Developers Didn't Quit on Papermill

AFFORDABLE HOUSING FINANCE • August 2008

BY BENDIX ANDERSON

ALSTEAD, N.H. - The developers of Papermill Village Senior Housing battled for years to build affordable apartments here. They lost one site and found another. They overcame a battle before the town’s zoning board. And they won two lawsuits before the state Superior Court, only to lose the rental subsidy they needed just months before they planned to start construction.

“We had gone through so much over four years. … I thought, ‘This can’t be happening,’” said Mary Lou Huffling, principal of Papermill Village, LLC.

Papermill’s 20 new garden apartments are the only affordable seniors housing for miles in any direction, allowing very low income seniors to stay in this tiny rural town and access community services like nursing visits and mental health counseling.

For nearly 20 years, Huffling has run the Friendly Meals program, serving 25,000 meals a year, Tuesdays and Thursdays, to the neediest people in her town and the rural hills nearby. She met elderly people who needed medical services but who lived in rotting trailers or dilapidated, isolated houses, yet were unwilling to go to clean, new developments miles away in Keene, N.H.

“If you’ve lived in a place all your life and you’re in your 80s, you don’t want to move,” said Huffling.

These experiences motivated her to start a development company to serve this population. After finding and losing a site, she partnered with Southwestern Community Services, Inc., an established nonprofit based in Keene. Together they found another site in 2001, won a reservation of low-income housing tax credits (LIHTCs), and through an innovative state program were also guaranteed a stream of federal project-based Sec. 8 rental voucher subsidy to very low income senior residents.

However, a group of townspeople vehemently opposed Papermill. Zoning board meetings in the winter of 2001- 2002 became wild circuses, filled with shouting and packed with out-of-town lawyers. Local officials eventually approved the “special exception” Papermill needed to build 20 apartments on its 14-acre site, and the opponents sued—twice—in state Superior Court.

Papermill won its legal battles, after each side spent more than $100,000 in legal costs. By then, the Department of Housing and Urban Development was in the midst of a budget crisis. In May 2004, just months before the planned start of construction, federal officials withdrew their pledge of Sec. 8 voucher subsidy.

For months, the deal teetered on the brink of collapse. The partners turned to the U.S. Department of Agriculture’s Rural Development (RD), which offered rental subsidy along with an $800,000 Sec. 515 affordable housing loan. Once again, the deal moved forward, until RD announced that it would make no new commitments to its rental subsidy program.

“We got on the phone with people all over the United States and told them to call their senators and representatives on the [Congressional] agricultural committees,” said Huffling. In response to pressure from advocates, RD changed its plan and offered another year of rental subsidy commitments.

Construction started in 2006, five years after the $3.6 million development first won its reservation of tax credits, which sold to Boston Capital Corp. for $1.4 million. The property also received $739,000 in soft financing from the New Hampshire Housing Finance Authority and a $650,000 Community Development Block Grant from Cheshire County.

Work finished on Papermill in September 2007. One tenant, an aging bachelor suffering from cancer, was in tears at the opening, said Huffling. “Even a couple of those that were very against it have said what a beautiful filled quickly, building it is.”

Corde