Harrisburg City Council expects to take up affordable housing policy this year, legislation that may include set-aside requirements for larger developments.
At a meeting on Tuesday night, council President Wanda Williams said that she wants to begin work on an affordable housing ordinance, with the goal of passing it within six months.
Specifically, Williams said that she is interested in passing an inclusionary zoning ordinance, which would require developers to set aside a certain number of units at lower rents as a part of market-rate projects.
These ordinances, which exist in some other cities, typically require developers to include, for instance, 5 to 10 percent of “affordable” units in a project, as long as the development exceeds a certain size—say, 15 or 20 units in total.
Williams said that she didn’t yet have specifics of her proposal, but that she’s in the information-gathering stage to see what she would like to include.
“I need to look at all aspects of it,” she said, following the meeting. “I’ve reached out to other cities, to see what they’re doing, and I want to try to put something together. I’m working on this as fast as I can.”
Her comments followed a hearing on the latest proposal by Harristown Enterprises to convert an aging downtown office building to residential space.
Harristown CEO Brad Jones told council members that the Harrisburg-based company plans to convert a Market Square building at 17 S. 2nd St., formerly occupied by the Skarlatos Zonarich law firm, to 30 one- and two-bedroom apartments.
Over the past few years, Harristown has similarly converted several other office buildings, most rundown or vacant, to market-rate apartments and, in fact, is currently signing leases for 82 new units in three downtown buildings where renovations are nearly complete.
“We’ve taken about 130,000 square feet of class B and C office buildings that were vacant or partially vacant and reactivated those buildings into new apartment buildings,” he told council, adding that the company’s other completed apartment projects are “100-percent occupied.”
Jones said that he expected units in the proposed Market Square project to rent for about $1,100 to $1,400 a month, depending on size and the number of bedrooms and bathrooms.
This prompted a lengthy discussion among council members about affordable housing downtown.
“Looking at the rates, that average rent is still above the average rent for the city of Harrisburg,” said Councilman Westburn Majors. “When you’re looking at market rate, are you looking at that or you just making a return for your investors?”
Jones explained that Harristown has found it difficult to attract investors to its Harrisburg projects, as real estate investors typically can get a higher rate of return by building in the suburbs, areas that tend to have lower taxes and construction costs than in the city.
“I know this is of great interest to the council,” Jones said. “Even knocking a couple of hundred bucks off of that (rent), we just couldn’t meet the terms of our investors’ requirements.”
He said that he expects to spend $130,000 to $140,000 per unit to renovate the 30,000-square-foot, 30-unit building.
“It’s a lot of dollars per unit,” he said. “That’s why you don’t see a lot of developers coming before you. We’re trying to reinvigorate the downtown, and these projects are very expensive.”
At the end of the meeting, Councilman Dave Madsen cautioned that council’s job is not to pass judgment on the anticipated rental rates, but to ensure that the project complies with all current city requirements.
“I do think it’s on us, as city government, to draft some regulations or incentive-based programs to incentivize developers to make some below-market, affordable housing,” he said. “What the applicant has put before us now, we have to look at the written rules and regulations as they stand currently and, based on the feedback and questions we’ve had, they are in compliance.”
A council vote on Harristown’s land development plan is expected next week. Jones said that he’d like to begin the project around April and expects a nine-month build-out.
In the meantime, Harristown, Jones said, continues to search for an anchor tenant for a new office building it plans to build at 21 S. 2nd St., next door to the Market Square apartment building. That site once housed a small, fire-damaged building that included the Coronet restaurant on the first floor, but is now an empty lot.
“We plan to do a four to six-story office building there,” he said. “It is a very narrow site, but we’re been trying to find tenants.”
For leasing information on Harristown’s newest apartment projects, visit hbgrealty.net.