Groups All Aboard Transit-Oriented Project

AFFORDABLE HOUSING FINANCE • October 2008

BY Donna Kimura

BEAVERTON, ORE.

The significance of the Merlo Station Apartments can be found both inside and outside its new walls. On the outside, the development is a prime example of a transit-oriented development. Inside, the apartments serve the housing needs of two distinct groups- large low-income families and developmentally disabled adults. Both achievements are impressive.

"Merlo Station is the result of four years of continual cooperation in an effort to meet a wide range of community goals," said Tom Benjamin, executive director of Tualatin Valley Housing Partners (TVHP), the nonprofit developer. "Initially suggested by TriMet, we have produced 128 units of affordable housing that meet the development goals of high-density housing adjacent to a light-rail station, the city and county high priority of housing for large families, and the goals of active parent groups for special-needs populations."

Built on land that was owned by TriMet, the local transit system, the project sits just a block away from the Merlo Station MAX light-rail station. TriMet originally planned to use the site to expand its bus facilities, but when those plans changed, it sold the land to TVHP at a discount.

The site was appraised for about $1.7 million, but TVHP acquired the property for approximately $1 million because the transit agency recognized that it would benefit from increased ridership that would come from the development, Benjamin said. As more market-rate developments are built near public transit, project supporters wanted to make sure that affordable apartments don't get squeezed out.

"The more our system has become an amenity and people are more willing to pay to be near it, it makes it hard for lower-income households that are transit dependent," said Jillian Detweiler, TriMet senior planner. The new apartments help those households to be near transportation, she said.

"To the extent that we can link affordable housing to the transit system, it's great public policy," said Bob Gillespie, administrator of the housing division at Oregon Housing and Community Services (OHCS), a key financier of the project.

One of the goals of Merlo Station Apartments is to provide housing to large families. A market study identified about an 800-unit shortfall in affordable threeand four-bedroom apartments in the area, and Benjamin thinks that may be conservative. The 15 four-bedroom units at the development rented in two weeks, a sign of the demand for large apartments. In another unique move, 20 units are home to 30 developmentally disabled residents, said Karen Voiss, TVHP program director. These units target individuals earning no more than 30 percent of the area median income (AMI) and are located in small groups throughout the development. The other units are for households earning no more than 60 percent of the AMI.

The community is made up of eight buildings configured around five courtyards. Almost all of the apartments open out toward a courtyard, a move aimed at increasing safety and encouraging interaction.

The $20 million development was financed with 4 percent low-income housing tax credits reserved by OHCS, which also issued tax-exempt bonds. Enterprise Community Investment, Inc., syndicated the tax credits to provide approximately $6.5 million in equity. U.S. Bank provided an approximately $14.7 million construction loan and a $9.4 million permanent loan, including about $5.8 million from the bonds.

Financing also included a $3.6 million loan subsidized by Oregon Affordable Housing Tax Credits; $700,000 in HOME funds from the city of Beaverton; and about $2 million from Washington County Community Development (WCCD) through the HOME program.

The project also received predevelopment grants from Washington Mutual and Home Depot and predevelopment loans from the Federal Home Loan Bank of Seattle, WCCD, and the Community Housing Fund.