WOMELSDORF, PA. - One-third of all rural renters are paying more than 30 percent of their incomes for housing costs, according to the National Rural Housing Coalition. Preservation and rehabilitation of the existing housing stock is critical to meet the housing needs in rural areas. Housing Development Corp. (HDC), based in Lancaster, Pa., knew this when it decided to rehabilitate a 19th century cigar factory in Womelsdorf, population 2,700.

The 27-unit building, Henner Apartments, is built for seniors and people with disabilities. It hasn’t even been advertised for rent, and 35 individuals have shown interest in renting.

“This is a small, quaint town, so all the construction created some excitement,” said Cyndie Fuhrer, development officer for HDC. Most of the developments in the neighborhood are single-family homes. The streets are very narrow. A log cabin built in the 1790s is located a few doors down in this historic community.

HDC is putting the finishing touches on the $4.5 million project, and it’s slated for completion Aug. 15. All the units are one-bedrooms, each with an average size of 565 square feet. A handful of the apartments are designed for residents in wheelchairs. All units are set aside for those earning no more than 60 percent of the AMI. More than 60 percent of the units are reserved for residents earning no more than 50 percent of the AMI.

The development received more than $2.9 million in equity from the sale of LIHTCs. The tax credit syndicator is Enterprise Community Investment, Inc. The day the award was announced brought HDC mixed blessings.

“That day was both the best and worst day of our lives,” said Michael Carper, CEO for HDC. “Our contractor announced it was getting out of the tax credit business. This happened at the same time as the spike in construction costs.”

HDC was left with a construction budget that was far from feasible. The firm interviewed four contractors and finally chose locally based Arthur Frank & Sons and began work with a brand new design that was within its budget. The new design included moving the community room to the second floor and replacing a dual-pipe heating system with individual PTAC (packaged terminal air conditioner) units in each apartment.

The project received financing from PennHOMES and HOME funds from Berks County. U.S. Department of Agriculture Rural Development supplied a $195,000 loan.

HDC has contracted with the Berks County Senior Citizens Council to provide classes, trips, and other services to residents. The Womelsdorf Community Library will visit regularly, bringing books for the resident library and conducting a variety of activities.

“What HDC is trying to do is to revitalize our boroughs, these small towns in Pennsylvania,” said Carper. “We have a lot of boroughs in Pennsylvania that are struggling, and we’ve been able to provide one more bit of stimulus of investment. Adaptively reusing these historic buildings leads to other investments.”

Additional project information, as provided in application by the nominator.

Q. Why does the nominated project deserve to be recognized based on the award criteria of this contest?

A. Perhaps out of all the criteria listed, the one that epitomizes this property is its “role in community revitalization.” Henner Apartments is an adaptive reuse of a historic 19th century cigar factory that was once the centerpiece of Womelsdorf, Pa.’s economic vitality. A quite charming brick building with large windows typical of that era’s industrial structures, the property was vacant for three decades. The blight that had come to the building was hard to miss, as Henner is situated directly on the main street and near the town square of this small, historic borough. “Small-town America” has long been considered the fabric of our country, and Pennsylvania claims many rural, friendly towns that fit this unfortunately dying breed. Womelsdorf is one of them, and Henner Apartments is helping to inject a fresh bout of life into this rural town of about 2,700 people. Even the excitement created by the construction has revitalized the town.

In addition, to be more cost-effective our development team is taking a new approach to parking and storm water management. To help reduce runoff into the town’s gutters, and reduce our development and management costs on this matter, Housing Development Corporation (HDC) is installing a pervious, green parking lot. This lot will comprise about half the property’s parking space, and will reduce runoff by 50 percent.

We also received excellent support, especially from the county and state, as many have recognized the need for this type of development in Womelsdorf and boroughs like it. Then-State Sen. David Brightbill was a very vocal advocate for Henner, helping to secure both tax credits and substantial state funds. Finally, by providing a quality supportive-services program for the residents, and securing a subsidy for apartments that allows them to pay no more than 30 percent of their income toward housing expenses, HDC is opening new doors on many fronts to improve the lives of elderly tenants.

Q. How does this project represent an innovative solution to a specific development challenge?

A. We submitted our application for low income housing tax credits before Hurricane Katrina hit. With the subsequent and substantial explosion in fuel and construction costs, we were left with a construction budget that was far from feasible, given the funds we received and the application to which we were committed. In response to the pressure to rework their bid into something more plausible, our general contractor backed out of the job after we were awarded tax credits.

We interviewed four other contractors to reach an achievable price, and we were able to work with one local company, Arthur Funk & Sons, to devise a new design of the property that would actually allow us to provide most of the same general amenities while remaining within the original budget without compromising quality. For example, by moving the community room to the second floor, we were able to produce a more cost-effective apartment layout. The original scope of work included a top-of-the-line dual-pipe heating system; by replacing it with individual PTAC units in each apartment, we saved a large amount. These and a few other design changes, along with a welcome increase in tax credit equity pay-in from our syndicator, allowed us to overcome this cost challenge and proceed toward completion of this community.