If you thought that the matter of the Denton Cove low-income housing development was over, think again.
Following a decision in February by the school board to take no action on a proposed $426,000 settlement offer in the Denton Cove court case, lawyers for the Florida limited partnership that wants to build the complex on a portion of the site of the former Apalachicola High School went back to Circuit Court Judge Charles Dodson and asked him to enforce the settlement.
The lawyers allege School Board Chair Stacy Kirvin and School Board Attorney Barbara Sanders on Jan. 30 entered into a mediated settlement agreement, and promised to recommend that agreement to their colleagues.
At the Feb. 11 meeting, Board Member George Thompson George Thompson moved to accept the mediation agreement from Denton Cove GP, LLC, developers of the more than $10 million project to create 52 low-income housing units, funded by the sale of federal tax credits, on the land at 17th Street and Avenue L.
Thompson’s motion died for lack of a second, without discussion.
The school board has long maintained its original agreement, dating back to Dec. 2012, covered only 2.04 of the entire 3.66 acres, with the remaining 1.62 acres being the public’s streets and alleys, and thus the responsibility of the city of Apalachicola to cover.
When the city decided against vacating the alleys, the matter went to court, and the city has since stepped away from the matter, leaving it up to the school district to battle it out in court as to what it is required, under the terms of the original contract, to sell to Denton Cove.
In addition, a local non-profit of civic activists, Historic Apalachicola Plat Preservation Inc. (HAPPI) has intervened in the suit, basing their opposition to the project on a desire to protect the city’s historic grid.
In its latest motion, Denton Cove is asking not only that the mediated settlement offer be enforced, but that their lawyers’ fees be covered. Dodson also has granted their motion to allow them to broaden the scope of their original complaint, which alleges the school board received “unjust enrichment” and breached “an implied covenant of good faith and fair dealing.”
Tallahassee attorney Leonard Dietzen, the school district’s outside counsel who has handled the Denton Cove matter, told the school board last month that he estimated litigation costs would exceed $200,000 to $300,000 if Denton Cove decides to pursue the matter in state, and possibly federal, court.
In addition to the courtroom proceedings, Trey Price, executive director of the Florida Housing Finance Corporation (FHFC), said last month he will continue to back Denton Cove’s effort to sell to investors the roughly $9.4 million in federal low-income housing tax credits ($940,000 annually for 10 years) that FHFC first allocated to it in 2015.
Because of the city’s decision not to vacate the streets and alleys, and the subsequent entanglement in the courts, Denton Cove argued successfully to FHFC that through no fault of their own, they couldn’t have the project completed by the original date, and received two carry-over agreements that extended that deadline to the end of 2019.
In its latest request for a waiver, Denton Cove’s attorney wrote that it is “highly unlikely” the project could be placed in service by the end of 2019, since construction, which can’t begin until the current case is over, would take between 12 and 18 months.
Denton Cove was also awarded a $2.25 million viability loan for gap financing, after they successfully argued that the estimated cost of the project had grown over the past three years
Also, Denton Cove has been granted an extension on deadlines with the Internal Revenue Service based on rules which allows states to provide carryover relief for developments located in major disaster areas.
“I’m of the mind to recommend to them (the FHFC board) to continue extensions because of the need for housing here in Franklin County,” said Price. “(FHFC) is hopeful the school board will approve the settlement and we can move ahead. This is badly needed by the county which has been impacted by the Eastpoint fire and Hurricane Michael.”
Price said he believes there has been some misunderstanding regarding how the proposed development was initially characterized. The rules require that residents make no more than 60 percent of the area median income, and are required to pay rent.
“Folks have to make rent, and a majority, if not all, of these people have to have jobs,” said Price. “If they don’t pay rent they’ll get evicted.”
He said he is aware some of the original selling points to the project, that it would be for teachers, police officers or others in the workforce, may have been misleading.
“I don’t know what all was represented to folks and I understand that can be part of the frustration,” said Price. “Sixty percent of area median income are working folks, that’s who we primarily serve. There are some elderly, and some special need groups. The overwhelming percentage of our folks are working people.”
In addition, he said Denton Cove’s developers must remain in compliance for up to 50 years with rules surrounding the granting of the tax credits, which still remain to be sold on the open market.
“We have to make sure they’re in compliance,” Price said. “That they’ve got the amenities and construction that they said they would do, and they’re admitting the folks in the income limits.”
He said he and his staff recently toured a property in Tallahassee that was newly built by the Denton Cove developers,
“It was great looking, with pools and amenities. I was really impressed by the place,” Price said.