Helm Place: A New Start for an Historic Neighborhood in Jackson, Mississippi

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On February 13, 2014, developers broke ground on Helm Place, a bold and much anticipated plan to bring new housing to a blighted historic district in Jackson, Miss.

The new homes couldn’t have a higher profile. They will stand in the heart of downtown Jackson, in a storied neighborhood just a block away from the edge of the State Capitol complex.

The development team is a partnership between a church that is a powerful pillar of the community and a for-profit developer.

Mississippi Governor Phil Bryant, Jackson Mayor Chokwe Lumumba, and City Council President Charles Tillman all attended the groundbreaking for the affordable housing development, which will ultimately contain 88 low-income housing tax credit units and a 4,000-square-foot community center. Residents are expected to be able to move in by year-end.

Historic Church and Neighborhood

Many of the new townhouses in the scattered-site development are being built a few steps away from the Historic Mount Helm Baptist Church, Jackson’s oldest historically black church, founded by former slaves in 1835. The church had assembled many lots in the neighborhood over the years in hopes of eventually building new houses.

In addition to these lots, the new development is incorporating lots obtained from the city, which acquired these through tax foreclosures.

Chartre Consulting, an affordable housing developer based in Oxford, Miss., is partnering with the church to build Helm Place.

The company’s first challenge was to gain the trust of the church, which had previously tried to redevelop the land it held around the church, only to be disappointed by earlier development partners. To gain the confidence of church leaders, Chartre took them to visit the company’s other housing developments in Jackson. Next, the development partners needed to win approval from Jackson’s Historical Preservation Commission to tear down nearly 40 existing houses in the historic Farish Street District. Many of the hundred-year-old houses had been cheaply constructed and were already in a state of collapse.

“We had to show them that there was no character left in the residential part of the neighborhood to maintain,” says Clarence Chapman, Chartre’s president. Eventually, the commission allowed the demolition to go forward.

Later, the developers had to secure the commission’s approval of the proposed design of the new townhomes. The 11 new townhouse buildings have architectural features such as wide front porches and Hardy Plank exteriors to help them fit in with existing buildings in better-preserved parts of the historic district. The developers created two new private alleys so that the garages for the townhomes could be located in the rear. These and other details added about $3,000 to $3,500 per unit to the development cost.

The townhomes are purposely very different in style from the demolished houses. “The church,” Chapman says, “insisted that we not to repeat the old design – it was shotgun shacks. Instead, we are able to build almost Charleston-style houses.”

Second Time is the Charm

The last big challenge was securing the funding for Helm Place.

Chartre submitted two applications to the Mississippi Home Corporation in 2012 for 9% housing tax credits, proposing to split the development into two phases. However, the competition in Mississippi for these credits is fierce. “Normally, in Mississippi, you have three or four times as many applications as you have tax credits,” explains Scott Spivey, spokesman for the Mississippi Home Corporation.

Chartre’s applications scored relatively well, but were placed on the state agency’s waiting list.

Fortunately, the plan was rescued by a special Health Care Zones initiative created by Governor Bryant. To facilitate new affordable housing and revitalize neighborhoods around health care centers, Mississippi forward-allocated housing tax credits in a special competitive round held in 2013. Helm Place applied for and received tax credit reservations for both phases by year-end.

The total development cost for the project is approximately $14.6 million.

The majority of the funding is $10.8 million in equity from Greenwich, Conn.-based Richman Group Affordable Housing Corporation, which syndicated the tax credits at a price of 82 cents per dollar of credit. Richman has also agreed to syndicate the tax credits from the second phase of Helm Place.

The other major funding source for the first phase is a 15-year mortgage from Mid-South Housing Foundation, a local nonprofit committed to the creation of lease-purchase housing. Chapman sits on MSHF’s board.

Lease-Purchase Model

All of the homes in both phases at Helm Place will be rented under a lease-purchase model. Residents who lease their homes for 15 consecutive years will be eligible to buy their homes for $50,000.

Residents must have incomes no greater than 60% of the area median income. Currently, the annual income cap for a four-person family at 60% of AMI is $35,160.

Gross initial monthly rents will average $675, about $200 to $300 less than the mortgage payment on a comparable home.

Mississippi Home Corporation set up its lease purchase program in 1997.

Chartre Consulting has participated in the Mississippi Home Corporation’s lease-purchase program since it was set up in 1997, and has built thousands of housing units under it. Chartre’s oldest lease-purchase tax credit properties are just now reaching the end of their 15-year initial compliance period. “Our first units run off into ownership this spring,” says Chapman.

Chartre Consulting’s lease-purchase properties have been highly successful, says Chapman, with a low resident turnover rate of about 5% per year. By comparison, the typical annual turnover for traditional LIHTC properties is 20% to 25%.

The markedly lower turnover makes Chartre Consulting’s lease-purchase properties significantly less expensive to operate, since preparing an apartment for a new tenant can cost $500 to $5,000, depending on how much repair and replacement is needed. A healthy operating surplus enables Chartre Consulting to maintain its lease-purchase properties over time, because they are more likely to have the funds they need to stay well-maintained and attractive as the years pass.