Oskaloosa council approves loan from housing trust to fill financing gap for Jefferson School senior apartments

The Oskaloosa City Council voted on May 5 to authorize a loan from the Oskaloosa Housing Trust Fund to help close a financing gap for the Jefferson School Lofts, a proposed conversion of the former Jefferson School into 42 senior rental apartments.

City staff, the developer and the council said the $13 million project now faces a roughly $1.4 million shortfall caused primarily by lower-than-expected tax-credit equity prices since the project's application and award. Developer representatives told the council they were seeking a combination of contributions and loans to fill the gap: $400,000 from developer equity, a requested $250,000 loan from the city housing trust fund, a $250,000 loan from the Mahaska County revolving loan fund and a $500,000 grant request to the George Veil Trust.

Why it matters: The project targets seniors and aims to preserve a historic building while adding affordable rental housing. Developers and council members framed the city loan as a construction-period tool the project needs to meet tax-credit timing and to avoid further deterioration of the building and neighborhood.

Developer John Cronin, identified as part of North Arrow Partners, told the council the financing shortfall resulted from a drop in the market price paid for Low-Income Housing Tax Credits after the project's award. “We dropped from 84¢ on the dollar to 76¢ on the dollar,” Cronin said, and each penny of decline translated into roughly $100,000 less equity for the project. Cronin and other development team members said construction was planned to begin in June and that the project must meet a placed-in-service deadline tied to the tax-credit schedule.

Council discussion centered on loan terms and project timelines. Staff recommended structuring the city loan with conditions to protect the fund and the public interest: recording the loan as subordinate to the first mortgage and other senior project financing, establishing a construction/completion deadline tied to the Iowa Finance Authority timing, and providing for interest to accrue in the event of default. Council members asked staff and the developer to identify a firm completion milestone; the council later instructed staff to use the tax-credit placed-in-service date as the deadline if that aligned with the developer's schedule.

The resolution approved by the council authorizes a construction-era loan from the Oskaloosa Housing Trust Fund to the Jefferson School Lofts project in the amount requested by staff. The council recorded its vote by roll call and the measure passed. The council and staff said the loan will be documented with completion deadlines and default provisions; staff will finalize the precise loan language and terms during preparation of the mortgage and loan documents.

Community and developer context: Beth Znowski, representing the Mahaska Chamber and Development Board and Business Development Committee, addressed the council during public comment in support of the Jefferson School conversion and described local housing needs for workforce and senior units. She cited a 2023 housing needs assessment that showed many residents — and a notable share of retirees — lack preferred housing options in Oskaloosa, and she outlined how the project preserves a historic building and adds 42 senior apartments.

What happens next: Staff will complete loan documentation reflecting the council’s direction, including the completion deadline tied to the tax-credit schedule, subordinate lien position and default interest provisions. The developer said construction timing aimed to meet the Iowa Finance Authority placed-in-service schedule and the council indicated it could amend deadlines later if progress and communication justified changes.