A view from the southeast of the proposed Merle Hay Apartments that would include 43 two- and three-bedroom units. Construction of the building, if approved by the Urbandale City Council, would begin in early 2020. Architectural rendering by ID8 Architects PLC.

An affordable housing project that failed to get a green light from Urbandale city officials about 10 months ago has been revised and will again be seeking city approval so construction can begin in the spring, the Business Record has learned.

The proposed Merle Hay Apartments, a $10 million project in the 6300 block of Douglas Avenue, would include 43 two- and three-bedroom apartments, 10% of which would be market rate and the remainder affordably priced with monthly rates determined by renters’ income.

Urbandale’s Planning and Zoning Commission is scheduled on Nov. 11 to hold a public hearing on whether to rezone the property to allow the construction of the multifamily building. The City Council is scheduled to hold a public hearing on Dec. 3.

If approved, the project would be the first affordable housing development built in Urbandale in more than 20 years.

The commission and council, last December and January, turned down requests to rezone the property, a parking area owned by Merle Hay Investors LLC. The group owns Merle Hay Mall. City officials raised concerns about the proposed four-story height of the building, its closeness to Douglas Avenue, and the lack of green space for play areas for children who may live in the building. 

The three-story apartment building proposed for the 6300 block of Douglas Avenue would be built on a narrow parcel that now mostly is parking. Map base by Google.

Under a revised plan, a three-story building is proposed that would sit 110 feet north of Douglas Avenue rather than 60 feet, according to information provided by the city. In addition, on-site parking was increased to 61 from 54 spaces and 0.8 acre was designated for green space, a 40% increase from what was originally proposed.

Since last spring, Indianapolis-based TWG Development LLC and the nonprofit Dream Catcher Inc. have worked with city officials to address issues raised by commission and council members. 

“We’re very excited about the changes that were made and that definitely improve the project,” said Sam Rogers, TWG’s development director. 

A.J. Johnson, Urbandale’s city manager, said the project previously proposed by TWG and Dream Catcher had several shortcomings.

“The deficiencies that were identified with the last project, we hope, have been successfully addressed so that the project moves forward,” Johnson said. 

The apartment project is important to complete because of the scarcity of affordable housing in the Greater Des Moines area, officials said.

A study released in May showed that more than 150,000 new jobs are expected to be added in Central Iowa in the next 20 years, creating the need for affordable housing located near employment centers as well as along mass transit routes. The study was sponsored by Capital Crossroads, the Polk County Housing Trust Fund, Des Moines, Ankeny, Clive, Norwalk, Urbandale and West Des Moines.

To accommodate new workers, the study showed that Polk, Dallas, Warren and Guthrie counties need to add 33,592 owner-occupied houses before 2038 and 23,577 new rental units. In addition, because 70% of the new households will have annual incomes of less than $75,000, more than half of the new owner-occupied homes will need to be priced below $175,000 and three-fourths of the new rental units will need to charge monthly rents of less than $1,250, according to the study.

The proposed Urbandale project “puts a dent in the need for affordable housing in the greater Des Moines area, but more is needed,” said BJ Connolly III, a senior commercial broker with NAI Iowa Realty who helped with the Merle Hay Apartment project.

Anawim Housing, a Des Moines-area nonprofit organization involved with affordable housing, helped navigate the original apartment proposal through various city groups. When the project failed to gain support, Anawim’s President Russ Frazier said Urbandale officials had a bias against affordable housing.

Urbandale, with nearly 45,000 residents, has one other affordable housing development in the city. While a council goal is to add more diverse and affordable housing in the city, Urbandale hasn’t had appropriate land available for the projects, Johnson said.

“The most desirable location – where I think the target audience may be  is on the eastern side of the community where we’re almost fully developed,” Johnson said. “So that’s been a challenge for us – finding that right location to score well for programs like (the Iowa Finance Authority). You need to have good proximity to transportation, groceries, educational institutions, and we have that on the east side of the city, but we didn’t have the land available.

The 1.75 acres where the proposed apartment building would be located is a parking lot, pictured, that had previously served Merle Hay Mall. However, the parking lot, which is in disrepair, is rarely used.

TWG and Dream Catcher
 have a contract to buy the property for an undisclosed price, contingent on city officials approving the zoning change.

Earlier this year, the project received $755,079 in federal low-income housing tax credits that will be award annually for 10 years. The total value of the tax credits is $7.5 million.

If the project gains city approval, construction will begin in the spring with completion slated for spring 2021, Rogers said. 

The proposed apartment building, which will include an activity center and fitness center and a washer and dryer in each unit, would remain affordable housing for 30 years, he said.

TWG and Dream Catcher are co-developers of the project. When it is completed, Dream Catchers would own the property and TWG would be its property manager, Rogers said. 

Who is Dream Catcher?

Dream Catcher is a nonprofit Des Moines-area organization formed in 1996 to build housing for low-income people and those with disabilities. About 15 years ago, it developed Lyn Circle Townhomes, a Waukee project for people with disabilities, said the group’s president, William Hedlund of West Des Moines. About 20 years ago, Dream Catcher developed Lyn Crossing Apartments in southeast Des Moines, for low-income people, he said. “We are a group of people who have a mission, and we look forward to continuing our mission with” the Merle Hay Apartment project, Hedlund said. 

Who is TWG? 

TWG is a real estate development company that specializes in commercial, market rate, affordable and senior housing developments. TWG was formed in 2007 to develop, own and manage housing communities in the Midwest. The Merle Hay Apartments will be TWG's fifth Des Moines project. The others are:

- The conversion of the former Des Moines Register and Tribune building at 717 Locust St. into the R&T Lofts, which includes 164 units. The $47 million project was completed in 2017.

-  Southridge Apartments, under construction at 7101 S.E. Fifth St., Des Moines. When completed, the $42 million project will have 288 market- and affordable-rate units.- District at 6th, under construction at 201 S.E. Sixth St., Des Moines. The $40 million project includes 213 market-rate apartments.

- Ankeny Lofts, under construction at 2810 S.E. Rio Drive, Ankeny. The $11 million project includes 54 units, about 90% of which are for low-income residents.