The four 2010 Jack Kemp Workforce Housing Award winners help moderate-income families live near their jobs.
Whether they are revitalizing struggling communities or augmenting housing bases of high-cost neighborhoods, the winners of the 2010 Jack Kemp Workforce Housing Models of Excellence Awards—presented by the ULI Terwilliger Center for Workforce Housing—are helping moderate-income families afford to live near employment centers. The winners are mixed-income, for-sale developments in Washington, D.C.; Denver, Colorado; and Newton, Massachusetts; and a mixed-use rental renovation project housing Baltimore teachers.
33Comm, Newton, Masachusetts
Sometimes even nonprofit workforce housing developers hit home runs. In the case of the 57-unit 33Comm mixed-income condominium development, principal developer B’nai B’rith Housing New England managed to sell 15 workforce units at well below the affluent Chestnut Hill neighborhood’s market value—and still repay one-third of the project’s nearly $2 million public sector subsidy.
A crying need for moderately priced ownership opportunities in the area convinced the board of Brighton, Massachusetts–based developer B’nai B’rith Housing to take on the risk of a for-sale development, executive director Susan Gittelman says. As the organization was eyeing the site a half decade earlier, market fundamentals appeared to warrant large, luxury housing at the site, which offered a rare arterial road–fronting, transit-served infill development opportunity in upscale Newton, Gittelman recalls. “A lot of people came together to support something that’s very different from what the market would have dictated,” she says.
The nonprofit leveraged a $1.2 million city subsidy under its Community Preservation Act and a $750,000 state contribution from its Affordable Housing Trust Fund with construction financing from Boston-based Wainwright Bank & Trust. In mid-2008, 33Comm opened, offering 15 units permanently reserved for households earning up to 80 percent of the area median income (AMI).
33Comm consists of a new building with 44 units on four residential levels, plus 13 additional homes provided at the renovated Carriage House building. Given that the project abuts the Boston College campus, it is no surprise that many teachers, librarians, and others affiliated with the university, including some who are retired, are 33Comm homeowners.
The workforce units sold for $138,000 to $192,000. However, Gittelman describes the entire 33Comm development as “quality bread-and-butter housing.”
Even the market-rate units are generally “affordable to the working middle class,” Gittelman says, though she declines to specify market-rate sales prices. Demand was so strong, she points out, that the developer was able to make the project pencil out even after voluntarily returning one-third of the city and state subsidy dollars.
Fire Clay Lofts, Denver
Though Denver developer Urban Ventures LLC’s first venture has spanned an exhausting and challenging decade, it also has proved rewarding through the transformation of a neighborhood with workforce housing.
The company’s Fire Clay Lofts project is the four-phase redevelopment of the Fire Clay Brick Co. site to provide 166 eclectic units, including loft homes at the renovated 1890-vintage Cable Building. Among the project’s two-bedroom lofts, live/work quarters, and townhouses are 32 deed-restricted units reserved for buyers earning up to 80 percent of AMI.
The project has attracted a pioneering resident base to the traditionally industrial Upper Larimer neighborhood just north of Denver’s central business district, observes developer Susan Powers, who directed the Denver Urban Renewal Authority before she and four partners founded Urban Ventures in the late 1990s.
The resident profile is as eclectic as the unit mix—people who appreciate the edgier environment Fire Clay offers, as Powers puts it. Many operate businesses from their homes as intended in the original plan, including many people from the creative fields, and there are public employees such as teachers and firefighters, she adds.
One characteristic they share: they cannot afford to buy the high-end condos developed in recent years in the nearby central business district or the Lower Downtown district. “At the end of the day, you have to say the whole project is workforce housing,” Powers says.
The city helped kick start the project with $319,000 in financing for tricky remediation activities; the debt was forgiven with the sale of the last restricted unit. Urban Ventures also secured construction financing totaling about $24 million from locally based Colorado Business Bank and Mile High Bank.
Early last decade when Phase I construction and presales began, deed-restricted units sold via lottery, and market-rate units sold quickly as well, Powers recalls. Pricing escalated with each successive phase, though the developer has had to lower some Phase IV asking prices over the past year in response to the housing slump.
Average sales prices began below $200 per square foot ($2,150 per sq m) for the first phase, and are now in the mid-$200s. One townhouse and four two-bedroom condos remained to be sold at the end of the year. The developers’ efforts ultimately generated what Powers characterizes as “a market-rate rate of return” from the first three phases.
