SPECIAL FOCUS >> READERS’ CHOICE AWARDS
BEST OVERALL PROJECT:
Lord Tennyson Solves
Preservation Puzzle
BY ANDRE SHASHATY
AFFORDABLE HOUSING FINANCE • NOVEMBER 2007
HAYWARD, CALIF.—The residents at the Lord
Tennyson Apartments are a
tight-knit group. That’s what
Rosalind Cosby likes about
living at the development.
“The tenants all get to know each other,”
she said, noting that there are many
seniors as well as children in the large
community.
Cosby, who works in physical therapy,
has lived at Lord Tennyson for 20 years.
Her apartment was recently rehabbed with
a new bathroom vanity and kitchen, including
a new microwave and dishwasher.
Volunteers of America (VOA) overcame
regulatory and financial challenges
to rehabilitate and preserve the affordability
of the family housing development.
It is one of the overall winners in the
AFFORDABLE HOUSING FINANCE Readers’
Choice Awards this year.
Located in the San Francisco Bay
Area, the 252-unit Lord Tennyson
Apartments development is home to lowand
moderate-income workers. Its location
allows it to serve workers at nearby
industrial parks, shopping centers, and
hospitals.
The development was built in 1968,
and its mortgage was close to being paid
off, plus its affordability requirements were expiring. It was a project that could
have been sold and turned into a marketrate
development, but VOA, the longtime
nonprofit owner, was committed to maintaining
its affordability.
The preservation of affordable housing
is an important focus for VOA. The
nonprofit expects to close on about seven
renovation deals in fiscal 2008, said
Patrick Sheridan, senior vice president of
housing development.
Lord Tennyson is a good example of
how a property can undergo a major renovation
and maintain its affordability. The
extensive work included upgrading the
electrical system, said Lloyd Wright, VOA
construction director. Units were also individually
metered for gas and electricity. And
the development has a new clubhouse,
landscaping, and playground facilities.
But most importantly, Lord
Tennyson remains affordable. Rents are
about 25 percent below market rates. The
project shows how creative structuring
can help a development remain affordable
to low-income residents without the
use of any federal or state tenant subsidies,
Sheridan said.
VOA won an allocation of lowincome
housing tax credits (LIHTCs) and
tax-exempt bonds for the deal. Initially,
local Department of Housing and Urban
Development (HUD) officials indicated
that the low-income households would
receive “enhanced” Sec. 8 vouchers, which
would subsidize rents upon prepayment of
an existing HUD 221(d)(3) loan. However,
late in the process, after new bonds had
been issued, HUD officials in the national
office determined that the owner’s nonprofit
status made the project ineligible
for the vouchers, according to developers.
Faced with this challenge, the development
team decided to defer half of the
developer fee to fund a reserve that would
subsidize rents for existing very low
income residents. Through consultation
with the California Debt Limit Allocation
Committee and the California Tax Credit
Allocation Committee, a plan was formed
to charge full LIHTC rents to those residents
with incomes between 50 percent
and 60 percent of the area median
income (AMI). This helped generate
more revenue to protect the rent levels for
those at or below 30 percent of the AMI.
Although all of the households were
qualified under Sec. 221(d)(3), some were
over-income under the tax credit regulations.
VOA encouraged higher-income residents,
whose units could not be counted in
the tax credit basis, to relocate and become
homeowners by offering relocation and
home-purchase incentives. Twenty-eight
households became first-time homebuyers.
The city of Hayward issued $13.9 million
in tax-exempt bonds (plus a
$700,000 taxable tail), which were credit
enhanced by Freddie Mac in a deal put
together by PNC MultiFamily Capital and
Merchant Capital. LIHTCs generated
about $8.9 million in equity. The credits
were syndicated by the National
Affordable Housing Trust, and the
investor was MassMutual.
Lord Tennyson
Apartments
Developer: Volunteers of America
Architect: Pyatok Architects, Inc.
Major Funders:
City of Hayward, Calif.
California Debt Limit Allocation Committee
California Tax Credit Allocation Committee
Freddie Mac
MassMutual
Merchant Capital
National Affordable Housing Trust
PNC MultiFamily Capital
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