Charleston isn't borrowing the $20 million for affordable housing that residents voted for in a 2017 bond referendum until at least next summer. Any new homes probably won't be move-in ready for another two years after that.
The city has delayed the bond issue twice because it didn't have a spending plan in time to justify the annual debt payment of about $1.4 million.
City officials said they intend to begin borrowing some of the money starting in June. That way, the debt payments won't be due until 2020.
City Council finalized a spending plan for the bond money in August, creating a process for lending funds to developers who plan to build or redevelop affordable rental housing. Letters of interest were due in November, and the full applications are due in January.
Council will decide which developers will get a portion of the funds in February, and the money wouldn't need to be paid out for another few months, according to Geona Shaw Johnson, director of the Housing and Community Development Department.
That's why the bond issue wasn't worked into the 2019 budget, said Chief Financial Officer Amy Wharton.
Shaw Johnson said the city expects to receive eight applications, and three will be chosen.
She couldn't say exactly how much money will be bonded yet because each development will have different needs. And she's not sure how many units will be built after this round of funding, but for reference, the eight applicants proposed about 600 affordable units combined.
The city's bond money will only cover a portion of funding for each chosen project. Most will also apply for Low Income Housing Tax Credits from the State Housing Finance and Development Authority.
Shaw Johnson said even though the city's bond issue was delayed, it won't significantly affect the overall development timeline. She said builders often spend about a year putting together funding plans for affordable housing projects, and then it takes about two years to construct them.
Under state law, municipalities must issue bonds for the total amount approved by voters within five years of a referendum, but they don't have to issue them all at once.
The city's selection process will be similar to the state agency's. It's a scoring system with criteria such as rent prices, periods of affordability, proximity to bus routes and grocery stores, as well as how quickly a project can be completed.
City Councilman Keith Waring said he's glad the city took time to create a careful spending plan for the bond money.
"If we were to rush into it, we would look back and say, 'We could’ve done better,'" he said.
He added that the fund isn't the only mechanism the city is using to fund more affordable housing construction. The city's workforce housing zone on the peninsula gives developers the option of building more units in exchange for making some of them affordable. If they don't want to include affordable units in their own projects, they can pay the city a flat fee.
Some of those proceeds are helping to build seven affordable homes in the Ashleyville-Maryville community in West Ashley.
The shortage of affordable housing is a regional problem, but Charleston's housing prices are among the state's highest, particularly on the peninsula. Many median-income people who work in the city can't afford to live in it. That's especially true for people who rent.
The average rent price for a two-bedroom home in Charleston has stayed at about $1,600 for the past year, according to Zillow. A family would have to earn at least $57,600 a year to reasonably afford that.
The housing built with the city's bond money will have to be affordable to people earning from 30 to 120 percent of the area’s median income, which ranges from $15,650 to $78,300 for a single person.