In a 5-0 vote, Salem’s Zoning Board of Appeals granted the appeal needed to turn a local affordable housing developer’s condo pro-ject into rental units to help it beat foreclosure, stay solvent, meet its obligations and complete its mission.
Salem Harbor Community Development Corp. (SHCDC), the non-profit parent company of the Palmer Cove Condominium project, built a $4.6 million, 15-unit affordable housing complex at The Point area in Salem with $2.2 million in construction loans.
The balance came from public funds.
The SHCDC put the units up for sale in a lottery last December, ranging in price from $142,500 to $189,900.
But just one applicant applied, and SHCDC’s construction loan was due this June.
The ZBA’s decision late last month to allow the SHCDC to rent the units saved the project from foreclosure.
“We appealed to the zoning board of appeals to let us turn the project into rental property to save it. We asked them for the opportunity to save this project and let us pay our bills,” said Michael Whelan, director of the SHCDC said before the meeting.
Currently, more than 80 percent of the residents in The Point neighborhood rent. The project’s aim was to change that demographic and offer affordable housing in a neighborhood better known for its hardscrabble lifestyle.
The ZBA approved the appeal Aug. 27, and will allow the permit change. That allows the SHCDC to rent the units, and Whelan hopes they will appeal to the same market to which they hoped to sell them as condominiums.
Whelan sees the change to rentals as the only way to reclaim the project. He wants to rent Palmer Cove through low-income tax cred-its. That will allow his group to repay the construction loan and make it solvent, he said, otherwise it will enter foreclosure.
“This is the only way we can realistically solve this problem,” Whelan said.
“The real estate market has collapsed out from under us,” Bill Quinn, the agency’s attorney, told the city’s zoning board in June.
Tough Love
At a meeting earlier this summer, the ZBA asked some hard questions and commented on the lost opportunity for local residents to build equity and develop some financial strength.
“I’m really surprised that none of the (CDC’s current tenants) or the neighbors expressed an interest in buying,” said board member Annie Harris at the ZBA meeting earlier this summer.
“I think that you missed the boat by not hiring someone to market the property,” said ZBA member Bonnie Belair.
In Whelan’s opinion, the project made sense but it fell victim to the current credit and debt pressures that have stalled the real estate market and sent house values plummeting back to levels of a decade ago.
With so many other units affordable in better neighborhoods, qualified buyers have gone elsewhere.
Whelan said the Palmer Cove project suffered from the real estate credit crunch and collapsing real estate prices across the city, which made this good deal less attractive.
Without a big economic incentive, this was a tough location to sell, he said.
Company:
Salem Harbor Community Development Corporation, non-profit parent company of the Palmer Cover Condominium project
Location:
The Point area in Salem
Cost:
$4.6 million
Loan Amount:
$2.2 million
Units:
15-unit, affordable housing
Asking Price Per unit:
$142,500 to $189,900
