South Bend trades downtown apartment complex $550k for 40% low-income housing mandate

SOUTH BEND ― The new owner of a historic apartment building downtown has agreed to devote 40% of its units to low-income tenants in exchange for more than half a million city dollars to help with sweeping renovations.

The new owner of the Mar-Main apartments, built just north of downtown as luxury housing a century ago, says it will spend about $4.5 million by the end of 2024 on renovations. Major repairs include replacing 850 windows, overhauling the bathrooms and kitchens of 120 units, and restoring the roof.

To mitigate South Bend's lack of affordable one- and two-bedroom units, the city will contribute $550,000 toward the roof replacement on the condition that 48 units are reserved for tenants with federal housing vouchers. Mar-Main will rent 136 units when the project is finished, said David St. Clair, a South Bend realtor and Mar-Main investor.

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The agreement, which the Redevelopment Commission passed last week, states that Mar-Main originally intended to set aside 20% of its units.

“The city wants to participate in helping ease the burden of the housing shortage for downtown, for vouchers, so we really were just all able to come together on the percentage that needs to be subsidized," St. Clair said.

Mar-Main

Oldtown Capital Partners bought the Mar-Main building in late 2020. Beyond the units designated for tenants receiving federal aid, St. Clair said most apartments are one- and two-bedroom units affordable for families earning 60-120% of the area median income.

Lori Wallace, director of the Housing Choice Voucher program ― formerly called Section 8 ― at the Housing Authority of South Bend, said the need for reasonably priced one- and two-bedroom units is dire in the city. Many South Bend renters are older and disabled residents who live alone, she said.

In renter-dominated areas such as the Near West Side neighborhood, where three of four people rent housing, more than a third of residents are 40-64, according to a recent neighborhood plan. Nearly 60% of households have one person and over 40% earn annual income below $10,000, a quarter of South Bend's median household income.

Yet affordability has worsened as rents soar nationwide. Rent estimates in the South Bend-Mishawaka metro rose by at least $100 for one- and two-bedroom apartments from the previous estimate, according to Fair Market Rent calculations by the Department of Housing and Urban Development.

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HUD released the new numbers this month, Wallace said. The estimates are 10% below the area median rent, at the 40th percentile. Housing authorities use them to negotiate fair prices with landlords who participate in the voucher program.

Data shows the FMR for one-bedroom apartments is $923 while the figure for two-bedroom units is $1,099.

Area landlords working with South Bend housing authority

Wallace said more landlords are showing interest in leasing their units to tenants with vouchers. As of Tuesday, more than 520 area landlords were actively working with the Housing Authority.

She pointed to benefits of renting to Section 8 tenants outlined by HUD, which funds the voucher program and local housing authorities. Tenants pay 30% of their income and the rest is paid by the Housing Authority, even if their income falls to zero. Assisted tenants tend to stay years longer than those without government assistance.

“A lot of times the housing providers who are coming in are talking about creating a balanced portfolio, because there is a sense of stability of working with a government program," Wallace said.

When the voucher program opened its waitlist this February, which happens about every two years, 5,000 applications came in, Wallace said. About 400 tenants a month are screened to determine eligibility, with people who are homeless or live in South Bend given priority.

"Assisted tenants and unassisted tenants are all tenants," Wallace added. "The idea that unassisted tenants are more difficult to deal with or create bigger headaches for housing providers is false."

Email South Bend Tribune city reporter Jordan Smith at JTsmith@gannett.com. Follow him on Twitter: @jordantsmith09

This article originally appeared on South Bend Tribune: Mar-Main apartments in South Bend devote units to voucher recipients