Spotlight on Langston Park Apartments in Hopewell, VA
Hopewell, VA, is thought by some to be the nation's oldest continuously occupied settlement. But the city will soon have another claim to fame –the first conversion of Virginia public housing to Project-based Rental Assistance (PBRA) under RAD. To facilitate the transaction, Hopewell Redevelopment & Housing Authority (HRHA) partnered with Community Housing Partners (CHP), a local non-profit developer and owner of assisted housing. In this Spotlight, HRHA Executive Director Steven Benham tells us how HRHA and CHP came together to make this conversion possible.
Owner: Community Housing Partners (CHP)
Population Type: Family
Conversion Type: PBRA
Year Built: 1962
Date of RAD Award: January 1, 2013
Total Units Awarded: 56
Average Bedrooms per Unit: 2.6
Average RAD Contract Rent: $645
New construction: $94,000 per unit
1. First – can you tell us a bit about the project?
The public housing structure, called Langston Park Apartments, was built in 1962. Over the years, it has fallen into such disrepair, that I consider the property functionally obsolete. The project has 30 units that simply were not livable; and as part of my vision to redevelop the City of Hopewell, one of my priorities was to redevelop this public housing structure.
2. How did RAD help with repositioning this project?
We needed to substantially rehabilitate the project, and we knew that low-income housing tax credits (LIHTCs) would create the mixed-income environment we envisioned. But when I learned about RAD, I also figured out that I could leverage much more debt and equity, than if I were to redevelop the property under a mixed-finance public housing program. Under RAD, it was a simpler transaction for all involved – lenders, investors, the non-profit developer, and our PHA.
3. What kind of redevelopment is planned for Langston Park?
The 30 existing units will be converted to PBRA, and then the rehabilitation of the building will create another 26 units that will be LIHTC units… for a total of 56 units when the project is complete. In addition to newly constructed units that are energy efficient -- the property will have a community center, and parking lots for added safety.
4. What motivated you to work with a non-profit like CHP?
We have a vision to redevelop the portfolio of public housing in Hopewell. We tried looking at various opportunities like Choice Neighborhoods, but it is very competitive. We even considered creating our own non-profit in an effort to drive our vision. But the important thing was to improve the housing stock, and we wanted to start that process as quickly as possible; so we started looking at non-profit housing developers. CHP was a clear winner in filling a gap that we couldn’t.
5. How did you benefit from that partnership?
We are trying to form dynamic partnerships to revitalize the community, something we can’t do on our own. As a PHA, we did not have adequate capacity, at least at this time, to be a developer. CHP had that experience and the LIHTCs were part of their strategy – one we knew we would all benefit from. Choosing RAD allowed us to transfer the title of ownership to CHP, while still administering the 30 Housing Choice Vouchers. CHP will manage the LIHTC units and generally manage the property.
6. Were there other benefits of RAD?
Yes. The signal is clear that the formula for financing is not going to be the same as it has been traditionally. Section 8 subsidy for the next 15-20 years is a good option for a small housing authority like ours. The diminishing affordable housing stock across the country is a great concern. We can tell just from the long waiting lists for vouchers and public housing stock that the need is greater than we are accommodating.
The biggest thing was that RAD gave us the opportunity to finance redevelopment with debt. Since RAD removes the deed of trust, and we are getting Low Income Housing Tax Credits, we can use a large portion of the money for redevelopment. Approximately $6.25 Million will be dedicated to constructing the new, energy efficient development.
We need to tap into private capital the way we have not in the past. Since Multifamily has done it in the past, and Congress is going to continue to cut funds, either [housing authorities will] go out of business or adopt a different financing stream. RAD simplifies rules that made redevelopment so cumbersome – we felt it was the right time and something right for us to do.
7. How will this affect the tenants?
The 30 tenants we have now will all remain in the new building. The main benefits to them are that they will see a huge improvement in the quality of living. Their homes will be brand new and energy efficient (Earth-Craft Certified).
8. What advice would you give to PHAs who know they will need partners to make their RAD deal successful, but are unsure how to reach out?
The writing is on the wall – we can’t sustain the public housing or the quality of life the way things have been going. It became apparent that this old housing stock with diminishing capital funds was not going to be sustainable.
I would say to housing authorities: if you can sit down and do a pro-forma and figure out how to sustain the properties with what you have, and provide quality homes, you don’t need to do this. But if you can’t do that – your best option is to participate in RAD and start looking for funding outside of the traditional HUD streams.