Nashville developer, Mayor Barry pursue lower-price apartments on 12th Avenue South
Elmington Capital Group is poised to become just the latest developer to — you guessed it — build apartments in Nashville. You might expect the forthcoming project at 12th Avenue South to feature lofty 10-foot-high ceilings, granite countertops and stainless-steel appliances.
Here’s the catch: They’ll only be rented to people earning at or below the area’s median income.
Elmington is in talks with Mayor Megan Barry’s administration to build a 110-unit apartment complex on land Metro owns across from the new Midtown Hills Police Precinct. The site sits in one of the hottest urban neighborhoods in Nashville, within eyesight of Belmont University, located on a bus line and maybe two miles from the heart of downtown.
Barry heralded the potential partnership as one way to tackle one of the thorniest issues confronting Nashville during its “It City” boom: the surging cost of housing, particularly in the city center where a lot of jobs are concentrated. Metro continues debating how to incentivize developers to create more housing units there that are priced below market rates — a pressing worry, for example, among hotel and restaurant owners who employ the types of workers who are being pushed further from their jobs by record-high (and still escalating) rents in the city. Within the business community, the debate has sparked warnings of ” a self-inflicted recession” and equally pointed calls for developers to accept lower profit margins, in certain cases, for the greater good of the city.
“The project Elmington Capital Group is doing across the street is going to be a model of what I think we can achieve … affordability within a private-development context,” Barry said at an April 11 event (in which she announced another dose of affordable-housing news). Barry said she will aim to strike similar deals with other examples of surplus land that Metro owns. She cited teachers, firefighters, musicians, artists and construction workers as among those she hopes to help by expanding the stock of this type of housing.
“I’m committed to working on incentives for affordable and workforce housing,” Barry said. “My hope is that we can get all the players around the table to talk through what works economically, what the market can bear and what developers need to make in order for us to have affordable housing.”
You probably know Elmington Capital for, well, anything but this type of project. The company just sold its high-profile retail strip on Demonbreun Street, at the Music Row roundabout, for $33.5 million — double what the company paid three years ago. Elmington also is the new owner of prime Hillsboro Village retail buildings, and is renovating the office space atop downtown’s Renaissance Hotel.
But affordable housing?
“It’s a less public side of our business, but it’s the biggest part of our business,” said Hunter Nelson, a senior vice president at Elmington who attended Barry’s announcement. Elmington manages close to 20,000 residential units across the country, and Nelson estimates just more than half qualify as affordable or workforce housing.
Elmington owns a few examples of this in the Nashville area, including the $10 million it spent in 2014 converting a 322-unit apartment community in Antioch into affordable housing. Lately, the epic surge in land prices has blocked Elmington from new construction in Nashville. In Memphis, meanwhile, Elmington has built 304 affordable-housing apartments in the past three years with those features I mentioned at the start of this story. Elmington also sees the full scope of Nashville’s escalating rent: The company is handling leases for a few new apartment complexes in town, including a pair in Midtown by developer Tony Giarratana.
“Obviously, this is a great piece of property and a highly visible one. It’s one we wanted to be involved with,” Nelson said.
Let’s get our terms straight. In Middle Tennessee, the median annual household income is $68,500. According to state law, “affordable” means units rented by people making 60 percent or less of that benchmark. Elmington’s apartments would be “workforce” housing, which means renters must earn no less than 80 percent of that figure. Also, housing costs must consume no more than 30 percent of that household’s income.
That means rent at Elmington’s complex would start at $900 a month and top out at $1,200 or $1,300. For example, a two-person household making 80 percent of the median income would be charged a maximum of $1,096 in monthly rent.
The terms of the deal aren’t cemented, and would require approval from Metro Council. Nelson said the talks began a few months ago as an intermediary connected the company with the mayor’s office to share its experiences developing affordable and workforce housing.
“We know it’s going to be an extreme point of interest for this administration, and we’re just happy to be part of the conversation,” Nelson said. “We’re still working out what the incentives are and what the agreement is with the mayor’s office.”