Thanks to Katie Granju at KnoxvilleTalks for this post. It is possible that this dialog might turn out to be helpful, too, although…well. We’ll see.
The old 5th Avenue Motel on the corner of 5th & Broadway has been a rough spot for a long time. You can find all kinds of stuff about it in the press, online, and on the tips of the tongues of people who are interested in the renascence of the Broadway and 5th corridor.
A lot of that info is recent. Some of the most germane is below. This post is related to cost and purpose: what this project will cost, who’ll pay for it, and what it’ll do. If you’re interested, you may have more questions. If so, comments are welcome. So are phone calls. As long as they’re not in the middle of the night.
Cost: well below $200/sf.
There’s been a lot of speculation about the cost of this project. It’s definitely not cheap. Minvilla is an expensive project because it’s historic rehab. When early estimates hit the papers and the pixelverse, they were very low. The former developer made the best estimate that he could with the 
information he had at the time. We now have much better information (completed construction documents, for one thing) and a firm estimate. It is much higher than the preliminary one to which people indexed their expectations, but it is also realistic. Based on revised cost estimates and post-rehab square footage, the cost is well below $200 per square foot.
Where will the money come from?
Corporate investors will supply approximately 75% of this project’s funding. The investors who purchase the equity generated by historic tax credits and low-income housing tax credits, the bank issuing the mortgage, the Federal Home Loan Bank, all of those are ultimate sources of funding for this project and others like it. These investors see this project as a good investment in our community, and their dollars could come to Knoxville from anywhere.
Another 25% of the funding for Minvilla will be public funds set aside by the Federal Government for the purpose of making housing available to those who otherwise couldn’t afford it. Other dollars are set aside by the Feds to be disbursed by local entities like the City and County, both of which are committed to ending chronic homelessness.
Why not do this somewhere else? Aren’t developers interested in developing a market rate project at Minvilla?
Nobody involved with this project is seriously entertaining notions of developing some other permanent supportive housing project in lieu of Minvilla or of selling the property to a private developer. Any professional developer who considers purchasing this property is probably going to be aware that prior to its transfer to Volunteer Ministry Center, at least two different developers tried to make a go of something there and couldn’t make the numbers work. That was in a much stronger real estate market with much lower construction costs than today’s. If Minvilla were such an attractive property to developers, VMC would not own it right now.
Too, Minvilla has access to low-income housing equity to the tune of about $2 million. That’s around a third of this project’s financing. That money goes away if you do a market rate project there.
Expansion of what?
Minvilla does expand the footprint of VMC in 5th & Broadway. That is a technical fact. But Minvilla’s not a business-as-usual expansion of homeless services in the mission district. And that is the truth.
Minvilla is permanent supportive housing, which is the proven, effective approach that we will use to end chronic homelessness in Knoxville. Minvilla’s not going to be a shelter or transitional housing or a feeding program or a street ministry or a sidewalk-strangling swarm of panhandlers. Instead, it’s going to be an apartment complex that will house rent-paying residents.
All of Minvilla’s residents will have some things in common: relationship with a case manager, some form of income, accountability, healthier relationships. The most significant of those things they’ll have in common? They won’t be homeless anymore. They’ll be like this guy.
Gary Waddell is the kind of resident who’ll be at Minvilla. He’s one reason that it’s fair and true to say that Minvilla does not represent an expansion of service to homeless people. Minvilla is about ending homelessness.