Remaking a Landmark

AFFORDABLE HOUSING FINANCE • August 2008

BY JERRY ASCIERTO

CLEVELAND - The Famicos Foundation faced a litany of challenges in its rehab of the historic Emeritus House. The nine-story landmark in Cleveland’s Central neighborhood has been the headquarters for the Phillis Wheatley Association (PWA) since it was built in 1926.

The building originally housed African-American women migrating from the South, and today it serves very low income seniors. When it came time to rehab the building, PWA partnered with Famicos Foundation, a 39-year-old affordable housing developer with 14 low-income housing tax credit (LIHTC) projects under its belt, half of which were historic rehabs.

The first challenge involved financing. Emeritus House has a Department of Housing and Urban Development Sec. 223(a)(7) mortgage and went through the Markto- Market program in 2003. That program forbids the property to take on secondary debt. But the rehab needed a $6 million construction loan to get going, and incredibly, Charter One Bank lent it without putting a lien on the property.

“We were able to finance a $10 million project with no additional liens or mortgages on the property,” said David Fagerhaug, director of real estate development at Famicos.

The nearly $10 million project received $4.87 million in LIHTCs and $1.48 million in historic tax credits, syndicated by the Ohio Capital Corporation for Housing (OCCH) and Enterprise Community Investment, Inc. The project also received $1.2 million from the city through its Community Development Housing Trust Fund, as well as $600,000 in grants from the Cleveland Foundation, Enterprise, and OCCH.

The guidelines for using historic tax credits also created some challenges, especially since the building was also being developed under Green Communities, a program developed by Enterprise Community Partners to help affordable developments achieve energy efficiency.

“They kind of clashed,” said Fagerhaug. “We couldn’t insulate the walls, for instance, because the walls were original plaster, and we weren’t allowed to tear the old plaster off.”

The historic renovation was mostly concentrated on the first two floors, which included the lobby, offices, a commercial kitchen, and community space. Famicos added a new computer lab for residents on the first floor, as well as a laundry facility and public bathrooms on the first two floors.

Famicos used recycled materials, low- VOC and low chemical-based products, put in Energy Star appliances and light fixtures in the units, and added a high-efficiency boiler system as well as a white roof that reduces solar heat.

The development was a true gut rehab. Before the renovation, the building had 42 efficiencies and 14 one-bedroom units. After Famicos tore out walls and eliminated space that had been devoted to common areas, it had 42 one-bedroom units and 14 efficiencies.

Another challenge involved the flooding of the basement after heavy rainstorms in August 2007. The flood swamped $100,000 worth of mechanical equipment such as boilers and water pumps, and Famicos had to spend another $50,000 to flood-proof the basement.

All of that hard work paid off. The vacancy rate at Emeritus house was historically between 15 percent and 20 percent, partly due to the building’s rundown condition. But now the building is 100 percent occupied, with about 20 people on the waiting list.

Corde