ST. PETERSBURG, FL-American Community Development Group, Inc. (ACDG) announced plans to acquire a motel in the St. Petersburg area for an undisclosed amount. ACDG transforms Tampa Bay area motels into affordable housing units.
ACDG President John Folger tells GlobeSt.com the 21-unit motel can house 42 people and generate $300,000 of annual revenue. He is predicting 90 percent occupancy in 90 days. But industry watchers can’t see how the numbers add up.
“We have a backlog of tenants who are clients of these non-profits that really need places to live,” Folger says. “Housing needy populations and providing the social services they need is a good formula for us right now. The need for affordable housing is growing. In this economy, we are making poor people at an alarming rate.”
ACDG leverages debt and equity, along with government subsidies, to invest in motel properties to house veterans, ex-offenders, rehabilitated citizens, and children aging out of foster care. With bids on seven additional properties, Folger expects the company to broaden its portfolio in the months ahead.
Senator Steve Geller, a partner at Greenspoon Marder in Fort Lauderdale and former chairman of the Florida Senate Committee on Comprehensive Planning, which deals with affordable housing, tells GlobeSt.com he’s skeptical about the strategy. Unless ACDG does substantial renovations, he says, motels don’t meet the minimum requirements for residential occupancy.
“I don’t know of any Florida cities that have a minimum size of less than 800 for residential occupancy,” Geller says. “Your typically size hotel room is somewhere around 400- to 450-square feet. At a minimum you’d have to combine two units. Now you have two bathrooms, no kitchen. By the time you make these cheap motels affordable housing units, you are probably just as well off tearing down and starting over.”
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
