No Paradise Without Troubles

AFFORDABLE HOUSING FINANCE • August 2008

BY LIZ ENOCHS

ST. THOMAS, U.S. VIRGIN ISLANDS - For Wilder Balter Partners, St. Thomas turned out to be anything but an island paradise. In building the 150- unit family and veterans housing development known as Patriot Manor, the Westchester, N.Y.-based developer endured a series of trials and tribulations that bring to mind the biblical troubles of Job.

Just for starters, the island’s governor refused to sign a document that was necessary to close the deal, so the developers —who had just 90 days to close if they wanted to preserve the project’s original allocation of low-income housing tax credits (LIHTCs)—had to wait until he left the island and get the lieutenant governor to sign it instead.

On top of that, the barge delivering the concrete to the project—the only one available on the island—crashed and had to be sent to Brooklyn for repair, forcing Wilder Balter to fly in 1,000- pound bags of concrete from Puerto Rico while the barge was in dry dock. Then, just to keep things interesting, Hurricane Katrina crashed through the Caribbean.

And that’s just a sampling of the obstacles the project sponsor had to overcome. “It used all our skill sets here, all our talents, and most of our financial resources,” said Bob Wilder, president of Wilder Balter Partners, which was brought in to handle the development after a local nonprofit group proved unable to get the project done. “Every day, you came in as a warrior because you knew you had to be a warrior and something was going to go wrong or multiple things were going to go wrong and you had to fix it.”

One of the biggest problems to be solved was the original development plan, which called for building efficiency units for veterans. The biggest need on the island was for family housing, however, according to Wilder, so Patriot Manor was redesigned to instead create 69 one-bedroom, 49 two-bedroom, and 42 three-bedroom units.

The development did get a few breaks, though. The Virgin Islands Housing Finance Authority (VIHFA) awarded it LIHTCs for an unprecedented four consecutive years. That included more than $800,000 allocated during construction to cover rising costs, an award that led to an additional $6.6 million being paid in as an adjusted equity contribution by investor Alliant Capital.

“They were really in the foxhole with us,” Wilder said of the VIHFA’s top officials. In all, Patriot Manor received $27.8 million in investor equity from the sale of LIHTCs.

The Federal Home Loan Bank of New York gave the project two awards totaling $2.3 million and Wilder Balter contributed $1.2 million in deferred developer’s fees. JPMorgan Chase Bank provided a $10 million construction loan, and the Virgin Islands government contributed the land at a $55,000 a year leasing rate while providing a full real estate tax abatement for 30 years.

The project, which was completed in early 2007 and is 100 percent leased, is located on a hillside overlooking Charlotte Amalie Harbor and boasts views of crystal blue waters that celebrities paid top dollar for back when the site was occupied by a luxury hotel. “I’ve never seen, in the history of the business, a site like this, and I’m never going to see one again,” said Wilder.

Corde