- January 13, 2009
- Category: Renovations
USDA-Rural Development 515 Affordable Rental Housing was at its construction peak during the mid to late 1980’s. After twenty years, these properties were starting to experience the need for revitalization; however, they lacked sufficient reserves to fund capital improvements. In the meantime, WWJ LLC, a partnership of Boyd Management Company’s officers, and Greystone Affordable Housing Initiatives proposed a highly complex, first of its kind, deal to acquire 830 rental units. This acquisition has provided the means for preserving both the physical asset and affordability for another thirty years. Boyd Management is the largest property management company for USDA-Rural Development 515 properties in the country while Greystone Affordable Housing Initiatives provides transaction management consulting services to affordable housing developers and owners.
Boyd Management, Greystone, USDA-Rural Development state and area offices, along with the South Carolina State Housing Finance Development Authority, thoroughly reviewed the proposed apartment communities. Together it was determined that there remained a significant demand for affordable housing throughout South Carolina, and therefore, approved the transfer to new ownership in an effort to preserve and, through a comprehensive construction program, modernize these 23 communities.
In order to provide sufficient resources needed to acquire and adequately rehabilitate the properties, the financing plan combined the collaborative efforts of both public and private parties – all of which desired to extend the physical and economic life of housing communities, and the affordability for low income families located throughout rural South Carolina. This unique state-wide portfolio tax exempt bond transaction took place between 20 different buyers and 23 different sellers, and combined the transfer of 23 rural residential properties (830 total units) into one transaction with common managing and investor members. “Preserving the units required a highly complex $57.5 million deal involving the assumption and subordination of $23.5 million in existing Rural Development Sec. 515 debt. The South Carolina State Housing Finance and Development Authority issued $27.7 million in multifamily private-activity tax exempt bonds, and Community Affordable Housing Equity Corp. (CAHEC) purchased 4 percent federal low-income housing tax credits (LIHTCs) to provide $16.6 million in equity. Other funding sources included $1.1 million in investment income and approximately $500,000 in deferred developer fees.” (Source: Affordable Housing Finance, February 2008)
Needless to say, this very complex transaction is a first of its kind and required endless perseverance, dedication, and cooperative efforts by all involved.
With a construction contract of just over $18,200,000, the new owners were able to fully renovate the properties and bring them up to fully accessible standards. System upgrades included the replacement of roofs, windows, siding, exterior doors, parking lots, and attic insulation. Kitchens were modernized to include new solid wood kitchen cabinets, countertops, sinks, faucets, appliances and dishwashers. Bathrooms received new vanities, sinks, faucets, flooring, toilets and fixtures. Old HVAC systems and water heaters were replaced with new energy efficient models. Additional smoke detectors, fire extinguishers, range queens and new GFI receptacles improved safety for our residents. Properties that had old polybutylene pipe had it replaced with CPVC or PEX pipe. New maintenance workshops were purchased or existing work areas were refurbished.
Marketability and perceived value improved through the addition of ceiling fans, replacement of sliding glass doors with French doors leading to patios, interior painting using up-to-date colors, faux granite countertops, and vinyl flooring which resembled hardwood floors. Curb appeal was enhanced with new landscaping, sprinkler systems, signage and playgrounds surrounded by black steel decorative fencing. Site offices were remodeled to meet accessibility standards and new furniture and equipment were purchased to provide a warm leasing environment.
When construction was completed, management saw an immediate change in the attitude of its residents, applicants and employees. Residents took pride in their homes by improving housekeeping standards and purchasing new furniture and décor. Applications flooded our offices as the word of the rehabs spread through the local communities, and the management employees were proud of their new product to sell.
This project was such a success that we are planning to renovate 52 properties and over 2000 apartments located in both North & South Carolina beginning in late 2009. Stayed tuned for exciting developments…