Save the Wheeler Arts Community

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To IHCDA and whomever it may concern:

 

On Tuesday, June 26th 2018, Southeast Neighborhood Development Corp (SEND) is scheduled to close on a real estate transaction, selling the Wheeler Community Arts Center to Core Redevelopment, which plans to convert the affordable housing units to market-rate apartments. In order to preserve some of final remaining affordable housing opportunities in the Fountain Square neighborhood, we urge you to do everything within your power to intercede and postpone this closing until the details listed below can be further reviewed.

 

1. SEND failed to mention its intention to monetize the remaining equity in the real estate by selling the building. Throughout the request they insist that their intent is to “achieve much-needed financial stability while continuing to provide affordable housing to Indianapolis residents.”
2. As a result of the RFP that SEND released appx 6 months after IHCDA granted the affordability exemption, SEND received multiple offers that did manage to preserve the Wheeler’s affordability, however, the board opted to sell to a market-rate developer as it netted the organization more cash than the non-market-rate offers.
3. SEND’s request claimed “the economic viability of the property is poor and cannot be improved (or even maintained) under its current rental structure.” It was represented to the board of directors by staff and board leadership that the property had a NOI of $11,131 in 2017. However, upon further investigation, it was found that the property’s current commercial lease income, totaling nearly $50,000 annually, were excluded from this calculation.
4. Furthermore, the assertions that the economic viability“cannot be improved” and that the property “has generally operated above 90% occupancy” are inaccurate. The property currently has an additional 15,000sf of monetizable commercial space that it is intentionally keeping vacant, at the request of the purchaser, in order to make the sale and redevelopment of the property less complicated. Additionally, SEND presently pays no rent for its office space located at the property. The value of this lease is at least $20,000 annually, which is the amount SEND offered to pay the purchaser to continue leasing its office space after the building closing. This figure ought to be included in the NOI calculation in order establish an accurate and complete assessment of financial viability.
5. SEND has made the argument that they are not required to include the commercial income in its NOI calculation. However, they still include all the operating expenses from this space, which is a large reason the NOI is so low in the first place
6. I do not disagree with the assessment that the Wheeler Campus has $312,200 in deferred maintenance needs. However, in making the case for non-viability to the SEND board of directors, staff and board leadership inflated this number to over $1,900,000, which I believe is a grossly misleading exaggeration.
7. SEND claims that “it is very unlikely that the Owner will be able to secure a mortgage loan that is sufficient to address critical repairs and deferred maintenance as required by a new lender. However, SEND never even tried. Also, the idea that it would be prohibitively difficult to find a lender willing to refinance a nearly debt-free, 70,000sf building in Fountain Square is absurd. Most if not all of the respondents to the RFP had multi-faceted financing packages that, in addition to traditional mortgage financing, utilized funding from a vast array of sources, including but not limited to HUD funds, grants from INHP and CICF, LIHTC dollars, etc.
8. The claim that are market-rate rents are “approximately the same as current 60% AMI rents” is wildly inaccurate. At the time this statement was made, the 60% AMI rents at the Wheeler were consistently rented for appx $634/ mo, and the building’s 2 market-rate units, which were similar in size and amenities, rented for $1015 and $1256, respectively.
9. In its closing statement, SEND concludes that “by transitioning the project to a market-rate community, the project can be stabilized, refinanced and maintained so that it can continue to provide high-quality, affordable housing for residents of the community, all without adverse impact on the affordable housing market.” Common sense along with the information contained in this appeal establish more than sufficient basis for our claim that this statement is blatantly false and woefully misleading.
 

All of the facts and numbers stated in this appeal were pulled directly from SEND’s cashflow statements, rent rolls, and supplemental documents that are a matter of public record. We are happy to provide assistance in guiding you through the piles of confusing paperwork

 

Sincerely,

Concerned neighbors and advocates for affordable housing and equitable transit-oriented development



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