Section 8 in MainStrasse brings howls

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A plan to rehab 13 properties in Covington's MainStrasse Village has sparked a debate about low-income housing and its effect on development.

The $9.3 million project has drawn the ire of many in the neighborhood. They're concerned it will lock a large chunk of properties into low-income housing for decades.

When nonprofit women's shelter Welcome House and developer Model Group went public in March that they would rehab the buildings, they described it as a project that would take problem properties and give them new life.

Residents, however, don't seem as rosy about the project in an area known for its historic buildings and vibrant nightlife.

"My fear is that it's going to keep the neighborhood exactly as it is," said Ron Padgett, who lives on Greer Avenue, where several of the buildings to be rehabbed are located. "It is a deterrent to any private investment. Why develop a property that is next to Section 8?"

The Kentucky Housing Corp. in March approved federal low-income housing tax credits for seven of the properties. An application will be made for the remaining six later in the year, possibly in December.

The tax credits require the properties remain low-income rental units for 30 years. That restriction has rankled many in MainStrasse. It's not that they oppose low-income housing. It's that they oppose it for so long, said Marisa McNee, who is rehabbing a building on Pike Street in MainStrasse.

"To hear that they're going to get locked in for 30 years takes the wind out of your sails," McNee said. "I can deal with five years."

Developers defend the project

The developers defended their project, which will have a total of about 50 rental units among the 13 buildings. They say it will improve the neighborhood since many of the buildings had fallen into disrepair. The buildings previously all belonged to Dudley Properties, which city officials said accrued many code violations and had been a thorn in the side of the city for a while.

The tax credits set aside the properties for low-income for a long period so gentrification won't push out poor residents, said Bobby Maly, chief operating officer of the Model Group. He doesn't believe that's a bad thing for the neighborhood.

"I think in urban areas in Covington and Over-the-Rhine and other cities, places that need revitalization need all the tools in a kit, high-quality and affordable," Maly said.

Welcome House wants to use the properties to provide stable housing for low-income tenants, said Linda Young, executive director. The group hopes to attract tenants who make between minimum wage and $13 an hour, she said.

"Our plan is to completely rehab them," Young said. "We will maintain them and will also provide services for these apartments. We're just as invested in the community as anyone else."

That doesn't, however, allay the fears of Emily Wolff.

Wolff and her husband Paul Weckman have a lot invested in MainStrasse. They own Otto's restaurant and are opening their second restaurant, Frida, down the road this year. They also own other properties in the neighborhood.

Wolff said the Welcome House/Model Group project shows the need for better city planning.

"It's a concern that one property is tied up for 30 years where there will be no change," Wolff said. "We're seeing change in the city; 30 years is a long time. That's a big setback."

Property owners wanted more notice

Some MainStrasse residents and property owners believe they should have been given more notice about the plans so they could have given input. It didn't become public knowledge until tax credits were already approved in March and a done deal, McNee and others said. Now they fear the prevalence of low-income housing will discourage development.

Mayor Sherry Carran said she first heard about the project in October and November. She signed off on a letter of support in December for the project to get the tax credits, with the idea that it would take problem properties and bring them back into compliance. She didn't know the tax credits would lock the properties in for 30 years.

"At that time, the properties they were buying were problem properties," Carran said. "I thought this had to be an improvement."

But even if she didn't sign the letter of support, it most likely wouldn't have stopped the state from approving the low-income housing tax credits, according to state officials with the Kentucky Housing Corp. Approval for tax credits doesn't require the signature of the mayor or local elected officials, said the agency's Nicole Morris.

The law requires notification of the city in the area. The document Carran signed also asked for the signatures of the Kenton County judge-executive, state representative and state senator, but the state waived the need to get the additional signatures and approved the application, Carran said.

Unclear whether it can be stopped

MainStrasse residents want the city of Covington to fight the tax credits on the basis that the developer didn't give adequate notification. But many have doubts about whether that will work.

Carran said she shares some of the MainStrasse residents' concerns about locking the properties in for 30 years to low-income housing, but doesn't know if the city has much power to stop it.

"They didn't need our approval," Carran said. "Those are fair housing laws. We can't go in and do what some people are hoping we could."

Some city commissioners share the residents' concerns but are uncertain about what they can do to stop it. If the city gets a chance to give input on the next batch of federal low-income housing tax credits for the project, some commissioners seemed undecided on whether they would support the application.

"I'm not going to prejudge this," said City Commissioner Chuck Eilerman. "If this comes back to us, I would like to look at it more carefully if there's an impact on the community and also helping the purpose of Welcome House, which over 35 years has proven to be very reliable and responsibly handled."

McNee said the residents will fight the next application for tax credits on the final phase of properties for the project, which are 17 units among six properties.

"The city's position is they're not sure there's anything they can do," McNee said. "My position is there's a reason the Kentucky Housing Corporation asks for you to be notified. The least you can do is mount a defense."

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