Franklin Hill in Dorchester is scheduled for a $90 million makeover, but questions are being raised about whether the deal can be financed.
For decades, residents of Franklin Hill in Dorchester have lived with violence, drug-dealing, rat infestation, mold and one of the city’s most notorious gangs – the Giants – which had its roots in the development.
The severely distressed project is scheduled for a $90 million extreme makeover. But soaring construction costs have forced the developer to reduce the number of units and questions are being raised about whether the deal can be financed.
MassHousing, the state’s affordable housing bank, has given initial approval to Trinity Financial Inc. for $6.8 million in construction financing toward the first phase of the development. But the loan has not yet closed as officials await a revised budget.
“We support the project and Trinity is capable of doing the job,” said Eric Gedstad, a MassHousing spokesman. “But we are concerned about rising costs and have to take a new look at how it’s underwritten.”
Trinity, the Boston-based developer that won praise for transforming the dilapidated Maverick Gardens projects in East Boston into Maverick Landing, a mixed-income waterfront community, plans to demolish the 366-unit Franklin Hill complex off Blue Hill Avenue and replace it with a mix of rentals and townhouse condominiums.
Kenan Bigby, Trinity’s project director, said last year’s cost estimates are being revised in the wake of higher-than-anticipated steel, copper and building material prices. The unique topography of the Dorchester site also has posed financial challenges, he said.
Prices for U.S. steel have risen 12 percent in the past year to $600 a ton, according to data from Purchasing.com, a Web site that tracks industry prices. John Surma, chief executive officer of Pittsburgh-based United States Steel Corp., said in the company’s earnings report this week that average prices and shipments of flat-rolled steel will decline this quarter.
When completed in two years, the new Franklin Hill was expected to include 300 rental units and 50 condominiums built in a variety of housing styles including townhouses with private entrances, backyards and two mid-rise buildings, according to the Boston Housing Authority. In addition, the site will be reconfigured with a new street layout, resulting in more city blocks that fit into the neighborhood.
But to meet what has been an unstoppable rise in construction costs, Trinity has reduced the number of units by 14 for the first phase and it’s unclear whether more cuts will be needed later. Originally, phase one called for construction of 138 units at a cost of $25 million or $181,159 per unit. Today, the per-unit price tag has swelled to about $239,130 – a nearly one-third increase.
‘We Feel Confident’
MassHousing’s Gedstad said it is not unusual for budget costs to climb given the global problem of rising steel prices. He said the hike is not necessarily a deal killer, but the agency is awaiting updated numbers before they give the final approval.
Bigby said he has been working with architects and contractors to “streamline” the units. For example, he said, in addition to reducing the number of dwellings, the three-level townhomes have been reduced to two floors. He said Trinity is working on revised cost estimates that will meet with approval from funders.
“We have been communicating with the funding sources and feel confident that we will put it all together and start demolition by year’s end,” Bigby said.
In addition to the MassHousing funds, the development is counting on $13 million in federal money from the BHA; $1.3 million in HOME funds from the city of Boston; $750,000 in Housing Stabilization Funds from the Department of Housing and Community Development; $3 million of BHA capital funding and $1.25 million from the Affordable Housing Trust Fund. The project also is expected to raise $5.5 million in equity from the sale of Low-Income Housing Tax Credits.
The development is located on Shandon Road, Franklin Hill Avenue, Fermoy Heights Avenue and American Legion Highway. That neighborhood is benefiting from other significant investments including two homeownership housing developments, Harvard Commons and Olmstead Green, less than a mile away.
New public streets will be installed and a variety of housing types are included in the plan to achieve the necessary transformation from a public housing development to a mixed-income community
Additional enhancements are planned for the area including upgrades to nearby Harambee and Franklin parks. The MBTA has renovations scheduled for the Uphams Corner and Morton Street T stations. The agency also is considering building as many as four new stations at Newmarket, Four Corners, Talbot Avenue and Blue Hill Avenue. An alternative site for the Four Corners station, located at Geneva Avenue, also is being studied.
‘A Little Scared’
The first phase of redevelopment at Franklin Hill calls for the demolition of two buildings containing 123 units, to make way for the new construction. The development will be rebuilt in five phases. Some tenants already have been placed in other apartments elsewhere in the city.
Each of the rental units will be affordable to households earning below 60 percent of the area median income. A family of four could earn up to $49,612. All residents of Franklin Hill will be offered the opportunity to return to the new development and will be provided temporary relocation assistance during construction. Those residents who wish not to return will be given relocation assistance and a Section 8 rental voucher.
Replacing Franklin Hill has been in the planning stages for years. In 2004, the BHA sought a $20 million HOPE VI grant from the Department of Housing and Urban Development to jumpstart the project. The federal program is designed to replace the nation’s worst housing projects with mixed-income developments. While the application was rejected twice, the BHA sought alternative funding.
The Bush administration has been trying to end HOPE VI while housing advocates continue to lobby Congress to save the program. In the past, the program’s budget has been at $500 million, but that number has declined in recent years to $100 million.
“Public housing and HOPE VI in particular are being starved by this administration,” said Sunia Zaterman, executive director of the Council of Large Public Housing Authorities, a national nonprofit organization that works to preserve and improve public and affordable housing through advocacy, research and public education. “HUD takes great pride in HOPE VI developments yet this administration’s disinvestment in public, mixed-income housing is completely inexplicable.”
HOPE VI was created by the Clinton administration to eradicate severely distressed public housing. Since its inception, 114 cities nationwide have been allocated $5.4 billion to replace dilapidated housing with new neighborhoods.
In the 1990s, the BHA received $79.9 million to transform crime-ridden and crumbling Roxbury developments Mission Main and Orchard Park as well as Maverick Gardens in East Boston where 286 new units of rental housing were built overlooking Boston Harbor.
Sylvia Brewer, 52, who moved to Franklin Hill with her family in 1974 and is now living in Mattapan while the work is completed, said she is optimistic about the project getting done. But the self-described recovering cocaine addict is worried that the deal may fall through and longtime residents will face another disappointment.
“We lost out on two HOPE VI grants and we’re a trying to shake that off and trust that the BHA has found another solution,” said Brewer, who is also co-chairwoman of the Franklin Hill Tenants Task Force. “I’m a little scared that we could get let down again. We’ve all endured this long enough.”
