Clearwater affordable housing project hits funding roadblock

Blue Sky Communities is requesting the city chip in $2 million to help it build a nine story, 81-unit affordable housing complex.

CLEARWATER — The forecast is becoming gloomy for one of Blue Sky Communities’ housing projects in Clearwater.

The pandemic’s effect on commodities and the supply chain continues to cause financial headaches for developers. The latest project hitting a roadblock is a nine story, 81-unit affordable housing complex.

The $22 million development at 610 Franklin St. appeared to be on track for Blue Sky Communities, a Tampa-based real estate developer of affordable and workforce housing.

It had received a development order from the city in August and was awarded more than $17 million in competitive tax credits for low-income housing projects.

But pandemic-related expenses have stalled that momentum, and now the developer is asking the city to chip in $2 million to bring the project to fruition.

“They’ve been working along to check all the checkboxes in their development agreement,” CRA Director Amanda Thompson told City Council members Oct. 18. “They are $4 million short of what they need to construct due to increase in construction costs because of COVID.”

She added Blue Sky is also looking to apply for $2 million in Penny for Pinellas sales tax revenue that has been designated for housing.

Blue Sky has a contract to purchase the city-owned property for about $2 million, but Thompson said the CRA could also donate the land, which it paid $1.6 million for, to close the funding gap, adding the CRA has also committed $300,000 to the project thus far.

Using state and federal housing funds is also an option, she said.

Despite the setback, Thompson said workforce housing is still likely the best option for the property, which has attracted little interest.

“This is a tough site,” she said. “It’s next to the police station and it’s in between a storage facility.”

The site may not be good for other uses, but council member Kathleen Beckman said its proximity to transit options, such as the Pinellas Trail, is among the reasons it’s perfect for housing.

“I’ve seen the proposal and it looks great,” she said. “I think it’s a phenomenal location for affordable housing and they put a lot of effort into it.”

Mayor Frank Hibbard disagreed, questioning whether the project was the best use for $2 million in the CRA.

“I am not going to support the $2 million,” he said. “I thought this was a bad project in the first place, but I was willing to go with it as long as the developer got the monies. But now that this additional ask has arisen, it is not something I’m going to be supporting.”

He said he’d rather invest the money in larger housing projects that would yield a greater benefit.

Dealing with Scientology

Another reason he is against moving forward is that he considers it a “strategic location” in an effort to secure more downtown parcels.

When pressed by Beckman what exactly he meant by that, Hibbard added a twist to the discussion.

“I think this is a site someday that might be deal-worthy of trading with the Church of Scientology that I want to get more strategic parcels from than this,” he said. “So, I’ll just lay it right out there on the table. But if you’re not thinking about that then you should be.”

According to Tampa Bay Times reports, the church in 2019 had expressed interest in building a community cultural center on the property, which was the former Fire Station 45. To the west of the property is the church’s 300,000-square-foot Flag Building.

The city rebuffed the church and later went with Blue Sky’s proposal.

Since that time, it’s been learned that parishioners of the church have made numerous purchases downtown since 2017, and Hibbard said he would like to swap the property for others with more potential for redevelopment and can bring more life to downtown.

Council member David Allbritton, however, said he’s no longer interested in waiting on the church to make its intentions known.

“I’m not going to worry about what their intentions are,” he said. “We need to be worrying about what we’re going to do and how we’re going to make downtown vibrant moving forward with what we have.”

Thompson, the CRA director, said that’s exactly what she’s doing.

“I don’t wake up every day and think like how can I maneuver and combat with the Church of Scientology,” she said. “We’re laser focused on implementing our plan, whoever is involved. And let that message rest where it lay. We’re moving forward with the community’s vision.”

Shawn Wilson, chief executive of Blue Sky Communities, said his firm’s project fits that vision.

It may be an affordable housing complex, he said, but it will also activate the downtown.

“We think our folks are going to bring vibrancy,” he said. “These are people who probably live in the city of Clearwater already and their rent is going to go down. So instead of that money going to an absentee landlord, it’s going to go in their pocket and they’re going to spend it.”

The majority of the council leaned in favor of the project, but Hibbard wanted to make sure staff did more research first.

He asked Thompson to supply a comparison between projects in the rest of CRA and the contribution the city is making on a per-unit basis.

“If you’re not making that comparison, you’re not doing your homework,” he said. “Just to say we’re just going to do a project regardless of the cost I think is foolishness.”