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Fayetteville Housing Authority agrees to buy motel property

by Stacy Ryburn | January 5, 2019 at 1:06 a.m.
NWA Democrat-Gazette/DAVID GOTTSCHALK A section of the property at 1140 North College Ave. is visible Friday in Fayetteville. The Fayetteville Housing Authority is looking at buying property to expand its footprint for residents.

FAYETTEVILLE -- The Housing Authority plans to buy a motel across the street from Veterans Health Care System of the Ozarks and convert the rooms into studio apartments.

Members of the board of FHA Development agreed Friday on a contract to buy Hi-Way Inn Motel and Cafe Rue Orleans, which are on the same property at 1140 and 1150 N. College Ave., for $731,000. A budget of an additional $650,000 is set for anticipated renovations to the 24 rooms.

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The total project is estimated at $1.5 million to be paid with a mortgage. Negotiations for financing options with a bank are underway, said Angela Belford, interim Housing Authority director.

FHA Development is a nonprofit entity the Housing Authority formed in 2017 with the purpose of purchasing property. Its board members mirror the Housing Authority Board.

The motel property, which includes the restaurant, is owned by Hari Krupa under the Patel family, which has owned it for decades, according to Washington County property records. Cafe Rue Orleans rents its building.

The restaurant is not part of the plans, Belford said. Rental income from the building would go to pay off the mortgage.

Renovation work is anticipated to come out lower than the $650,000 budgeted, Belford said.

Mike Gilbert, of property management firm Parkside Properties, will be an adviser for the project. Gilbert also is chief operating officer of the Jones Trust philanthropic organization. The motel rooms need to be converted into studio apartments, which involves installing a kitchenette, upgrading the electrical wiring and anything else to get the building up to par, he said.

Board members are hoping to have a mix of public-housing and market-rate tenants in the long term. But first, tenants living at Hillcrest Towers, a Housing Authority-owned property, will move in temporarily.

The Housing Authority was awarded a $3 million federal grant for emergency repairs to the sewer pipes at Hillcrest. The work requires moving groups of 20 tenants at a time. The grant includes about $234,000 to cover the cost of moving residents.

The authority's plan is to move Hillcrest residents to the hotel property and then keep the property after the work at Hillcrest is finished.

Housing Authority Chairwoman Melissa Terry said, if successful, the project could serve as a guiding signal to developers about inclusionary housing.

"Once we've taken care of our critical need, which is the healthy and safe transition of our Hillcrest Tower residents during our renovations, what kind of ratio would we like to see the private market replicate?" she asked.

Belford said rent at the new property would stay affordable to lower- and middle-income tenants.

The project would help increase the stock of one-bedroom units in the city, Belford said. One-bedroom units are in high demand, she said. Typically, people waiting for public housing for a one-bedroom unit wait longer than those seeking a two- or three-bedroom unit, Belford said.

"One of the No. 1 problems our community has is one-bedroom units," she said.

Even if rental income comes strictly from housing vouchers, which would be the lowest income possible, the authority will be able to pay the mortgage, Belford said.

About $20,000 will be needed for preliminary due diligence and survey work. Belford said the Housing Authority could possibly loan the money to the nonprofit development company.

Controversy surrounded the Housing Authority's previous effort to build new units onto another property it owns, Morgan Manor at 324 E. 24th Place. Several city residents criticized the plan to move public housing tenants out of Willow Heights, 10 S. Willow Ave., to Morgan Manor. Willow Heights was to be sold.

The City Council held a heated public meeting on the topic last summer and later some board members resigned. The previous executive director also was fired.

NWA Democrat-Gazette/DAVID GOTTSCHALK A section of the property at 1140 North College Ave. is visible Friday in Fayetteville. The Fayetteville Housing Authority is looking at buying property to expand its footprint for residents.

NW News on 01/05/2019

Print Headline: Housing Authority agrees to buy motel


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