Committee approves anticipated use of Lakewood complex for public–private affordable housing redevelopment

The Capital Development Committee unanimously approved the Department of Personnel and Administration's request to pursue a public–private partnership (P3) structure to redevelop state‑owned parcels at the Lakewood Complex, including 1881 Pierce Street, for residential development that will include at least 80 affordable housing units.

Tom Kerik, director of the Public‑Private Partnership Unit at the Department of Personnel and Administration, described the site as approximately 14.4 acres of developable land and said the department has issued a request for qualifications (RFQ) and is conducting site and infrastructure studies. Kerik said the state will retain ownership of a flex parcel and a 99‑year ground lease with annual payments is expected in a typical structure. "What I'm asking you to approve today is the P3 agreement structure, the baselines, the guidelines that we're definitely looking to sign with them," Kerik said. He described two baseline points the department seeks: at least 80 affordable units meeting Low‑Income Housing Tax Credit (LIHTC) rules and a 99‑year ground lease in which initial ground payments typically start around year five.

Kerik said the department expects to close the RFQ on May 9, 2025, select a developer around June 9, 2025, enter a predevelopment agreement to finalize feasibility and then a development agreement. He told the committee he expects to have "shovels in the ground by the first half of 2027," and said preliminary studies suggest up to about 320 total units could be feasible on the site.

Committee members pressed for more specificity on affordability percentages and ground‑lease economics. Senator Malika asked why the department proposed a floor of 80 affordable units rather than a percentage of total units; Kerik said he expects more than 80 affordable units but put a fixed minimum in the RFQ to encourage a range of proposals because the total unit count is not yet fixed. On ground‑lease revenue, Kerik said a typical market starting point is roughly 2–4% of the appraised land value as an initial annual ground‑lease payment, subject to negotiation during predevelopment.

Legislative staff and department officials clarified the committee's oversight role. Mr. Pogue of Legislative Council staff read statutory language explaining the committee "shall review the report submitted by the department, make recommendations to the Department concerning the anticipated use of the unused state owned real property, and approve or disapprove the anticipated use of the unused state owned real property." Seth Ford, legislative liaison for the Department of Personnel Administration, said the department regularly reports P3 projects in the SMART Act and that the committee could request to see a final lease before the department signs it.

Officials listed advisory firms the department has engaged to inform negotiations and underwriting: KPMG, AECOM and Ballard Spahr. Kerik said the department expects proposals to use LIHTC financing and that ground‑lease payments often begin after project construction and occupancy because financing and tax‑credit structures require a completed, leased project before payments begin.

A motion to approve the department's anticipated use of the Lakewood Complex for redevelopment through a P3 passed unanimously. The clerk recorded the vote: Senator Henriksen — Yes; Representative Lindsay — Yes; Senator Pelton — Aye; Representative Winter — Yes; Senator Mullica — Yes; Madam Chair — Yes.

Committee members said they want the department to return with the final lease terms for committee review prior to execution or otherwise provide updates during subsequent SMART Act reporting.

Next steps described by staff include closing the RFQ in May, developer selection in June, completion of predevelopment agreements and negotiation of lease and development agreements during the remainder of 2025 and 2026, with construction beginning as early as the first half of 2027.