Developer requests loan from city for Carnation Building rehabilitation
Sep. 21—TUPELO — A Madison-based investor hopes to ride what he calls the "silver tsunami" by converting the former Carnation Milk building into affordable housing for senior citizens.
Developer Steve Nail, president of Madison-based investment firm Intervest Corp., has requested a $500,000 loan from the Tupelo City Council for the project. Though city attorney Ben Logan said he was presented with a loan with no interest based upon a promissory note he provided to the Daily Journal, Nail told the Daily Journal the loan proposal has a 1% interest.
Nail said he plans to turn the historic building, which he purchased several years ago, into 33 apartment units specifically for senior citizens over 62 years old who earn approximately 60% of the area's median income.
"The city of Tupelo has a pot of money that is viable, and I think it could be used very well for affordable housing," he said.
Developer outlines project
Nail said the need for affordable housing does not just affect first-time home buyers, noting that there are many people of retirement age looking to live somewhere with no upkeep.
Nail called the demographic the "biggest housing crisis nobody is listening to."
"It sounds like it is low income, but for elderly people here, 90% of them will qualify for this because they are on a fixed income," Nail said. "We call it the 'silver tsunami.' It is here. When we open one of these up, we have a waiting list a mile long ... (because) there is such a need."
Nail estimated a monthly rent of between $600 and $700. Most of the apartments, he said, would be one bedroom and one bath, but seven of the units would be two bedrooms with one bath. According to the proposed covenants, children and grandchildren would be allowed to visit but not stay overnight.
Nail also stressed that he was not building an assisted living complex.
City unsure of loan legalities
Chief Financial Officer Kim Hanna said the money Nail is seeking from the city comes from a restricted fund, and the city was unsure it could loan the money for Nail's proposed purpose.
City Attorney Ben Logan said the money has been in the city's coffers since 2018, but the story of how the money got there is much older. He said developers built a senior living complex using a loan from the city and federal affordable housing tax credits in the early to mid-1990s. When the property's 15-year restrictive period was up, a private investor bought out the property owners and also paid out the city's original investment with interest, getting it close to $500,000.
The money, Logan said, can only be used on affordable low- to moderate-income developments, but because it was not money that flowed through the U.S. Department of Housing and Urban Development, the city was unsure it could loan it to developers.
"The money is in limbo," Logan said, adding he is looking for a statutory provision that would allow the city to make such a loan with the money. "If there is a mechanism to use (the money) for that, it would be discretionary (to the council)."
Chief Operations Officer Don Lewis said the city would take the proposal under further consideration.
Historic preservation project has additional funding sources
Nail's project is primarily funded through federal and state tax credits, including affordable housing and historic preservation tax credits. Nail said the estimated cost of the project is about $16 million.
An important requirement for the historic preservation tax credits is that the building's facade must be restored to its original look and can not be torn down to make way for a new complex.
When asked if the city's money was a linchpin for the project's success, Nail said it was not critical but would speed up the process. He also said that if the city did not approve the request, he would seek additional state funding for the restoration project.
The Carnation Milk plant was constructed in 1927 in what Tupelo Historic Preservation Commission member Doyce Deas called the "Toyota" of the time, referring to the construction of Toyota Mississippi, a vehicle manufacturer plant located in Blue Springs.
"This will be one of the highlights of your term," Deas said, addressing the council about the senior housing project. "That is one of the most important landmarks in Tupelo.... To be able to save that building is just fabulous."
Ward 4 Councilwoman Nettie Davis said she supported the project and Nail's effort to preserve Tupelo's history.
"It is a very historical spot, and I hope we can be supportive of this," she said, noting she has gotten several calls from older constituents looking for just such a complex.
Nail said this is his third senior citizen affordable housing complex. The other two are in Hattiesburg and Pascagoula.
