'Who all can afford that?': High rent for 239 apartments concerns Murfreesboro leader
Proposed Keystone development monthly rents of $1,900 to $2,200 for 239 apartments in downtown Murfreesboro exceed the local average.
The high rent proposal for apartments in two four-story buildings by Linebaugh Library and Murfreesboro City Hall worries elected Councilwoman Madelyn Scales Harris.
"Who all can afford that?" said Harris, who's in her 14th year on the seven-member Murfreesboro City Council. "It seems like we’re going to squeeze out a lot of people because they aren’t going to afford to live here."
The majority of the council, however, recently supported providing the four-building Keystone project that includes condos and a hotel from Brentwood-based HRP Residential development company with an up to $26 million property tax rebate agreement with annual payments spread out for up to 20 years.
The developers plan for the $175 million project to include building the following:
239 apartments in two four-story buildings by Linebaugh Library;
80 to 100 residential condos in a four- or five-story building on Broad Street;
boutique hotel with 80 to 150 rooms at southeast corner of Broad and Vine streets;
ground floor retail spaces that total 30,000 to 40,000 square feet;
and 780 parking spaces, including 715 in two garages.
Keystone developers also recently won support for the up to $26 million tax incremental financing (TIF) agreement with the Rutherford County Industrial Development Board (IDB). The deal provides annual real estate property tax rebates for up to 20 years or $26 million to help pay for the parking garages, sidewalks and other infrastructure on the project land.
The developers will be buying 7 acres from the city for $5 million for the Keystone project. The property has served as city offices for the relocating Fire Rescue and Water Resources administrations, as well as the former Murfreesboro Police Department Headquarters.
The Keystone developers hope to start construction in 2025 and complete the work by 2028, said Matt Taylor, a project civil engineer who's a vice president with Murfreesboro-based Site Engineering Consultants (SEC).
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Developers pledge discounted rates for 12 apartments, 4 to 5 condos
The Keystone developers have responded to affordable housing concerns by pledging that 5% of the 239 apartments will offer 30% discounts to monthly rents.
Those eligible for these 12 apartments through FHA Hometown Heroes financing assistance would be firefighters, police officers and teachers, the developers have told council members.
The developers also promise that 5% of the condos, which would be four or five dwellings, will include a 20% discounted price for eligible FHA Hometown Heroes to buy.
In addition to telling city leaders about reduced rents and condo prices for those eligible, the developers have adjusted plans in response to concerns from the council in 2022 about the number apartments.
The current plan from the developers decreased apartments from 340 to 239 and increased condos from 25 to 80 to 100.
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Keystone rents will be higher than Medical Center Parkway apartments
The Keystone developers expect apartment rents to range from $1,900 for one-bedroom to $2,200 for two-bedrooms.
The Keystone project is similar in design and rent to other urban developments in downtown Knoxville with apartments offering walkable places to live near commercial spaces with restaurants, coffee shops and other businesses, said Ross Bradley, vice president of development for Murfreesboro-based TDK.
"It's very appealing," said Bradley, whose TDK company is unaffiliated with the Keystone project.
The Keystone rents will be higher than what the current "Class A" apartments are going for in Murfreesboro's Medical Center Parkway area with an average of $1,695, based on data from CoStar, Bradley said.
Part of the higher expected rent for the Keystone project is to help pay for the expensive costs to build the parking garages, said Bradley, whose company has developed about 1,200 apartments in Murfreesboro and still owns about 800.
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Bradley: Rents on rise because of lack of supply
The occupancy rate of apartments at this time in Murfreesboro is 95%, which is high, said Bradley, adding that there is a concern about a lack of supply.
The current economic conditions make financing apartment projects more challenging to have more units available, Bradley said.
"I think we need more units to continue affordability of housing," Bradley said. "I know most people when they hear apartments the first thing they think of is traffic and congestion and overcrowding. And those are all valid concerns that we need to address. But at the same time, we need to continue to manage our housing inventories, so we don't get a supply imbalance, which could cause the cost of housing to become extremely unaffordable."
Part of why cities are building downtown apartments is to provide workforce housing, such as the 9,541 units under construction in Nashville, Bradley said.
Downtown Nashville's current average rent is $2,100 with a vacancy rate of 22%. That's higher than than the average rent of $1,744 in the Antioch area on the southeast side of Nashville with a 32% vacancy rate.
In Smyrna, the town has 325 units under construction with an average monthly rent of $1,700 and a 13% vacancy rate, Bradley said.
