State says fixing Linden Meadows in New Albany could cost around $1.7 million: New Albany, state to talk strategy for troubled development next week

Oct 27, 2009 (The Evening News and the Tribune - McClatchy-Tribune Information Services via COMTEX) -- PNC.C | Quote | Chart | News | PowerRating -- New Albany and state officials will meet next week to discuss financial strategy for dealing with the Linden Meadows subdivision.

Three options proposed by the state to fix and complete the development each are estimated to cost around $1.7 million. That's on top of the more than $1 million the New Albany-Floyd County Community Housing Development Organization, or CHDO, owes PNC Bank for Linden Meadows.

Indiana Housing and Community Development Authority, or IHCDA, offered the bank $300,000 for the subdivision and funding toward the rehab costs.

But the matter could be decided in court after PNC denied the deal.

The bank wants at least $500,000 for Linden Meadows according to Sherry Seiwert, executive director of IHCDA.

Construction was stopped by the state at Linden Meadows earlier this year, and the development has several unfinished houses in need of funding to complete. Pipe work stills needs to be completed and there are questions about the stability of some of the foundations for the homes.

The houses were moved to Linden Meadows as a result of the expansion of Floyd Memorial Hospital and Health Services. The state loaned the CHDO $500,000 last year for Linden Meadows, and New Albany aided by waiving sewer tap-in fees and with land acquisition.

The houses were intended to be sold to low-to-moderate income families.

A state-hired firm inspected the development recently and recorded its

finding in a three-inch thick report that has been sent to the city administration, Seiwert said.

The report includes assessments of each house, with three different scenarios presented. One option calls for razing most of the houses, as starting over may be the best way to make neighborhood appealing to a buyer.

"We have to look at it from a marketability standpoint as well,"

Seiwert said. She added the report examines "what to do with houses

that need to have some additional work. Whether it's more cost-effective if those were torn down and rebuilt."

Mark Young, chief operations officer for IHCDA, said the options vary based on how many houses would be torn down. Purchasing Linden Meadows depends in part on the future of the New Albany CHDO, Seiwert said. She hasn't been notified of the organization's disbandment, though CHDO board president Shannon Johnson said last week splitting up the local agency was "probably imminent" due to the financial setbacks.

The CHDO executive director was laid off earlier this year, and the organization's phone number has been disconnected.

Attempts to reach Johnson for additional comments were unsuccessful as

of press time.

Determining whether Linden Meadows remains controlled by local and state

agencies won't be a decision only made by the IHCDA, Seiwert said.

"I think it really depends on the New Albany CHDO, and how they decide on their dissolution," she said.

New Albany City Councilman Jeff Gahan has suggested using tax- increment-financing funds to rehab Linden Meadows, which used to be a

public park.

Carl Malysz, deputy mayor and director of community development for New Albany, said he's waiting on a meeting with the state next week before commenting on the administration's strategy for dealing with

Linden Meadows.

He did say the administration is "still under advisement" on how to proceed.

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