less of AMI, the city agenda packet states.

The developer behind the project, Jamauri Bogan, also received a $400,000 grant in county millage funds earlier this year.

Related: Former Western Michigan running back’s next play is building new housing in Kalamazoo

Bogan is a former member of the Western Michigan University Broncos football team, where he also attended college. He has a degree in personal financial planning and a Master in Business Administration degree from WMU.

The city also approved a Brownfield plan for the project Tuesday.

The Brownfield Plan was developed to reimburse existing and anticipated costs to be incurred by Bogan Developments and the city. Tax increment revenues will be captured for reimbursement from local tax increment revenues. School taxes will be captured to cover statutorily approved activities and Michigan Strategic Fund (MSF) activities.

The transport and disposal of contaminated soil and the installation of a vapor mitigation system is estimated to cost $186,916. Engineering controls related to vapor mitigation are expected to cost $195,000 inclusive of the design, installation and performance of a sub-slab-depressurization system.

A 15% contingency on future costs is included to cover unexpected cost overruns encountered during construction on the future costs. The total contingency cost is anticipated at $130,708. Of this, $79,386 is anticipated to be covered by an EGLE grant if needed to cover unexpected costs related to environmental work and would not be requested for reimbursement if covered by the grant, the developer said.

The plan helps to offset a cost gap for the redevelopment by reimbursing eligible expenditures through the new tax increment revenue it is expected to generate.

The total cost of all eligible activities, inclusive of contingencies, is anticipated to be $1,029,946.

EGLE eligible activities are estimated at $624,477, Michigan Strategic Fund eligible activities are estimated at $405,469, and local only eligible activities are estimated at $67,831, the plan states.

The total capital investment for the project is expected to be $3,765,000, according to documents the developer submitted to the city.

Capture of tax increment revenue for the Local Brownfield Revolving Fund (LBRF) is estimated to be as much as $178,512, the Brownfield plan states.

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