CHARLESTOWN — Charlestown officials have committed $2.5 million in taxpayer money toward 32 new homes reserved for Pleasant Ridge senior homeowners, who won’t pay additional costs after moving.
The Charlestown City Council voted during its meeting Monday night to approve an agreement with Neace Ventures LLC on the Villas of Springville Manor, a gated community reserved for Pleasant Ridge residents older than 55. Councilwoman Tina Barnes, a resident of Pleasant Ridge, cast the only dissenting vote.
The project initiated by the city is intended to provide affordable housing to property owners in the middle- to low-income neighborhood targeted for demolition and redevelopment.
The city’s subsidies on the Springville Manor on Fulkerson Drive will mean any seniors who have paid off their mortgages in their current homes will continue living with no monthly payments in the new neighborhood, aside from utilities and other living costs. They won’t owe any down payment, either.
“The developer is not making money on these homes … the cost of building the homes is greater than the sales price,” Charlestown Mayor Bob Hall said. “That’s the reason we proposed it, and we’re willing to subsidize it to make it work.”
The development company that has bought rental properties in Pleasant Ridge with hopes to redevelop the entire neighborhood are also the developers of Springville Manor. The subsidies will be kept in a fund the developer can draw from to cover costs of building the homes.
Hall said multiple developers showed interest in the city’s initial request for proposals in March on the project, but Neace Ventures LLC was the only one to submit a proposal.
“It was an open process,” the mayor said.
The city is also investing $1 million, half of which are state funds, to build a road that will provide another access point into Pleasant Ridge.
Per the agreement passed Monday, the city will spend $800,000 on infrastructure in Springville Manor, such as roads, sidewalks and sewers.
Both the city of Charlestown and Neace Ventures are giving a $20,000 credit against the homes’ sales prices of $75,000 to $78,000. The city is providing its share up front to developers, so they are able to pay their builders. If homes aren’t sold within five years, the developer must pay the city its $20,000 back for each home.
Mortgages costing $35,000 will be in the form of a lien against the property owed to the city, with $700 in interest each year. Charlestown is fronting $1.12 million in a revolving loan fund, with the developer drawing funds and holding the mortgages.
Since homes are estimated to be valued $85,000, owners will automatically have $10,000 in equity in their properties.
The city estimates that the appreciation of homes, even if it’s just 1 percent, will still be greater than the cost of the mortgages. When owners sell their homes, they will receive the sale price minus what is owed through the mortgage to the developer, which will then be repaid back into the revolving fund.
For those who haven’t paid off their current mortgages, their monthly mortgage costs in Springville Manor will remain about the same, Hall said.
It’s a plan that is designed as a lateral move for Pleasant Ridge homeowners.