Pensacola Habitat says controversial property sale funded affordable housing elsewhere

Pensacola Habitat for Humanity is defending a decision to sell a 1.4-acre property that highlights the difficulty of building affordable housing in the downtown core of Pensacola without some type of government subsidy.

Pensacola Habitat for Humanity sold the 1.4-acre property at 512 N. D St on July 13, 2021, to a holding company owned by Merrill Land Company for $655,000.

Habitat officials say the sale enabled them to build more than double the number of affordable housing that was possible on that property.

The property was the site of the former L.A. Kirksey Elementary School, a school that was built as a Black-only school during segregation.

Merrill Land Company sold the property to aDoor Development, a home building company, for $846,400 in April. The developer has submitted plans to build a 14-home development to a company called Kirksey Court, which is under review by city planning officials.

The land sale has echoes of a past deal in 2015 when Pensacola Habitat for Humanity sold several properties significantly under market value, but current officials contend the organization got full market value for the property when it sold it in 2021.

Crystal Scott, vice president for development and communications at Pensacola Habitat for Humanity, told the News Journal that the organization worked to get the best price possible for the property, seeking bids from seven potential developers.

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"Two of them came back right at the same price, and then those two people were then given another opportunity to send us their best price, and we sold it to the highest bidder," Scott said.

Scott said the property wasn't listed through a real estate agent to avoid a 6% cost on the final sale price.

Collier Merrill, one of the owners of Merrill Land Company, told the News Journal the decision to purchase the land was a "arm's length deal" and he was competing against other developers to buy the land.

"We didn't get any kind of break that I knew of," Merrill said.

Merrill said he has not yet made money from his sale of the property to aDoor because it was structured in a way that gives aDoor two years to pay him for the property by building and selling homes on the property.

Pensacola Habitat for Humanity bought the property for $60,000 in 2013 from the Florida Housing Finance Corporation, which had foreclosed on the property in 2011 from the Escambia County Community Land Trust after its owner John Wyche was convicted of misusing state funds.

Florida Housing Finance Corporation Executive Director Trey Price and Director of Asset Management Laura Cox told the News Journal on Wednesday that Pensacola Habitat for Humanity was under no obligation to build affordable housing on the property when it purchased the property in 2013.

Scott said that over the years Pensacola Habitat considered different ideas for the property to build anything from single-family homes to multi-family homes, but when they started seriously exploring development, they found out from city planning officials that they could only build 12 single-family lots on the property.

"There would have been significant pre-development costs," Scott said.

Ultimately, the decision was to sell the property and use the funds to build more affordable housing elsewhere.

Pensacola Habitat CEO Sam Young sent out a letter this week to donors explaining the situation and said with the land sale, Pensacola Habitat was able to buy 39 other lots in Escambia and Santa Rosa counties.

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Young said that nine of those lots are under construction and 17 of the lots have been selected by Pensacola Habitat home buyers representing new homes for 19 adults and 37 children.

"When all 39 lots are completed, likely sometime in 2023, they will be home to over 150 of our community members," Young wrote. "The purchase, and subsequent development of these lots, will make their dream of affordable homeownership a reality."

Scott said Pensacola Habitat for Humanity is not giving up on trying to find ways of building affordable housing in the city core and acknowledges that the rising cost of the housing market puts more pressure on the organization.

"We're the only people who are developing affordable housing, especially at this magnitude, and so I think it emphasizes and puts a lot of pressure on us," Scott said. "We have said loud and proud we are it, but we can't do this by ourselves. We need county support. We need the city to support us. We need help. We cannot solve this affordable housing crisis alone, but we're doing a pretty damn good job."

Scott said the Pensacola Habitat currently has 57 home projects in progress in Escambia and Santa Rosa counties. Last year the organization built 27 homes while this year they're on track to complete 52.

In 2019, the city passed a zoning overlay for its community redevelopment areas that set minimum design standards for new construction projects in the area.

Scott said that meeting those requirements adds at least another $20,000 to the price of a new home in the CRA.

In April, the City Council approved a waiver process for the overlay district. Scott said that had that waiver been in place in 2020, Pensacola Habitat might have reconsidered selling the property.

"We would have still had to have a significant subsidy from either the city or the county to be able to develop this parcel," Scott said.

Pensacola Mayor Grover Robinson said on Monday he believed the overlay district was a good idea aimed a preserving the character of the neighborhoods as they faced increasing pressure to be redeveloped.

"It was very pressing, at the time, was the changing characteristic in those neighborhoods," Robinson said. "I think now, affordability has totally flipped the argument."

Jim Little can be reached at jwlittle@pnj.com and 850-208-9827.

This article originally appeared on Pensacola News Journal: Pensacola Habitat for Humanity defends sale of old Kirksey property