A major overhaul of one of the city’s interior neighborhoods will begin next year as Dothan Housing Authority board members approved a $26 million investment into Johnson Homes on Wednesday.
Of the $26 million, the DHA will finance about $10.7 million. Roughly another $8 million will be available through tax credits that other entities purchase from the Alabama Housing Authority, and the Dothan Housing Authority will leverage $2 million of its own money into the project, said Jeff Williams, one of seven DHA commissioners.
Other tenets of the Low-Income Housing Tax Credit (LIHTC) agreement, like the Dothan Housing Authority’s own equity in Johnson Homes, account for the rest of the funding. Board members selected the LIHTC plan over a tax bond arrangement that provided about $12 million in funding but gave DHA more control over the Johnson Homes properties.
“To me, Option 1 is just putting lipstick on a pig,” said Williams, a banking executive, noting board members wanted a “transformation” of the Johnson Homes property.
Under the accepted agreement, DHA will have to transfer the ownership of Johnson Homes to a limited liability corporation consisting of itself and the entities that buy tax credits for the project, Williams said. As the 40-year deal progresses, DHA can refinance for needed renovations or repairs, buy the complex back, or even sell it outright.
The arrangement, though, allows DHA to obtain almost an additional $14 million while only borrowing an extra $2.5 million, Williams said. The idea is to renovate Johnson Homes in a way that gives it the appearance of a market-rate apartment complex.
“The federal government … is moving away from public housing (as it is),” said Michael Jackson, a DHA board member. “If we don’t do this, we’ll be stuck in the past.”
DHA executive director Samuel Crawford said Johnson Homes will still remain a voucher-based public housing community, though the organization is in the process of converting all of its properties to Section 8 housing. Since it remains in the Department of Housing and Urban Development voucher program, residents will maintain the protections regulations afford them, he added.
Crawford noted HUD must approve the financing plan, which can take up to three months. He expects construction to begin on the project in March or April if HUD signs off on the plan.
When construction begins, DHA will be responsible for relocating residents as needed. Since Johnson Homes contains more than 20 buildings, Crawford anticipates developers addressing the project a couple of buildings at a time.