City buys apartments

The Charleston Housing Authority has completed its purchase of a 40-unit apartment building at 670 King St., the second of two building purchases on that block aimed at boosting the authority's inventory of publicly-owned housing for those with limited incomes.

In both cases, the apartment buildings were being managed by the nonprofit group Volunteers of America and were already serving low-income tenants, but the buildings needed extensive maintenance, authority Executive Director Don Cameron said.

"For some reason, unknown to us, the owners didn't keep up with what they could have been charging," Cameron said. "Because of the lack of income, there was no maintenance."

The Housing Authority plans to improve the buildings and raise the rents, although the rents would remain within federal guidelines for low-income tenants.

At 670 King St., Cameron said tenants were being charged $390 a month for a one-bedroom apartment, when the rent should have been $517.

He said the Housing Authority will raise rents by $30 in February or March, and raise them more significantly as it invests $600,000 in improvements to the building.

The Housing Authority expects to immediately see a positive cash flow from the purchases. In both cases, it acquired the buildings for little money, taking on existing loans, and there were no government subsidies involved.

"For about $139,000 we bought 40 apartments," Cameron said, referring to 670 King St.

That building, and the next-door 676 King St. building, with 50 efficiency apartments, were both available inexpensively because they were developed through tax-credit financing deals, with restrictions on the rents that could be charged. The rent restrictions made them unappealing to private investors, Cameron said, once the tax credit benefits were used up.

In tax-credit deals, banks provide financing by purchasing federal tax credits at a discount. The investors are typically in the deal for the tax credits, while a nonprofit partner usually gets a development fee and then manages the building.

Cameron said the building purchases are good for the Charleston area because they maintain the affordability of the housing and put them under public stewardship. The purchases will, however, take both buildings off the property tax roles.

The authority acquired 676 King St. by taking on $172,000 in existing debt. This week the authority's board approved a $466,300 contract to modernize the apartments.

Cameron said tenants will not be displaced, but may have to move to different apartments in their buildings so that the authority can make improvements.

Reach David Slade at 937-5552 or dslade@postandcourier.com.