Affiliated Development won city approval of its subsidized plan to develop The Tropic, an 18-story apartment building with rent-controlled “workforce” units in downtown Hollywood.
The 208-unit, mixed-income apartment building at 1744 and 1753 Federal Highway will have 50 percent of its units reserved for such middle-income tenants as police officers, nurses and teachers.
City commissioners on Wednesday directed city staff to negotiate a funding commitment with Affiliated that provides up to $9.4 million of public financial incentives for the development of The Tropic.
The workforce units will be reserved for tenants with income up to 120 percent of the area median. By deed restriction for 15 years, a quarter of the apartments would be reserved for tenants earning up to 100 percent of area median income, and another quarter for tenants earning up to 120 percent of area median income.
“On average, renters [with workforce units] will save $300 to $600 per month,” compared to the rent for market-rate units at The Tropic, said Jeff Burns, founder and CEO of Fort Lauderdale-based Affiliated Development.
Construction could start by early 2022, Burns said.
Affiliated reduced the planned portion of workforce units at The Tropic to half from two-thirds to reduce the size of the subsidy the company sought from the Hollywood Community Redevelopment Agency, Burns said. Concern about the size of the CRA contribution led city staff to pull a discussion of the funding commitment to Affiliated from a city commission meeting agenda on Feb. 17.
After that, “we were able to move that from a $4 million ask from the CRA to a $1.5 million ask,” Burns said. “I think a few of the commissioners and the mayor were struggling with that [$4 million] amount.”
The CRA would be required to make the $1.5 million payment to Affiliated when construction of The Tropic is 50 percent completed.
The public funding commitment requires Affiliated to finish construction of The Tropic within 36 months of the issuance of building permits. The city will hold a second mortgage on the property and conceivably could foreclose if Affiliated defaults on terms of the commitment.
The funding will also include a $3.5 million forgivable loan from the city government, waivers of as much as $2 million of municipal fees generated by development of The Tropic, and up to $2.4 million of property tax rebates as the property value of the development site increases.
The $3.5 million city loan will still require approval from Broward County. The principal amount of the loan would be forgiven when construction of The Tropic is completed. “We still have one more step to move forward with the project. We’re going to need a signature from the county administrator,” Burns said.
Financing for The Tropic also will come from a $125 million real estate investment fund that Affiliated has created with money raised from public employee pension funds, he said.
Affiliated has developed subsidized multifamily projects with workforce units in other parts of South Florida, including in Lake Worth, West Palm Beach, and Fort Lauderdale.