The old El Dorado Middle School could become senior low income apartments after the new middle school is opened.
The USD 490 Board of Education voted to approve the commercial real estate sales contract for the building with Cohen-Esrey during a special board meeting Wednesday evening after hearing from representatives from Schneider Electric and Cohen-Esrey on their proposals for the building.
Paige Ralston, with Schneider Electric, first addressed the board.
She said there was not much on which to update the board on her proposal, but she had mailed them a letter with some options for reducing the proposed project.
"There's a lot of levels of projects between what we presented originally," she said. "This is still a work in progress. We can set a target and do everything we can to get there if this is the right project for the school board."
They were proposing tearing down a portion of the building and remodeling the rest, which would allow the school district to keep possession of it.
They also heard from Tim Quigley with Cohen-Esrey.
"One item I need to mention about the Affordable Housing Program that might be helpful for everybody," he said. "When an award is made for low income housing tax credits, one of the requirements is a land use restriction agreement be put in place and recorded. This ensures the property will be operated in accordance with the Affordable Housing Program."
That requirement stipulates what the project is and the number of units. It also requires the property operate within the program for 15 years. After 15 years, the owner can attempt to sell it, but the restrictions would go with the property for an additional 15 years. Another option if it cannot be sold is to change a portion of the apartments to market rate apartments.
"The project would always stay as housing," Quigley said.
He also explained their model is not to have any permanent debt.
They use historic tax credits and low income housing tax credits to pay for the construction.
One thing that attracted them to this property was its location right in the middle of the city and near services.
"Based on preliminary research there is adequate demand for the housing," Quigley said.
They are looking at using the grassy lot across the street for off-street parking.
"We don't want to take any of the building down," he said, adding that they may want to turn the gym into units and they will maintain the auditorium and continue to use it for its intended use.
Quigley estimated it would be about a $10 million project offering a combination of one- and two-bedroom apartments. It also would include at least one elevator and have a safe room and community space such as a library or exercise room.
Page 2 of 3 - As to the homeless unit that was mentioned during the last discussion that would be part of the project, Quigley said they did not have to have a homeless unit, but if they did it would be for someone with a track record of trying to get a job and not transient people. He also said they do not have to include that unless they want to be more competitive with their application for the tax credits.
The apartments would rent for between $400 to $450 up to $550 or $600, he estimated. That will be part of the project defined by a housing study that will look at market rates.
The board also heard from Gayle Arnett, Susan B. Allen Memorial Hospital president and CEO.
"Now is our community's time to shape our future in regard to this property," she said. "Once it changes hands our opportunity to do that as a community is lost for the most part. Both of these projects look very positive and would be great assets for El Dorado and be a great neighbor for the hospital."
She urged the board to include language in the sale to ensure if the project didn't sustain itself it would not fall into an undesired use.
She also asked that the hospital be given the first right of refusal if it became available at a future date.
"It would give us options," she said. "That's really what we're asking for. It's kind of a long-term planning for us and the community."
They also requested restrictions on a healthcare facility from operating there.
Board member Leon Leachman thought they would need a list of prohibited uses, not just say that there are some.
Arnett said now they were just asking for a letter intent to do this and those could be worked out in the negotiation process.
Quigley said he didn't have any experience with those type of restrictions on their projects in the past.
"The actual land use restriction agreement already restricts the use," he said. "I could see right of first refusal hindering a potential buyer from stepping up and negotiating the contract. That being said, I don't think the hospital would want to buy it knowing the deed restriction says it has to be operated as a housing property."
Board President Deb Wheeler did point out the Cohen-Esrey proposal is a contingency contract based on if the company receives the tax credits.
"I personally have liked all of the proposals we have seen," Leachman said. "I just don't feel, even with it being pared down, I don't think we can afford to put USD 490 in debt.
"I understand where the hospital is coming from, but I don't want this to get strangled with that," he continued. "I would like to see us go with Cohen-Esrey and would like to see them work with the hospital the best they can."
Page 3 of 3 - BOE member Bernie Spradling agreed.
"From the people I have talked to, along with the comments made, they want to see that building standing there," she said. "Even tearing down one section (which was the proposal from Schneider Electric) or it was not a popular choice by most of our constituents.
"I really feel like we're in the business to educate children, we are not in the business to manage property. I've always said that's an icon in our community. If it can be maintained and can be maintained in a way that makes our community proud, I say let's let them do it."
BOE member Cathy Cooper also agreed.
"I don't think we have the necessary cash flow to support the Schneider Electric project," she said.
The cost of the project, $6.2 million, would be around $600,000 a year minus the savings, for a net of $525,000 a year for capital improvement costs from the district.
Cooper excused herself from the vote because she serves on the hospital board.
BOE member Vickie Coash also said she heard the Cohen-Esrey project was preferable.
Leachman made a motion to accept the Cohen-Esrey contract, which was approved 6-0. They will purchase the building for $250,000.