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Developer offers $600,000 for city land

Plans to build $7.2-million complex for senior citizens

By Steve Welker | The News Herald

Published: November 2, 2009

Updated: 11/03/2009 06:00 am

Morganton, NC - Two developers, one from Greensboro and one from Rock Hill, S.C., on Monday offered the Morganton City Council $600,000 for 6.86 acres in the 500 block of College Street.
Both want to build 60 units of senior-citizen rental housing on the site opposite the city's municipal auditorium.
After hearing details about both projects, the city council approved — in principle and subject to conditions — the property's sale to Beacon Management Co. of Greensboro.
Earlier this year, the city paid $300,000 to buy back the property from developer Steven Bell, who failed in his attempt to line up financing for 113 units of assisted-living senior citizen housing.
Beacon Management's proposed complex will provide affordable rental units (not assisted living) for couples and singles 55 and older.
If all goes well, developer George Carr told the council, construction of the $7.2-million complex could begin in October 2010.
City officials now must advertise the developer's offer and wait 10 days to see whether anyone files a higher "upset bid" for the property.
Mark Richardson, who presented the counter proposal from Greenway Residential Development LLC of Rock Hills, S.C., said following the meeting that his firm will not compete against Beacon's bid. He said his company will concentrate on development of its 60-unit apartment complex, called Glenwood Hills, off Burkemont Avenue in Morganton.
Carr, who founded Beacon Management in 1979, said he and his colleagues are excited about the Morganton project they're calling Summit Place.
"It's a beautiful site," he said.
Carr described to the council a mixture of 48 700-square-foot one-bedroom and 12 900-square-foot two-bedroom, single-story cottages designed in the Craftsman style. There also will be a community building. Private streets and walking trails will thread through the complex. There will be a minimum of one parking space for each unit, plus eight to 10 more for general use.
"We've built this plan before and it's been very successful," Carr said.
In addition to developing the property, Beacon will manage it. There will be an on-site manager, Carr added.
If Beacon Management wins the bid for the land, the project still will be contingent on lining up financing and winning approval for loans through the North Carolina Housing Finance Agency (NCHFA).
Beacon Management will seek a commercial loan of at least $814,000; a $1.2-million loan from the N.C. State Rental Production Program administered by NCHFA; a $1.29-million N.C. State Tax Credit Reservation Loan from NCHFA; and a $240,000, 20-year, 2 percent loan from the City of Morganton.
Another key to the project is putting together a private equity investment of $3.71 million from the sale of federal low-income housing tax credits.
Carr admitted real-estate syndication is "a tough, tough business right now," but said his company has a long track record and years of experience with such projects.
According to Beacon Management's Web site, www.beacon-nc.com, the corporation manages and/or owns some 20 apartment communities in North and South Carolina. It also manages a commercial shopping center and a large senior citizen housing complex in Connecticut.
Carr said it's vital to the project's success that it proceed on a timely basis and hit strict deadlines, starting with a presentation of its proposal to NCHFA in January.
City officials said they hope the sale can proceed quickly without any delays due to North Carolina's upset-bid process. Basically, that process allows competing bidders to up the ante over a series of 10-day periods and for specified amounts (a bid that upsets Beacon's would have to be at least $630,000) until all but one bidder drop out.
Lee Anderson, director of the city's department of development and design services, emphasized the importance of the city's moving ahead quickly, because developers time their projects to coincide with the January start of the housing tax credit program.
Anderson said city officials and the community still will have an opportunity to scrutinize Beacon Management's plans and to add input. He noted that the city rezoned the property to a conditional use for Steven Bell's planned project, so the land will have to be rezoned again, probably to residential multi-family rental housing.
City Attorney Steve Settlemyer and City Manager Sally Sandy said that in their experience — and Settlemyer's goes back to 1978 — Morganton never has had competing bids for city-owned land.
Just in the past week, a third developer also made inquiries about the property, but did not enter a formal proposal.