Covenant House/CHAI Apartments is well underway on financing and approvals that could over the next 10 years result in the replacement of its buildings with brand-new structures. The project would also extend existing federally subsidized housing assistance for the project by two decades.
If conditions are satisfied in the timeframe anticipated, the first phase, costing approximately $20 million, would begin in fall 2014, with the construction of a new Covenant I on the campus that would be completed in 2016. A second phase with a budget of about $26.7 million would follow shortly thereafter, and replace Covenant II, also including significant space for services and programs for both its residential seniors as well as those living in the greater community.
Covenant I, which has some vacant efficiency units, would be replaced with 101 one-bedroom units, the same number of apartments currently occupied. Covenant II and the Chai Building are both currently 100 percent occupied.
Once the new Covenant I is completed and residents are relocated, the existing Covenant I would be demolished. Construction on a new Covenant II would commence in the approximate location of existing Covenant I. That project is anticipated to take 18 to 24 months.
Development of the third phase, which would replace the CHAI apartments, is not anticipated for another six to seven years. A determination on the efficacy of that project will be dependent on various factors, including the market, needs of the community, available financing, tax credits and donor commitments.
A large number of the Covenant units qualify as United States Department of Housing and Urban Development (HUD) Section 8 affordable housing. Covenant Executive Director Joan Denison said that HUD has offered to extend those contracts, which currently expire in 2019, for two decades. Ensuring the Section 8 capacity has an impact on the size of the development, Denison explained.
“In order to preserve those Section 8 contracts, we have to build a building that will accommodate the size of the number of contracts,” she said. “We feel we’d be very shortsighted to let go of those contracts and reduce the number of affordable apartments we’d be able to offer.”
At present, the complex receives about $2.4 million annually from HUD for the subsidized units.
Covenant residents are being informed in writing this week of the project, which has quietly been in process for more than two years as the requisite financing package and approvals have been sought. Relocation costs for residents are included in the project budget.
The notice to residents stresses there are still hurdles to be overcome. “At this time, we want to share some of the potential plans for the future,” read the notice distributed Tuesday to residents of the complex. “We use the word ‘potential’ because there are many things that will have to come together in order for us to be able to move forward with our plans.”
A need to replace
The multi-million dollar project is the result of extensive discussions by the Covenant board, which began two and a half years ago to examine facilities issues on the campus and weigh the price tag associated with ongoing maintenance and upkeep of the antiquated buildings. The project comes on the heels of Covenant determining that new construction presented the best option, said Denison.
“When we started to look at the cost factors of rehabbing this building, it just simply didn’t make sense to put money into a rehab,” she said, “particularly since you would have to pay a significant amount of funds to relocate residents during the rehab rather than put money into an actual building that would be there for the future.”
The project as planned contemplates the need for additional land. Covenant has entered into an option agreement with the Jewish Community Center to purchase three acres of its property for $350,000. The plot represents roughly half of a six-acre hilltop site overseeing Lindbergh Boulevard, which was the longtime home of a bowling alley that was recently torn down. The project would create an additional permanent entrance into the Millstone Campus as well.
“We thought about putting the building on the part of our property that’s just in front of Covenant II,” said Denison. “We had space to do it there but it would make a more gracious building if we could have a little more space.”
Michael Staenberg, owner of TSG Properties, who was instrumental in spearheading and donating to the Jewish Community Center construction and expansion, has volunteered as a development and construction advisor to Covenant. He and Covenant are working with developer McCormack Baron Salazar, a St. Louis based firm with major experience across America with sophisticated housing projects.
Staenberg said the project will help complete the “natural evolution” of the vision I.E. Millstone conceived for the campus and praised the sale as a win-win for both parties.
“It leaves the JCC with a nice usable piece of ground, helps Covenant House get what they need and I think it will enhance the ingress and egress to the entire campus,” he said.
Denison cited major advice, consultation and cooperation during its due diligence process from Millstone Campus agencies, particularly the Jewish Federation of St. Louis and JCC.
Financing for the project will come from a complex array of sources, including federal and state tax credit programs, along with Federal Housing Administration (FHA) and state loan funding. Approximately $12 million in fundraising will be required for the first two phases beyond those dollars provided through the tax credit and related programs.
The state share of the tax credits for Phase 1 has been recommended by the Missouri Housing Development Commission (MHDC) at its recent December meeting. The credits for this project were at the top of St. Louis County’s recommended list to the commission.
Actual approval and award of the state tax credits and other MHDC funding was delayed to March 2014. Timing of the credits was affected by the public and legislative discussions concerning attraction of Boeing’s 777X jet program. Missouri Governor Jay Nixon, who heads MHDC, made a commitment to certain state senators he would support tax credit reform as part of the consideration of approval on Boeing.
Other government actions required include rezoning approval for the acquired land from the St. Louis County Council after vetting by the county’s Planning Commission. Covenant has already met with the commission once, and anticipates approval early next year.
A community for seniors
The institution is getting a new name, Covenant Place – A Community for Seniors. The name more accurately reflects the combination of residential units and programs associated with the senior community.
An increasing elderly population that is living longer is creating more demand for housing options that enable seniors to remain in place. Denison indicated the most recent census projects that the percentage of adults over age 85 will more than double over the next quarter century, marking a greater need for mobility devices and other accessibility modifications.
In addition, the Millstone Campus presents an unusual and beneficial combination of residential units and facilities, including the JCC, that cater to seniors. Covenant also resides within a Natually Occurring Retirement Community (NORC) supported by the Jewish Federation of St. Louis, and partners with such other programs as ElderLink and Jewish Family & Children’s Services to create a comprehensive lifestyle community for seniors.
“It’s not only the housing but the supportive services that we provide for Covenant House,” Denison said. “We wanted to get ahead of things and not wait for them to break before fixing them — really understanding what the needs were of the building.”
Though the rebuild is largely a replacement effort, it will offer one noteworthy expansion – the creation of community space in Phase 2 that Denison thinks will be a centerpiece of the project. Denison believes that Covenant’s array of programs, classes and activities represents a natural magnet for local seniors.
“We are building senior community space that will not only be accessible for our residents who live with us but also to the entire senior community around us,” she said.
Denison said that the board has approached the rebuilding effort with diligence and caution.
“In terms of the budget, the debt ratio, the whole decision-making process, everything has been done with a very conservative approach to the project,” she said. “We’ve seen difficulties other community projects have had and we feel we’re in a nice position to learn from some of that and really do this in a way that everyone can feel a sense of ease and a sense of pride when we’re done.”