By Kevin Boneske
HOWARD – Construction of a third building for the Howard Commons apartment complex will proceed following action Monday, Oct. 8, by the village board.
Board members agreed to move forward with bidding out Building C next January.
The 45-unit apartment estimated to cost around $10 million could be completed in the spring of 2020 after beginning construction next spring.
The village has served as the developer of the Howard Commons to spur development in the Village Center and not have to provide large economic development incentives through tax incremental financing.
Located between the YMCA and Meadowbrook Park, the project was designed as three apartment buildings with 84 units in Building A, 39 units in Building B and 45 units in Building C.
Construction started last year on Building A and B. Building A was opened to tenants in phases beginning with the third floor Labor Day weekend, the second floor in mid-September and the first floor Oct. 1. Building B is scheduled to open Dec. 1.
Erik Goerke, CEO/owner of Alliance Management, which has an agreement with the village to manage and market Howard Commons, and Ryan Raskin of Altius Building Company appeared before the board for an update on the project.
Goerke said the goal of having 50 signed leases in Building A and five more in Building B by Dec. 1 is on track to be met with 46 leases having been signed and three more accepted applications being received.
“We’re leasing at a good clip,” he said. “The activity has been very serious. When people are in the apartments, they’re feeling the differences… so we’re over 80 percent of our way to the goal that we need to get to by Dec. 1.”
Goerke expects the leasing activity to pick up in March and April.
He said completing the third apartment in the spring of 2020 would make it possible to lease out units earlier in the year than has been the case for the first apartment.
Though the rental rates are now the same for comparable units in the apartments, Goerke said Building A will have those rates increase of about 2.5-3 percent by the time Building C is leased out.
“It will be cheaper to live in Building B and C, theoretically, than it will be in Building A,” he said. “The other thing is, depending on what your occupancy levels are, if there’s a unit available, and there’s only one available in Building C, you’ll take it, even if you’re paying the same amount as Building A, because there’s nothing available in Building A.”
Goerke said no business has yet expressed an interest in signing a lease for the retail space in the Howard Commons with the project yet to be completed.
“My guess is, at best, we would see something like in mid-2019,” he said.
To determine the construction costs for the third apartment building, Raskin said an internal budget was put together, based on the housing market, along with speaking with the vendors currently working on the first two buildings to gauge interest in whether they would also want to work on Building C.
“(The costs) all came in relatively close to what the assumptions we had made – some were a little higher, some were a little lower,” he said. “So we feel good about the budget that we placed in the proforma (financial statement).
They’re up about 10-11 percent. Part of that is it’s a smaller project, so you some of the efficiencies. Most of it is just materials are up.”
Over the next 60 days, Raskin said the drawings for Buildings C will be including all the changes that have been made with the apartment complex over the last year and a half.
“When we go out and bid Building C, all of that is already included,” he said.
Raskin said about $400,000 in the contingency fund has been spent with the various changes to the apartment complex.
“Let’s just say we end up at $500,000 over (budget), that’s about 2 percent,” he said. “We didn’t want to spend anything (in contingency funds), but I would tell you 2 percent on a project like this is probably under the industry norm.”
Raskin said constructing Building C has already received state approval.