Avenue on 34th, the affordable housing project planned for the site of the former Doyle’s Restaurant in Oak Forest, recently received a significant chunk of the funding it needs to come to fruition.
The Houston City Council last week unanimously passed an ordinance that will provide a $9.09 million loan to Avenue CDC, a nonprofit housing developer based in Houston, using Hurricane Harvey Community Development Block Grant Disaster Recovery funds. That money was awarded by the United States Department of Housing and Urban Development through the Texas General Land Office.
The council agenda item for the Sept. 9 meeting describes Avenue on 34th, to be located at 2136 W. 34th St., as a “70-unit, garden-style affordable rental development targeted for families.” The complex will feature one-, two- and three-bedroom units serving low- to moderate-income households at 30, 50, 60 and 80 percent of the area median income.
“We are thankful to the Houston City Council for approving vitally needed funding for the development of Avenue on 34th,” Avenue CDC said in a statement provided to The Leader. “… We are thrilled to advance the development process for this affordable workforce housing project and look forward to creating a valuable asset that benefits families and the community as a whole.”
Avenue CDC first announced its plan to buy the Doyle’s property and turn it into affordable housing in February 2019, which prompted a mixed reaction from members of the Oak Forest community. The developer said a week later that it was pausing its plans for the project, but community engagement continued and the pending sale has proceeded.
Doyle’s, a popular Italian-American restaurant that opened in 1954, closed in February of this year. Avenue CDC said it anticipates closing on the purchase of the property later this month, with “on-site activity beginning in October” and construction expected to be completed in 2022.
According to the council agenda item, the loan from the city will cover roughly half the cost to develop Avenue on 34th, which has an estimated total of nearly $18.2 million. Included in that sum are a conventional loan exceeding $6 million and land acquisition costs of more than $3.8 million.
The developer said it also is receiving 4 percent federal housing tax credits awarded through the Texas Department of Housing and Community Affairs.
“Avenue on 34th will provide a valuable asset to both the Oak Forest area and Houston at large that will contribute to resiliency and the long-term recovery efforts after Harvey,” read the council agenda item. “This development will bring new, quality, energy-efficient, affordable housing inventory built to modern drainage and building standards, located in a non-flooding area of a thriving neighborhood that did suffer flood damage to a portion of its inventory located close to White Oak Bayou.”
Per the agreement outlined in the council agenda item, the loan and affordability period will be 40 years, commencing when construction is completed, with the outstanding principal balance of the note accruing at 1 percent interest. Avenue CDC will “pay an annual installment equal to the lesser of 1 percent annually on the outstanding balance of the loan plus accrued unpaid interest, if any, or 50 percent of net cash flow, provided the default rate interest of 10 percent per annum will accrue in the event of a default.”
The agreement also says any unpaid principal balance and interest will be forgiven if the loan is not in default at the end of the 40-year term.
“Even before the pandemic, approximately 28 percent of Harris County working residents were struggling to make ends meets,” Avenue CDC said. “The financial hardship caused by COVID-19 has made Houston’s need for safe, affordable housing even more urgent. Our community cannot achieve its full potential unless working families have safe, affordable places to live.”