ORLEANS — The town’s affordable housing trust entered “final negotiations” with Cape Abilities to purchase outright a 1.25-acre property at 107 Main St. that could be developed as affordable rental apartments, trust chairman Alan McClennen confirmed last week. The proposed purchase was on the agenda of the board of selectmen, whose approval is required, in an executive session held last night (April 29).
At the trust’s April 21 meeting, Director of Planning and Community Development George Meservey said Cape Abilities had been approached by Cape Dreams Building and Design, the company that developed luxury town houses on Cove Road, about a sale. That transaction would be contingent upon the developer securing permits, which could take years.
“Cape Abilities has made it clear that they’d like to sell,” said McClennen, who with Meservey and trust member Henry Brehm constituted the trust’s negotiating team. “They really don’t want to wait to run through the permitting process.”
The trust was unanimous in moving from its option to purchase to an outright buy, with a price to be negotiated at its own executive session April 24. While the assessed value is $548,800, an appraisal valued the property at $415,000 “based on legally permitted uses in the residential district,” Meservey said April 21. “It did not seem to account for the value of a 20-bedroom septic system in a residential district that makes a large project physically possible.”
The trust negotiating committee had discussed a price of $480,000 and Cape Abilities came back with an offer to sell at $500,000 minus the $9,000 the trust will have paid through April for its option on the property. Last Friday’s executive session of the trust was held to settle on a deal that could be brought to the selectmen last night.
“If we buy it, we would need to find a developer and management team to build and operate the property,” Meservey said at the April 21 meeting. He said Housing Assistance Corporation has expressed interest. There are potential “downsides,” according to Meservey: “One would be if we couldn’t find an agency or developer to take on the job. Two would be if financing grants and sources of funds we need were to change or not be available in a timely manner. Third, if the zoning board of appeals were not interested in approving the project as a special permit to expand a non-conforming use, it would require a comprehensive (state) 40B permit” and additional time to determine eligibility.
The “upside,” Brehm said, includes “very limited availability in terms of space to put a multi-family unit like this in the town of Orleans. Second, my understanding is that the neighbors would be friendly for its use as affordable housing. I don’t think zoning is that much risk… If we see early on that it won’t work, we can put it up for sale. With the limited inventory in Orleans, I’m fairly confident it would be sold. Although we’d be tying up some money, I think the risk is quite low.”
Trust member Katie Wibby wasn’t so sure. “In the current situation, I hesitate to think we can sell it,” she said. “That property sat on the market before Cape Abilities bought it. We’re not going into a great economy. I wonder if we really have an out if we purchase it and it isn’t viable.”
The trust’s current reserves amount to $835,000, with $500,000 anticipated from Community Preservation funds after town meeting in June. Another $275,000 is in the budget for the fiscal year beginning July 1, and the trust hoped to win approval from the selectmen last night to obtain a $2 million line of credit from Cape Cod Five Cents Savings Bank. “Money is not an issue at this point,” McClennen said.
The chairman said he looked at similar-sized properties that are theoretically developable in nearby downtown General Business and Limited Business districts that allow up to 12 dwelling units per acre. Calculating land cost per dwelling unit based on land size and assessed value for nine of the properties, he found per-unit costs of development ranging from $27,775 to $77,536, with 107 Main St. at Cape Abilities’ asking price of $500,000 coming in at $35,714.
“I believe this is the only parcel in a residential district in the town of Orleans that currently has the ability to have” up to 20 bedrooms, McClennen said. “It’s an extremely valuable piece of land to control. The fact is that Cape Dreams did call Cape Abilities and talked about purchasing it, probably at a price higher than we’re willing to pay. If we don’t respond, somebody else will and our opportunity to produce affordable housing disappears.”
If the town purchases the property, it could enter a lease agreement with a developer for 50 or more years to avoid having to follow state prevailing wage guidelines that would add significant costs.
“I much prefer the idea of the town owning it rather than stepping aside and letting somebody else own it,” said trust member Mefford Runyon in supporting a long-term lease. “The example in my mind is Rock Harbor Village, affordable housing that we do not own. It’s come up at least one time for renewal and the town really had some questions about whether it would continue as affordable… Being able to own this even though most of us won’t be around in the 50 years it takes, the fact that it comes back to the town is a big plus to me.”