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Developers seek tax deal for east Baltimore affordable apartments

4-14-14 Baltimore, MD- Daniel Henson, President of The Henson Development Company, Inc., shown shown standing in a model unit of their new property, Fells Point Station a new low income mixed use apartment complex at 1621 Bank Street in Fells Point. (The Daily Record/Maximilian Franz)

Daniel Henson, president of The Henson Development Co. (File Photo/The Daily Record)

Baltimore’s spending board is slated to consider a tax deal for the developer behind part of a proposed massive overhaul of east Baltimore properties, including public housing sites.

Mission First Housing Development Co. and the Henson Development Co., operating as McElderry LLC, requested the Board of Estimates approve a payment in lieu of taxes for its 1234 McElderry apartments project. Baltimore’s Low Income PILOT Committee recommends approving the 75 years agreement set to begin July 1, according to the spending board’s agenda. Daniel P. Henson III, owner of Henson Development Co., previously served as Baltimore Department of Housing and Community Development commissioner in the 1990s.

“Given the need for affordable housing in the city, the Low Income PILOT Committee believes that the PILOT is necessary to support both the capital and operating needs of the project …. since an (Housing Authority of Baltimore City) related entity is a partner in the legal structure and that entity owns the underlying fee simple interest in the property subject to a long-term ground lease. The property, at present, is vacant land which does not pay any real estate taxes since it is owned by the HABC,” according to the Board of Estimate’s agenda.

The developers propose a four-story mixed-use project at 1234 McElderry St. with 104 mixed-income units, 2,6000 square feet of ground-floor retail, and 88 parking spaces. Plans call for 84 of the units to be restricted to residents making 80% or less of the area median income.

Plans also call for 50 income-restricted units described as “deeply affordable.” Residents, subsidized via Housing Authority of Baltimore City-administered vouchers, would pay 30% of their adjusted gross income. The remaining 20 units would be market rate.

During a presentation to Baltimore’s Urban Design and Architecture Advisory Panel in May 2018, Dana Henson, of Henson Development Co., said the project at 1234 McElderry is expected to cost $19 million.

Under the proposed tax deal the property owner would pay the city 10% of the tenant portion of rent for units built with Low Income Housing Tax Credits.

For all other units, including the remaining 34 income-restricted units and the 20 market-rate apartments, the property owner would pay the city and state 10% of the rent based on a rental schedule established at the start of the agreement.

Retail space in the project would not be included in the proposed tax deal and the developer would pay full taxes.

This is the first phase of a nine-phase project, including the overhaul of the aging Perkins Homes public housing site.

Henson Development Co. and Mission First Housing Group also presented designs to Baltimore’s design board for a building at nearby 520 Somerset Court. That project consisted of 240,000 square feet of space consisting of 197 mixed-income units, with 2,500 square feet of retail, at an estimated cost of $37 million.

The housing authority in March 2018 reached an agreement with PSO Housing Co. LLC, a joint venture of St. Louis-based McCormack Baron Salazar, plus Beatty Development, Henson Development Co. and Mission First Housing Group for an $800 million redevelopment of Perkins Homes, the former Somerset Courts public housing site and the Old Town Mall site.

In July, Baltimore was named one of five cities to receive a Choice Neighborhoods Initiative Grant and was awarded $30 million in federal funding for the project from the U.S. Department of Housing and Urban Development.

Overall the redevelopment is expected to replace roughly 629 public housing units. The project is expected to create about 1,345 new residential units, 652 of those “deeply subsidized,” 276 affordable units made possible with tax credits and about 417 market-rate units.

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