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First Phases Of Beecher Terrace Redo On Track, But Officials Still Predict Cost Overruns

The first phase of the Beecher Terrace redevelopment is on track, even as the project's overall cost is projected to surpass original estimates.

Alex Hunn of Messer Construction, the project manager for the new Beecher Terrace, said the first two phases of the housing project will meet their $50 million budget. The first phase is a 117-unit senior living building that will open this fall, he said.

The Louisville Metro Housing Authority is using a mix of federal and local funds to complete the project, which will cost about $200 million overall. LMHA Executive Director Lisa Osanka said Monday that a combination of factors contributed to a construction budget gap of $19 million last March that shrank to $12 million in November.

In an email, Osanka pointed to certain cost-raising pressures that came into play since late 2016: "new trade tariffs on materials, increased demands for materials and labor resulting from numerous natural disasters throughout the United States, and a boom of large-scale residential, hotel and industrial projects that have taken place in Louisville."

That combined with lower revenue from Low Income Housing Tax Credits (LIHTC) as a result of the Republican tax change in 2017 meant LMHA has fewer funds to pay for more expensive goods and services, she said.

Those factors are why LMHA pursued an additional $4 million grant from the U.S. Department of Housing and Urban Development, on top of the $29.5 million Choice Neighborhoods Implementation Grant awarded in late 2016, which city officials credit for the Beecher Terrace project.

Osanka and other city officials announced that they had received that additional grant — which also allows them to extend the final project deadline two years to 2025 — last month.

LMHA is now counting on that supplement and seeking other potential solutions to plug the hole. Some options include a combined $1 million injection through a Kentucky Housing Corporation (KHC) and Louisville Affordable Housing Trust Fund matching program, as well as a higher-value LIHTC allocation from KHC that could bring in an additional $5 million, she said.

Plus, the housing authority is willing to put in more money.

"LMHA is prepared to contribute $7.5 [million] towards the remaining budget gap using its Capital Funds and Section 8 reserves," Osanka said. "LMHA has also identified additional Section 8 Reserve funds in the event the future phases’ construction costs exceed the current Master Budget estimates."

Meanwhile, Hunn said a mild winter has helped keep the construction on the first two phases moving along. That could change in the near future if the weather changes.

"Now when winter hits, everything moves a little bit slower," he said. "Just the the cold temperatures, it's just harder to work in."

Already, workers have started putting windows in the parts of the building that have already been drywalled, which allows them to pump heat in and make working conditions more comfortable.

About 40 to 50 people work on the senior building each day, Hunn said. The units there will be about 600 square feet each, with kitchens that open into combination living and dining spaces, plus a single bedroom with an attached bathroom. There will be communal laundry on each floor.

The new Beecher Terrace will be rebuilt on 12 city blocks in four phases. All the old residents have moved out, and many relocated to other public housing or scatter sites. City officials have said those who want to move back will be able to.

But the new Beecher Terrace will have mixed-income housing, unlike the original complex, which had 758 units, all for low-income people. The new complex will have 448 units for residents of that income level.

Councilwoman Barbara Sexton Smith (D-4) dropped in on a media hard hat tour Monday to reflect on the progress of the construction. She said many families want to return to Beecher Terrace, but did not provide an estimate on how many.

"Everyone had the opportunity to work with case managers to fill out their forms and to make sure we know where folks are and how to get in touch with them," she said. "So when it's time to start moving folks back in, they'll have that first option to do so."

Amina Elahi is LPM's City Editor. Email Amina at aelahi@lpm.org.

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