Miller’s Court, Baltimore
“Education is the city’s greatest economic tool,” says Evan Morville, partner in Baltimore-based Seawall Development Co., identifying a primary motivation behind the firm’s educator-focused Miller’s Court mixed-use workforce housing project.
The $21 million renovation of a long-vacant, century-old former tin box manufacturing plant in Baltimore’s Charles Village neighborhood was completed in summer 2009 by Seawall, founded by father and son Donald and Thibault Manekin. The project includes 40 apartments—ten reserved as affordable—and 35,000 square feet (3,250 sq m) of commercial space.
All the apartments are rented to school teachers at substantial discounts to market rental rates, and all office space—with the exception of Seawall’s headquarters—is leased to education-related organizations, including Teach for America.
Over 70 percent of the residents are members of Teach for America who work in Baltimore’s public school system, Morville notes. Several others are participating in the Baltimore system’s City Teacher Residency program, and some teach in parochial schools.
In fact, teachers helped design Miller’s Court, and more than 250 people are on the development’s waiting list.
Rents for the 30 market-rate units are based on starting salaries in the Baltimore school district and generally represent discounts of $300 to $600 from market rates, depending on the unit, its size, and its location in the building, Morville says.
Residents qualifying for the dedicated affordable units earn no more than 70 to 80 percent of AMI. These first-floor units mostly rent for about $700 per month.
The financing mechanism that really made the project pencil out was the pairing of the New Markets Tax Credit (NMTC) with federal and state historic tax credits, Morville says. The project is located in a census tract defined as “highly distressed” under the NMTC program.
A SunTrust Banks subsidiary invested in NMTC and historic tax credits, and also provided the Miller’s Court permanent mortgage of about $8 million. A U.S. Bancorp subsidiary invested historic tax credit equity, and also in NMTC authority allocated to Enterprise Community Investment.
Capitol Quarter, Phase I,
In a high-cost market like Washington, D.C., homebuyers who qualify for workforce housing subsidies do not necessarily differ much from neighbors willing to pay market rates.
This has certainly been the case as federal and city authorities have worked with private developers to replace the close-in, 1940s-era Capper/Carrollsburg public housing project in the Capitol Riverfront district with a mixed-use, mixed-income urban neighborhood.
Local redevelopment specialist EYA has been overseeing the transformation of seven former Capper/Carrollsburg blocks into a community offering market-rate and workforce ownership units, plus city-owned rental apartments. The first four blocks of the project constitute Phase I, dubbed Capitol Quarter, with Forest City Residential Development, Urban-Atlantic LLC, the District of Columbia Housing Authority (DCHA), and the U.S. Department of Housing and Urban Development (HUD) participating with EYA.
The benefits of Phase I—with 77 market-rate townhouses, 36 workforce homes, 39 DCHA-owned public housing rentals, and eight HUD Housing Choice Voucher Program units—far exceed the decent return on the private participants’ investments, says EYA vice president A.J. Jackson.
“The city has a revitalized community, the housing authority has a mixed-income development, and the developers earned a return on their investment,” he says.
The developers were able to offer workforce units at an average discount of $190,000 to $200,000 off prevailing market rates, Jackson says. The initial release of two- and three-bedroom units sold by lottery to qualifying buyers in 2006 for $295,000 to $350,000. The subsequent group sold in 2009 for about $450,000, also by lottery.
Jackson characterizes those prices as break-even from the development team’s perspective. In such a high-cost market, buyers of the market-rate units are hardly distinguishable from their workforce counterparts, he adds.
The aim is to bring working people into a close-in location where dense housing is desirable by offering homes at costs more typically seen with larger suburban houses. Workforce and market-rate units are interspersed and indistinguishable from the exterior. They simply have less-costly interior finishes and tend to be the smaller models, Jackson says.
Jackson and his EYA associates—who are now busy with Phase II and other projects—appreciate the public/private nature of the overall Capper/Carrollsburg makeover, which got off the ground with a $34.9 million HOPE VI grant. City housing authorities tend to be “land rich and cash poor,” Jackson says, noting that the private specialty partners pursue redevelopment “in a market-based manner.”
Read more about the Jack Kemp Workforce Housing Models of Excellence Awards and how to apply for the 2011 Awards.