Affordable Housing Finance

READERS' CHOICE AWARD

GREEN FINALIST

Rust Belt Project Turns Green

AFFORDABLE HOUSING FINANCE • August 2008

BY GENEVIEVE RAJEWSKI

TARENTUM, PA. - Dalton’s Edge deserves raves for adding 120 new affordable residences for seniors to Allegheny County—home of one of the largest elderly populations of any metropolitan area in the United States. The $17.8 million development also is helping to color this Rust Belt mill city “green.”

Dalton’s Edge is heated and cooled completely through the use of an open-loop geothermal heat pump system, which uses several high-capacity wells that pull water from the earth and circulate it through heat exchanges to heat and cool the apartments before returning the water to the Allegheny River. The development also features a green roof and incorporates a number of other energy- efficient features that earned a federal Energy Star rating.

What originally began as an effort to assist the Allegheny County Housing Authority in the repositioning of several of its aging seniors highrises turned into a significant new construction initiative.

“About three years ago, we responded to an RFQ [request for qualifications] from the housing authority,” said Bill Gatti, president of Trek Development Group, developer of Dalton’s Edge. “However, we soon determined that building new would be the most efficient way to go.” Trek Development Group settled on a largely vacant former supermarket, razed the building, and set about turning the weed-riddled five-acre parking lot into a new center of seniors living overlooking the Allegheny River.

The apartments are in two threestory buildings: Phase I, which opened in 2006, features 48 one- and two-bedroom apartments; and Phase II, which opened in 2007, contains 72 one- and two-bedroom apartments. The development received an allocation of low-income housing tax credits from the Pennsylvania Housing Finance Agency (PHFA), which were sold to PNC MultiFamily Capital in exchange for $12 million in equity. Project financing also included a $500,000 Affordable Housing Program grant from the Federal Home Loan Bank of Pittsburgh; a $1.6 million soft loan from Allegheny County Economic Development; a $914,600 PennHomes loan from the PHFA; and a $4.6 million loan from the Allegheny County Housing Authority’s Capital Fund program, which borrowed from the Department of Housing and Urban Development’s Capital Fund Financing Program.

“We are firm believers, especially with seniors housing, in the co-location of housing and services,” said Gatti. To that end, the development includes an on-site medical facility operated by a third party that provides medical care, meals, nutrition counseling, transportation, and other services.

“We formed an alliance with Community LIFE (Living Independently for Elders), which can provide up to nursing- home level care,” noted Gatti. Enrollees in the program are cared for in accordance with their level of need.

Although few seniors ultimately chose to relocate to Dalton’s Edge from the housing authority’s older high-rises, the development quickly achieved 100 percent occupancy.

The open-loop geothermal system—a first for the developer— proved the biggest challenge. “We had issues with [the water] yield,” said Gatti. “We [projected] 500 gallons per minute and ended up with less than 200 gallons. We also had major issues with water quality. The water on-site is very high in iron, which [shortens the life of] the heat exchangers. We had to drill numerous test wells” until water of acceptable quality was found. Still, the developer was satisfied with the eventual results.

“We are averaging about $60 per unit per month for heating/cooling, which is 40 percent less than what we’re used to,” said Gatti. “It takes very committed ownership to make it work. No one is ever going to get in trouble for installing a traditional heating/ cooling system.”