The Lakewoods Apartments was built in the 1960s by the housing affiliate of the AFL-CIO, primarily as a place for union members to retire in Dayton, Ohio.
Operating under the federal Sec. 202 program for nearly five decades, the 417-unit property remained affordable to its residents. However, replacement reserves were significantly underfunded and capital needs went unmet. In recent years, the budget was so strained that the owner struggled to turn around vacant apartments to lease to new households. As a result, occupancy was plummeting.
Millennia Housing Development and its partner, Eternal Housing Fund, stepped in to preserve and recapitalize the valuable housing community. “There was a commitment from day one to improve the project,” says Frank Sinito, CEO of The Millennia Cos.
The new team had to win over skeptical residents, however. Millennia had to convince residents, who had not had a rent hike in more than 12 years, that it would use a rent increase to address key issues, including leaky windows, outdated HVAC systems, and accessibility to allow the seniors to age in place. It also needed the tenants to participate in an income-qualification process to determine which households would qualify for the funding programs the firm planned to use.
While working closely with Lakewoods' residents, Millennia developed a two-stage financing plan to fund the $23.9 million project. The first stage focused on stabilizing the property, while the second stage concentrated on preserving it for the long term, says Christine Robertson, vice president at Millennia.
New financing programs were called upon. The Lakewoods is one of just 12 projects to receive a federal Senior Preservation Rental Assistance Contract (SPRAC), a little-known rental assistance program that aims to prevent the displacement of residents in Sec. 202 properties.
It is also the first project to utilize the new Freddie Mac Tax Exempt Loan Program, which allowed for reduced costs associated with traditional bond deals.
Key physical improvements to the building will be completed this year. In addition, the deal has allowed Millennia to increase resident services. For example, a new operating budget enabled the team to hire a full-time service coordinator.
Apartments serves low-income seniors and nonelderly disabled households. The
property was serving households with incomes up to 80% of the area median
income (AMI) pursuant to Sec. 202 requirements. Following closing, the property
is targeting the majority of its units to households with incomes at or below
50% of the AMI.