Mental Health America of West Central Indiana Inc. faces a $1 million funding gap on a $14.7 million project to construct a community-based justice diversion center and build a low-income housing project named Mullen Flats.
The gap is a result of higher construction prices, higher loan interest costs and higher environmental remediation costs said Myra Wilkey, chief executive officer.
The non-profit is seeking $750,000 from the Vigo County Council to help plug that gap. That includes $500,000 for the diversion center, proposed to be funded from the county’s local income tax public safety fund, and $250,000 for the housing project to come from the county’s American Rescue Plan Act (ARPA) funds.
“We have a $1 million gap. If we were to build the diversion center outside of building it with Mullen Flats, the cost of that six months ago was $1 million,” Wilkey said after the council’s Tuesday non-voting information meeting.
“The general contractor and the sub [contractors] said if we can roll [the two projects together] you could have a potential savings of $500,000,” Wilkey said. In addition to higher construction costs, environmental remediation cost $300,000 for the Mullen Flats project.
“Costs have significantly increased since we started the project in 2020,” Wilkey said. “We got delayed because of the [COVID-19] pandemic and then the cost has skyrocketed. We thought if we waited [to move forward] it would be better. It is not because the interest rates are going up,” Wilkey said, adding interest rates on loans to start the project have created an unanticipated $350,000 funding gap.
Mullen Flats, to be built on land at 2750 Elm St., west of Mental Health America’s Liberty Village, is a 44,000-square-foot, three-story project with a 5,500-square-foot justice diversion center on the ground floor. The project includes 42 one-bedroom, low-income permanent supportive housing units on the top two floors.
Mental Health America has been awarded $13.9 million for the project, with $1.5 million from the Indiana Housing Trust Fund and $12.4 million in Low Income Housing Tax Credits from Indiana Housing and Community Development Authority.
However, the project is now facing declines due to housing tax credits, with a land purchase agreement with the city slated to expire April 7. Mental Health intends to close on financing for the property prior to that, on April 3. Construction is slated to take 16 months, with the project slated for completion in August 2024, then another six months to lease out the apartments.
Wilkey told the Vigo County Council that Terre Haute City Council is slated to vote on a resolution to commit an additional $250,000 from ARPA funds for the diversion center. That money will complete the $1 million funding gap.
Councilman Aaron Loudermilk questioned why the county is paying a larger portion of the funding gap and why it is not equally divided with the city.
Commissioner Chris Switzer said commissioners were contacted about the issue three months ago.
“We did have a meeting with the mayor [of Terre Haute] who made it clear we [the county] did receive the biggest substantial chunk of public safety [income tax money] and we should pay for the diversion aspect as the city is providing the property, cleanup and matching $250,000,” Switzer said.
Loudermilk said that while he supports the project, “you could have countered and said the city received more in ARPA funds than the county.” Switzer said “he did that.”
The timing and sudden need of the funds annoyed Council President R. Todd Thacker.
“If this conversation all happened three months ago and we just now hear it and it is crunch time, then you come to us,” Thacker said, “I don’t like that.”
“I understand,” Wilkey said. “I don’t like it either,” she said adding some commitments were not met.
“We all need to work together so we can get there,” Wilkey said.
“That’s what we always hear,” Thacker said. “We all need to work together but you [County Council] just happened to be the last one invited.”
Councilwoman Marie Theisz said the county “has got to do something to get people to not end up in our jail. Our jail numbers are high. I am with you, I don’t like the [cost] split [with the city], but at the same time, I feel like we have to do something,” Theisz said. “Having a variety of options for the judges, for law enforcement, for the citizens of Terre Haute and Vigo County, I think is going down the right path. I want to continue moving forward on that.”
Thacker said the council “has a decision to make next week… I don’t necessarily like the split [of costs] but I don’t know that it will hang me up on it individually,” Thacker said of the funding request.
The County Council will vote on the funding request at its 5 p.m. March 14 meeting at the Vigo County Government Center.