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Lottery opens for 13 affordable apartments in East Providence

EAST PROVIDENCE − Do you want to own a brand new centrally air-conditioned apartment on Taunton Avenue in East Providence, surrounded by shops and cafes?

And what if that apartment only cost $169,900, almost unheard of in the post-pandemic market?

That’s the reality as thirteen new three-story townhomes are completed in a complex on Ivy Street.

The income-restricted units range in price, up to $294,742, with a litany of requirements for potential buyers, and the list of people who have already signed up is long: 227 people.

The Ivy Place apartments are being built by NeighborWorks Blackstone River Valley, a nonprofit housing developer. They should be ready by the fall.

The biggest catch is that all units have an income restriction, ranging in maximum area median income (AMI) from 60% to 100%. More about that below.

Resource Development and Communications Director Meghan Rego said she expects about half of the current list of 227 people to pass the income verification process and make it into the actual lottery.

Applications are open until June 16so that number could still increase.

The property was once a movie theater, said Real Estate Development co-director Bill Lewis, before it was demolished, leaving an empty lot.

Interested? Here is the direct link to sign up for the lottery

How much are the units selling for?

The sales price of the units depends on both the type and the income bracket of the buyer

In total there will be six separate lotteries:

  • a single accessible unit at 80% of the region’s median income ($232,900)
  • four 3-bedroom units at 60% of area median income ($169,900)
  • three 3-bedroom units at 80% of area median income ($232,900)
  • a 3-bedroom unit at 100% of the area median income ($294,742)
  • two 2-bedroom “live/work” units at 80% of area median income ($207,900)
  • two 2-bedroom “live/work” units at 100% of area median income ($263,900)

What do the units look like?

The 13 units are spread across three buildings, two on Ivy Street and one on Taunton Avenue, with all three buildings sharing a rear car park.

The other two buildings, whose exteriors are alternately red, yellow, green, blue and gray, each have four townhouses, with garages on the first floor. All these units have three bedrooms.

East Providence Mayor Roberto DaSilva said the city supported the development, which benefited from an overlay district that reduced the amount of parking required, allowing the project to add more units.

“This is the concept we should apply to all commercial corridors,” he said. ‘We want people who live there to make the city center, the commercial areas, bustling with people, come alive. They took a vacant lot, an eyesore, and are now turning it into a commercial space, housing people who are just starting out.

He hopes other developers will see that East Providence welcomes new development in its commercial corridors and will consider converting the empty lots and vacant buildings into new uses, DaSilva said.

What are living/working units?

There are four units in the dark green Taunton Avenue building.

They are all ‘live/work’ units, with the first floor designed as a dedicated commercial space on Taunton Avenue. On the third floor are the two bedrooms and on the second floor there is a combined kitchen and living room area.

The Taunton Avenue building has a different water main than the other two buildings, with a commercial sprinkler system.

One of the 13 units in the complex is considered accessible and compliant with the Americans with Disabilities Act, and can be accessed by someone with mobility issues or who uses a wheelchair. While the townhouses have all three floors, the only accessible unit has an elevator.

The accessible unit is one of four regular units sold to people with incomes at or below 80% of the area median income, for $232,900.

The elevator cost an estimated $60,000. If the accessible device were sold on the market, Lewis estimated it would cost between $450,000 and $500,000.

What are the requirements for purchasing?

To participate in the lottery and purchase one of the units, potential buyers must:

While the application is “easy,” it does require some documents, including a few pay stubs, a tax return from last year and, for anyone with a part-time job, proof of income from those jobs, Rego said.

Some things that can disqualify buyers are high debt-to-income ratios and low credit scores, below 580 to 620, Lewis said.

The equation for a debt ratio is simple: add up all your monthly debts and divide by gross monthly income. Most lenders will not grant a loan if the debt-to-income ratio is greater than 45%.

The income limits depend on family size and were recently increased after the Department of Housing and Urban Development established new income tables for the 2024 fiscal year. The table below shows the maximum income.

% of AMI 1 person 2 people 3 people 4 people
60% $47,220 $54,000 $60,720 $67,440
80% $62,950 $71,950 $80,950 $89,900
100% $78,680 $89,920 $101,160 $112,400
Fiscal year 2024 median income guidelines by area in East Providence and most other communities

How much would a mortgage cost?

Mortgages currently have interest rates of 7%, below the 20-year high in October 2023 of 7.79%, and well above the sub-3% in 2020.

Here’s how much each monthly mortgage payment would be, assuming no down payment and not including taxes, utilities, homeowners’ association fees, or private mortgage insurance:

  • $169,900: $1,130 one month
  • $207,900: $1,383 one month
  • $232,900: $1,549 one month
  • $263,900: $1,756 one month
  • $294,742: $1,960 one month

The amount of condo fees will be determined by the owners when they first meet, and NeighborWorks will provide seed money for a capital reserve.

A place to call home, not an investment

A key difference between the deed restricted apartments and their market rate counterparts is that the apartments cannot be rented for 30 years and if they are sold, they can only be sold to someone below the income limit at which the owner originally purchased it. .

RI Housing has a calculator that uses a complex formula to calculate how much a unit can sell for, based on current interest rates and the area median income at the time of sale, which increases over time.

While the price will rise over time, it won’t follow the same rapid 60% to 100% price appreciation that the rest of the housing market has seen since the pandemic began.

Rego said people should think of it like putting money in a savings account: It will grow a little each year.

The counterpart in that metaphor is buying a house on the open market, where the money put into the house is much more like putting money into an investment account and investing in the stock market: it could see a wild rise or a steep crash.

How was the project financed?

Although the project had been in the works with NeighborWorks since 2018, costs increased when the pandemic hit. While that was expected, it wasn’t expected to be as high as it is now, with $1.5 million in additional costs. The total project price is $6.3 million, Lewis said.

Proceeds from the sale of the units will also help NeighbourWorks Blackstone River Valley break even, financing approximately 50% of the project.

The recent increase in income limits for fiscal year 2024 has slightly increased the price of the units, a formula calculated by RI Housing. The total price increase was $100,000 for all units, just enough for the nonprofit developer to break even, Rego said. Under the restrictions on average income in the 2023 financial year, they would still be in the red.

Some of the funding for the project came from the East Providence Waterfront Commission, which oversees the money paid by developers in exchange for not putting income-restricted units in projects, such as the Kettle Point project, which costs $1 million to avoid income restrictions being imposed. 23 of his units.

The Waterfront Commission paid $743,000 for the project. State and other local funds were also used to pay for the project.

Thank you to our subscribers who help make this coverage possible. If you are not a subscriber, please consider supporting quality local journalism with a Providence Journal subscription. Here is our latest offering.

Reach reporter Wheeler Cowperthwaite at [email protected] or follow him on Twitter @WheelerReporter

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