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Entry level teachers may have hard time affording Keystone apartments
A 30% reduction in monthly rent for the Keystone development would bring a one-bedroom priced at $1,900 down to $1,330 and two-bedroom priced at $2,200 down to $1,540.
Those reduced prices of the proposed rents for 12 of the 239 apartments expected to be ready by 2028 may be affordable for teachers after five years of pay raises.
Any monthly rent of $1,330 today, however, could be challenging for an entry level Rutherford County Schools teacher with a bachelor's degree. The annual salary is nearly $47,177, and that comes to about $3,932 monthly. Financial advisors recommend rent not exceed 30% of monthly income, which would be about $1,179 for a county entry level teacher and falls below the proposed discounted rent price for the Keystone project.
The same affordable rent principle applies to an entry level annual pay of a teacher for Murfreesboro City Schools at $48,000 with a bachelor's degree. That's $4,000 per month, and 30% of that is $1,200, which also is below the $1,330 the discounted rent for the proposed 12 Keystone apartments out of 239.
Both local school districts have campuses within a mile of the proposed Keystone project by Murfreesboro City Hall: the city's Bradley Academy; and the county's McFadden School of Excellence, Central Magnet School and Holloway High School.
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Entry level police officers could afford single-bedroom Keystone apartment at discounted rate
Entry level Murfreesboro firefighters make nearly $47,959 annually, which is slightly less than the city's first-year teachers with a bachelor's degree.
An entry level Murfreesboro police officer makes nearly $56,485 annually or about $4,707 monthly.
About 30% of a police officer's monthly base pay would be about $1,412, so that would fall within what would be considered enough to afford a $1,330 rent that's at the proposed discounted Keystone price for a one-bedroom apartment.
A police officer at entry level pay, however, would be below what financial experts would recommend to afford a two-bedroom apartment as a single occupant at a discounted monthly rent at the Keystone project of $1,540.
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More condos may help with prices, real estate broker says
The Keystone project plan for 80 to 100 condos may be beneficial to condo buyers looking for more affordable options, said Joe Hafner, a Middle Tennessee real estate broker with an office in Murfreesboro.
"That’s going to put pressure on prices," Hafner said. "If we increase the inventory, that’s going to help with the cost of everything. We still have more buyers than sellers."
The median sales price on condos and town homes in July in the Murfreesboro was at $328,650, which decreased by 3.35% from July 2022, Hafner said.
When the housing market slows down, condos tend to take longer to sell and take a price hit more than single-family homes, Hafner said.
Many first-time buyers wanting single-family detached houses, however, are purchasing more affordable homes farther from Nashville and the surrounding suburbs. This includes people driving 30 to 40 minutes south of Murfreesboro to buy houses in Shelbyville with a median sales price of $299,900 in the first half of 2023, "one of the few places where it was under $300,000," Hafner said.
Others have even driven an hour southeast of Murfreesboro to buy more affordable homes in McMinnville with a median sales price at $249,900 the first half of this year, Hafner said.
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Mayor says downtown landlords oppose competition
The Keystone project's $26 million tax abatement deal won support from Mayor Shane McFarland, Vice Mayor Bill Shacklett and fellow council members Kirt Wade and Jami Averwater.
McFarland mentioned that the city will get tax dollars from the Keystone property that has served as city government offices.
"We're getting zero right now," said McFarland, adding that he'd like to see downtown Murfreesboro have a similar vibe as Knoxville and Chattanooga in attracting young professionals who graduated from college and retirees. "We don't have that."
The mayor contends the Keystone project provides a vision for better housing in the downtown Murfreesboro area than what landlords are offering in 50-year-old rental houses that are not well maintained.
"They don't want competition," McFarland said.
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'The project totally changes the feel and culture of our downtown'
Fellow council members Shawn Wright and Austin Maxwell opposed the Keystone tax incentive agreement because of the plan for apartments.
"We’re giving a tax rebate to basically build apartments," Maxwell said after the meeting. "We can call it a parking garage all day. But in the end, they (developers) need the tax rebate to support the project and the building of apartments."
Murfreesboro City Manager Craig Tindall responded by saying the Keystone development should be viewed as a mixed-use residential and commercial project. The development may not occur without the incentive, he said.
"There's a strong demand for apartments," Tindall said. "We want a higher density."
Wright and Maxwell said they support the proposed condos and hotel, but worry about a policy that could attract hundreds of urban apartments to the downtown area.
"The mix isn't right," Wright said. "I think the project totally changes the feel and culture of our downtown."
Although Wright acknowledged the need of more housing and vibrancy in downtown, he said he'd rather the city pursue a project that retains the small-town identity.
"We can be Murfreesboro," Wright said. "Let other cities compare to us, not us compare to them."
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Keystone developers expected to realign Broad St. intersection
Councilwoman Harris was unable to attend the Aug. 31 meeting. Harris after the meeting said she has concerns about the Keystone project and would rather the city focus more on other priorities.
"Let’s see what we could do with the homeless and affordable housing," Harris said.
Harris also said she's worried about the impact that the Keystone project will have on the congested traffic on Broad Street, which is part of U.S. Highway 41.
Part of the city plan is to reimburse the Keystone developers for realigning of the Broad and Vine intersection where the hotel is proposed with Front Street on the other side of Broad. The road improvement plan includes adding a traffic signal.
The city also plans to build a pedestrian bridge over Broad Street by the Church Street intersection that's near the proposed Keystone project. The city won a $1.4 million grant from the Tennessee Department of Transportation to help fund the design and construction costs of the pedestrian bridge.
The bridge will lead pedestrians to the city's project to daylight Town Creek, which has flowed through underground pipes for decades. The project will include trails along Town Creek that leads northwest to nearby Cannonsburgh Village, a city historic parks and recreation property on Front Street.
Traffic improvement plan: Safer Broad Street intersection sought in realignment of Vine & Front in Murfreesboro
IDB unanimous in backing $26 million tax rebate for Keystone project
The up to $26 million TIF tax rebate deal for the Keystone project had strong support from a unanimous IDB, which includes Tara MacDougall, the chief executive officer of Discovery Center at Murfreesboro Spring. The center provides hands-on educational opportunities for children and families in a location near the proposed Keystone development.
"I am personally beyond thrilled," MacDougall said.
IDB chairman Bill Jones agreed.
"I think it's a tremendous benefit to the community to have this mixed use development in downtown Murfreesboro," Jones said.
The TIF will help pay for the expected $48.6 million infrastructure costs for the Keystone development, project architect Bart Kline told the IDB.
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City expects to keep $450K in annual revenues from Keystone project
The Keystone project is expected to produce more than $531,000 in city property tax per year with the government allocating $435,000 to the TIF, according to an Aug. 31 agenda report to the city council from Assistant City Manager Sam Huddleston.
The city will receive $450,349 annually in estimated direct and indirect revenue, Huddleston reported.
The Murfreesboro government will collect about $108,260 annually from the indirect and shared property taxes paid.
The annual revenues also will include an estimated $155,589 from restaurants and retail sales taxes, and the proposed hotel should provide the city with an additional $186,500 from sales and lodging taxes, the report said.
Reach reporter Scott Broden with news tips or questions by emailing him at sbroden@dnj.com. Follow his tweets on the X social media platform @ScottBroden. To support his work with The Daily News Journal, sign up for a digital subscription.
Facts about Keystone project
What is Keystone project: Proposed mixed commercial and residential use development for downtown Murfreesboro
Who's building Keystone: HRP Residential development company in Brentwood
Where will Keystone project be built: around Murfreesboro City Hall and Linebaugh Library by Broad, Church and Vine streets
Acres from Murfreesboro government for Keystone project: 7
Sale price for the city property to Keystone developers: $5 million
How many buildings in plan: 4 for apartments, condos and hotel
How many apartments: 239 apartments in two four-story buildings
How many residential condos: 80 to 100 in one four- or five-story building
How many rooms for boutique hotel: 80 to 150
Retail square feet on bottom floors of Keystone buildings: 30,000 to 40,000
How many parking spaces: 780, including 715 in two garages
Estimated investment for project: $175 million
Estimated cost by Keystone developers to build parking garages and other on-site infrastructure: $48.6 million
Tax increment finance incentive for developers to help pay for parking garages, sidewalks, other on-site infrastructure: up to $26 million or 20 years of annual tax rebate payments from Murfreesboro and Rutherford County governments
Estimated annual property tax revenue collected by city on completed Keystone project: $108,260
Estimated annual sales taxes collected by city from restaurants and retail at Keystone project: $155,589
Estimated annual sales and lodging taxes collected by city from boutique hotel: $186,500
Total estimated annual city revenues expected for city from Keystone project: $450,349
Source: Murfreesboro Assistant City Manager Sam Huddleston
This article originally appeared on Murfreesboro Daily News Journal: High rent for 239 Keystone apartments concerns Murfreesboro leader
